v3.26.1
Derivative and Hedging Activities
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative and Hedging Activities
11.Derivative and Hedging Activities
We use derivative instruments to reduce our exposure to fluctuations in future commodity prices and to protect our expected operating cash flow against significant market movements or volatility. These commodity contract derivative financial instruments primarily includes financial price instruments, collars, call options and basis protection instruments. All of our commodity contract derivative instruments are net settled based on the difference between the fixed-price payment and the floating-price payment, resulting in a net amount due to or from the counterparty. Additionally, we enter into exchange traded derivative instruments with brokers or the clearing houses of certain exchanges. We have elected not to designate any of our derivative instruments for hedge accounting treatment.

The estimated fair values of our natural gas, oil and NGL derivative instrument assets (liabilities) as of March 31, 2026 and December 31, 2025 are provided below: 
March 31, 2026December 31, 2025
Notional Volume(a)
Fair Value
Notional Volume(a)
Fair Value
Natural gas (Bcf):
Fixed-price instruments869 $264 756 $128 
Two-way collars858 252 1,143 212 
Three-way collars680 95 175 32 
Call options (sold)55 (4)73 (1)
Basis protection instruments261 (31)337 (66)
Total natural gas2,723 576 2,484 305 
Oil (MMBbls):
Two-way collars2 $(2)— $— 
Three-way collars— — — 2 
Total oil2 (2)— 2 
NGLs (MMBbls):
Fixed-price instruments4 $(18)— $— 
Total NGL4 (18)— — 
Total estimated fair value$556 $307 
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(a)Notional volumes are presented net of short and long positions.
The following table presents the fair value and location of each classification of derivative instrument included in the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025 on a gross basis and after same-counterparty netting:
Gross Fair Value(a)
Amounts Netted in the Condensed Consolidated Balance SheetsNet Fair Value Presented in the Condensed Consolidated Balance Sheets
As of March 31, 2026
Commodity Contracts:
Short-term derivative asset$661 $(232)$429 
Long-term derivative asset142 (15)127 
Short-term derivative liability(232)232 — 
Long-term derivative liability(15)15 — 
Total derivatives$556 $— $556 
As of December 31, 2025
Commodity Contracts:
Short-term derivative asset$340 $(76)$264 
Long-term derivative asset66 (19)47 
Short-term derivative liability(79)76 (3)
Long-term derivative liability(20)19 (1)
Total derivatives$307 $— $307 
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(a)These financial assets (liabilities) are measured at fair value on a recurring basis utilizing significant other observable inputs; see further discussion on fair value measurements below.
Fair Value
The fair value of our commodity derivatives is based on third-party pricing models, which utilize inputs that are either readily available in the public market, such as natural gas, oil and NGL forward curves and discount rates, or can be corroborated from active markets or broker quotes, and, as such, are classified as Level 2. These values are compared to the values given by our counterparties for reasonableness. Derivatives are also subject to the risk that either party to a contract will be unable to meet its obligations. We factor non-performance risk into the valuation of our derivatives using current published credit default swap rates. To date, this has not had a material impact on the values of our derivatives.
Credit Risk Considerations
Our derivative instruments expose us to our counterparties’ credit risk. To mitigate this risk, we only enter into commodity contracts derivatives with counterparties that are highly rated or deemed by us to have acceptable credit strength and deemed by management to be competent and competitive market-makers, and we attempt to limit our exposure to non-performance by any single counterparty. As of March 31, 2026, our commodity contracts derivative instruments were spread among 21 counterparties.
Hedging Arrangements
Certain of our hedging arrangements are with counterparties that are also Lenders (or affiliates of Lenders) under our Credit Facility. We do not expect to post cash or letters of credit to secure our obligations under these hedging arrangements while we have our investment grade ratings. The obligations under these contracts must be secured by cash or letters of credit to the extent that any mark-to-market amounts exceed defined thresholds. As of March 31, 2026, we did not have any cash or letters of credit posted as collateral for our commodity derivatives. We maintain accounts with brokers or the clearing houses of certain exchanges to facilitate financial derivative transactions. Based on the value of the positions in these accounts and associated margin requirements, we may
be required to deposit cash into these accounts. As of March 31, 2026, the cash held within these broker margin accounts was $17 million, and is included within other current assets within our condensed consolidated balance sheets.