Annual report pursuant to Section 13 and 15(d)

Derivative Instruments (Tables)

v3.20.4
Derivative Instruments (Tables)
 12 Months Ended
Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of open fixed price swap positions Below is a summary of the Company's open fixed price swap positions as of December 31, 2020.
Index Daily Volume (MMBtu/day) Weighted
Average Price
2021 NYMEX Henry Hub 410,000  $ 2.75 
The Company entered into costless collars based off the NYMEX Henry Hub natural gas index. Each two-way price collar has a set floor and ceiling price for the hedged production. If the applicable monthly price indices are outside of the ranges set by the floor and ceiling prices in the various collars, the Company will cash-settle the difference with the counterparty.
Index Daily Volume (MMBtu/day) Weighted Average Floor/Ceiling Price
2021 NYMEX Henry Hub 250,000 
$2.46/$2.81
2022 NYMEX Henry Hub 20,000 
$2.80/$3.40
In the third quarter of 2019, the Company sold 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 primarily for 2020. Each short call option has an established ceiling price. When the referenced settlement price is above the price ceiling established by these short 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.
Index Daily Volume (MMBtu/day) Weighted
Average Price
2022 NYMEX Henry Hub 153,000  $ 2.90 
2023 NYMEX Henry Hub 628,000  $ 2.90 
Schedule of natural gas basis swap positions As of December 31, 2020, the Company had the following natural gas basis swap positions open:
Gulfport Pays Gulfport Receives Daily Volume (MMBtu/day) Weighted Average Fixed Spread
2021 Rex Zone 3 NYMEX Plus Fixed Spread 35,000  $ (0.21)
2021 Tetco M2 NYMEX Plus Fixed Spread 60,000  $ (0.67)
Subsequent to December 31, 2020 and as of March 1, 2021, the Company entered into the following natural gas, oil, and NGL derivative contracts as it works toward fulfilling minimum hedging requirements as provided for in the RSA:
Period Type of Derivative Instrument Index
Daily Volume(1)
Weighted
Average Price
July 2021 - December 2021 Swaps NYMEX WTI 2,250  $53.07
July 2021 - December 2021 Swaps Mont Belvieu C3 3,100  $27.80
January 2022 - June 2022 Swaps Mont Belvieu C3 1,000  $27.30
April 2021 - May 2021 Basis Swaps Tetco M2 36,443  $(0.61)
February 2021 - October 2021 Basis Swaps Rex Zone 3 94,505  $(0.22)
July 2021 - December 2021 Costless Collars NYMEX Henry Hub 210,000 
$2.67/$3.15
January 2022 - March 2022 Costless Collars NYMEX Henry Hub 340,000 
 $2.82/$3.40
(1)    Volume units for gas instruments are presented as MMBtu/day while oil and NGL is presented in Bbls/day.
Schedule of purchase and sale agreement for sale of the company's non-core assets
The purchase and sale agreement for the sale of the Company's non-core assets located in the WCBB and Hackberry fields of Louisiana included a contingent consideration arrangement that entitles the Company to receive bonus payments if commodity prices exceed specified thresholds. The calculated fair value of this contingent payment arrangement was approximately $1.1 million as of the closing date of the divestiture. See below for threshold and potential payment amounts.
Period
Threshold(1)
Payment to be received(2)
January 2021 - June 2021
Greater than or equal to $60.65
 $ 150,000 
Between $52.62 - $60.65
Calculated Value(3)
Less than or equal to $52.62
 $ — 
_____________________
(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.
Schedule of derivative instruments on a gross basis The following table presents the fair value of the Company's derivative instruments on a gross basis at December 31, 2020 and 2019:
December 31,
2020 2019
(In thousands)
Commodity derivative instruments $ 27,146  $ 125,383 
Contingent consideration arrangement —  818 
Total short-term derivative instruments – asset $ 27,146  $ 126,201 
Commodity derivative instruments 322  — 
Contingent consideration arrangement —  563 
Total long-term derivative instruments – asset $ 322  $ 563 
Total short-term derivative instruments – liability $ 11,641  $ 303 
Total long-term derivative instruments – liability $ 36,604  $ 53,135 
Schedule of net gain (loss) on derivatives
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 years ended December 31, 2020, 2019, and 2018.
Net gain (loss) on derivative instruments
For the Year Ended December 31,
2020 2019 2018
(In thousands)
Natural gas derivatives $ 23,765  $ 194,450  $ (116,130)
Oil derivatives 43,510  7,035  (13,084)
NGL derivatives (603) 6,632  5,735 
Contingent consideration arrangement (1,381) 243  — 
Total $ 65,291  $ 208,360  $ (123,479)
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.
As of December 31, 2020
Derivative instruments, gross Netting adjustments Derivative instruments, net
(In thousands)
Derivative assets $ 27,468  $ (25,730) $ 1,738 
Derivative liabilities $ (48,245) $ 25,730  $ (22,515)
As of December 31, 2019
Derivative instruments, gross Netting adjustments Derivative instruments, net
(In thousands)
Derivative assets $ 126,764  $ (53,438) $ 73,326 
Derivative liabilities $ (53,438) $ 53,438  $ — 
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.
As of December 31, 2020
Derivative instruments, gross Netting adjustments Derivative instruments, net
(In thousands)
Derivative assets $ 27,468  $ (25,730) $ 1,738 
Derivative liabilities $ (48,245) $ 25,730  $ (22,515)
As of December 31, 2019
Derivative instruments, gross Netting adjustments Derivative instruments, net
(In thousands)
Derivative assets $ 126,764  $ (53,438) $ 73,326 
Derivative liabilities $ (53,438) $ 53,438  $ —