Quarterly report pursuant to Section 13 or 15(d)

Derivative Instruments and Hedging Activities (Tables)

v3.21.2
Derivative Instruments and Hedging Activities (Tables)
 9 Months Ended
Sep. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of price risk derivatives This contingent consideration arrangement is summarized in the table below (in thousands except for per Bbl amounts):
Year
Threshold (1)
Contingent Receipt - Annual
Threshold (1)
Contingent Receipt - Annual Period Cash Flow Occurs Statement of Cash Flows Presentation Remaining Contingent Receipt - Aggregate Limit
Remaining Potential Settlement 2021
Greater than $60/Bbl, less than $65/Bbl
 $9,000
Equal to or greater than $65/Bbl
 $20,833
(2)
(2)
 $20,833 
(1)    The price used to determine whether the specified thresholds have been met is the average of the final monthly settlements for each month during each annual period end for NYMEX Light Sweet Crude Oil Futures, as reported by the CME Group.
(2)    Cash received for settlements of contingent consideration arrangements are classified as cash flows from financing activities up to the divestiture date fair value with any excess classified as cash flows from operating activities. If either of the commodity price thresholds is reached in 2021, $8.5 million of the contingent receipt will be presented in cash flows from financing activities with the remainder presented in cash flows from operating activities in the first quarter of 2022.
Summary of fair value of derivative instruments the Contingent ExL Consideration, as summarized below, is the only contingent consideration arrangement remaining from the Carrizo Acquisition.
Year
Threshold (1)
Period
Cash Flow
Occurs		 Statement of
Cash Flows Presentation		 Contingent
Payment -
Annual		 Remaining Contingent
Payments -
Aggregate Limit
(In thousands)
Remaining Potential Settlement 2021 $50.00 
(2)
(2)
 ($25,000) ($25,000)
(1)    The price used to determine whether the specified threshold for the year has been met is the average daily settlement price of the front month NYMEX WTI futures contract as published by the CME Group.
(2)    Cash paid for settlements of contingent consideration arrangements are classified as cash flows from investing activities up to the acquisition date fair value with any excess classified as cash flows from operating activities. If the commodity price threshold is reached in 2021, $19.2 million of the contingent payment will be presented in cash flows from investing activities with the remainder presented in cash flows from operating activities in the first quarter of 2022.
Schedule of offsetting assets The following presents the impact of this presentation to the Company’s recognized assets and liabilities for the periods indicated:
As of September 30, 2021
Presented without   As Presented with
Effects of Netting Effects of Netting Effects of Netting
(In thousands)
Assets
Commodity derivative instruments $64,151  ($64,113) $38 
Contingent consideration arrangements 18,567  —  18,567 
Fair value of derivatives - current $82,718  ($64,113) $18,605 
Commodity derivative instruments $7,278  ($7,278) $— 
Contingent consideration arrangements —  —  — 
Other assets, net $7,278  ($7,278) $— 
Liabilities      
Commodity derivative instruments (1)
($364,107) $64,113  ($299,994)
Contingent consideration arrangements (24,688) —  (24,688)
Fair value of derivatives - current ($388,795) $64,113  ($324,682)
Commodity derivative instruments ($22,528) $7,278  ($15,250)
Contingent consideration arrangements —  —  — 
Fair value of derivatives - non-current ($22,528) $7,278  ($15,250)
(1)    Includes approximately $6.6 million of deferred premiums, which the Company will pay as the applicable contracts settle.
As of December 31, 2020
Presented without   As Presented with
Effects of Netting Effects of Netting Effects of Netting
(In thousands)
Assets
Commodity derivative instruments $21,156  ($20,235) $921 
Contingent consideration arrangements —  —  — 
Fair value of derivatives - current $21,156  ($20,235) $921 
Commodity derivative instruments $—  $—  $— 
Contingent consideration arrangements 1,816  —  1,816 
Other assets, net $1,816  $—  $1,816 
Liabilities      
Commodity derivative instruments (1)
($117,295) $20,235  ($97,060)
Contingent consideration arrangements —  —  — 
Fair value of derivatives - current ($117,295) $20,235  ($97,060)
Commodity derivative instruments $—  $—  $— 
Contingent consideration arrangements (8,618) —  (8,618)
September 2020 Warrants liability (79,428) —  (79,428)
Fair value of derivatives - non-current ($88,046) $—  ($88,046)
(1)    Includes approximately $11.2 million of deferred premiums, which the Company will pay as the applicable contracts settle.
