v3.26.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Generally, the determination of fair value requires the use of significant judgment and different approaches and models under varying circumstances. Under a market-based approach, we consider prices of similar assets, consult with brokers and experts or employ other valuation techniques. Under an income-based approach, we generally estimate future cash flows and then discount them at a risk-adjusted rate. We classify the inputs used to measure the fair value of our financial assets and liabilities into the following hierarchy:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active or other than quoted prices that are observable, either directly or indirectly, and can be corroborated by observable market data.

Level 3: Unobservable inputs that reflect management’s best estimates and assumptions of what market participants would use in measuring the fair value of an asset or liability.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of significance for a particular input to the fair value measurement requires judgment and may affect our valuation of the fair value assets and liabilities within the fair value hierarchy levels.

Recurring Fair Value Measurements

The following table presents the fair value of our derivative assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 by level within the fair value hierarchy:

Fair Value Measurement Using
Level 1Level 2Level 3Total
(in thousands)
March 31, 2026
Financial assets:
Derivative assets$— $246,066 $— $246,066 
Vital contingent earn-out consideration
— — 50,148 50,148 
Financial liabilities:    
Derivative liabilities$— $(576,278)$— $(576,278)
Ridgemar contingent earn-out consideration— (68,698)— (68,698)
     
December 31, 2025    
Financial assets:    
Derivative assets$— $369,724 $— $369,724 
Vital contingent earn-out consideration
— — 17,590 17,590 
Financial liabilities:    
Derivative liabilities$— $(57,532)$— $(57,532)
Ridgemar contingent earn-out consideration
— (26,870)— (26,870)

As of March 31, 2026
(in thousands)
Rollforward of Recurring Level 3 Fair Value Measurements:
Beginning balance
$17,590 
Unrealized gain (loss) on Vital contingent earn-out consideration
32,558 
Ending balance
$50,148 
Non-Recurring Fair Value Measurements

Certain nonfinancial assets and liabilities are measured at fair value on a non-recurring basis. We utilize fair value measurements on a non-recurring basis to value our oil and natural gas properties when events and circumstances indicate a possible decline in the recoverability of the carrying amount of such property. When a triggering event is identified, we compare the carrying amount of our oil and natural gas properties to the estimated undiscounted cash flows our oil and natural gas properties will generate to determine if the carrying amount is recoverable. We perform this analysis on an asset pool basis. If the carrying amount exceeds the estimated undiscounted cash flows, we will write-down the carrying amount of the oil and natural gas properties to fair value. The Level 3 inputs used to determine such fair value are primarily based upon internally developed cash flow models and estimated net proceeds upon the potential sale of an asset pool and are classified within Level 3. Significant Level 3 assumptions associated with discounted cash flows include, but are not limited to, estimates of reserves, future commodity prices, future production estimates, and discount rates commensurate with the risk associated with realizing the projected cash flows.

Our other non-recurring fair value measurements include the estimates of the fair value of assets and liabilities acquired through business combinations. Our business combinations are accounted for using the acquisition method under GAAP, which requires all assets acquired and liabilities assumed in the acquisitions to be recorded at fair values at the acquisition date of each transaction. Oil and natural gas properties are valued based on an income approach using a discounted cash flow model utilizing Level 3 inputs, including internally generated development and production profiles and price and cost assumptions. Net derivative liabilities assumed in acquisitions are valued based on Level 2 inputs similar to the Company's other commodity price derivatives. See NOTE 3 – Acquisitions and Divestitures.

Other Fair Value Measurements

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term maturities of these instruments. Our long-term debt obligations under our Revolving Credit Facility also approximate fair value because the associated variable rates of interest are market based. The fair value of the Company’s outstanding senior notes (collectively, “Senior Notes") as of March 31, 2026 and December 31, 2025 was approximately $5.2 billion and $4.7 billion, respectively, based on quoted market prices or Level 1 inputs.