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Derivative Instruments and Hedging Activities (Tables)
6 Months Ended
Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Notional Volume of Commodity Hedges

At June 30, 2024, the notional volumes of our commodity derivative contracts were:

 

Commodity

Instrument

Unit

2024

 

2025

 

2026

 

2027

 

2028

 

Natural Gas

Swaps

MMBtu/d

 

92,610

 

 

67,040

 

 

50,568

 

 

4,588

 

 

 

Natural Gas

Basis Swaps

MMBtu/d

 

561,060

 

 

333,192

 

 

192,500

 

 

118,329

 

 

15,000

 

NGL

Swaps

Bbl/d

 

30,886

 

 

21,354

 

 

10,250

 

 

485

 

 

 

NGL

Futures

Bbl/d

 

27,718

 

 

8,304

 

 

 

 

 

 

 

Condensate

Swaps

Bbl/d

 

4,220

 

 

3,447

 

 

2,374

 

 

161

 

 

 

Fair Values of Derivative Instruments

The following schedules reflect the fair value of our derivative instruments and their location on our Consolidated Balance Sheets as well as pro forma reporting assuming that we reported derivatives subject to master netting agreements on a net basis:

 

 

 

 

 

Fair Value as of June 30, 2024

 

 

Fair Value as of December 31, 2023

 

 

 

Balance Sheet

 

Derivative

 

 

Derivative

 

 

Derivative

 

 

Derivative

 

 

 

Location

 

Assets

 

 

Liabilities

 

 

Assets

 

 

Liabilities

 

Derivatives designated as hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity contracts

 

Current

 

$

54.9

 

 

$

(44.5

)

 

$

103.5

 

 

$

(16.4

)

 

Long-term

 

 

14.2

 

 

 

(14.8

)

 

 

29.0

 

 

 

(3.0

)

Total derivatives designated as hedging instruments

 

 

 

$

69.1

 

 

$

(59.3

)

 

$

132.5

 

 

$

(19.4

)

Derivatives not designated as hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity contracts

 

Current

 

$

7.9

 

 

$

(67.2

)

 

$

8.4

 

 

$

(37.6

)

 

Long-term

 

 

2.7

 

 

 

(50.8

)

 

 

4.3

 

 

 

(13.8

)

Total derivatives not designated as hedging instruments

 

 

 

$

10.6

 

 

$

(118.0

)

 

$

12.7

 

 

$

(51.4

)

Total current position

 

 

 

$

62.8

 

 

$

(111.7

)

 

$

111.9

 

 

$

(54.0

)

Total long-term position

 

 

 

 

16.9

 

 

 

(65.6

)

 

 

33.3

 

 

 

(16.8

)

Total derivatives

 

 

 

$

79.7

 

 

$

(177.3

)

 

$

145.2

 

 

$

(70.8

)

 

Pro Forma Impact of Derivatives Net in Consolidated Balance Sheet

The pro forma impact of reporting derivatives on our Consolidated Balance Sheets on a net basis is as follows:

 

 

 

 

Gross Presentation

 

 

Pro Forma Net Presentation

 

June 30, 2024

 

Asset

 

 

Liability

 

 

Collateral

 

 

Asset

 

 

Liability

 

Current Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counterparties with offsetting positions or collateral

 

$

62.8

 

 

$

(106.6

)

 

$

23.5

 

 

$

7.2

 

 

$

(27.5

)

Counterparties without offsetting positions - assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counterparties without offsetting positions - liabilities

 

 

 

 

 

(5.1

)

 

 

 

 

 

 

 

 

(5.1

)

 

 

 

62.8

 

 

 

(111.7

)

 

 

23.5

 

 

 

7.2

 

 

 

(32.6

)

Long-Term Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counterparties with offsetting positions or collateral

 

 

16.9

 

 

 

(60.8

)

 

 

6.7

 

 

 

1.2

 

 

 

(38.4

)