Schedule of offsetting liabilities The following presents the impact of this presentation to the Company’s recognized assets and liabilities for the periods indicated:
As of September 30, 2021
Presented without   As Presented with
Effects of Netting Effects of Netting Effects of Netting
(In thousands)
Assets
Commodity derivative instruments $64,151  ($64,113) $38 
Contingent consideration arrangements 18,567  —  18,567 
Fair value of derivatives - current $82,718  ($64,113) $18,605 
Commodity derivative instruments $7,278  ($7,278) $— 
Contingent consideration arrangements —  —  — 
Other assets, net $7,278  ($7,278) $— 
Liabilities      
Commodity derivative instruments (1)
($364,107) $64,113  ($299,994)
Contingent consideration arrangements (24,688) —  (24,688)
Fair value of derivatives - current ($388,795) $64,113  ($324,682)
Commodity derivative instruments ($22,528) $7,278  ($15,250)
Contingent consideration arrangements —  —  — 
Fair value of derivatives - non-current ($22,528) $7,278  ($15,250)
(1)    Includes approximately $6.6 million of deferred premiums, which the Company will pay as the applicable contracts settle.
As of December 31, 2020
Presented without   As Presented with
Effects of Netting Effects of Netting Effects of Netting
(In thousands)
Assets
Commodity derivative instruments $21,156  ($20,235) $921 
Contingent consideration arrangements —  —  — 
Fair value of derivatives - current $21,156  ($20,235) $921 
Commodity derivative instruments $—  $—  $— 
Contingent consideration arrangements 1,816  —  1,816 
Other assets, net $1,816  $—  $1,816 
Liabilities      
Commodity derivative instruments (1)
($117,295) $20,235  ($97,060)
Contingent consideration arrangements —  —  — 
Fair value of derivatives - current ($117,295) $20,235  ($97,060)
Commodity derivative instruments $—  $—  $— 
Contingent consideration arrangements (8,618) —  (8,618)
September 2020 Warrants liability (79,428) —  (79,428)
Fair value of derivatives - non-current ($88,046) $—  ($88,046)
(1)    Includes approximately $11.2 million of deferred premiums, which the Company will pay as the applicable contracts settle.
Schedule of gain or loss on derivative contracts The components of “(Gain) loss on derivative contracts” are as follows for the respective periods:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(In thousands)
(Gain) loss on oil derivatives $67,198  $16,606  $393,792  ($118,348)
(Gain) loss on natural gas derivatives 33,026  7,296  48,539  18,819 
(Gain) loss on NGL derivatives 10,242  2,421  15,114  2,418 
(Gain) loss on contingent consideration arrangements (3,297) 715  (680) (855)
(Gain) loss on September 2020 Warrants liability —  —  55,390  — 
(Gain) loss on derivative contracts $107,169  $27,038  $512,155  ($97,966)
Schedule of derivative instruments
The components of “Cash received (paid) for commodity derivative settlements, net” and “Cash paid for settlements of contingent consideration arrangements, net” are as follows for the respective periods:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(In thousands)
Cash flows from operating activities        
Cash received (paid) on oil derivatives ($98,752) $2,130  ($221,112) $100,823 
Cash received (paid) on natural gas derivatives (9,592) (1,677) (12,867) 931 
Cash received (paid) on NGL derivatives (2,463) —  (4,399) — 
Cash received (paid) for commodity derivative settlements, net ($110,807) $453  ($238,378) $101,754 
Cash flows from investing activities        
Cash paid for settlements of contingent consideration arrangements, net $—  $—  $—  ($40,000)
