v3.25.3
FAIR VALUE MEASUREMENTS
 9 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Assets and Liabilities Measured at Fair Value on a Recurring Basis

As discussed in Note 11—Fair Value Measurements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, certain assets and liabilities are reported at fair value on a recurring basis on the Company’s condensed consolidated balance sheets, including the Company’s commodity derivative instruments and the 2026 WTI Contingent Liability.
The fair values of the Company’s derivative contracts are measured internally using established commodity futures price strips for the underlying commodity provided by a reputable third-party, the contracted notional volumes and time to maturity. The net amounts are classified as current or noncurrent based on their anticipated settlement dates. The fair value of the 2026 WTI Contingent Liability is estimated using observable market data and a Monte Carlo pricing model, which are considered Level 2 inputs in the fair value hierarchy.

The following tables provide (i) fair value measurement information for financial assets and liabilities measured at fair value on a recurring basis, (ii) the gross amounts of recognized derivative assets and liabilities, (iii) the amounts offset under master netting arrangements with counterparties, and (iv) the resulting net amounts presented in the Company’s condensed consolidated balance sheets as of September 30, 2025, and December 31, 2024:

As of September 30, 2025
Level 1Level 2Level 3Total Gross Fair ValueGross Amounts Offset in Balance SheetNet Fair Value Presented in Balance Sheet
(In millions)
Assets:
Current:
Derivative instruments$— $35 $— $35 $(13)$22 
Non-current:
Derivative instruments$— $2 $— $2 $(2)$— 
Liabilities:
Current:
Derivative instruments$— $13 $— $13 $(13)$— 
2026 WTI Contingent Liability$— $27 $— $27 $— $27 
Non-current:
Derivative instruments$— $13 $— $13 $(2)$11 

As of December 31, 2024
Level 1Level 2Level 3Total Gross Fair ValueGross Amounts Offset in Balance SheetNet Fair Value Presented in Balance Sheet
(In millions)
Assets:
Current:
Derivative instruments$— $24 $— $24 $(6)$18 
Liabilities:
Current:
Derivative instruments$— $8 $— $8 $(6)$2 
Non-current:
2026 WTI Contingent Liability$— $30 $— $30 $— $30 
Assets and Liabilities Not Recorded at Fair Value

The following table provides the fair value of financial instruments that are not recorded at fair value in the condensed consolidated balance sheets:

September 30, 2025December 31, 2024
Carrying ValueFair ValueCarrying ValueFair Value
(In millions)
Debt
$2,621 $2,664 $1,083 $1,105 

The fair values of the Operating Company’s current or previous revolving credit facility, as applicable, and the Term Loan approximate their carrying values based on borrowing rates available to the Company for bank loans with similar terms and maturities and are classified as Level 2 in the fair value hierarchy. The fair values of the Notes and Guaranteed Senior Notes were determined using the quoted market price at each period end, a Level 1 classification in the fair value hierarchy.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis in certain circumstances. These assets and liabilities can include mineral and royalty interests acquired in asset acquisitions and subsequent write-downs of the Company’s proved oil and natural gas interests to fair value when they are impaired or held for sale.

Fair Value of Financial Assets

The Company has other financial instruments consisting of cash and cash equivalents, royalty income receivables, income tax receivables, prepaid expenses and other current assets, accounts payable, accrued liabilities and income taxes payable. The carrying values of these instruments approximate their fair values because of the short-term nature of the instruments.