DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTSAt September 30, 2023, the Company had one natural gas basis differential swap contract open and in place to mitigate its exposure to natural gas price volatility, with a specific term (calculation period), notional quantity (volume hedged) and fixed price. At September 30, 2023, the contract was set to expire during the fourth quarter of 2023. The Company had no open contracts associated with oil or natural gas liquids prices at September 30, 2023.

The following is a summary of the Company’s open basis differential swap contract at September 30, 2023.


Commodity	Calculation Period	Notional Quantity (MMBtu)	Fixed Price ($/MMBtu)		Fair Value of Asset (Liability) (thousands)

Natural Gas Basis Differential	10/01/2023 - 12/31/2023	4,600,000	$	(1.85)	$	(4,314)
Total open basis differential swap contracts					$	(4,314)

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, 2023 and December 31, 2022 (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, 2023


Current liabilities	$	(4,314)	$	—	$	(4,314)

Total	$	(4,314)	$	—	$	(4,314)
December 31, 2022
Current assets	$	3,930	$	—	$	3,930



Total	$	3,930	$	—	$	3,930

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	2023		2022		2023		2022
Derivative Instrument
Oil	Revenues: Realized loss on derivatives	$	—	$	(14,779)	$	—	$	(67,182)
Natural Gas	Revenues: Realized loss on derivatives	(6,975)		(41,484)		(6,454)		(72,683)

Realized loss on derivatives		(6,975)		(56,263)		(6,454)		(139,865)
Oil	Revenues: Unrealized loss on derivatives	—		(1,873)		—		(36,236)
Natural Gas	Revenues: Unrealized gain (loss) on derivatives	7,482		44,970		(8,244)		34,734

Unrealized gain (loss) on derivatives		7,482		43,097		(8,244)		(1,502)
Total		$	507	$	(13,166)	$	(14,698)	$	(141,367)