COMMODITY DERIVATIVE INSTRUMENTS

12 Months Ended

Dec. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

COMMODITY DERIVATIVE INSTRUMENTS

COMMODITY DERIVATIVE INSTRUMENTS

The Company utilizes derivative instruments to manage its exposure to fluctuations in the underlying commodity prices of its inventory. The Company's management sets and implements hedging policies, including volumes, types of instruments and counterparties, to support oil prices at targeted levels and manage its exposure to fluctuating prices.

The Company’s derivative instruments consist of option and futures arrangements for oil. For option and futures arrangements, the Company receives the difference positive or negative between an agreed-upon strike price and the market price.

The mark-to-market effects of these contracts as of December 31, 2021 and December 31, 2020 , are summarized in the following table. The notional amount is equal to the total net volumetric derivative position during the period indicated. The fair value of the crude oil options and future agreements is based on the difference between the strike price and the New York Mercantile Exchange and Brent Complex futures price for the applicable trading months.

December 31, 2021
Contract Type	Contract Period	Weighted Average Trade Price (Barrels)		Remaining Volume (Barrels)	Fair Value
Option	Dec. 2021- Mar. 2022	$	3.18	18,000	$	136,440
Futures	Dec. 2021- Mar. 2022	$	31.59	20,000	$	71,000
Futures	Dec. 2021- Mar. 2022	$	32.48	50,000	$	(111,460)

December 31, 2020
Contract Type	Contract Period	Weighted Average Trade Price (Barrels)		Remaining Volume (Barrels)	Fair Value
Futures	Dec. 2020- Mar. 2021	$	62.33	55,000	$	(94,214)

The carrying values of the Company's derivatives positions and their locations on the consolidated balance sheets as of December 31, 2021 and 2020 are presented in the table below.

Balance Sheet Classification	Contract Type	2021		2020
	Crude oil options	$	136,440	$	—
	Crude oil futures	(40,460)		(94,214)
Derivative commodity asset (liability)		$	95,980	$	(94,214)

For the years ended December 31, 2021, 2020 and 2019, we recognized a $2,257,592 loss, $3,476,593 gain and $2,458,359 loss, respectively, on commodity derivative contracts on the consolidated statements of operations as part of our costs of revenues.