10 unchanged sentences
The prices we receive for our production depend on many factors outside of our control, including volatility in the differences between commodity prices at sales points and the applicable index price.
−Removed: To mitigate some of the potential negative impact on our cash flows caused by changes in commodity prices, we enter into financial derivative instruments for a portion of our natural gas, NGLs and oil production when management believes that favorable future prices can be secured.
−Removed: Our financial hedging activities are intended to support natural gas, NGLs and oil prices at targeted levels and to manage our exposure to natural gas, NGLs and oil price fluctuations.
−Removed: These contracts may include commodity price swaps whereby we will receive a fixed price and pay a variable market price to the contract counterparty, collars that set a floor and ceiling price for the hedged production, basis differential swaps, call options or embedded put options.
+Added: We may enter into financial derivative instruments for a portion of our natural gas, NGLs and oil production when circumstances warrant and management believes that favorable future prices can be secured in order to mitigate some of the potential negative impact on our cash flows caused by changes in commodity prices.
+Added: Due to our improved liquidity and leverage position as compared to historical levels, the percentage of our expected production that we hedge has decreased.
+Added: For the years ended December 31, 2022 and 2023, 33% and 1%, respectively, of our production was hedged through fixed price commodity swaps, and as of December 31, 2023, we had no fixed price commodity swap positions.
+Added: Our financial hedging activities may include commodity fixed price swaps, basis swaps, collars or other similar instruments related to the price risk associated with our production.
These contracts are financial instruments and do not require or allow for physical delivery of the hedged commodity.
−Removed: As of December 31, 2022, our commodity derivatives included fixed price swaps, swaptions, basis differential swaps, call options and embedded put options at index-based pricing for a portion of our production.
+Added: As of December 31, 2023, our commodity derivatives included basis differential swaps, call options and embedded put options at index-based pricing for a portion of our production.
See Note 11—Derivative Instruments to our consolidated financial statements for more information.
1 unchanged sentence
We may enter into hedge contracts with a term greater than 60 months, and for no longer than 72 months, for up to 65% of our estimated production.
−Removed: Based on our production and our fixed price swap contracts, call option and embedded put option that settled during the year ended December 31, 2022, our revenues would have decreased by approximately $81 million for each $0.10 decrease per MMBtu in natural gas prices and $1.00 decrease per Bbl in oil and NGLs prices, excluding the effects of changes in the fair value of our derivative positions which remain open as of December 31, 2022.
+Added: Based on our production and our derivative instruments that settled during the year ended December 31, 2023, our revenues would have decreased by $148 million for each $0.10 decrease per MMBtu in natural gas prices and $1.00 decrease per Bbl in oil and NGLs prices, excluding the effects of changes in the fair value of our derivative positions which remain open as of December 31, 2023.
All derivative instruments, other than those that meet the normal purchase and normal sale scope exception or other derivative scope exceptions, are recorded at fair market value in accordance with GAAP and are included in our consolidated balance sheets as assets or liabilities.
1 unchanged sentence
Because we do not designate these derivatives as accounting hedges, they do not receive hedge accounting treatment;
−Removed: therefore, all mark-to- market gains or losses, as well as cash receipts or payments on settled derivative instruments, are recognized in our statements of operations.
+Added: therefore, all mark to market gains or losses, as well as cash receipts or payments on settled derivative instruments, are recognized in our statements of operations and comprehensive income (loss).
We present total gains or losses on commodity derivatives (for both settled derivatives and derivative positions which remain open) within operating revenues as “Commodity derivative fair value gains (losses).”
2 unchanged sentences
Our cash flows are impacted when the associated derivative contracts are settled or monetized by making or receiving payments to or from the counterparty.
−Removed: As of December 31, 2021 and 2022, the estimated fair value of our commodity derivative instruments was a net liability of $727 million, and $431 million, respectively, comprised of current and noncurrent assets and current liabilities.
−Removed: By removing price volatility from a portion of our production, we have mitigated, but not eliminated, the potential negative effects of changing prices on our operating cash flows for those periods.
−Removed: While mitigating the negative effects of falling commodity
−Removed: prices, these derivative contracts also limited the benefits we received from increased commodity prices above the fixed hedge prices.
−Removed: Due to our improved liquidity and leverage position as compared to past levels, the percentage of our expected production that we hedge has decreased.
−Removed: For the years ended December 31, 2021 and 2022, approximately 70% and 33%, respectively, of our production was hedged through fixed price commodity swaps.
−Removed: Assuming our 2023 production is the same as our production in 2022, approximately 1% of our production for 2023 will be hedged through fixed price commodity swaps.
+Added: As of December 31, 2022 and 2023, the estimated fair value of our commodity derivative instruments was a net liability of $431 million, and $37 million, respectively, comprised of current and noncurrent assets and liabilities.
Counterparty and Customer Credit Risk
4 unchanged sentences
The inability or failure of our significant customers to meet their obligations to us, or their insolvency or liquidation, may adversely affect our financial results.
−Removed: In addition, by using derivative instruments that are not traded on an exchange to hedge exposures to changes in commodity prices, we expose ourselves to the credit risk of our counterparties.
+Added: In addition, we are exposed to the credit risk of our counterparties for our derivative instruments.
Credit risk is the potential failure of a counterparty to perform under the terms of a derivative contract.
2 unchanged sentences
The creditworthiness of our counterparties is subject to periodic review.
−Removed: We have commodity hedges in place with four different counterparties, two of which are lenders under the Credit Facility.
+Added: We have commodity hedges in place with three different counterparties, two of which are lenders under the Credit Facility.
As of December 31, 2023, we did not have any derivative assets with bank counterparties under our Credit Facility.
The estimated fair value of our commodity derivative assets has been risk adjusted using a discount rate based upon the counterparties’ respective published credit default swap rates (if available, or if not available, a discount rate based on the applicable Reuters bond rating) as of December 31, 2023.
−Removed: We believe that all of our counterparties currently are acceptable credit risks.
+Added: We believe that all of the counterparties to our derivative instruments are acceptable credit risks as of December 31, 2023.
Other than as provided by the Credit Facility, we are not required to provide credit support or collateral to any of our counterparties under our derivative contracts, nor are they required to provide credit support to us.
2 unchanged sentences
Our primary exposure to interest rate risk results from outstanding borrowings under the Credit Facility, which has a floating interest rate.
−Removed: The average annualized interest rate incurred on the Credit Facility for borrowings during the year ended December 31, 2022 was approximately 3.9%.
+Added: The average annualized interest rate incurred on the Credit Facility for borrowings during the year ended December 31, 2023 was 7.6%.
We estimate that a 1.0% increase in the applicable average interest rates for the year ended December 31, 2023 would have resulted in an estimated $3 million increase in interest expense.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.