XML 48 R21.htm IDEA: XBRL DOCUMENT v3.25.0.1
FAIR VALUE MEASUREMENTS
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The Company uses appropriate valuation techniques based on available inputs to measure the fair values of its assets and liabilities.

Level 1 - Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets as of the reporting date.

Level 2 - Observable market-based inputs or unobservable inputs that are corroborated by market data. These are inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3 - Unobservable inputs that are not corroborated by market data and may be used with internally developed methodologies that result in management’s best estimate of fair value.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

See Note 4—Acquisitions and Divestitures and Note 5—Endeavor Energy Resources, LP Acquisition for discussion of the fair values of proved oil and natural gas properties assumed in business combinations.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Certain assets and liabilities are reported at fair value on a recurring basis, including the Company’s commodity derivative instruments, interest rate swaps, and investments in the common stock of other entities. The fair values of the Company’s commodity derivative contracts are measured internally using established commodity futures price strips for the underlying commodity provided by a reputable third party, the contracted notional volumes, and time to maturity. The fair values of the Company’s interest rate swaps are determined based on inputs that are readily available in public markets, are determined based on inputs readily available in public markets, can be derived from information available in publicly quoted markets, or are provided by financial institutions that trade these contracts. These valuations are Level 2 inputs. The fair value of interest rate swaps is recorded as an asset or liability on the consolidated balance sheets. The net amounts of derivative instruments are classified as current or noncurrent based on their anticipated settlement dates. The Company has an immaterial investment in the Class A common stock of Verde Clean Fuels, Inc. The Company elected the fair value option for measuring the fair value of this equity investment. The investment is reported at fair value using observable, quoted stock prices and is included in “Other assets” on the Company’s consolidated balance sheet at December 31, 2024.

Viper LLC has an immaterial contingent liability that is reported at fair value using observable market data inputs and a Monte Carlo pricing model, which are considered Level 2 inputs within the fair value hierarchy. The 2026 WTI Contingent Liability is recorded in “Other long-term liabilities” on the Company’s consolidated balance sheets at December 31, 2024, with the change in fair value being recognized in “Gain (loss) on derivative instruments, net” on the Company’s consolidated statements of operations for the year ended December 31, 2024.
The following table provides (i) fair value measurement information for financial assets and liabilities measured at fair value on a recurring basis, (ii) the gross amounts of recognized derivative assets and liabilities, (iii) the amounts offset under master netting arrangements with counterparties, and (iv) the resulting net amounts presented under the captions “Derivative instruments” in the Company’s consolidated balance sheets as of December 31, 2024 and December 31, 2023:

As of December 31, 2024
Level 1Level 2Level 3Total Gross Fair ValueGross Amounts Offset in Balance SheetNet Fair Value Presented in Balance Sheet
(In millions)
Assets:
Current assets- Derivative instruments:
Commodity derivative instruments$— $274 $— $274 $(106)$168 
Non-current assets- Derivative instruments:
Commodity derivative instruments$— $19 $— $19 $(17)$2 
Non-current assets- Other assets:
Investment$8 $— $— $8 $— $8 
Liabilities:
Current liabilities- Derivative instruments:
Commodity derivative instruments$— $121 $— $121 $(106)$15 
Interest rate swaps$— $28 $— $28 $— $28 
Non-current liabilities- Derivative instruments:
Commodity derivative instruments$— $27 $— $27 $(17)$10 
Interest rate swaps$— $96 $— $96 $— $96 
Non-current liabilities- Other long-term liabilities:
2026 WTI Contingent Liability$— $30 $— $30 $— $30 
As of December 31, 2023
Level 1Level 2Level 3Total Gross Fair ValueGross Amounts Offset in Balance SheetNet Fair Value Presented in Balance Sheet
(In millions)
Assets:
Current assets- Derivative instruments:
Commodity derivative instruments$— $88 $— $88 $(71)$17 
Non-current assets- Derivative instruments:
Commodity derivative instruments$— $8 $— $8 $(7)$1 
Non-current assets- Other assets:
Investment$5 $— $— $5 $— $5 
Liabilities:
Current liabilities- Derivative instruments:
Commodity derivative instruments$— $111 $— $111 $(71)$40 
Interest rate swaps$— $46 $— $46 $— $46 
Non-current liabilities- Derivative instruments:
Commodity derivative instruments$— $12 $— $12 $(7)$5 
Interest rate swaps$— $117 $— $117 $— $117 

Assets and Liabilities Not Recorded at Fair Value

The following table provides the fair value of financial instruments that are not recorded at fair value in the consolidated balance sheets:
December 31, 2024December 31, 2023
CarryingCarrying
ValueFair ValueValueFair Value
(In millions)
Debt$12,975 $12,564 $6,641 $6,507 

The fair values of the Company’s credit agreement and Viper LLC’s credit agreement approximate their carrying values based on borrowing rates available to the Company for bank loans with similar terms and maturities and are classified as Level 2 in the fair value hierarchy. The fair values of the outstanding notes were determined using the quoted market prices at each period end, a Level 1 classification in the fair value hierarchy.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis in certain circumstances. These assets and liabilities can include those acquired in a business combination, inventory, proved and unproved oil and natural gas properties, equity method investments, asset retirement obligations and other long-lived assets that are written down to fair value when they are impaired or held for sale. Refer to Note 4—Acquisitions and Divestitures, Note 5—Endeavor Energy Resources, LP Acquisition and Note 6—Property and Equipment for additional discussion of nonrecurring fair value adjustments.

Fair Value of Financial Assets
The carrying amount of cash and cash equivalents, receivables, prepaid expenses, other current assets, payables, other accrued liabilities and funds held in escrow approximate their fair value because of the short-term nature of the instruments.