v3.26.1
Derivative Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments
Note 7—Derivative Instruments
The Company is exposed to certain risks relating to its ongoing business operations and may use derivative instruments to manage its exposure to commodity price risk from time to time.
Commodity Derivative Contracts
Historically, prices received for crude oil and natural gas production have been volatile because of supply and demand factors, worldwide political factors, general economic conditions and seasonal weather patterns. The Company may periodically use derivative instruments, such as swaps, basis swaps, and other similar agreements, to mitigate its exposure to declines in commodity prices and to the corresponding negative impacts such declines can have on its cash flows from operations, returns on capital and other financial results. While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future revenues from favorable price changes. The Company does not enter into derivative contracts for speculative or trading purposes.
Commodity Swaps. The Company may use commodity derivative instruments known as fixed price swaps to realize a known price for a specific volume of production or basis swaps to hedge the difference between the index price and a local or future index price. All transactions are settled in cash with one party paying the other for the resulting difference in price multiplied by the contract volume.
The following table summarizes the approximate volumes and average contract prices of derivative contracts the Company had in place as of June 30, 2026:
PeriodVolume (Bbls)Volume
(Bbls/d)
Wtd. Avg. Crude Price
($/Bbl)
Crude oil swaps - NYMEX WTI
July 2026 - September 20266,440,000 70,000 $68.68
October 2026 - December 20266,440,000 70,000 67.10
January 2027 - March 2027900,000 10,000 74.25
April 2027 - June 2027910,000 10,000 72.94
July 2027 - September 2027920,000 10,000 72.06
October 2027 - December 2027920,000 10,000 71.29

PeriodVolume (Bbls)Volume
(Bbls/d)
Wtd. Avg. Differential
($/Bbl)
Crude oil basis differential swaps - Mid-Cush(1)
July 2026 - September 20266,440,000 70,000 $1.03
October 2026 - December 20266,440,000 70,000 1.03
January 2027 - March 2027900,000 10,000 1.10
April 2027 - June 2027910,000 10,000 1.10
July 2027 - September 2027920,000 10,000 1.10
October 2027 - December 2027920,000 10,000 1.10

PeriodVolume (Bbls)Volume
(Bbls/d)
Wtd. Avg. Differential
($/Bbl)
Crude oil roll differential swaps - NYMEX WTI
July 2026 - September 20266,578,000 71,500 $1.24
October 2026 - December 20266,578,000 71,500 1.13
(1)    These crude oil basis swap transactions are settled utilizing the ARGUS MIDLAND WTI and ARGUS WTI CUSHING indices.

PeriodVolume (MMBtu)Volume (MMBtu/d)
Wtd. Avg. Gas Price
($/MMBtu)
Natural gas swaps - NYMEX Henry Hub
July 2026 - September 202612,604,000 137,000 $3.83
October 2026 - December 202612,604,000 137,000 4.16
January 2027 - March 202712,600,000 140,000 4.24
April 2027 - June 202712,740,000 140,000 3.32
July 2027 - September 202712,880,000 140,000 3.58
October 2027 - December 202712,880,000 140,000 3.94

PeriodVolume (MMBtu)Volume (MMBtu/d)
Wtd. Avg. Gas Price
($/MMBtu)
Natural gas swaps - Waha
July 2026 - September 20268,740,000 95,000 $1.80
October 2026 - December 202615,145,000 164,620 2.73
January 2027 - March 20277,650,000 85,000 3.57

PeriodVolume (MMBtu)Volume (MMBtu/d)
Wtd. Avg. Gas Price
($/MMBtu)
Natural gas swaps - HSC
July 2026 - September 20269,200,000 100,000 $3.95
October 2026 - December 20269,200,000 100,000 4.24

PeriodVolume (MMBtu)Volume (MMBtu/d)
Wtd. Avg. Differential
($/MMBtu)
Natural gas basis differential swaps - Waha(1)
July 2026 - September 202612,604,000 137,000 $(1.42)

