Quantitative and Qualitative Disclosures About Market Risk
−Removed: This discussion provides information about the financial instruments we used to manage commodity prices.
+Added: This discussion provides information about the financial instruments we have historically used to manage commodity prices.
All contracts were settled in cash and did not require the actual delivery of a commodity at settlement.
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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 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: Due to the historical price volatility of these commodities, from time to time, we have historically entered, 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 .
We have used, and may use, a variety of commodity-based derivative contracts, including fixed price swaps, basis swaps and collars.
−Removed: At September 30, 2022, the Company's open derivative contracts consisted of natural gas 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.
−Removed: These commodity derivative contracts consisted of the following:
−Removed: Notional Units Weighted Average Fixed Price per Unit
−Removed: Natural Gas Price Swaps:
−Removed: October 2022 - March 2023 2,088,000 MMBtu $ 8.39
−Removed: 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.
+Added: At March 31, 2023, we had no open commodity derivative contracts or obligations to enter into commodity derivative contracts.
+Added: 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.
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 nine-month periods ended September 30, 2022 and 2021 (in thousands):
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 2022 2021
+Added: The following table summarizes derivative activity for the three-month periods ended March 31, 2023 and 2022 (in thousands):
+Added: Three Months Ended March 31,
(Gain) loss on derivative contracts $ (1,447) $ 1,064
1 unchanged sentence
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 are exposed to credit risk related to counterparties to our derivative financial contracts.
+Added: As applicable, we were 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.
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The counterparties for all of our derivative transactions have had an “investment grade” credit rating.
−Removed: We have monitored the credit ratings of our derivative counterparties and considered our counterparties’ credit default risk ratings in determining the fair value of our derivative contracts.
+Added: We have historically monitored the credit ratings of our derivative counterparties and considered our counterparties’ credit default risk ratings in determining the fair value of our derivative contracts.
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 do not require collateral or other security from counterparties to support derivative instruments.
−Removed: 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.
−Removed: 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.
−Removed: Therefore, we are not required to post additional collateral under our commodity derivative contracts.
+Added: We did not require collateral or other security from counterparties to support derivative instruments.
+Added: We historically had master netting agreements with our derivative contract counterparties, which allowed 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 was limited to the net amounts due from the counterparties under the commodity derivative contracts.
+Added: Therefore, we were 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 on wells and properties we operate.
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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.