Derivative Financial Instruments

6 Months Ended

Jun. 30, 2021

Derivative Instruments Not Designated as Hedging Instruments [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE 5 - COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS

Objective and Strategy. Our results of operations and operating cash flows are affected by changes in market prices for crude oil, natural gas and NGLs. To manage a portion of our exposure to price volatility from producing crude oil and natural gas we enter into commodity derivative contracts such as collars, fixed-price exchanges and basis protection exchanges, to protect against price declines in future periods. We do not enter into derivative contracts for speculative or trading purposes.

We believe our commodity derivative instruments continue to be effective in achieving the risk management objectives for which they were intended. Depending on changes in oil and gas futures markets and management's view of underlying supply and demand trends, we may increase or decrease our derivative positions from current levels. As of June 30, 2021, we had derivative instruments in place for a portion of our anticipated production in 2021 through 2023. Our commodity derivative contracts have been entered into at no upfront cost to us as we hedge our anticipated production at the then-prevailing commodity market prices, without adjustment for premium or discount.

Commodity Derivative Contracts. As of June 30, 2021, we had the following outstanding derivative contracts. When aggregating multiple contracts, the weighted-average contract price is presented:

	Collars					Fixed-Price Swaps
Commodity/ Index/ Maturity Period	Quantity (Crude oil - MBbls Natural Gas - BBtu)	Weighted-Average Contract Price				Quantity (Crude Oil - MBbls Gas and Basis- BBtu)	Weighted- Average Contract Price		Fair Value June 30, 2021 (in thousands)
		Floors		Ceilings
Crude Oil
NYMEX
2021	2,502	$	38.01	$	49.29	4,976	$	41.89	$	(200,961)
2022	3,552	49.49		60.96		6,744	44.42		(169,559)
2023	—	—		—		4,602	56.23		(21,386)
Total Crude Oil	6,054					16,322			$	(391,906)
Natural Gas
NYMEX
2021	36,600	2.51		2.92		15,900	2.40		(47,880)
2022	17,400	2.50		2.89		33,600	2.70		(22,607)
2023	—	—		—		20,400	2.57		(4,761)
Total Natural Gas	54,000					69,900			(75,248)
Basis Protection - Natural Gas
CIG
2021						52,500	(0.44)		(12,885)
2022						51,000	(0.26)		(1,130)
2023						20,400	(0.23)		1,369
Total Basis Protection - Natural Gas						123,900			(12,646)
Commodity Derivatives Fair Value									$	(479,800)

Effect of Derivative Instruments on the Condensed Consolidated Balance Sheet. The balance sheet line items and fair value amounts of our derivative instruments are disclosed in Note 4 - Fair Value Measurements.

Our financial derivative agreements contain master netting provisions that provide for the net settlement of contracts through a single payment in the event of early termination. We have elected not to offset the fair value positions recorded on our condensed consolidated balance sheets.

The following table reflects the impact of netting agreements on gross derivative assets and liabilities as of the dates indicated:

As of June 30, 2021	Total Gross Amount Presented on the Balance Sheet		Effect of Master Netting Agreements		Total Net Amount
	(in thousands)
Derivative assets:
Derivative instruments, at fair value	$	14,055	$	(14,055)	$	—
Derivative liabilities:
Derivative instruments, at fair value	$	493,855	$	(14,055)	$	479,800