October 2026 - December 202612,604,000 137,000 (1.21)
January 2027 - March 202714,490,000 161,000 (0.47)
April 2027 - June 202714,651,000 161,000 (1.11)
July 2027 - September 202714,812,000 161,000 (0.65)
October 2027 - December 202714,812,000 161,000 (0.91)
PeriodVolume (MMBtu)Volume (MMBtu/d)Wtd. Avg. Differential
($/MMBtu)
Natural gas basis differential swaps - HSC(2)
January 2027 - March 20279,000,000 100,000 $(0.48)
April 2027 - June 20279,100,000 100,000 (0.48)
July 2027 - September 20279,200,000 100,000 (0.48)
October 2027 - December 20279,200,000 100,000 (0.48)
January 2028 - March 20289,100,000 100,000 (0.36)
April 2028 - June 20289,100,000 100,000 (0.36)
July 2028 - September 20289,200,000 100,000 (0.36)
October 2028 - December 20289,200,000 100,000 (0.36)
(1)    These natural gas basis swap contracts are settled utilizing the Inside FERC’s West Texas Waha price and the NYMEX Henry Hub price of natural gas.
(2)    These natural gas basis swap contracts are settled utilizing the HSC price and the NYMEX Henry Hub price of natural gas.
Derivative Instrument Reporting. The Company’s oil and natural gas derivative instruments have not been designated as hedges for accounting purposes. Therefore, all gains and losses are recognized in the Company’s consolidated statements of operations. All derivative instruments are recorded at fair value in the consolidated balance sheets, other than derivative instruments that meet the “normal purchase normal sale” exclusion, and any fair value gains and losses are recognized in current period earnings.
The following table presents the impact of the Company’s derivative instruments in its consolidated statements of operations for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)
2026202520262025
Net gain (loss) on derivative instruments
$139,146 $73,019 $(200,778)$130,750 
Offsetting of Derivative Assets and Liabilities. The Company’s commodity derivatives are included in the accompanying consolidated balance sheets as derivative assets and liabilities. The Company nets its financial derivative instrument fair value amounts executed with the same counterparty pursuant to ISDA master netting agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract. The tables below summarize the fair value amounts and the classification in the consolidated balance sheets of the Company’s derivative contracts outstanding at the respective balance dates, as well as the gross recognized derivative assets, liabilities and offset amounts:
Balance Sheet ClassificationGross Fair Value Asset/Liability Amounts
Gross Amounts Offset(1)
Net Recognized Fair Value Assets/Liabilities
(in thousands)
June 30, 2026
Derivative Assets
Commodity contracts
Derivative instruments$170,750 $(42,078)$128,672 
Other noncurrent assets53,906 (14,999)38,907 
Derivative Liabilities
Commodity contracts
Other current liabilities$42,078 $(42,078)$— 
Other noncurrent liabilities15,482 (14,999)483 
December 31, 2025
Derivative Assets
Commodity contracts
Derivative instruments$281,752 $(2,027)$279,725 
Other noncurrent assets8,733 (7,987)746 
Derivative Liabilities
Commodity contracts
Other current liabilities
$2,027 $(2,027)$— 
Other noncurrent liabilities8,623 (7,987)636 
(1)     The Company has agreements in place with each of its counterparties that allow for the financial right of offset for derivative assets against derivative liabilities at settlement or in the event of a default under the agreements or if contracts are terminated.
Contingent Features in Financial Derivative Instruments. None of the Company’s derivative instruments contain credit-risk-related contingent features. Counterparties to the Company’s financial derivative contracts are high credit-quality financial institutions that are primarily lenders under the Credit Agreement. The Company is not required to post letters of credit or corporate guarantees for its derivative counterparties in order to secure contract performance obligations.
In addition, the Company is exposed to credit risk associated with its derivative contracts from non-performance by its counterparties. The Company mitigates its exposure to any single counterparty by contracting with a number of financial institutions, each of which has a high credit rating and generally is a lender under the Credit Agreement as referenced above.