DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTSAt September 30, 2021, the Company had various costless collar and swap contracts open and in place to mitigate its exposure to oil and natural gas price volatility, each with a specific term (calculation period), notional quantity (volume hedged) and price floor and ceiling for the collars and fixed price for the swaps. At September 30, 2021, each contract was set to expire

at varying times during 2021 and 2022. The Company had no open contracts associated with natural gas liquids (“NGL”) prices at September 30, 2021.

The following is a summary of the Company’s open costless collar contracts for oil and natural gas at September 30, 2021.

Commodity	Calculation Period	Notional Quantity (Bbl or MMBtu)	Weighted Average Price Floor ($/Bbl or $/MMBtu)		Weighted Average Price Ceiling ($/Bbl or $/MMBtu)		Fair Value of Asset (Liability) (thousands)
Oil	10/01/2021 - 12/31/2021	2,370,000	$	42.06	$	55.15	$	(46,669)
Natural Gas	10/01/2021 - 12/31/2021	13,900,000	$	2.53	$	4.71	(24,169)
Oil	01/01/2022 - 12/31/2022	2,040,000	$	50.00	$	67.85	(14,402)
Natural Gas	01/01/2022 - 03/31/2022	8,250,000	$	2.70	$	6.33	(11,844)
Total open costless collar contracts							$	(97,084)

The following is a summary of the Company’s open swap contracts for oil at September 30, 2021.

Commodity	Calculation Period	Notional Quantity (Bbl)	Fixed Price ($/Bbl)		Fair Value of Asset (Liability) (thousands)
Oil	10/01/2021 - 12/31/2021	510,000	$	35.26	$	(19,999)
Total open swap contracts					$	(19,999)

The following is a summary of the Company’s open basis swap contracts for oil at September 30, 2021.

Commodity	Calculation Period	Notional Quantity (Bbl)	Fixed Price ($/Bbl)		Fair Value of Asset (Liability) (thousands)
Oil Basis	10/01/2021 - 12/31/2021	2,100,000	$	0.87	$	623
Oil Basis	01/01/2022 - 12/31/2022	5,520,000	$	0.95	3,393
Total open basis swap contracts					$	4,016

At September 30, 2021, the aggregate liability value for the Company’s open derivative financial instruments was $113.1 million.

The Company’s derivative financial instruments are subject to master netting arrangements, and the Company’s counterparties allow for cross-commodity master netting provided the settlement dates for the commodities are the same. The Company does not present different types of commodities with the same counterparty on a net basis in its interim unaudited condensed consolidated balance sheets.

The following table presents the gross asset and liability fair values of the Company’s commodity price derivative financial instruments and the location of these balances in the interim unaudited condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020 (in thousands).

Derivative Instruments	Gross amounts recognized		Gross amounts netted in the condensed consolidated balance sheets		Net amounts presented in the condensed consolidated balance sheets
September 30, 2021
Current assets	$	303,891	$	(300,734)	$	3,157
Other assets	56,035		(55,176)		859
Current liabilities	(414,887)		300,734		(114,153)
Long-term liabilities	(58,106)		55,176		(2,930)
Total	$	(113,067)	$	—	$	(113,067)
December 31, 2020
Current assets	$	382,328	$	(375,601)	$	6,727
Other assets	150,194		(147,624)		2,570
Current liabilities	(420,787)		375,601		(45,186)
Long-term liabilities	(147,624)		147,624		—
Total	$	(35,889)	$	—	$	(35,889)

The following table summarizes the location and aggregate gain (loss) of all derivative financial instruments recorded in the interim unaudited condensed consolidated statements of operations for the periods presented (in thousands). These derivative financial instruments are not designated as hedging instruments.

		Three Months Ended September 30,				Nine Months Ended September 30,
Type of Instrument	Location in Condensed Consolidated  Statement of Operations	2021		2020		2021		2020
Derivative Instrument
Oil	Revenues: Realized (loss) gain on derivatives	$	(52,774)	$	(5,406)	$	(121,460)	$	49,571
Natural Gas	Revenues: Realized loss on derivatives	(4,645)		—		(4,483)		—
Realized (loss) gain on derivatives		(57,419)		(5,406)		(125,943)		49,571
Oil	Revenues: Unrealized gain (loss) on derivatives	38,961		(9,843)		(35,471)		(7,980)
Natural Gas	Revenues: Unrealized loss on derivatives	(29,912)		(3,190)		(41,707)		(1,291)
Unrealized gain (loss) on derivatives		9,049		(13,033)		(77,178)		(9,271)
Total		$	(48,370)	$	(18,439)	$	(203,121)	$	40,300