Quantitative and Qualitative Disclosures About Market Risk
−Removed: This discussion provides information about the financial instruments we have historically used to manage commodity prices.
−Removed: All contracts were settled in cash and did not require the actual delivery of a commodity at settlement.
+Added: This discussion provides information about the financial instruments we use to manage commodity prices.
+Added: All contracts are settled in cash and do not require the actual delivery of a commodity at settlement.
Additionally, our exposure to credit risk and interest rate risk is also discussed.
1 unchanged sentence
Our most significant market risk relates to the prices we receive for our oil, natural gas and NGLs.
−Removed: Due to the historical price volatility of these commodities, from time to time, depending upon our view of opportunities under the then-prevailing current market conditions, we have historically entered into commodity derivative contracts for a portion of our anticipated production volumes for the purpose of reducing variability of oil and natural gas prices we receive.
−Removed: We have used, and may use, a variety of commodity-based derivative contracts, including fixed price swaps, basis swaps and collars.
−Removed: At June 30, 2021, we had no open commodity derivative contracts.
−Removed: Because we historically have not designated any of our derivative contracts as hedges for accounting purposes, changes in the fair value of our derivative contracts were recognized as gains and losses in current period earnings.
+Added: Due to the historical price volatility of these commodities, from time to time, depending upon our view of opportunities under the then-prevailing current market conditions, we enter into commodity derivative contracts for a portion of our anticipated production volumes for the purpose of reducing the impact of the variability of oil and natural gas prices.
+Added: We may use a variety of commodity-based derivative contracts, including fixed price swaps, basis swaps and collars.
+Added: At September 30, 2021, the Company's open derivative contracts consisted of natural gas and NGL commodity derivative contracts under which we will receive a fixed price for the contract and pay a floating market price to the counterparty over a specified period for a contracted volume.
+Added: These commodity derivative contracts consisted of the following:
+Added: Notional Units Weighted Average Fixed Price per Unit
+Added: NGL Price Swaps:
+Added: October 2021 - February 2022 2,605,000 Gallons $ 1.20
+Added: Natural Gas Price Swaps:
+Added: October 2021 - February 2022 1,800,000 MMBtu $ 4.07
+Added: Because we have not designated any of our derivative contracts as hedges for accounting purposes, changes in the fair value of our derivative contracts were recognized as gains and losses in current period earnings.
As a result, and when applicable, current period earnings could have been significantly affected by changes in the fair value of our commodity derivative contracts.
Changes in fair value were principally measured based on a comparison of future prices to the contract price at the end of the period.
−Removed: The following table summarizes derivative activity for the three and six-month periods ended June 30, 2021, and 2020 (in thousands):
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: The following table summarizes derivative activity for the three-and nine-month periods ended September 30, 2021, and 2020 (in thousands):
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(Gain) loss on commodity derivative contracts $ 4,129 $ 5,299 $ 4,129 $ (7,168)
−Removed: Cash received on settlements $ — $ 6,490 $ — $ 10,577
+Added: Cash received (paid) on settlements $ — $ 619 $ — $ 11,197
See “Note 3 - Derivatives” to the accompanying unaudited condensed consolidated financial statements included in this Quarterly Report for additional information regarding our commodity derivatives.
−Removed: As applicable, we were exposed to credit risk related to counterparties to our derivative financial contracts.
+Added: As applicable, we are exposed to credit risk related to counterparties to our derivative financial contracts.
All of our derivative transactions have been carried out in the over-the-counter market.
3 unchanged sentences
Our derivative contracts have historically been with multiple counterparties to minimize exposure to any individual counterparty, and in addition our counterparties have been large financial institutions.
−Removed: We did not require collateral or other security from counterparties to support derivative instruments.
−Removed: We historically had master netting agreements with each of our derivative contract counterparties, which allowed us to net our derivative assets and liabilities by commodity type with the same counterparty.
−Removed: As a result of the netting provisions, our maximum amount of loss under derivative transactions due to credit risk was limited to the net amounts due from the counterparties under the commodity derivative contracts.
−Removed: Therefore, we were not required to post additional collateral under our commodity derivative contracts.
+Added: We do not require collateral or other security from counterparties to support derivative instruments.
+Added: We have master netting agreements with our derivative contract counterparties, which allows us to net our derivative assets and liabilities by commodity type with the same counterparty.
+Added: As a result of the netting provisions, our maximum amount of loss under derivative transactions due to credit risk is limited to the net amounts due from the counterparties under the commodity derivative contracts.
+Added: Therefore, we are not required to post additional collateral under our commodity derivative contracts.
We are also exposed to credit risk related to the collection of receivables from our joint interest partners for their proportionate share of expenditures made on projects we operate.
1 unchanged sentence
Interest Rate Risk.
−Removed: We are exposed to interest rate risk on our New Credit Facility.
−Removed: This variable interest rate on our New Credit Facility fluctuates, and exposes us to short-term changes in market interest rates as our interest obligations on this instrument is periodically redetermined based on prevailing market interest rates, primarily LIBOR.
−Removed: We had $20.0 million in outstanding variable rate debt as of June 30, 2021.
+Added: We are not exposed to interest rate risk as of September 30, 2021.
Tabl e of Contents
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.