DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At September 30, 2022, 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, 2022, each contract was set to expire at varying times during 2022. The Company had no open contracts associated with natural gas liquids (“NGL”) prices at September 30, 2022.

The following is a summary of the Company’s open costless collar contracts for oil and natural gas at September 30, 2022.


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	10/01/2022 - 12/31/2022	2,700,000	$	65.22	$	110.49	$	(2,947)
Natural Gas	10/01/2022 - 12/31/2022	13,200,000	$	3.68	$	7.61	(13,610)
Natural Gas	01/01/2023 - 03/31/2023	2,400,000	$	6.00	$	14.00	1,349

Total open costless collar contracts							$	(15,208)

The following is a summary of the Company’s open basis swap contracts for oil at September 30, 2022.


Commodity	Calculation Period	Notional Quantity (Bbl)	Fixed Price ($/Bbl)		Fair Value of Asset (Liability) (thousands)
Oil Basis	10/01/2022 - 12/31/2022	1,380,000	$	0.95	$	(1,172)

Total open basis swap contracts					$	(1,172)

At September 30, 2022, the net liability value for the Company’s open derivative financial instruments was $16.4 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, 2022 and December 31, 2021 (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, 2022
Current assets	$	49,571	$	(48,072)	$	1,499

Current liabilities	(65,951)		48,072		(17,879)

Total	$	(16,380)	$	—	$	(16,380)
December 31, 2021
Current assets	$	215,145	$	(213,174)	$	1,971

Current liabilities	(230,023)		213,174		(16,849)

Total	$	(14,878)	$	—	$	(14,878)

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).


		Three Months Ended September 30,				Nine Months Ended September 30,
Type of Instrument	Location in Condensed Consolidated Statement of Operations	2022		2021		2022		2021
Derivative Instrument
Oil	Revenues: Realized loss on derivatives	$	(14,779)	$	(52,774)	$	(67,182)	$	(121,460)
Natural Gas	Revenues: Realized loss on derivatives	(41,484)		(4,645)		(72,683)		(4,483)

Realized loss on derivatives		(56,263)		(57,419)		(139,865)		(125,943)
Oil	Revenues: Unrealized (loss) gain on derivatives	(1,873)		38,961		(36,236)		(35,471)
Natural Gas	Revenues: Unrealized gain (loss) on derivatives	44,970		(29,912)		34,734		(41,707)

Unrealized gain (loss) on derivatives		43,097		9,049		(1,502)		(77,178)
Total		$	(13,166)	$	(48,370)	$	(141,367)	$	(203,121)