QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: Our financial condition, results of operations and capital resources are highly dependent upon the prevailing market prices of oil and natural gas.
−Removed: These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond our control.
−Removed: Factors influencing oil and natural gas prices include the level of global demand for oil, the foreign supply of oil and natural gas, the establishment of and compliance with production quotas by oil exporting countries, weather conditions which determine the demand for natural gas, the price and availability of alternative fuels and overall economic conditions.
−Removed: It is impossible to predict future oil and natural gas prices with any degree of certainty.
−Removed: Sustained weakness in oil and natural gas prices may adversely affect our financial condition and results of operations, and may also reduce the amount of oil and natural gas reserves that we can produce economically.
−Removed: Any reduction in our oil and natural gas reserves, including reductions due to price fluctuations, can have an adverse effect on our ability to obtain capital for our exploration and development activities.
+Added: Our financial condition, results of operations and capital resources are highly dependent upon the prevailing market prices of natural gas and oil.
+Added: These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors, some of which are beyond our control.
+Added: Factors influencing oil and natural gas prices include the level of global demand for oil, the foreign supply of natural gas and oil, the establishment of and compliance with production quotas by oil exporting countries, weather conditions that determine the demand for natural gas, the price and availability of alternative fuels and overall economic conditions.
+Added: It is impossible to predict future natural gas and oil prices with any degree of certainty.
+Added: Sustained weakness in natural gas and oil prices may adversely affect our financial condition and results of operations, and may also reduce the amount of natural gas and oil reserves that we can produce economically.
+Added: Any reduction in our natural gas and oil reserves, including reductions due to price fluctuations, can have an adverse effect on our ability to obtain capital for our exploration and development activities.
Similarly, any improvements in oil and natural gas prices can have a favorable impact on our financial condition, results of operations and capital resources.
−Removed: Based on our oil and natural gas production in 2020 and taking into account any oil or natural gas price swap agreements we had in place, a $1.00 change in the price per barrel of oil would have resulted in a change in our cash flow for such period by approximately $1.4 million and a $0.10 change in the price per Mcf of natural gas would have changed our cash flow by approximately $24.4 million.
−Removed: As of December 31, 2020, we have entered into natural gas price swap agreements to hedge approximately 208.3 Bcf of our 2021 through 2022 production at an average price of $2.54 per MMBtu and natural gas swaption contracts where the counterparty has the right to exercise a call option to enter into a price swap with us on 65.7 Bcf of our 2021 through 2022 natural gas production at an average price of $2.51 per MMBtu.
−Removed: We have also entered into natural gas collars to hedge approximately 120.5 Bcf of natural gas with an average floor price of $2.46 per MMBtu and an average ceiling price of $2.99 per MMBtu.
−Removed: We also have oil collars to hedge 182,500 Bbls with an average floor price of $40.00 per barrel and an average ceiling price of $45.00 per barrel.
+Added: As of December 31, 2021, we had natural gas price swap agreements to hedge approximately 121.3 Bcf of our 2022 through 2023 production at an average price of $2.67 per MMBtu.
+Added: We have also entered into natural gas collars to hedge approximately 147.7 Bcf of our natural gas production with an average floor price of $2.63 per MMBtu and an average ceiling price of $3.92 per MMBtu.
None of our derivative contracts have margin requirements or collateral provisions that could require funding prior to the scheduled cash settlement date.
−Removed: The change in the fair value of our natural gas swaps that would result from a 10% change in commodities prices at December 31, 2020 would be $43.4 million.
−Removed: Such a change in fair value could be a gain or a loss depending on whether prices increase or decrease.
−Removed: Since December 31, 2020, the Company added natural gas collar contracts to hedge 32.9 Bcf of natural gas production from July 2021 to December 2022 at an average ceiling price of $3.20 per MMBtu and an average floor price of $2.50 per MMBtu and added natural gas swap contracts to hedge 7.3 Bcf of natural gas production from January 2022 to December 2022 at an average price of $2.70 per MMBtu.
−Removed: also added oil collar contracts to hedge 349,500 Bbls of oil production from January 2021 to December 2021 at an average ceiling price of $54.96 per Bbl and an average floor price of $42.39 per Bbl.
+Added: An increase of 10% in the market price of natural gas on December 31, 2021 would decrease the fair value of our natural gas swaps and collars by approximately $64.0 million.
+Added: A decrease of 10% in the market price of natural gas on December 31, 2021 would increase the fair value of our natural gas swaps and collars by approximately $61.4 million.
+Added: The impact of hypothetical changes in market prices of natural gas on our natural gas derivative financial instruments does not include the offsetting impact that the same hypothetical changes in market prices of natural gas may have on our physical sales of natural gas.
+Added: Since our outstanding natural gas derivative financial instruments hedge only a portion of our forecasted physical gas production, a positive or negative impact to the fair value of our natural gas derivative financial instruments would be partially offset by our physical sales of natural gas.
Interest Rates
At December 31, 2021, we had approximately $2.7 billion principal amount of long-term debt outstanding.
−Removed: The 2026 Notes, of which $1.65 billion was outstanding at December 31, 2020, bear interest at a fixed rate of 9¾%.
−Removed: The 2025 Notes, of which $619.4 million was outstanding at December 31, 2020 bear interest at a fixed rate of 7½%.
−Removed: The fair market value of the 2026 Notes and 2025 Notes as of December 31, 2020 was $1,769.6 million and $628.7 million, respectively, based on the market price of approximately 107.3% and 101.5% of the face amount of such debt.
+Added: $965.0 million of our long-term debt bear interest at a fixed rate of 5.875%, $1.25 billion of our long-term debt bear interest at a fixed rate of 6.75% and $244.4 million of our long-term debt bear interest at a fixed rate of 7.50%.
+Added: The fair market value of the Senior Notes due 2030, Senior Notes due 2029 and Senior Notes due 2025 as of December 31, 2021 were $989.1 million, $1.3 billion and $248.1 million, respectively, based on the market price of approximately 102.5%, 107.0% and 101.5% of the face amount of such debt.
At December 31, 2021, we had $235.0 million outstanding under our bank credit facility, which is subject to variable rates of interest that are tied to LIBOR or the corporate base rate, at our option.
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