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Fair Value
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Note 11 - Fair Value
The fair value of an asset or liability is defined as the price that would be received for an asset or paid to transfer a liability in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use
of unobservable inputs. To determine fair value, the Company applies a hierarchy that consists of three input levels. The first and
second levels are regarded as observable, while the third is categorized as unobservable. These input levels may be utilized in the
measurement of fair value as outlined below:
Level 1:
Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2:
Inputs (other than quoted prices included in Level 1) can include the following:
(1) Observable prices in active markets for similar assets or liabilities;
(2) Prices for identical assets or liabilities in markets that are not active;
(3) Directly observable market inputs for substantially the full term of the asset or liability; and
(4) Market inputs that are not directly observable but are derived from or corroborated by observable market data.
Level 3:
Unobservable inputs which reflect the Company’s best estimates of what market participants would use in pricing the
asset or liability at the measurement date.
There were no transfers between fair value levels for the three months ended June 30, 2026.
Recurring Fair Value Measurements
Derivatives
The Company measures the fair value of its derivatives in accordance with ASC 820, Fair Value Measurement, utilizing valuation
models that incorporate observable market inputs whenever available. These inputs typically include contractual terms, current market
prices, forward price curves for natural gas, liquids, and oil, relevant interest rate yield curves (such as U.S. Treasury and SOFR), and
volatility factors.
Derivatives are classified within the fair value hierarchy based on the observability of the inputs used in the valuation. The Company’s
fixed price swaps are classified as Level 2 and are valued using third-party discounted cash flow models, which rely on NYMEX
futures for natural gas and oil derivatives and OPIS forward curves for NGL derivatives. Interest rate derivatives, also classified as
Level 2, are valued using discounted cash flow models that incorporate contracted notional amounts, market-quoted SOFR yield
curves, and credit-adjusted risk-free rates.
Options, including call options, put options, and collars, are classified as Level 2 and valued using the Black-Scholes option pricing
model. This model incorporates contract terms such as maturity, market parameters including NYMEX and OPIS futures, interest
rates, volatility, and counterparty credit risk. Volatility and other significant inputs are obtained from independent third-party pricing
sources and are subject to monthly verification.
Basis swaps are classified as Level 2 and are valued using third-party models based on forward commodity price curves.
Changes in key inputs, such as volatility, may result in changes to the fair value measurement of the Company’s derivatives.
Assets and liabilities measured at fair value on a recurring basis for the date presented:
As of June 30, 2026
(in thousands)
Level 1
Level 2
Level 3
Assets
Derivatives
—
121,498
—
Liabilities
Derivatives
—
(516,391)
—
Total net assets (liabilities)
$—
$(394,893)
$—
Nonrecurring Fair Value Measurements
Impairment of Proved Natural Gas & Oil Properties
When impairment occurs, the Company estimates the fair value of the impaired proved natural gas and oil properties through a
discounted cash flow method, which incorporates Level 3 inputs that are not directly observable.
Business combinations
The Company assesses the value of acquired proved properties using an income-based approach as of the acquisition date. This
method is classified as a Level 3 fair value estimate due to its reliance on key assumptions, such as anticipated production volumes,
future commodity pricing, operating costs, weighted average cost of capital (the discount rate) and risk adjustments tailored to the
reserve classification.
Financial Instruments Not Measured at Fair Value
The carrying values of cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued liabilities, and
other current liabilities approximate fair value due to the highly liquid or short-term nature. The Company’s Credit Facility (see Note
10) has a recorded value that approximates fair market value, as it bears interest at a floating rate that approximates a current market
rate.