DERIVATIVES

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

At December 31, 2024, the Company has commodity derivative contracts and interest rate swaps outstanding. All derivative financial instruments are recorded at fair value.

Commodity Contracts

The Company has entered into multiple crude oil and natural gas derivatives, indexed to the respective indices as noted in the table below, to reduce price volatility associated with certain of its oil and natural gas sales. As part of the Endeavor Acquisition, the Company acquired a number of derivative financial instruments that were added to its hedging program during the third quarter of 2024. The Company has not designated its commodity derivative instruments as hedges for accounting purposes and, as a result, marks its commodity derivative instruments to fair value and recognizes the cash and

non-cash changes in fair value in the consolidated statements of operations under the caption “Gain (loss) on derivative instruments, net.”

By using derivative instruments to economically hedge exposure to changes in commodity prices, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk. The Company has entered into commodity derivative instruments only with counterparties that are also lenders under its credit facility and have been deemed an acceptable credit risk. As such, collateral is not required from either the counterparties or the Company on its outstanding commodity derivative contracts.

As of December 31, 2024, the Company had the following outstanding commodity derivative contracts. When aggregating multiple contracts, the weighted average contract price is disclosed:


					Swaps	Collars
Settlement Month	Settlement Year	Type of Contract	Bbls/MMBtu Per Day	Index	Weighted Average Differential		Weighted Average Floor Price	Weighted Average Ceiling Price
OIL
Jan. - Mar.	2025	Basis Swap(1)	64,000	Argus WTI Midland	$1.09		$—	$—
Jan. - Mar.	2025	Costless Collar	13,000	WTI Cushing	$—		$60.00	$89.55
Apr. - Dec.	2025	Basis Swap(1)	51,000	Argus WTI Midland	$1.07		$—	$—
NATURAL GAS
Jan. - Mar.	2025	Costless Collar	750,000	Henry Hub	$—		$2.52	$5.26
Jan. - Mar.	2025	Basis Swap(1)	670,000	Waha Hub	$(0.82)		$—	$—
Apr. - Dec.	2025	Costless Collar	690,000	Henry Hub	$—		$2.49	$5.28
Apr. - Dec.	2025	Basis Swap(1)	610,000	Waha Hub	$(0.84)		$—	$—
Jan. - Dec.	2026	Costless Collar	320,000	Henry Hub	$—		$2.50	$6.21
Jan. - Dec.	2026	Basis Swap(1)	30,000	Waha Hub	$(1.29)		$—	$—

(1) The Company has fixed price basis swaps for the spread between the Cushing crude oil price and the Midland WTI crude oil price as well as the spread between the Henry Hub natural gas price and the Waha Hub natural gas price. The weighted average differential represents the amount of reduction to the Cushing, Oklahoma, oil price and the Waha Hub natural gas price for the notional volumes covered by the basis swap contracts.


Settlement Month	Settlement Year	Type of Contract	Bbls Per Day	Index	Strike Price	Deferred Premium
OIL
Jan. - Mar.	2025	Put	52,000	Brent	$60.00	$1.48
Jan. - Mar.	2025	Put	83,000	Argus WTI Houston	$55.84	$1.59
Jan. - Mar.	2025	Put	142,000	WTI Cushing	$56.58	$1.59
Apr. - Jun.	2025	Put	43,000	Brent	$58.84	$1.52
Apr. - Jun.	2025	Put	81,000	Argus WTI Houston	$55.12	$1.59
Apr. - Jun.	2025	Put	113,000	WTI Cushing	$55.71	$1.57
Jul. - Sep.	2025	Put	20,000	Brent	$57.50	$1.61
Jul. - Sep.	2025	Put	67,000	Argus WTI Houston	$55.00	$1.61
Jul. - Sep.	2025	Put	42,000	WTI Cushing	$55.00	$1.54
Oct. - Dec.	2025	Put	5,000	Brent	$55.00	$1.83
Oct. - Dec.	2025	Put	30,000	Argus WTI Houston	$55.00	$1.64

Interest Rate Swaps and Treasury Locks

Interest Rate Swaps

The Company had two receive-fixed, pay variable interest rate swap agreements for notional amounts of $600 million, which were designated as fair value hedges of the Company’s $1.2 billion 3.50% fixed rate senior notes due 2029 (the “2029 Notes”) at inception. During the third quarter of 2024, the Company terminated and settled $300 million of the notional amount of one interest rate swap for a loss of $37 million recognized in the caption “Gain (loss) on derivative instruments, net” on the consolidated statement of operations for the year ended December 31, 2024. As a result of the partial termination, the Company has remaining interest rate swap agreements for a notional amount of $900 million at December 31, 2024. The Company receives a fixed 3.50% rate of interest on these swaps. Effective on May 28, 2023, the variable rate of interest the Company pays on these swaps was reset from three month LIBOR to three month SOFR plus 2.1865%.

The interest rate swaps were designated as fair value hedges at inception. In the second quarter of 2022, the Company elected to fully dedesignate these interest rate swaps and hedge accounting was discontinued. The cumulative fair value basis adjustment recorded on the 2029 Notes at the time of dedesignation totaled $135 million. This basis adjustment is being amortized to interest expense over the remaining term of the 2029 Notes utilizing the effective interest method. See Note 9—Debt for further details. The dedesignated interest rate swaps are considered economic hedges of the Company’s fixed-rate debt. As such, changes in the fair value of the interest rate swaps after the date of dedesignation have been recorded in earnings under the caption “Gain (loss) on derivative instruments, net” in the consolidated statements of operations.

Treasury Locks

During the second quarter of 2024, the Company entered into certain treasury lock contracts to reduce the forecasted interest rate risk associated with the issuance of the April 2024 Notes. The treasury locks were terminated and settled upon issuance of the April 2024 Notes with a loss of $25 million recognized in the caption “Gain (loss) on derivative instruments, net” on the consolidated statement of operations for the year ended December 31, 2024.

Balance Sheet Offsetting of Derivative Assets and Liabilities

The fair value of derivative instruments is generally determined using established index prices and other sources which are based upon, among other things, futures prices and time to maturity. These fair values are recorded by netting asset and liability positions, including any deferred premiums, that are with the same counterparty and are subject to contractual terms which provide for net settlement. See Note 14—Fair Value Measurements for further details.

Gains and Losses on Derivative Instruments

The following table summarizes the gains and losses on derivative instruments included in the consolidated statements of operations:


	Year Ended December 31,
	2024		2023		2022
	(In millions)
Gain (loss) on derivative instruments, net:
Commodity contracts	$	210	$	(239)	$	(528)
Interest rate swaps	(45)		(20)		(58)
2026 WTI Contingent Liability	(3)		—		—
Treasury locks	(25)		—		—
Total	$	137	$	(259)	$	(586)

Net cash received (paid) on settlements:
Commodity contracts(2)	$	57	$	(61)	$	(849)
Interest rate swaps(1)	(83)		(49)		(1)
Treasury locks	(25)		—		—
Total	$	(51)	$	(110)	$	(850)

(1)The year ended December 31, 2024 includes cash paid on interest rate swaps terminated prior to their contractual maturity of $37 million.

(2)The year ended December 31, 2022 includes cash paid on commodity contracts terminated prior to their contractual maturity of $138 million.