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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended
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Mar. 31, 2013
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company periodically enters into commodity derivative instruments to hedge its exposure to price fluctuations related to its natural gas and crude oil production. The Company’s credit agreement restricts the ability of the Company to enter into commodity hedges other than to hedge or mitigate risks to which the Company has actual or projected exposure or as permitted under the Company’s risk management policies and not subjecting the Company to material speculative risks. All of the Company’s derivatives are used for risk management purposes and are not held for trading purposes. As of March 31, 2013, the Company had the following outstanding commodity derivatives:
Commodity and Derivative Type |  | Weighted-Average Contract Price |  | Volume |  | Contract Period |
Derivatives Designated as Hedging Instruments |  |  |  |  |  |  |
Natural gas collars |  | $3.09 Floor / $4.12 Ceiling per Mcf |  | 26.7 Bcf |  | Apr. 2013 - Dec. 2013 |
Natural gas collars |  | $3.35 Floor / $4.01 Ceiling per Mcf |  | 26.7 Bcf |  | Apr. 2013 - Dec. 2013 |
Natural gas collars |  | $3.40 Floor / $4.12 Ceiling per Mcf |  | 13.4 Bcf |  | Apr. 2013 - Dec. 2013 |
Natural gas collars |  | $3.60 Floor / $3.99 Ceiling per Mcf |  | 13.4 Bcf |  | Apr. 2013 - Dec. 2013 |
Natural gas collars |  | $3.60 Floor / $4.17 Ceiling per Mcf |  | 13.4 Bcf |  | Apr. 2013 - Dec. 2013 |
Natural gas collars |  | $3.76 Floor / $4.16 Ceiling per Mcf |  | 13.4 Bcf |  | Apr. 2013 - Dec. 2013 |
Natural gas collars |  | $3.86 Floor / $4.34 Ceiling per Mcf |  | 13.4 Bcf |  | Apr. 2013 - Dec. 2013 |
Natural gas collars |  | $3.96 Floor / $4.41 Ceiling per Mcf |  | 13.4 Bcf |  | Apr. 2013 - Dec. 2013 |
Natural gas collars |  | $5.15 Floor / $6.20 Ceiling per Mcf |  | 13.4 Bcf |  | Apr. 2013 - Dec. 2013 |
Natural gas collars |  | $3.60 Floor / $4.58 Ceiling per Mcf |  | 31.1 Bcf |  | Apr. 2013 - Dec. 2014 |
Natural gas collars |  | $3.96 Floor / $4.56 Ceiling per Mcf |  | 31.1 Bcf |  | Apr. 2013 - Dec. 2014 |
Natural gas collars |  | $3.86 Floor / $4.66 Ceiling per Mcf |  | 17.7 Bcf |  | Jan. 2014 - Dec. 2014 |
Natural gas collars |  | $4.12 Floor / $4.64 Ceiling per Mcf |  | 35.5 Bcf |  | Jan. 2014 - Dec. 2014 |
Crude oil swaps |  | $101.90 per Bbl |  | 825 Mbbl |  | Apr. 2013 - Dec. 2013 |
The changes in the fair value of derivatives designated as hedges that are effective are recorded to accumulated other comprehensive income / (loss) in stockholders’ equity in the Condensed Consolidated Balance Sheet. The ineffective portion of the change in fair value of derivatives designated as hedges, if any, and the change in fair value of derivatives not designated as hedges are recorded currently in earnings as a component of natural gas revenue and crude oil and condensate revenue in the Condensed Consolidated Statement of Operations. The following disclosures reflect the impact of derivative instruments on the Company’s condensed consolidated financial statements: Effect of Derivative Instruments on the Condensed Consolidated Balance Sheet
|  |  |  | Fair Values of Derivative Instruments |
|  |  |  | Derivative Assets |  | Derivative Liabilities |
(In thousands) |  |  |  | March 31, 2013 |  | December 31, 2012 |  | March 31, 2013 |  | December 31, 2012 |
Derivatives Designated as Hedging Instruments |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | Derivative instruments (current assets) |  | $ | 4,215 |  | $ | 50,824 |  | $ | — |  | $ | — |
Commodity contracts |  | Derivative instruments (current liabilities) |  | — |  | — |  | 26,100 |  | 192 |
Commodity contracts |  | Derivative instruments (non-current liabilities) |  | — |  | — |  | 3,799 |  | — |
|  |  |  | $ | 4,215 |  | $ | 50,824 |  | $ | 29,899 |  | $ | 192 |
