6 unchanged sentences
Our primary market risk exposure is in the price we receive for our natural gas, NGLs and oil production.
−Removed: Pricing was primarily driven by spot regional market prices applicable to our U.S.
+Added: Pricing is primarily driven by spot regional market prices applicable to our U.S.
natural gas production and the prevailing worldwide price for oil.
1 unchanged sentence
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 may 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.
+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 three months ended March 31, 2023 and 2024, 2% and 1%, respectively, of our production was hedged through fixed price commodity swaps.
+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.
+Added: These contracts are financial instruments and do not require or allow for physical delivery of the hedged commodity.
+Added: As of March 31, 2024, our commodity derivatives included fixed swaps, basis differential swaps, call options and embedded put options at index-based pricing for a portion of our production.
+Added: See Note 11—Derivative Instruments to our unaudited condensed consolidated financial statements for more information.
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.
1 unchanged sentence
These contracts are financial instruments and do not require or allow for physical delivery of the hedged commodity.
−Removed: As of September 30, 2023, we had in place natural gas swaps and basis swaps, as well as a call option and embedded put option covering portions of our projected production.
−Removed: Substantially all of our derivative arrangements terminate by December 31, 2023.
−Removed: Our commodity hedge position as of September 30, 2023 is summarized in Note 11—Derivative Instruments to our unaudited condensed consolidated financial statements.
Under the Credit Facility, we are permitted to hedge up to 75% of our projected production for the next 60 months.
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 nine months ended September 30, 2023, our revenues would have decreased by $112 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 September 30, 2023.
+Added: Based on our production and our derivative instruments that settled during the three months ended March 31, 2024, our revenues would have decreased by $38 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 March 31, 2024.
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.
−Removed: 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).”
+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.
+Added: 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.”
Mark-to-market adjustments of derivative instruments cause earnings volatility but have no cash flow impact relative to changes in market prices until the derivative contracts are settled or monetized prior to settlement.
1 unchanged sentence
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, 2022 and
−Removed: September 30, 2023, the estimated fair value of our commodity derivative instruments was a net liability $431 million and $75 million, respectively, comprised of current and noncurrent assets and liabilities.
−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 three and nine months ended September 30, 2022, 31% and 34%, respectively, of our production was hedged through fixed price commodity swaps as compared to 1% for each of the three and nine months ended September 30, 2023.
−Removed: Assuming our 2023 production is the same as our production in 2022, 1% of our production for 2023 will be hedged through fixed price commodity swaps.
+Added: As of December 31, 2023 and March 31, 2024, the estimated fair value of our commodity derivative instruments was a net liability $37 million and $29 million, respectively, comprised of current and noncurrent assets and liabilities.
Counterparty and Customer Credit Risk
Our principal exposures to credit risk are through receivables resulting from the following:
−Removed: the sale of our natural gas, NGLs and oil production ($353 million as of September 30, 2023), which we market to energy companies, end users and refineries, and commodity derivative contracts ($9 million as of September 30, 2023).
+Added: the sale of our natural gas, NGLs and oil production ($326 million as of March 31, 2024), which we market to energy companies, end users and refineries, and commodity derivative contracts ($11 million as of March 31, 2024).
We are subject to credit risk due to the concentration of our receivables from several significant customers for sales of natural gas, NGLs and oil.
1 unchanged sentence
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 three different counterparties, two of which are lenders under the Credit Facility.
−Removed: As of September 30, 2023, substantially all of our derivative assets were with one counterparty that is not affiliated with our Credit Facility.
−Removed: 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 September 30, 2023 for each of the European and American banks.
−Removed: We believe that all of our counterparties currently are acceptable credit risks.
+Added: We have commodity hedges in place with four different counterparties, three of which are lenders under the Credit Facility.
+Added: As of March 31, 2024, we did not have any derivative assets with bank counterparties under our Credit Facility.
+Added: 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 March 31, 2024.
+Added: We believe that all of the counterparties to our derivative instruments are acceptable credit risks as of March 31, 2024.
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.
−Removed: As of September 30, 2023, we did not have any past-due receivables from, or payables to, any of the counterparties to our derivative contracts.
+Added: As of March 31, 2024, we did not have any past-due receivables from, or payables to, any of the counterparties to our derivative contracts.
Interest Rate Risks
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 nine months ended September 30, 2023 was 7.46%.
−Removed: We estimate that a 1.0% increase in the applicable average interest rates for the nine months ended September 30, 2023 would have resulted in an estimated $2.2 million increase in interest expense.
+Added: The average annualized interest rate incurred on the Credit Facility for borrowings during the three months ended March 31, 2024 was 7.8%.
+Added: We estimate that a 1.0% increase in the applicable average interest rates for the three months ended March 31, 2024 would have resulted in an estimated $1.0 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.