DERIVATIVES

9 Months Ended

Sep. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

We enter into commodity derivative contracts to help protect our cash flows, margins and capital program from the volatility of commodity prices. We primarily hedge a portion of our forecasted oil production and purchase natural gas used in our steamflood operations. We did not have any derivative instruments designated as accounting hedges as of and for the three and nine months ended September 30, 2025 and 2024. Unless otherwise indicated, we use the term "hedge" to describe derivative instruments that are designed to implement our hedging strategy.

Summary of Derivative Contracts

We held the following Brent-based contracts as of September 30, 2025:


	Q4 2025		Q1 2026		Q2 2026		Q3 2026		Q4 2026		2027		2028
Sold Calls
Barrels per day	29,000		35,000		35,000		35,000		35,000		—		—
Weighted-average price per barrel	$	87.13	$	83.86	$	83.86	$	83.86	$	83.86	$	—	$	—

Purchased Puts
Barrels per day	29,000		35,000		35,000		35,000		35,000		—		—
Weighted-average price per barrel	$	61.72	$	61.14	$	61.14	$	61.14	$	61.14	$	—	$	—

Swaps
Barrels per day	43,376		36,444		29,399		28,369		27,703		39,382		1,697
Weighted-average price per barrel	$	69.86	$	68.98	$	68.03	$	67.51	$	66.99	$	64.80	$	65.00

At September 30, 2025, we also held the following swaps to hedge purchased natural gas used in our operations as shown in the table below.


	Q4 2025		Q1 2026		Q2 2026		Q3 2026		Q4 2026		2027		2028

SoCal Border
MMBtu per day	22,408		20,350		13,250		10,750		9,908		—		—
Weighted-average price per MMBtu	$	3.53	$	5.18	$	4.82	$	4.83	$	4.84	$	—	$	—

NWPL Rockies
MMBtu per day	51,750		51,750		51,750		51,750		51,750		38,546		1,576
Weighted-average price per MMBtu	$	4.22	$	4.67	$	3.64	$	3.63	$	4.22	$	4.08	$	3.95

In the three and nine months ended September 30, 2025 and 2024, we also had a limited number of derivative contracts related to our natural gas marketing activities that were intended to lock in locational price spreads. These derivative contracts were not significant to our results of operations or financial statements taken as a whole.

The outcomes of the derivative positions shown in the tables above are as follows:

•Sold calls – we make settlement payments for prices above the indicated weighted-average price per barrel.

•Purchased puts – we receive settlement payments for prices below the indicated weighted-average price per barrel.

•Swaps – with respect to swaps for crude oil, we make settlement payments for prices above the indicated weighted-average price per barrel and receive settlement payments for prices below the indicated weighted-average price per barrel. With respect to swaps for purchased natural gas, we receive settlement payments for prices above the indicated weighted-average price per MMBtu and we make settlement payments for prices below the weighted-average price per MMBtu.

Fair Value of Derivatives

Derivative instruments not designated as hedging instruments are required to be recorded on the balance sheet at fair value. We report gains and losses on our derivative contracts related to our oil production and our marketing activities in operating revenue on our consolidated statements of operations as shown in the table below:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

	(in millions)				(in millions)
Non-cash commodity derivative (loss) gain	$	(32)	$	373	$	130	$	325
Net proceeds (settlements) and premium amortization	9		(17)		10		(35)
Net (loss) gain from commodity derivatives	$	(23)	$	356	$	140	$	290

We report gains and losses on our commodity derivative contracts related to purchases of natural gas in operating expenses on our condensed consolidated statements of operations as shown in the table below:


	Three months ended September 30,				Nine months ended September 30,
	2025		2024		2025		2024

	(in millions)				(in millions)
Non-cash loss (gain) on natural gas purchase derivatives	$	24	$	(3)	$	2	$	(7)
Settlements	3		12		22		18
Net loss on natural gas purchase derivatives	$	27	$	9	$	24	$	11

Our derivative contracts are measured at fair value using industry-standard models with various inputs, including quoted forward prices, and are classified as Level 2 in the required fair value hierarchy for the periods presented. The following tables present the fair values of our outstanding commodity derivatives as of September 30, 2025 and December 31, 2024.


September 30, 2025
Classification	Gross Amounts at Fair Value		Netting		Net Fair Value

	(in millions)
Other current assets, net	$	87	$	(10)	$	77
Other noncurrent assets	33		(7)		26

Current liabilities	(27)		10		(17)
Noncurrent liabilities	(22)		7		(15)
	$	71	$	—	$	71


December 31, 2024
Classification	Gross Amounts at Fair Value		Netting		Net Fair Value

	(in millions)
Other current assets, net	$	26	$	(12)	$	14
Other noncurrent assets	32		(16)		16

Current liabilities	(62)		12		(50)
Noncurrent liabilities	(61)		16		(45)
	$	(65)	$	—	$	(65)

- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

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