Counterparties without offsetting positions - assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counterparties without offsetting positions - liabilities

 

 

 

 

 

(4.8

)

 

 

 

 

 

 

 

 

(4.8

)

 

 

 

16.9

 

 

 

(65.6

)

 

 

6.7

 

 

 

1.2

 

 

 

(43.2

)

Total Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counterparties with offsetting positions or collateral

 

 

79.7

 

 

 

(167.4

)

 

 

30.2

 

 

 

8.4

 

 

 

(65.9

)

Counterparties without offsetting positions - assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counterparties without offsetting positions - liabilities

 

 

 

 

 

(9.9

)

 

 

 

 

 

 

 

 

(9.9

)

 

 

$

79.7

 

 

$

(177.3

)

 

$

30.2

 

 

$

8.4

 

 

$

(75.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Presentation

 

 

Pro Forma Net Presentation

 

December 31, 2023

 

Asset

 

 

Liability

 

 

Collateral

 

 

Asset

 

 

Liability

 

Current Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counterparties with offsetting positions or collateral

 

$

111.7

 

 

$

(54.0

)

 

$

3.6

 

 

$

69.2

 

 

$

(7.9

)

Counterparties without offsetting positions - assets

 

 

0.2

 

 

 

 

 

 

 

 

 

0.2

 

 

 

 

Counterparties without offsetting positions - liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

111.9

 

 

 

(54.0

)

 

 

3.6

 

 

 

69.4

 

 

 

(7.9

)

Long-Term Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counterparties with offsetting positions or collateral

 

 

31.7

 

 

 

(16.8

)

 

 

(0.1

)

 

 

17.0

 

 

 

(2.2

)

Counterparties without offsetting positions - assets

 

 

1.6

 

 

 

 

 

 

 

 

 

1.6

 

 

 

 

Counterparties without offsetting positions - liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33.3

 

 

 

(16.8

)

 

 

(0.1

)

 

 

18.6

 

 

 

(2.2

)

Total Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counterparties with offsetting positions or collateral

 

 

143.4

 

 

 

(70.8

)

 

 

3.5

 

 

 

86.2

 

 

 

(10.1

)

Counterparties without offsetting positions - assets

 

 

1.8

 

 

 

 

 

 

 

 

 

1.8

 

 

 

 

Counterparties without offsetting positions - liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

145.2

 

 

$

(70.8

)

 

$

3.5

 

 

$

88.0

 

 

$

(10.1

)

 

 

Amounts Recorded in Other Comprehensive Income ("OCI") and Amounts Reclassified from OCI to Revenue

The following tables reflect amounts recorded in Other comprehensive income (“OCI”) and amounts reclassified from OCI to revenue for the periods indicated:

 

 

 

Gain (Loss) Recognized in OCI on
Derivatives (Effective Portion)

 

Derivatives in Cash Flow

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

Hedging Relationships

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Commodity contracts

 

$

3.0

 

 

$

109.6

 

 

$

(67.2

)

 

$

193.5

 

 

 

 

 

Gain (Loss) Reclassified from OCI into
Income (Effective Portion)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

Location of Gain (Loss)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenues

 

$

32.2

 

 

$

49.8

 

 

$

29.0

 

 

$

95.0

 

Gain (Loss) Recognized in Income on Derivatives The use of mark-to-market accounting for financial assets and liabilities (“financial instruments”) can cause non-cash earnings volatility due to changes in the underlying commodity price indices. For the three and six months ended June 30, 2024, the unrealized mark-to-market losses are primarily attributable to unfavorable movements in natural gas forward basis prices, as compared to our positions.

 

 

 

Location of Gain (Loss)

 

Gain (Loss) Recognized in Income on Derivatives

 

Derivatives Not Designated

 

Recognized in Income on

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

as Hedging Instruments

 

Derivatives

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Commodity contracts

 

Revenue

 

$

(88.8

)

 

$

145.2

 

 

$

(120.7

)

 

$

323.2