v3.26.1
Financial Instruments and Fair Value Measurement
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Financial Instruments and Fair Value Measurement Financial Instruments and Fair Value Measurement
Financial Instruments

Financial instruments are initially recorded at fair value, defined as the price that would be received to sell an asset or paid to market participants to settle liability at the measurement date. For financial instruments carried at fair value, GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels:

•Level 1 - Inputs representing quoted market prices in active markets for identical assets and liabilities
•Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the assets and liabilities, either directly or indirectly
•Level 3 - Unobservable inputs for assets and liabilities

At June 30, 2026, the Company’s financial instruments recognized on the balance sheet consist of cash and cash equivalents, accounts receivable, derivatives, other long-term assets, accounts payable and accrued liabilities, current portion of long-term debt, long-term debt and other long-term liabilities. The Company uses appropriate valuation techniques based on the available information to measure the fair values of assets and liabilities.
Fair Value Measurement

The following table presents the Company’s fair value measurements of its financial instruments as of June 30, 2026, and December 31, 2025:
(Thousands of U.S. Dollars)As at June 30, 2026As at December 31, 2025
Level 1
Liabilities
7.75% Senior Notes
$22,749 $19,784 
9.50% Senior Notes
83,257 505,020 
9.75% Senior Notes
433,757 — 
$539,763 $524,804 
Level 2
Assets
Restricted cash and cash equivalents - long-term (1)
$11,113 $9,735 
Foreign currency derivatives - current 3,077 10,147 
$14,190 $19,882 
Liabilities
Commodity derivatives - current $30,693 $— 
(1) The long-term portion of restricted cash and cash equivalents is included in the other long-term assets on the Company’s condensed consolidated balance sheet.

The fair values of cash and cash equivalents, current restricted cash and cash equivalents, accounts receivable and accounts payable, and accrued liabilities approximate their carrying amounts due to the short-term maturity of these instruments.

Restricted Cash and Cash Equivalents - Long-Term

The fair value of long-term restricted cash and cash equivalents approximate its carrying value because interest rates are variable and reflective of market rates.
Senior Notes

Financial instruments recorded at amortized cost at June 30, 2026, were the Senior Notes (Note 6).

At June 30, 2026, the carrying amounts of the 7.75% Senior Notes, 9.50% Senior Notes and 9.75% Senior Notes were $24.1 million, $83.9 million and $467.3 million, respectively, which represented the aggregate principal amounts less unamortized debt issuance costs and discounts, and the fair values were $22.7 million, $83.3 million and $433.8 million, respectively.

Derivative asset and derivative liability

The fair value of derivatives is estimated based on various factors, including quoted market prices in active markets and quotes from third parties. The Company also performs an internal valuation to ensure the reasonableness of third party quotes. In consideration of counterparty credit risk, the Company assessed the possibility of whether the counterparty to the derivative would default by failing to make any contractually required payments. Additionally, the Company considers whether such counterparty has the ability to meet its potential repayment obligations associated with the derivative transactions.
Three Months Ended June 30,Six Months Ended June 30,
(Thousands of U.S. Dollars)2026202520262025
Commodity price derivative (gain) loss$(9,266)$(6,802)$79,352 $(5,335)
Foreign currency derivative gain(2,598)(7,230)(2,806)(7,230)
Derivative instruments (gain) loss$(11,864)$(14,032)$76,546 $(12,565)

Commodity Price Risk

The Company may at times utilize commodity price derivatives to manage the variability in cash flows associated with the forecasted sale of its oil production, reduce commodity price risk and provide a base level of cash flow in order to assure it can execute at least a portion of its capital spending. As at June 30, 2026, the Company had outstanding commodity price derivative positions in Canada and Colombia as follows:

Oil
Type of InstrumentStart PeriodEnd PeriodVolume
bbl/d		ReferenceSold Put (C$/bbl or $/bbl Weighted Average)Purchased Put (C$/bbl or $/bbl Weighted Average)Sold Call
(C$/bbl or $/bbl Weighted Average)		Premium (C$/bbl or $/bbl Weighted Average)
Collar07/01/2609/30/26500 WTI CMA— C$75.00 C$91.95 — 
Put Option07/01/2609/30/26500 Brent— 60.00 — 4.30 
Put Spread07/01/2609/30/265,000 Brent45.00 55.00 — 21.64 
Three Way07/01/2609/30/261,000 WTI CMAC$62.50 C$72.50 C$103.70 C$0.95 
Three Way07/01/2609/30/269,000 Brent50.89 60.89 73.23 — 
Collar10/01/2612/31/26500 WTI CMA— C$70.00 C$92.47 — 
Put Option10/01/2612/31/26500 Brent— 60.00 — 4.30 
Three Way10/01/2612/31/26500 WTI CMAC$60.00 C$70.00 C$107.00 C$1.90 
Put Spread10/01/2612/31/265,000 Brent45.00 55.00 — 21.64 
Three Way10/01/2612/31/269,000 Brent50.33 60.33 72.49 — 
Three Way01/01/2703/31/273,000 Brent58.33 71.67 89.55 — 

Natural Gas
Type of InstrumentStart PeriodEnd PeriodVolume,
GJ/day		ReferenceSold Swap (C$/GJ, Weighted Average)Purchased Put (C$/GJ, Weighted Average)Sold Call
(C$/GJ, Weighted Average)
Swap07/01/2609/30/2620,000 Aeco 5AC$2.71 — — 
Swap10/01/2612/31/266,739 Aeco 5AC$2.71 — — 

Foreign Exchange Risk

The Company is exposed to foreign exchange risk arising from Colombian and Canadian operations predominantly related to operating and transportation costs. Revenue and general and administrative expenses associated with the Company’s Canadian operations are also subject to foreign currency fluctuations. To mitigate exposure to fluctuations in foreign exchange, the Company may enter into foreign currency exchange derivatives.
As at June 30, 2026, the Company had the following outstanding foreign currency exchange derivative positions:

Period and Type of InstrumentU.S. Dollars Amount Hedged
(Thousands of U.S. Dollars)
COP Equivalent of Amount Hedged (Millions of COP)(1)
ReferenceFloor Price
(COP, Weighted Average)		Cap Price (COP, Weighted Average)
Collars: July 2026, to March 20279,000 30,996 COP3,790 4,080 
Collars: July 2026, to May 202732,000 110,208 COP3,767 4,050 
(1) At June 30, 2026 foreign exchange rate.