Derivatives and Risk Management (Tables)

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments Notional Amount, Weighted Average Contract Prices and Fair Value

The following tables provide information about the Company’s financial instruments that are sensitive to changes in commodity prices and that are used to protect the Company’s exposure. None of the financial instruments below are designated for hedge accounting treatment. The tables present the notional amount, the weighted average contract prices and the fair value by expected maturity dates as of September 30, 2022:

Financial Protection on Production
		Weighted Average Price per MMBtu
	Volume (Bcf)	Swaps		Sold Puts		Purchased Puts		Sold Calls		Basis Differential		Fair Value at September 30, 2022 (in millions)
Natural Gas
2022
Fixed price swaps	207	$	3.04	$	—	$	—	$	—	$	—	$	(798)
Two-way costless collars	18	—		—		2.47		2.89		—		(73)
Three-way costless collars	92	—		2.03		2.48		2.88		—		(368)
Total	317											$	(1,239)
2023
Fixed price swaps	504	$	3.08	$	—	$	—	$	—	$	—	$	(1,152)
Two-way costless collars	219	—		—		3.03		3.55		—		(413)
Three-way costless collars	215	—		2.09		2.54		3.00		—		(557)
Total	938											$	(2,122)
2024
Fixed price swaps	224	$	2.96	$	—	$	—	$	—	$	—	$	(372)
Two-way costless collars	44	—		—		3.07		3.53		—		(56)
Three-way costless collars	11	—		2.25		2.80		3.54		—		(22)
Total	279											$	(450)
Basis Swaps
2022	82	$	—	$	—	$	—	$	—	$	(0.48)	$	61
2023	281	—		—		—		—		(0.50)		3
2024	46	—		—		—		—		(0.71)		13
2025	9	—		—		—		—		(0.64)		3
Total	418											$	80

	Volume (MBbls)	Weighted Average Strike Price per Bbl								Fair Value at September 30, 2022 (in millions)
		Swaps		Sold Puts		Purchased Puts		Sold Calls
Oil
2022
Fixed price swaps	846	$	52.68	$	—	$	—	$	—	$	(21)
Three-way costless collars	344	—		39.76		50.08		56.97		(7)
Total	1,190									$	(28)
2023
Fixed price swaps	1,081	$	60.05	$	—	$	—	$	—	$	(12)
Three-way costless collars	1,268	—		33.97		45.51		56.12		(24)
Total	2,349									$	(36)
2024
Fixed price swaps	913	$	70.66	$	—	$	—	$	—	$	3
2025
Fixed price swaps	41	$	77.66	$	—	$	—	$	—	$	—
Ethane
2022
Fixed price swaps	1,463	$	11.44	$	—	$	—	$	—	$	(7)
2023
Fixed price swaps	1,308	$	11.91	$	—	$	—	$	—	$	(4)
Propane
2022
Fixed price swaps	1,536	$	31.22	$	—	$	—	$	—	$	(8)
Three-way costless collars	77	—		16.80		21.00		31.92		—
Total	1,613									$	(8)
2023
Fixed price swaps	1,925	$	36.79	$	—	$	—	$	—	$	4
2024
Fixed price swaps	73	$	42.32	$	—	$	—	$	—	$	1
Normal Butane
2022
Fixed price swaps	464	$	36.22	$	—	$	—	$	—	$	(3)
2023
Fixed price swaps	347	$	41.24	$	—	$	—	$	—	$	1
Natural Gasoline
2022
Fixed price swaps	501	$	55.78	$	—	$	—	$	—	$	(6)
2023
Fixed price swaps	359	$	66.00	$	—	$	—	$	—	$	1

Other Derivative Contracts
	Volume (Bcf)	Weighted Average Strike Price per MMBtu		Fair Value at September 30, 2022 (in millions)
Call Options – Natural Gas (Net)
2022	21	$	3.01	$	(82)
2023	46	2.94		(118)
2024	9	3.00		(23)
Total	76			$	(223)

Balance Sheet Classification of Derivative Financial Instruments

The balance sheet classification of the assets and liabilities related to derivative financial instruments are summarized below as of September 30, 2022 and December 31, 2021:

