v3.26.1
DERIVATIVES
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES DERIVATIVES
We enter into commodity derivative contracts to help protect our cash flows, margins and capital program from the volatility of commodity prices. We primarily hedge a portion of our forecasted oil production and a portion of our purchased natural gas used in our steamflood operations. We did not have any derivative instruments designated as accounting hedges as of and for the three months ended March 31, 2026 and 2025. Unless otherwise indicated, we use the term "hedge" to describe derivative instruments that are designed to implement our hedging strategy.

Summary of Derivative Contracts

We held the following Brent-based contracts for our forecasted oil production as of March 31, 2026:

Q2
2026		Q3
2026		Q4
2026		20272028
Sold Calls
Barrels per day36,000 36,000 36,000 2,465 17,534 
Weighted-average price per barrel$83.51 $83.51 $83.51 $71.06 $81.28 
Purchased Puts
Barrels per day36,000 36,000 36,000 2,465 17,534 
Weighted-average price per barrel$61.11 $61.11 $61.11 $61.01 $62.74 
Swaps
Barrels per day44,487 42,869 41,703 69,610 7,285 
Weighted-average price per barrel$68.52 $68.20 $67.98 $65.69 $66.98 

At March 31, 2026, we also held the following swaps to hedge purchased natural gas used in our operations as shown in the table below.

Q2
2026		Q3
2026		Q4
2026		20272028
SoCal Border
MMBtu per day
13,250 10,570 9,908 3,463 — 
Weighted-average price per MMBtu
$4.82 $4.83 $4.84 $4.77 $— 
NWPL Rockies
MMBtu per day
91,750 91,750 91,750 88,254 11,475 
Weighted-average price per MMBtu
$3.77 $3.76 $4.17 $4.00 $3.51 

In the three months ended March 31, 2026, we also had a limited number of derivative contracts related to our natural gas marketing activities that were intended to lock in locational price spreads. These derivative contracts were not significant to our results of operations or financial statements taken as a whole.

The outcomes of the derivative positions shown in the tables above are as follows:

•Sold calls – we make settlement payments for prices above the indicated weighted-average price per barrel.
•Purchased puts – we receive settlement payments for prices below the indicated weighted-average price per barrel.
•Swaps – with respect to swaps for crude oil, we make settlement payments for prices above the indicated weighted-average price per barrel and receive settlement payments for prices below the indicated weighted-average price per barrel. With respect to swaps for purchased natural gas, we receive settlement payments for prices above the indicated weighted-average price per MMBtu and we make settlement payments for prices below the weighted-average price per MMBtu.
Fair Value of Derivatives

Derivative instruments not designated as hedging instruments are required to be recorded on the balance sheet at fair value. We report gains and losses on our derivative contracts related to our oil production and our marketing activities in operating revenue on our consolidated statements of operations as shown in the table below:

Three months ended
March 31,
20262025
(in millions)
Non-cash (loss) gain from commodity sales derivatives
$(792)$22 
Net settlements and premiums
(56)(16)
Net (loss) gain from commodity sales derivatives
$(848)$6 

We report gains and losses on our commodity derivative contracts related to purchases of natural gas in operating expenses on our condensed consolidated statements of operations as shown in the table below:

Three months ended
March 31,
20262025
(in millions)
Non-cash loss (gain) from natural gas purchase derivatives
$12 $(18)
Settlements
12 12 
Net loss (gain) from natural gas purchase derivatives
$24 $(6)

Our derivative contracts are measured at fair value using industry-standard models with various inputs, including quoted forward prices, and are classified as Level 2 in the required fair value hierarchy for the periods presented. The following tables present the fair values of our outstanding commodity derivatives as of March 31, 2026 and December 31, 2025.

March 31, 2026
ClassificationGross Amounts at Fair ValueNettingNet Fair Value
(in millions)
Other current assets, net
$17 $(15)$2 
Other noncurrent assets
41 (35)6 
Current liabilities(436)15 (421)
Noncurrent liabilities(204)35 (169)
$(582)$— $(582)
December 31, 2025
ClassificationGross Amounts at Fair ValueNettingNet Fair Value
(in millions)
Other current assets, net
$193 $(6)$187 
Other noncurrent assets
106 (5)101 
Current liabilities(48)6 (42)
Noncurrent liabilities(22)5 (17)
$229 $— $229