Schedule of outstanding oil and natural gas derivative contracts
Listed in the tables below are the outstanding oil, natural gas and NGL derivative contracts as of September 30, 2021:
For the Remainder For the Full Year For the Full Year
Oil contracts (WTI) 2021 2022 2023
   Swap contracts
   Total volume (Bbls) 1,748,000  3,240,000  — 
   Weighted average price per Bbl $56.87  $64.00  $— 
   Collar contracts
   Total volume (Bbls) 2,290,450  7,097,500  — 
   Weighted average price per Bbl
   Ceiling (short call) $46.97  $67.70  $— 
   Floor (long put) $39.37  $56.15  $— 
Long put contracts
Total volume (Bbls) 414,000  —  — 
Weighted average price per Bbl $62.50  $—  $— 
   Short call contracts
   Total volume (Bbls) 1,216,240 
(1)
 —  — 

   Weighted average price per Bbl $63.62  $—  $— 
Short call swaption contracts
   Total volume (Bbls) —  1,825,000 
(2)
 1,825,000 
(2)
   Weighted average price per Bbl $—  $52.18  $72.00 
Oil contracts (Brent ICE) (3)
   
Collar contracts
Total volume (Bbls) 184,000  —  — 
Weighted average price per Bbl
Ceiling (short call) $50.00  $—  $— 
Floor (long put) $45.00  $—  $— 
Oil contracts (Midland basis differential)
   Swap contracts
   Total volume (Bbls) 892,400  —  — 
   Weighted average price per Bbl $0.33  $—  $— 
Oil contracts (Argus Houston MEH)
   Collar contracts
   Total volume (Bbls) —  452,500  — 
   Weighted average price per Bbl
Ceiling (short call) $—  $63.15  $— 
Floor (long put) $—  $51.25  $— 
(1)    Premiums from the sale of call options were used to increase the fixed price of certain simultaneously executed price swaps and three-way collars.
(2)    The 2022 and 2023 short call swaption contracts have exercise expiration dates of December 31, 2021 and December 30, 2022, respectively.
(3)    In February 2021, the Company entered into certain offsetting ICE Brent swaps to reduce its exposure to rising oil prices. Those offsetting swaps resulted in a locked-in loss of approximately $2.9 million, of which $1.6 million settled in the third quarter of 2021 with the remaining $1.3 million to be settled in the fourth quarter of 2021.
For the Remainder For the Full Year
Natural gas contracts (Henry Hub) 2021 2022
   Swap contracts
      Total volume (MMBtu) 4,357,000  7,320,000 
      Weighted average price per MMBtu $2.96  $3.08 
Collar contracts
      Total volume (MMBtu) 1,840,000  5,740,000 
      Weighted average price per MMBtu
         Ceiling (short call) $2.80  $3.64 
         Floor (long put) $2.50  $2.83 
   Short call contracts
      Total volume (MMBtu) 1,840,000 
(1)
 — 
      Weighted average price per MMBtu $3.09  $— 
Natural gas contracts (Waha basis differential)
   Swap contracts
      Total volume (MMBtu) 4,140,000  5,475,000 
      Weighted average price per MMBtu ($0.42) ($0.21)
(1)    Premiums from the sale of call options were used to increase the fixed price of certain simultaneously executed price swaps and three-way collars.
For the Remainder For the Full Year
NGL contracts (OPIS Mont Belvieu Purity Ethane) 2021 2022
   Swap contracts
      Total volume (Bbls) 460,000  378,000 
      Weighted average price per Bbl $7.62  $15.70 
NGL contracts (OPIS Mont Belvieu Propane)
Swap contracts
Total volume (Bbls) 266,800  252,000 
Weighted average price per Bbl $52.15  $48.43 
NGL contracts (OPIS Mont Belvieu Butane)
Swap contracts
Total volume (Bbls) 101,200  99,000 
Weighted average price per Bbl $59.43  $54.39 
NGL contracts (OPIS Mont Belvieu Isobutane)
Swap contracts
Total volume (Bbls) 55,200  54,000 
Weighted average price per Bbl $58.96  $54.29