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Derivative Instruments
 12 Months Ended
Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments
Note 8—Derivative Instruments
The Company is exposed to certain risks relating to its ongoing business operations and may use derivative instruments to manage its exposure to commodity price risk from time to time.
Commodity Derivative Contracts
Historically, prices received for crude oil and natural gas production have been volatile because of supply and demand factors, worldwide political factors, general economic conditions and seasonal weather patterns. The Company may periodically use derivative instruments, such as swaps, costless collars and basis swaps, to mitigate its exposure to declines in commodity prices and to the corresponding negative impacts such declines can have on its cash flow from operations, returns on capital and other financial results. While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future revenues from favorable price changes. The Company does not enter into derivative contracts for speculative or trading purposes.
Commodity Swap and Collar Contracts. The Company may use commodity derivative instruments known as fixed price swaps to realize a known price for a specific volume of production, basis swaps to hedge the difference between the index price and a local index price, or costless collars to establish fixed price floors and ceilings. All transactions are settled in cash with one party paying the other for the resulting difference in price multiplied by the contract volume.
The following table summarizes the approximate volumes and average contract prices of derivative contracts the Company had in place as of December 31, 2022:

PeriodVolume (Bbls)Volume (Bbls/d)
Wtd. Avg. Crude Price
($/Bbl)(1)
Crude oil swaps
January 2023 - March 20231,575,000 17,500 $90.58
April 2023 - June 20231,592,500 17,500 87.64
July 2023 - September 20231,472,000 16,000 86.36
October 2023 - December 20231,472,000 16,000 84.11
January 2024 - March 20241,092,000 12,000 78.46
April 2024 - June 20241,092,000 12,000 77.30
July 2024 - September 20241,104,000 12,000 76.21
October 2024 - December 20241,104,000 12,000 75.27

PeriodVolume (Bbls)Volume (Bbls/d)
Wtd. Avg. Collar Price Ranges
($/Bbl)(2)
Crude oil collars
January 2023 - March 2023810,000 9,000 $75.56-$91.15
April 2023 - June 2023819,000 9,000 75.56-91.15
July 2023 - September 2023644,000 7,000 76.43-92.70
October 2023 - December 2023644,000 7,000 76.43-92.70

PeriodVolume (Bbls)Volume (Bbls/d)
Wtd. Avg. Differential
($/Bbl)(3)
Crude oil basis differential swaps
January 2023 - March 2023729,999 8,111 $0.55
April 2023 - June 2023739,499 8,126 0.55
July 2023 - September 2023749,000 8,141 0.52
October 2023 - December 2023749,002 8,141 0.52
January 2024 - March 2024637,000 7,000 0.43
April 2024 - June 2024637,000 7,000 0.43
July 2024 - September 2024644,000 7,000 0.43
October 2024 - December 2024644,000 7,000 0.43

PeriodVolume (Bbls)Volume (Bbls/d)
Wtd. Avg. Differential
($/Bbl)(4)
Crude oil roll differential swaps
January 2023 - March 20231,350,000 15,000 $1.34
April 2023 - June 20231,365,000 15,000 1.25
July 2023 - September 20231,380,000 15,000 1.23
October 2023 - December 20231,380,000 15,000 1.22
January 2024 - March 2024637,000 7,000 0.75
April 2024 - June 2024637,000 7,000 0.74
July 2024 - September 2024644,000 7,000 0.73
October 2024 - December 2024644,000 7,000 0.72
(1)    These crude oil swap transactions are settled based on the NYMEX WTI index price on each trading day within the specified monthly settlement period versus the contractual swap price for the volumes stipulated.
(2)    These crude oil collars are settled based on the NYMEX WTI index price on each trading day within the specified monthly settlement period versus the contractual floor and ceiling prices for the volumes stipulated.
(3)    These crude oil basis swap transactions are settled based on the difference between the arithmetic average of ARGUS MIDLAND WTI and ARGUS WTI CUSHING indices, during each applicable monthly settlement period.
(4)    These crude oil roll swap transactions are settled based on the difference between the arithmetic average of NYMEX WTI calendar month prices and the physical crude oil delivery month price.