At March 31, 2013 and December 31, 2012, unrealized losses of $25.7 million ($15.6 million, net of tax) and unrealized gains of $50.6 million ($30.7 million, net of tax), respectively, were recorded in accumulated other comprehensive income / (loss) in stockholder’s equity in the Condensed Consolidated Balance Sheet. Based upon estimates at March 31, 2013, the Company expects to reclassify $13.3 million in after-tax income associated with its commodity hedges from accumulated other comprehensive income / (loss) to the Condensed Consolidated Statement of Operations over the next 12 months. Offsetting of Derivative Assets and Liabilities in the Condensed Consolidated Balance Sheet
(In thousands) |  | March 31, 2013 |  | December 31, 2012 |
Derivative Assets |  |  |  |  |
Gross amounts of recognized assets |  | $ | 18,353 |  | $ | 54,454 |
Gross amounts offset in the statement of financial position |  | (14,138 | ) | (3,630 | )
Net amounts of assets presented in the statement of financial position |  | 4,215 |  | 50,824 |
Gross amounts of financial instruments not offset in the statement of financial position |  | 832 |  | 1,892 |
Net amount |  | $ | 5,047 |  | $ | 52,716 |
Derivative Liabilities |  |  |  |  |
Gross amounts of recognized liabilities |  | $ | 44,037 |  | $ | 3,822 |
Gross amounts offset in the statement of financial position |  | (14,138 | ) | (3,630 | )
Net amounts of liabilities presented in the statement of financial position |  | 29,899 |  | 192 |
Gross amounts of financial instruments not offset in the statement of financial position |  | — |  | — |
Net amount |  | $ | 29,899 |  | $ | 192 |
Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations
Derivatives Designated |  | Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion) |  | Location of Gain (Loss) Reclassified from Accumulated OCI into |  | Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |
as Hedging Instruments |  | Three Months Ended March 31, |  | Income |  | Three Months Ended March 31, |
(In thousands) |  | 2013 |  | 2012 |  | (In thousands) |  | 2013 |  | 2012 |
Commodity Contracts |  | $ | (60,946 | ) | $ | 70,728 |  | Natural gas revenues |  | $ | 13,328 |  | $ | 56,996 |
|  |  |  |  |  | Crude oil and condensate revenues |  | 2,042 |  | (1,326 | )
|  |  |  |  |  |  |  | $ | 15,370 |  | $ | 55,670 |
For the three months ended March 31, 2013 and 2012, respectively, there was no ineffectiveness recorded in our Condensed Consolidated Statement of Operations related to our derivative instruments.
Derivatives Not Designated as |  | Location of Gain (Loss) |  | Three Months Ended |
Hedging Instruments |  | Recognized in Income on |  | March 31, |
(In thousands) |  | Derivatives |  | 2013 |  | 2012 |
Commodity Contracts |  | Natural gas revenues |  | $ | — |  | $ | 42 |
Additional Disclosures about Derivative Instruments and Hedging Activities The use of derivative instruments involves the risk that the counterparties will be unable to meet their obligation under the agreement. The Company enters into derivative contracts with multiple counterparties in order to limit its exposure to individual counterparties. The Company also has netting arrangements with each of its counterparties that allow it to offset assets and liabilities from separate derivative contracts with that counterparty. Certain counterparties to the Company’s derivative instruments are also lenders under its credit facility. The Company’s credit facility and derivative instruments contain certain cross default and acceleration provisions that may require immediate payment of its derivative liability in certain situations.

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- Definition The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80784-113994 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624171-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624181-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708775-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579245-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41641-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579240-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41638-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41635-113959 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 44 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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