Derivative Assets
		Fair Value
(in millions)	Balance Sheet Classification	September 30, 2022		December 31, 2021
Derivatives not designated as hedging instruments:
Fixed price swaps – natural gas	Derivative assets	$	—	$	79
Fixed price swaps – oil	Derivative assets	1		—
Fixed price swaps – ethane	Derivative assets	—		2
Fixed price swaps – propane	Derivative assets	6		2
Fixed price swaps – normal butane	Derivative assets	2		1
Fixed price swaps – natural gasoline	Derivative assets	2		—
Two-way costless collars – natural gas	Derivative assets	27		9
Three-way costless collars – natural gas	Derivative assets	12		12
Three-way costless collars – oil	Derivative assets	2		1
Basis swaps – natural gas	Derivative assets	125		77
Fixed price swaps – natural gas	Other long-term assets	—		64
Fixed price swaps – oil	Other long-term assets	5		—
Fixed price swaps – propane	Other long-term assets	2		—
Two-way costless collars – natural gas	Other long-term assets	22		100
Three-way costless collars – natural gas	Other long-term assets	7		37
Three-way costless collars – oil	Other long-term assets	1		3
Basis swaps – natural gas	Other long-term assets	41		22
Interest rate swaps	Other long-term assets	—		2
Total derivative assets		$	255	$	411

Derivative Liabilities
		Fair Value
(in millions)	Balance Sheet Classification	September 30, 2022		December 31, 2021
Derivatives not designated as hedging instruments:
Fixed price swaps – natural gas storage	Derivative liabilities	$	—	$	1
Fixed price swaps – natural gas	Derivative liabilities	1,693		565
Fixed price swaps – oil	Derivative liabilities	32		60
Fixed price swaps – ethane	Derivative liabilities	10		10
Fixed price swaps – propane	Derivative liabilities	11		78
Fixed price swaps – normal butane	Derivative liabilities	4		27
Fixed price swaps – natural gasoline	Derivative liabilities	7		33
Two-way costless collars – natural gas	Derivative liabilities	423		104
Two-way costless collars – ethane	Derivative liabilities	—		1
Three-way costless collars – natural gas	Derivative liabilities	826		298
Three-way costless collars – oil	Derivative liabilities	28		24
Three-way costless collars – propane	Derivative liabilities	—		4
Basis swaps – natural gas	Derivative liabilities	77		9
Call options – natural gas	Derivative liabilities	164		67
Fixed price swaps – natural gas	Long-term derivative liabilities	629		246
Fixed price swaps – oil	Long-term derivative liabilities	4		9
Fixed price swaps – ethane	Long-term derivative liabilities	1		—
Fixed price swaps – propane	Long-term derivative liabilities	—		1
Fixed price swaps – natural gasoline	Long-term derivative liabilities	—		1
Two-way costless collars – natural gas	Long-term derivative liabilities	168		115
Three-way costless collars – natural gas	Long-term derivative liabilities	140		178
Three-way costless collars – oil	Long-term derivative liabilities	6		21
Basis swap – natural gas	Long-term derivative liabilities	9		22
Call options – natural gas	Long-term derivative liabilities	59		42
Total derivative liabilities		$	4,291	$	1,916

Net Derivative Position
	September 30, 2022		December 31, 2021
(in millions)
Net current derivative liabilities	$	(3,098)	$	(1,098)
Net long-term derivative liabilities	(938)		(407)
Non-performance risk adjustment	10		3
Net total derivative liabilities	$	(4,026)	$	(1,502)

Summary of Before Tax Effect of Fair Value Hedges not Designated for Hedge Accounting

The following tables summarize the before-tax effect of the Company’s derivative instruments on the consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021:

Unsettled Gain (Loss) on Derivatives Recognized in Earnings
	Consolidated Statement of Operations Classification of Gain (Loss) on Derivatives, Unsettled	For the three months ended September 30,				For the nine months ended September 30,
Derivative Instrument		2022		2021		2022		2021
		(in millions)
Purchased fixed price swaps – natural gas	Gain (Loss) on Derivatives	$	—	$	(1)	$	—	$	1
Fixed price swaps – natural gas	Gain (Loss) on Derivatives	(140)		(748)		(1,654)		(991)
Fixed price swaps – oil	Gain (Loss) on Derivatives	73		—		39		(81)
Fixed price swaps – ethane	Gain (Loss) on Derivatives	24		(12)		(3)		(25)
Fixed price swaps – propane	Gain (Loss) on Derivatives	67		(32)		74		(120)
Fixed price swaps – normal butane	Gain (Loss) on Derivatives	24		(7)		24		(41)
Fixed price swaps – natural gasoline	Gain (Loss) on Derivatives	28		1		29		(30)
Two-way costless collars – natural gas	Gain (Loss) on Derivatives	(99)		(358)		(432)		(518)
Two-way costless collars – oil	Gain (Loss) on Derivatives	—		1		—		—
Two-way costless collars – ethane	Gain (Loss) on Derivatives	—		(1)		1		(2)
Two-way costless collars – propane	Gain (Loss) on Derivatives	—		—		—		—
Three-way costless collars – natural gas	Gain (Loss) on Derivatives	(26)		(619)		(520)		(869)
Three-way costless collars – oil	Gain (Loss) on Derivatives	38		—		10		(47)
Three-way costless collars – propane	Gain (Loss) on Derivatives	3		(3)		4		(5)
Basis swaps – natural gas	Gain (Loss) on Derivatives	4		(70)		12		(23)
Call options – natural gas	Gain (Loss) on Derivatives	(8)		(143)		(114)		(180)
Call options – oil	Gain (Loss) on Derivatives	—		—		—		(1)
Put options – natural gas	Gain (Loss) on Derivatives	—		—		—		1
Swaptions – natural gas	Gain (Loss) on Derivatives	—		(21)		—		(24)
Purchased fixed price swap – natural gas storage	Gain (Loss) on Derivatives	—		1		—		2
Fixed price swap – natural gas storage	Gain (Loss) on Derivatives	—		(3)		1		(5)
Interest rate swaps	Gain (Loss) on Derivatives	—		—		(2)		1
Total loss on unsettled derivatives		$	(12)	$	(2,015)	$	(2,531)	$	(2,957)

