v3.26.1
Derivatives
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Note 6 - Derivatives
The Company faces volatility in market prices and basis differentials for natural gas, NGLs and oil, affecting the predictability of its
cash flows from commodity sales. Additionally, the Company’s cash flows related to interest payments on variable rate debt
obligations can be impacted by fluctuations in interest rate markets, depending on its debt structure. To manage these risks, the
Company enters into derivative contracts primarily with major financial institutions and energy trading counterparties. As of June 30,
2026, these instruments included swaps, collars, basis swaps, and stand-alone put and call options. The Company does not intend to
hold or issue derivative financial instruments for speculative trading purposes and has elected not to designate any of its derivative
instruments for hedge accounting treatment. Below is a description of these instruments:
Swaps:
When the Company sells a swap, it agrees to receive a fixed price for the contract while paying a floating market price
to the counterparty;
Collars:
Arrangements that include a fixed floor price (purchased put option) and a fixed ceiling price (sold call option) based
on an index price have no net costs overall. At the contract settlement date, (1) when the index price is higher than the
ceiling price, the Company pays the counterparty the difference between the index price and ceiling price, (2) when the
index price is between the floor and ceiling prices, no payments are due from either party, and (3) when the index price
is below the floor price, the Company will receive the difference between the floor price and the index price.
Some collar arrangements may also include a sold put option with a strike price below the purchased put option.
Known as a three-way collar, the structure operates similarly to the standard collar. However, when the index price
settles below the sold put option, the Company pays the counterparty the difference between the index price and sold
put option, effectively enhancing realized pricing by the difference between the price of the sold and purchased put
options;
Basis
swaps:
Arrangements that guarantee a price differential for commodities from a specified delivery point. When the Company
sells a basis swap, it receives a payment from the counterparty if the price differential exceeds the stated terms of the
contract. Conversely, if the price differential is less than the stated terms, the Company pays the counterparty;
Put
options:
The Company purchases and sells put options in exchange for a premium. When the Company purchases a put option,
it receives from the counterparty the excess amount (if any) by which the market price falls below the strike price of
the put option at the time of settlement. If the market price is above the put option’s strike price, no payment is
required from either party. Conversely, when the Company sells a put option, it pays the counterparty the excess
amount (if any) by which the market price falls below the strike price of the put option at the time of settlement. If the
market price is above the put option’s strike price, no payment is required from either party;
Call
options:
The Company purchases and sells call options in exchange for a premium. When the Company purchases a call option,
it receives from the counterparty the excess amount (if any) by which the market price exceeds the strike price of the
call option at the time of settlement. If the market price is below the call option’s strike price, no payment is required
from either party. When the Company sells a call option, it pays the counterparty the excess amount (if any) by which
the market price exceeds the strike price of the call option at the time of settlement. If the market price is below the call
option’s strike price, no payment is required from either party; and
The Company may elect to enter into offsetting transactions for the above instruments for the purpose of cancelling or terminating
certain positions.
The following table summarizes the Company's calculated fair value of derivatives for the date presented:
As of June 30, 2026
(In thousands, except volume data)
Volume
Fair Value
Natural gas (MMbtu)
Swaps
1,167,568
$(218,213)
Two-way collars
143,091
(1,797)
Three-way collars
157,536
(11,000)
Stand-alone calls(a)
67,773
(34,324)
Basis swaps
764,286
(22,095)
Purchased puts
7,978
2,205
Sold puts
16,537
(3,615)
Total natural gas
2,324,769
$(288,839)
NGLs (MBbls)
Swaps
31,757
$(41,583)
Stand-alone calls
460
(2,006)
Total NGLs
32,217
$(43,589)
Oil (MBbls)
Swaps
33,585
$(45,308)
Three-way collars
3,291
(7,089)
Sold calls
1,335
(10,121)
Total oil
38,211
$(62,518)
Interest
SOFR interest rate swap ($5,520 principal hedged, 4.15% fixed-rate)
$53
Total interest
$53
Total fair value of derivatives
$(394,893)
(a)Includes future cash settlements for deferred premiums.