PeriodVolume (MMBtu)Volume (MMBtu/d)
Wtd. Avg. Gas Price
($/MMBtu)(1)
Natural gas swaps
January 2023 - March 20231,670,157 18,557 $7.64
April 2023 - June 20231,572,752 17,283 4.70
July 2023 - September 20231,486,925 16,162 4.70
October 2023 - December 20231,413,628 15,366 4.90
January 2024 - March 2024464,919 5,109 5.01
April 2024 - June 2024446,321 4,905 3.93
July 2024 - September 2024429,388 4,667 4.01
October 2024 - December 2024413,899 4,499 4.32

PeriodVolume (MMBtu)Volume (MMBtu/d)
Wtd. Avg. Collar Price Ranges
($/MMBtu)(2)
Natural gas collars
January 2023 - March 20237,104,84378,943 $4.67-$10.33
April 2023 - June 20236,389,74870,217 3.64-7.62
July 2023 - September 20236,563,07571,338 3.64-7.52
October 2023 - December 20236,636,37272,134 3.66-8.22
January 2024 - March 20243,175,08134,891 3.36-9.44
April 2024 - June 20241,373,67915,095 3.00-6.45
July 2024 - September 20241,410,61215,333 3.00-6.52
October 2024 - December 20241,426,10115,501 3.25-7.30

PeriodVolume (MMBtu)Volume (MMBtu/d)
Wtd. Avg. Differential
($/MMBtu)(3)
Natural gas basis differential swaps
January 2023 - March 20236,075,000 67,500 $(1.10)
April 2023 - June 20236,142,500 67,500 (1.30)
July 2023 - September 20236,210,000 67,500 (1.30)
October 2023 - December 20236,210,000 67,500 (1.30)
January 2024 - March 20241,820,000 20,000 (0.59)
April 2024 - June 20241,820,000 20,000 (0.67)
July 2024 - September 20241,840,000 20,000 (0.66)
October 2024 - December 20241,840,000 20,000 (0.64)
(1)    These natural gas swap contracts are settled based on the NYMEX Henry Hub price on each trading day within the specified monthly settlement period versus the contractual swap price for the volumes stipulated.
(2)    These natural gas collars are settled based on the NYMEX Henry Hub price on each trading day within the specified monthly settlement period versus the contractual floor and ceiling prices for the volumes stipulated.
(3)    These natural gas basis swap contracts are settled based on the difference between the Inside FERC’s West Texas WAHA price and the NYMEX price of natural gas, during each applicable monthly settlement period.
Derivative Instrument Reporting. The Company’s oil and natural gas derivative instruments have not been designated as hedges for accounting purposes. Therefore, all gains and losses are recognized in the Company’s consolidated statements of operations. All derivative instruments are recorded at fair value in the consolidated balance sheets, other than derivative instruments that meet the “normal purchase normal sale” exclusion, and any fair value gains and losses are recognized in current period earnings.
The following table presents the impact of the Company’s derivative instruments on its consolidated statements of operations for the periods presented:
Year Ended December 31,
(in thousands)
202220212020
Net gain (loss) on derivative instruments
$(42,368)$(148,825)$(64,535)
Offsetting of Derivative Assets and Liabilities. The Company’s commodity derivatives are included in the accompanying consolidated balance sheets as derivative assets and liabilities. The Company nets its financial derivative instrument fair value amounts executed with the same counterparty pursuant to ISDA master netting agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract. The tables below summarize the fair value amounts and classification in the consolidated balance sheets of the Company’s derivative contracts outstanding at the respective balance dates, as well as the gross recognized derivative assets, liabilities and offset amounts:
Balance Sheet ClassificationGross Fair Value Asset/Liability Amounts
Gross Amounts Offset(1)
Net Recognized Fair Value Assets/Liabilities
(in thousands)
December 31, 2022
Derivative Assets
Commodity contracts
Derivative instruments$125,120 $(24,323)$100,797 
Other noncurrent assets22,016 (3,691)18,325 
Derivative Liabilities
Commodity contracts
Derivative instruments$26,321 $(24,323)$1,998 
Other noncurrent liabilities6,349(3,691)2,658 
December 31, 2021
Derivative Assets
Commodity contracts
Derivative instruments$3,284 $(3,284)$— 
Other noncurrent assets585 (345)240 
Derivative Liabilities
Commodity contracts
Derivative instruments$38,434 $(3,284)$35,150 
Other noncurrent liabilities345 (345)— 
(1)     The Company has agreements in place with all of its counterparties that allow for the financial right of offset for derivative assets against derivative liabilities at settlement or in the event of a default under the agreements or contract termination.
Contingent Features in Financial Derivative Instruments. None of the Company’s derivative instruments contain credit-risk-related contingent features. Counterparties to the Company’s financial derivative contracts are high credit-quality financial institutions that are lenders under OpCo’s Credit Agreement. The Company enters into new hedge arrangements only with participants under its Credit Agreement, since these institutions are secured equally with the holders of any OpCo bank debt, which eliminates the potential need to post collateral when Permian Resources is in a derivative liability position. As a result, the Company is not required to post letters of credit or corporate guarantees for its derivative counterparties in order to secure contract performance obligations.
In addition, the Company is exposed to credit risk associated with its derivative contracts from non-performance by its counterparties. The Company mitigates its exposure to any single counterparty by contracting with a number of financial institutions, each of which has a high credit rating and is a member of OpCo’s credit facility as referenced above.