v3.25.2
Derivative Instruments
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments

Note 5 – Derivative Instruments

 

The Company utilizes commodity derivative instruments to reduce its exposure to crude oil, natural gas, and NGL price volatility for a portion of its estimated production from its proved, developed, producing oil and natural gas properties. As of June 30, 2025, the Company only had commodity swap contracts outstanding, which guarantee a fixed price on contracted volumes over specified time periods. However, in the future, the Company may utilize other types of derivative instruments including call and purchased options, put spreads, collars, and three-way collars. All of the Company’s commodity derivative counterparties are large financial institutions with investment-grade credit ratings, as such, the Company believes it does not have any significant credit risk associated with its counterparties and does not currently anticipate any nonperformance from its counterparties.

 

As of June 30, 2025, the Company had the following outstanding crude oil, natural gas, and NGL derivative contracts in place, which settle monthly and are indexed to NYMEX West Texas Intermediate, NYMEX Henry Hub, and Mount Belvieu OPIS, respectively:

 

   Settling
July 1, 2025
through
December 31, 2025		   Settling
January 1, 2026
through
December 31, 2026		   Settling
January 1, 2027
through
December 31, 2027		   Settling
January 1, 2028
through
December 31, 2028		 
Crude Oil Swaps:                    
Notional volume (Bbls)   1,542,652    2,241,616    1,592,503    471,907 
Weighted average price ($/Bbl)  $68.04   $64.42   $64.16   $63.47 
Natural Gas Swaps:                    
Notional volume (MMBtus)   6,285,244    11,413,134    9,874,626    4,406,357 
Weighted average price ($/MMBtu)  $4.30   $4.08   $4.07   $4.00 
Ethane Swaps:                    
Notional volume (Bbls)   178,406    288,956    232,375    51,809 
Weighted average price ($/Bbl)  $11.91   $11.54   $11.05   $11.28 
Propane Swaps:                    
Notional volume (Bbls)   310,017    509,724    417,744    94,220 
Weighted average price ($/Bbl)  $28.74   $26.36   $26.51   $26.00 
Iso Butane Swaps:                    
Notional volume (Bbls)   39,012    63,185    50,812    11,328 
Weighted average price ($/Bbl)  $35.62   $33.92   $30.22   $29.63 
Normal Butane Swaps:                    
Notional volume (Bbls)   107,931    174,809    140,580    31,343 
Weighted average price ($/Bbl)  $38.32   $35.24   $31.37   $30.37 
Pentane Plus Swaps:                    
Notional volume (Bbls)   80,461    130,321    104,802    23,366 
Weighted average price ($/Bbl)  $46.17   $53.05   $52.40   $52.49 

 

 

The Company recognizes all of its derivative instruments at fair value as assets or liabilities on the accompanying consolidated balance sheets. The Company has not designated any of its derivative instruments as hedges for accounting purposes; therefore, it presents aggregate net gains or losses resulting from changes in the fair values of its outstanding derivatives as unrealized gains on derivatives and aggregate net gains or losses resulting from the settlement of derivative instruments during the period are recognized as realized gain on derivatives on the accompanying consolidated statements of operations.

 

The Company typically has numerous hedge positions that span several time periods and often result in both fair value derivative asset and liability positions held with that counterparty. The Company has elected to net its derivative instrument fair values executed with the same counterparty, pursuant to the International Swaps and Derivatives Association, Inc. master agreements, which provide for the net settlement over the term of the contract and in the event of the default or termination of the contract.

 

The following tables present the gross and net fair values of the Company’s derivative instruments recognized on the condensed consolidated balance sheets for the periods presented:

 

   Gross Amounts Recognized   Gross Amounts Offset in Consolidated Balance Sheet   Net Amounts Presented on the Consolidated Balane Sheet 
   June 30, 2025 
   Gross Amounts Recognized   Gross Amounts Offset in Consolidated Balance Sheet   Net Amounts Presented on the Consolidated Balane Sheet 
   (In thousands) 
Current derivative assets  $16,040   $(3,327)  $12,713 
Long-term derivative assets  $8,286   $(2,305)  $5,981 

 

   Gross Amounts Recognized   Gross Amounts Offset in Consolidated Balance Sheet   Net Amounts Presented on the Consolidated Balane Sheet 
   December 31, 2024 
   Gross Amounts Recognized   Gross Amounts Offset in Consolidated Balance Sheet   Net Amounts Presented on the Consolidated Balane Sheet 
   (In thousands) 
Current derivative liabilities  $(2,446)  $—   $(2,446)
Long-term derivative liabilities  $(1,949)  $—   $(1,949)

 

The following table presents the components of realized gain on derivatives and unrealized gain on derivatives reflected on the accompanying consolidated statements of operations and cash flows for the periods presented:

 

                 
   Three Months Ended June 30,   Six Months Ended June 30, 
   2025   2024   2025   2024 
   (In thousands) 
Cash received (paid) for derivative settlements, net:                
Crude oil  $

4,150

   $—   $

3,630

   $— 
Natural gas   

1,223

    —    961    — 
NGLs   

(429

)   —    

(429

)   — 
Total cash received for derivative settlements, net:  $

4,944

   $—   $

4,162

   $— 
Non-cash gain (loss) on derivatives:                  
Crude oil  $

22,332

   $—   $

23,406

   $— 
Natural gas   

3,375

    —    

2,185

    — 
NGLs   

(2,501

)   —    

(2,501

)   — 
Total non-cash gain on derivatives   

23,206

    —    

23,090

    — 
Total gain on derivatives, net  $

28,149

   $—   $

27,252

   $—