Netting of derivative assets and liabilities is applied at each reporting date when a legal right of offset exists under a master netting
arrangement. The Company elected to present these derivative assets and liabilities on a net basis when these conditions are satisfied.
The following table outlines the Company’s net derivatives for the date presented:
(In thousands)
As of
Derivatives
Consolidated Statement of Financial Position
June 30, 2026
Assets:
Current assets
Derivatives
$83,940
Noncurrent assets
Other assets
37,558
Total assets
$121,498
Liabilities
Current liabilities
Derivatives
$(137,865)
Noncurrent liabilities
Derivatives
(378,526)
Total liabilities
$(516,391)
Net assets (liabilities):
Net assets (liabilities) - current
Derivatives
$(53,925)
Net assets (liabilities) - noncurrent
Other assets / Derivatives
(340,968)
Total net assets (liabilities)
$(394,893)
The Company presents the fair value of derivative contracts on a net basis in the Consolidated Statement of Financial Position. Below
is the impact of this presentation on the Company’s recognized assets and liabilities for the date presented:
As of June 30, 2026
(In thousands)
Presented without
Effects of Netting
Effects of Netting
As Presented with
Effects of Netting
Current assets
$125,135
$(41,195)
$83,940
Noncurrent assets
317,095
(279,537)
37,558
Total assets
$442,230
$(320,732)
$121,498
Current liabilities
(179,060)
41,195
(137,865)
Noncurrent liabilities
(658,063)
279,537
(378,526)
Total liabilities
$(837,123)
$320,732
$(516,391)
Total net assets (liabilities)
$(394,893)
$—
$(394,893)
The Company recorded the following gains (losses) on derivatives in the Condensed Consolidated Statements of Comprehensive
Income (Loss) for the specified periods:
Three Months Ended
Six Months Ended
(In thousands)
June 30, 2026
June 30, 2025
June 30, 2026
June 30, 2025
Net gain (loss) on commodity derivatives settlements
$(61,396)
$14,617
$(211,895)
$(37,654)
Net gain (loss) on interest rate swaps
17
35
37
70
Total gain (loss) on settled derivatives(a)
$(61,379)
$14,652
$(211,858)
$(37,584)
Gain (loss) on fair value adjustments of unsettled derivatives(b)
352,413
154,419
(45,491)
(77,629)
Total gain (loss) on derivatives
$291,034
$169,071
$(257,349)
$(115,213)
(a)Represents the cash settlement of derivatives that were settled during the period.
(b)Represents the change in fair value of derivatives, net of the carrying value of derivatives that were settled during the period.
All derivatives are classified as Level 2 instruments under ASC 820, as their valuation relies on observable market inputs other than
quoted prices. For further details related to fair value measurements, refer to Note 11.
Commodity Derivative Contract Modifications and Extinguishments
Occasionally, such as during the acquisition of producing assets, the completion of ABS financings, or in response to fluctuating price
environments, the Company may strategically modify, offset, terminate, or expand certain existing hedge positions. These
modifications can involve changes to the volume of production covered by contracts, the swap or strike price of specific derivative
contracts, and other similar aspects of the derivative agreements. The Company manages distinct, long-dated derivative contract
portfolios for its ABS financings and term loans. Additionally, the Company maintains a separate derivative contract portfolio for
assets secured by the Credit Facility. These derivative contract portfolios associated with the Company’s ABS financings, term loans,
and Credit Facility are presented in the Company’s Statement of Financial Position.
2026 Modifications and Extinguishments
In June 2026, the Company paid $8 million to modify contracts associated with the ABS IV Notes in connection with their
extinguishment. As these modifications were associated with a borrowing transaction, these amounts are presented as a financing
activity in the Consolidated Statement of Cash Flows. Refer to Note 10 for additional information regarding borrowings.
2025 Modifications and Extinguishments
In February 2025, the Company adjusted portions of its commodity derivative portfolio across its legal entities for approximately
$150 million in connection with the completion of the ABS X financing arrangement. The Company made further adjustments to its
commodity derivative portfolio for approximately $21 million for the retirement of the ABS I and Term Loan I financing
arrangements (each as previously defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025).
Refer to Note 10 for additional information regarding borrowings.