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DERIVATIVE INSTRUMENTS
 3 Months Ended
Mar. 31, 2024
General Discussion of Derivative Instruments and Hedging Activities [Abstract]  
DERIVATIVE INSTRUMENTS DERIVATIVE INSTRUMENTS
Natural Gas, Oil and NGL Derivative Instruments
The Company seeks to mitigate risks related to unfavorable changes in natural gas, oil and NGL prices, which are subject to significant and often volatile fluctuation, by entering into over-the-counter fixed price swaps, basis swaps, costless collars and various types of option contracts. These contracts allow the Company to mitigate the impact of declines in future natural gas, oil and NGL prices by effectively locking in a floor price for a certain level of the Company’s production. However, these hedge contracts also limit the benefit to the Company in periods of favorable price movements.
The volume of production subject to commodity derivative instruments and the mix of the instruments are frequently evaluated and adjusted by management in response to changing market conditions. Gulfport may enter into commodity derivative contracts up to limitations set forth in its Credit Facility. The Company generally enters into commodity derivative contracts for approximately 30% to 70% of its forecasted current year annual production by the end of the first quarter of each fiscal year. The Company typically enters into commodity derivative contracts for the next 12 to 36 months. Gulfport does not enter into commodity derivative contracts for speculative purposes.
The Company does not currently have any commodity derivative transactions that have margin requirements or collateral provisions that would require payments prior to the scheduled settlement dates. The Company's commodity derivative contract counterparties are typically financial institutions and energy trading firms with investment-grade credit ratings. Gulfport routinely monitors and manages its exposure to counterparty risk by requiring specific minimum credit standards for all counterparties, actively monitoring counterparties' public credit ratings and avoiding the concentration of credit exposure by transacting with multiple counterparties. The Company has master netting agreements with some counterparties that allow the offsetting of receivables and payables in a default situation. As of March 31, 2024, our commodity derivative contracts were spread among 12 counterparties.
Fixed price swaps require that the Company receive a fixed price and pay a floating market price to the counterparty for the hedged commodity. They are settled monthly based on differences between the fixed price specified in the contract and the referenced settlement price. When the referenced settlement price is less than the price specified in the contract, the Company receives an amount from the counterparty based on the price difference multiplied by the volume. Similarly, when the referenced settlement price exceeds the price specified in the contract, the Company pays the counterparty an amount based on the price difference multiplied by the volume.
The Company has entered into natural gas, crude oil and NGL fixed price swap contracts based off the NYMEX Henry Hub, NYMEX WTI and Mont Belvieu C3 indices. Below is a summary of the Company’s open fixed price swap positions as of March 31, 2024. 
IndexDaily VolumeWeighted
Average Price
Natural Gas(MMBtu/d)($/MMBtu)
Remaining 2024NYMEX Henry Hub376,836 $3.85 
2025NYMEX Henry Hub200,000 $3.94 
2026NYMEX Henry Hub30,000 $3.62 
Oil(Bbl/d)($/Bbl)
Remaining 2024NYMEX WTI500 $77.50 
NGL(Bbl/d)($/Bbl)
Remaining 2024Mont Belvieu C32,500 $30.25 
2025Mont Belvieu C32,000 $30.09 
Each two-way costless collar has a set floor and ceiling price for the hedged production. They are settled monthly based on differences between the floor and ceiling prices specified in the contract and the referenced settlement price. If the applicable monthly price indices are outside of the ranges set by the floor and ceiling prices in the collar contracts, the Company will cash-settle the difference with the hedge counterparty. When the referenced settlement price is less than the floor price in the contract, the Company receives an amount from the counterparty based on the price difference multiplied by the hedged contract volume. Similarly, when the referenced settlement price exceeds the ceiling price specified in the contract, the Company pays the counterparty an amount based on the price difference multiplied by the hedged contract volume. No payment is due from either party if the referenced settlement price is within the range set by the floor and ceiling prices.
The Company has entered into natural gas and crude oil costless collars based off the NYMEX Henry Hub and NYMEX WTI indices. Below is a summary of the Company's costless collar positions as of March 31, 2024.
IndexDaily VolumeWeighted Average Floor PriceWeighted Average Ceiling Price
Natural Gas(MMBtu/d)($/MMBtu)($/MMBtu)
Remaining 2024NYMEX Henry Hub225,000 $3.36 $5.14 
2025NYMEX Henry Hub180,000 $3.39 $4.33 
Oil(Bbl/d)($/Bbl)($/Bbl)
Remaining 2024NYMEX WTI1,000 $62.00 $80.00 
From time to time, the Company has sold natural gas call options in exchange for a premium, and used the associated premiums received to enhance the fixed price for a portion of the fixed price natural gas swaps. Each sold call option has an established ceiling price. If at the time of settlement the referenced settlement price exceeds the ceiling price, the Company pays its counterparty an amount equal to the difference between the referenced settlement price and the price ceiling multiplied by the hedged contract volumes. No payment is due from either party if the referenced settlement price is below the price ceiling. Below is a summary of the Company's open sold call option positions as of March 31, 2024.
