Note 7 - Derivative Instruments

The Company may utilize derivative contracts in connection with its natural gas, NGL, and power operations to provide an economic hedge of the Company’s exposure to commodity price risk associated with anticipated future natural gas and NGL production, as well as to manage the Company’s exposure to delivery risk, optimize physical and contractual assets in the Company’s portfolio, and manage working capital requirements. The Company also determined that the contingent consideration generated from the Devon Barnett Acquisition met the definition of a derivative in accordance with ASC 815 - Derivatives and Hedging, and the fair value of the contingent consideration was $20.0 million as of December 31, 2024, and is included in contingent consideration payable in the consolidated balance sheets. The change in the fair value of this contingent consideration was a gain of $7.5 million and $25.0 million for the years ended December 31, 2024 and 2023, respectively, and is included in gains on contingent consideration liabilities on the consolidated statements of operations. See Note 16 - Commitments and Contingencies for further discussion.

The derivative contracts outstanding as of December 31, 2025 consisted of commodity swaps, basis swaps, put and call options, producer collar agreements, fixed-price natural gas forwards, fixed-price power forwards, and HRCOs, subject to master netting agreements with each individual counterparty. The following table presents gross commodity derivative balances prior to applying netting adjustments recorded in the consolidated balance sheets:

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Derivative Contracts

Collar, Commodity Swap, and Basis Swap Contracts

A commodity collar provides for a price floor and a price ceiling. The floating price for the collar contract is traded for a fixed price when the floating price is not between the floor and ceiling. If the floating price is between these contracted prices, no trade occurs. A commodity swap agreement is an agreement whereby a floating price based on the underlying commodity is traded for a fixed price over a specified period. Basis swaps provide a guaranteed price differential for natural gas from two different specified delivery points over a specified period. The fair value of open collar, commodity swap, and basis swap contracts reported in the consolidated balance sheets may differ from that which would be realized in the event the Company terminated its position in the respective contract.

Fixed-Price Power Forwards and HRCOs

For the power generated out of the Temple Plants, the Company enters into fixed-price power sales contracts in which energy is delivered to the ERCOT north hub at a fixed-price per MWh. The contracts contain an agreed upon quantity of total MW and total MWh. The Company also enters into fixed-price power purchase contracts to hedge BKV-BPP Retail power purchases for its retail customers.

The Company also enters into bilateral heat rate call option (“HRCO”) agreements under which counterparties obtain the right to receive specified quantities of power at the Temple Plants, subject to the contractual terms of each agreement. As of December 31, 2025, the Company had four outstanding HRCO contracts with two counterparties, representing contracted capacity of 600 MW, which became effective January 1, 2026. As of December 31, 2024, the Company had two outstanding HRCO contracts with two counterparties, representing contracted capacity of 200 MW, which became effective January 1, 2025. Under the agreements, the Company receives fixed monthly capacity premiums from the counterparties. If exercised, the counterparties receive specified quantities of power from the Temple Plants with settlement based on contractually specified prices that incorporate the applicable heat rate, natural gas index pricing, and other contractual charges. Premiums received under the Company’s HRCO agreements are recognized within derivative gains, net as realized gains (losses), net on the consolidated statements of operations. Fuel costs incurred

to satisfy exercised HRCO obligations are recognized within fuel commodity costs on the consolidated statements of operations. Outstanding HRCO agreements are remeasured at fair value, with changes in fair value recognized within derivative gains, net as unrealized gains (losses), net on the consolidated statements of operations.

The following tables set forth the derivative gains, net on the consolidated statements of operations:

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There were no early-terminated natural gas commodity derivative swap contracts during the year ended December 31, 2025. Realized gains (losses) on derivatives (natural gas) for the year ended December 31, 2024, includes gains of $13.3 million related to the termination of certain natural gas commodity derivative swap contracts prior to their contractual settlement dates. $8.4 million of such gains is attributable to early-terminated natural gas commodity derivative swap contracts covering production during the year ended December 31, 2024. Realized gains (losses) on derivatives (natural gas) for the year ended December 31, 2023 includes gains of $46.7 million related to the termination of certain natural gas commodity derivative swap contracts prior to their contractual settlement dates. $39.1 million of such gains is attributable to early-terminated natural gas commodity derivative swap contracts covering production during the year ended December 31, 2023.

During the first quarter in 2024, the Company entered into an agreement to sell a call option and subsequently received a net premium of $23.5 million for contracts that settle in 2026 and 2027. The call option has an established ceiling price of $5.00 per MMBtu. If at the time of settlement the contracted settlement price exceeds the ceiling price, the Company pays the counterparty an amount equal to the difference between the contracted settlement price and the ceiling price multiplied by the contract volumes. The premium received was recorded as a liability and is subsequently adjusted to the current fair value of the option written. During the fourth quarter of 2025, the Company terminated a portion of the call option contracts scheduled to settle in 2026 in exchange for natural gas fixed-price swap contracts that will settle in 2026. No realized gain or loss was recognized on this transaction.

During the first quarter in 2025, the Company entered into agreements to buy put options and subsequently paid a net premium of $16.2 million for contracts that settle in 2026 and 2027. The put options have an established floor of $3.00 per MMBtu. If at the time of settlement the contracted settlement price falls below the floor, the counterparties pay the Company an amount equal to the difference between the contracted settlement price and the floor multiplied by the contract volumes. The premium paid was recorded as an asset and is subsequently adjusted to the current fair value of the option written. During the fourth quarter of 2025, the Company terminated a portion of the put option contracts scheduled to settle in 2026 in exchange for natural gas fixed-price swap contracts that will settle in 2026. No realized gain or loss was recognized on this transaction.

Derivative Contract Volumes and Fair Values

The following tables summarize the Company’s outstanding derivative positions as of December 31, 2025 by commodity and contract type, including volume, pricing indices, or reference points, and associated fair values.

The following table summarizes the Company’s power derivatives:

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The following table summarizes the Company’s natural gas commodity derivatives indexed to NYMEX Henry Hub pricing:

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The following table summarizes the Company’s natural gas basis derivatives by reference price:

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The following table summarizes the Company’s natural gas liquids derivatives position by product and reference price:

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