DERIVATIVE INSTRUMENTS (Tables)
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9 Months Ended |
Sep. 30, 2020 |
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| General Discussion of Derivative Instruments and Hedging Activities [Abstract] |
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| Schedule of Open Fixed Price Swap Positions and Natural Gas Basis Swap Positions |
Below is a summary of the Company’s open fixed price swap positions as of September 30, 2020.
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Location |
Daily Volume
(MMBtu/day) |
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Weighted
Average Price |
| Remaining 2020 |
NYMEX Henry Hub |
500,000 |
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$ |
2.69 |
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Location |
Daily Volume
(Bbls/day) |
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Weighted
Average Price |
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| Remaining 2020 |
NYMEX WTI |
3,000 |
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$ |
35.49 |
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Location |
Daily Volume
(Bbls/day) |
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Weighted
Average Price |
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| Remaining 2020 |
Mont Belvieu C3 |
1,500 |
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$ |
20.27 |
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The Company sold call options in exchange for a premium, and used the associated premiums to enhance the fixed price for a portion of the fixed price natural gas swaps primarily for 2020 listed above. Each call option has an established ceiling price. When the referenced settlement price is above the price ceiling established by these call options, 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.
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Location |
Daily Volume
(MMBtu/day) |
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Weighted Average Price |
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| 2022 |
NYMEX Henry Hub |
628,000 |
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$ |
2.90 |
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| 2023 |
NYMEX Henry Hub |
628,000 |
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$ |
2.90 |
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Location |
Daily Volume (MMBtu/day) |
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Weighted Average Floor Price |
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Weighted Average Ceiling Price |
| 2021 |
NYMEX Henry Hub |
250,000 |
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$ |
2.46 |
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$ |
2.81 |
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As of September 30, 2020, the Company had the following natural gas basis swap positions open:
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Gulfport Pays |
Gulfport Receives |
Daily Volume
(MMBtu/day) |
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Weighted Average Fixed Spread |
| Remaining 2020 |
Transco Zone 4 |
NYMEX Plus Fixed Spread |
60,000 |
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$ |
(0.05) |
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| Remaining 2020 |
Fixed Spread |
ONEOK Minus NYMEX |
10,000 |
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$ |
(0.54) |
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| Schedule of Purchase and Sale Agreement for Sale of the Company's Non-Core Assets |
See below for threshold and potential payment amounts.
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| Period |
Threshold(1)
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Payment to be received(2)
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| July 2020 - June 2021 |
Greater than or equal to $60.65 |
$ |
150,000 |
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Between $52.62 - $60.65 |
Calculated Value(3)
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Less than or equal to $52.62 |
$ |
— |
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| (1) |
Based on the "WTI NYMEX + Argus LLS Differential," as published by Argus Media. |
| (2) |
Payment will be assessed monthly from July 2020 through June 2021. If threshold is met, payment shall be received within five business days after the end of each calendar month. |
| (3) |
If average daily price, as defined in (1), is greater than $52.62 but less than $60.65, payment received will be $150,000 multiplied by a fraction, the numerator of which is the amount determined by subtracting $52.62 from such average daily price, and the denominator of which is $8.03. |
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| Schedule of Derivative Instruments in Balance Sheet |
The following table presents the fair value of the Company’s derivative instruments on a gross basis at September 30, 2020 and December 31, 2019:
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September 30, 2020 |
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December 31, 2019 |
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(In thousands) |
| Commodity Contracts: |
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| Short-term derivative asset |
$ |
6,245 |
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$ |
125,383 |
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| Long-term derivative asset |
1,098 |
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— |
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| Short-term derivative liability |
(24,164) |
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(303) |
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| Long-term derivative liability |
(63,803) |
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(53,135) |
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| Total commodity derivative position |
$ |
(80,624) |
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$ |
71,945 |
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| Contingent consideration arrangement: |
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| Short-term derivative asset |
$ |
— |
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$ |
818 |
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| Long-term derivative asset |
— |
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563 |
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| Total contingent consideration derivative position |
$ |
— |
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$ |
1,381 |
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| Total net (liability) asset derivative position |
$ |
(80,624) |
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$ |
73,326 |
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| Schedule of Net Gain (Loss) on Derivatives |
The following table presents the gain and loss recognized in net gain on natural gas, oil and NGL derivatives in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019.
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Net (loss) gain on derivative instruments |
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Three months ended September 30, |
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Nine months ended September 30, |
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2020 |
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2019 |
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2020 |
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2019 |
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(In thousands) |
| Natural gas derivatives |
$ |
(52,648) |
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$ |
11,731 |
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$ |
28,894 |
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$ |
147,774 |
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| Oil derivatives |
(782) |
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12,736 |
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44,155 |
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24,153 |
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| NGL derivatives |
(393) |
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3,641 |
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(254) |
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7,276 |
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| Contingent consideration arrangement |
— |
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(1,034) |
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(1,381) |
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(1,034) |
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| Total |
$ |
(53,823) |
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$ |
27,074 |
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$ |
71,414 |
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$ |
178,169 |
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| Schedule of Recognized Derivative Assets |
The following table presents 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.
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As of September 30, 2020 |
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Gross Assets (Liabilities) |
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Gross Amounts |
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Presented in the |
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Subject to Master |
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Net |
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Consolidated Balance Sheets |
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Netting Agreements |
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Amount |
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(In thousands) |
| Derivative assets |
$ |
7,343 |
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$ |
(6,948) |
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$ |
395 |
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| Derivative liabilities |
$ |
(87,967) |
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$ |
6,948 |
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$ |
(81,019) |
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As of December 31, 2019 |
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Gross Assets (Liabilities) |
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Gross Amounts |
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Presented in the |
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Subject to Master |
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Net |
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Consolidated Balance Sheets |
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Netting Agreements |
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Amount |
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(In thousands) |
| Derivative assets |
$ |
126,764 |
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$ |
(53,438) |
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$ |
73,326 |
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| Derivative liabilities |
$ |
(53,438) |
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$ |
53,438 |
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$ |
— |
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| Schedule of Recognized Derivative Liabilities |
The following table presents 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.
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As of September 30, 2020 |
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Gross Assets (Liabilities) |
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Gross Amounts |
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Presented in the |
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Subject to Master |
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Net |
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Consolidated Balance Sheets |
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Netting Agreements |
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Amount |
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(In thousands) |
| Derivative assets |
$ |
7,343 |
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$ |
(6,948) |
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$ |
395 |
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| Derivative liabilities |
$ |
(87,967) |
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$ |
6,948 |
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$ |
(81,019) |
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As of December 31, 2019 |
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Gross Assets (Liabilities) |
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Gross Amounts |
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Presented in the |
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Subject to Master |
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Net |
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Consolidated Balance Sheets |
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Netting Agreements |
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Amount |
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(In thousands) |
| Derivative assets |
$ |
126,764 |
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$ |
(53,438) |
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$ |
73,326 |
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| Derivative liabilities |
$ |
(53,438) |
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$ |
53,438 |
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$ |
— |
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