Settled Gain (Loss) on Derivatives Recognized in Earnings (1)
	Consolidated Statement of Operations Classification of Gain (Loss) on Derivatives, Settled	For the three months ended September 30,					For the nine months ended September 30,
Derivative Instrument		2022			2021		2022			2021
		(in millions)
Purchased fixed price swaps - natural gas	Gain (Loss) on Derivatives	$	—		$	4	$	—		$	5
Fixed price swaps – natural gas	Gain (Loss) on Derivatives	(1,082)			(111)		(2,249)			(112)
Fixed price swaps – oil	Gain (Loss) on Derivatives	(30)			(18)		(104)			(63)
Fixed price swaps – ethane	Gain (Loss) on Derivatives	(15)			(13)		(42)			(23)
Fixed price swaps – propane	Gain (Loss) on Derivatives	(21)			(53)		(96)			(113)
Fixed price swaps – normal butane	Gain (Loss) on Derivatives	(7)			(17)		(33)			(33)
Fixed price swaps – natural gasoline	Gain (Loss) on Derivatives	(9)			(16)		(45)			(38)
Two-way costless collars – natural gas	Gain (Loss) on Derivatives	(152)			(79)		(386)			(79)
Two-way costless collars – oil	Gain (Loss) on Derivatives	—			(1)		—			(3)
Two-way costless collars – ethane	Gain (Loss) on Derivatives	—			(1)		(1)			(1)
Three-way costless collars – natural gas	Gain (Loss) on Derivatives	(491)			(84)		(1,008)			(91)
Three-way costless collars – oil	Gain (Loss) on Derivatives	(12)			(10)		(43)			(16)
Three-way costless collars – propane	Gain (Loss) on Derivatives	(1)			—		(4)			—
Basis swaps – natural gas	Gain (Loss) on Derivatives	40			27		64			76
Index swaps – natural gas	Gain (Loss) on Derivatives	—			—		(1)			—
Call options – natural gas	Gain (Loss) on Derivatives	(109)			(16)		(235)			(16)
Call options – oil	Gain (Loss) on Derivatives	—			(1)		—			(1)
Put options – natural gas	Gain (Loss) on Derivatives	—			—		—			(2)		(2)
Purchased fixed price swaps – natural gas storage	Gain (Loss) on Derivatives	—			1		1			1
Fixed price swaps – natural gas storage	Gain (Loss) on Derivatives	—			—		(3)			—
Total loss on settled derivatives		$	(1,889)		$	(388)	$	(4,185)		$	(509)
Total loss on derivatives		$	(1,903)	(1)	$	(2,399)	$	(6,709)	(1)	$	(3,461)

(1)The Company calculates gain (loss) on derivatives, settled, as the summation of gains and losses on positions that settled within the period.

(2)Includes $2 million in amortization of premiums paid related to certain natural gas put options for the nine months ended September 30, 2021, which is included in gain (loss) on derivatives on the consolidated statements of operations.

Total Gain (Loss) on Derivatives Recognized in Earnings
	For the three months ended September 30,				For the nine months ended September 30,
	2022		2021		2022		2021
	(in millions)
Total loss on unsettled derivatives	$	(12)	$	(2,015)	$	(2,531)	$	(2,957)
Total loss on settled derivatives	(1,889)		(388)		(4,185)		(509)
Non-performance risk adjustment	(2)		4		7		5
Total loss on derivatives	$	(1,903)	$	(2,399)	$	(6,709)	$	(3,461)