IndexDaily VolumeWeighted Average Price
Natural Gas(MMBtu/d)($/MMBtu)
Remaining 2024NYMEX Henry Hub202,000 $3.33 
2025NYMEX Henry Hub193,315 $5.80 
In addition, the Company has entered into natural gas basis swap positions. These instruments are arrangements that guarantee a fixed price differential to NYMEX Henry Hub from a specified delivery point. The Company receives the fixed price differential and pays the floating market price differential to the counterparty for the hedged commodity. As of March 31, 2024, the Company had the following natural gas basis swap positions open:
Gulfport PaysGulfport ReceivesDaily VolumeWeighted Average Fixed Spread
Natural Gas(MMBtu/d)($/MMBtu)
Remaining 2024Rex Zone 3NYMEX Plus Fixed Spread150,000 $(0.15)
Remaining 2024NGPL TXOKNYMEX Plus Fixed Spread70,000 $(0.31)
Remaining 2024TETCO M2NYMEX Plus Fixed Spread196,618 $(0.92)
2025NGPL TXOKNYMEX Plus Fixed Spread30,000 $(0.27)
2025TETCO M2NYMEX Plus Fixed Spread120,000 $(0.98)
Balance Sheet Presentation
The Company reports the fair value of derivative instruments on the consolidated balance sheets as derivative instruments under current assets, noncurrent assets, current liabilities and noncurrent liabilities on a gross basis. The Company determines the current and noncurrent classification based on the timing of expected future cash flows of individual trades. The following table presents the fair value of the Company’s derivative instruments on a gross basis at March 31, 2024 and December 31, 2023 (in thousands):
March 31, 2024December 31, 2023
Short-term derivative asset$228,579 $233,226 
Long-term derivative asset45,617 47,566 
Short-term derivative liability(37,607)(21,963)
Long-term derivative liability(16,547)(18,602)
Total commodity derivative position$220,042 $240,227 
Gains and Losses
The following table presents the gain and loss recognized in net gain (loss) on natural gas, oil and NGL derivatives in the accompanying consolidated statements of operations for the three months ended March 31, 2024 and 2023 (in thousands):
Net gain (loss) on derivative instruments
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
Natural gas derivatives - fair value (losses) gains$(11,479)$374,148 
Natural gas derivatives - settlement gains (losses)66,451 (173)
Total gains on natural gas derivatives54,972 373,975 
Oil and condensate derivatives - fair value (losses) gains(2,460)4,733 
Oil and condensate derivatives - settlement gains (losses)12 (443)
Total (losses) gains on oil and condensate derivatives(2,448)4,290 
NGL derivatives - fair value losses(6,247)(1,186)
NGL derivatives - settlement (losses) gains(1,141)982 
Total losses on NGL derivatives(7,388)(204)
Total gains on natural gas, oil and NGL derivatives$45,136 $378,061 
Offsetting of Derivative Assets and Liabilities
As noted above, the Company records the fair value of derivative instruments on a gross basis. The following tables present the gross amounts of recognized derivative assets and liabilities in the consolidated balance sheets and the amounts that are subject to offsetting under master netting arrangements with counterparties, all at fair value (in thousands):
As of March 31, 2024
Gross Assets (Liabilities) Presented in the Consolidated Balance SheetsGross Amounts Subject to Master Netting AgreementsNet Amount
Derivative assets$274,196 $(48,216)$225,980 
Derivative liabilities$(54,154)$48,216 $(5,938)
As of December 31, 2023
Gross Assets (Liabilities) Presented in the Consolidated Balance SheetsGross Amounts Subject to Master Netting AgreementsNet Amount
Derivative assets$280,792 $(30,866)$249,926 
Derivative liabilities$(40,565)$30,866 $(9,699)
Concentration of Credit Risk
By using derivative instruments that are not traded on an exchange, the Company is exposed to the credit risk of its counterparties. Credit risk is the risk of loss from counterparties not performing under the terms of the derivative instrument. When the fair value of a derivative instrument is positive, the counterparty is expected to owe the Company, which creates credit risk. To minimize the credit risk in derivative instruments, it is the Company’s policy to enter into derivative contracts only with counterparties that are creditworthy financial institutions deemed by management as competent and competitive market makers. The Company’s derivative contracts are spread between multiple counterparties to lessen its exposure to any individual counterparty. Additionally, the Company uses master netting agreements to minimize credit risk exposure. The creditworthiness of the Company’s counterparties is subject to periodic review. None of the Company’s derivative instrument contracts contain credit-risk related contingent features. Other than as provided by the Company’s revolving credit facility, the Company is not required to provide credit support or collateral to any of its counterparties under its derivative instruments, nor are the counterparties required to provide credit support to the Company.