XML 68 R14.htm IDEA: XBRL DOCUMENT
v2.4.0.8

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 6 Months Ended
--- | ---
Jun. 30, 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 where such derivatives do not subject 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 June 30, 2013, the Company had the following outstanding commodity derivatives:
|  |  |  |  |  |  |  | Collars |  |  |
|  |  |  |  |  |  |  | Floor |  | Ceiling |  | Swaps |
Type of Contract |  | Volume |  | Contract Period |  | Range (1) |  | Weighted Average (1) |  | Range (1) |  | Weighted Average (1) |  | (Weighted Average) (1) |
Natural gas collars |  | 8.9 |  | Bcf |  | Jul. 2013 - Dec. 2013 |  | $ | — |  | $ | 5.15 |  | $ | 6.18-$6.23 |  | $ | 6.20 |  |  |
Natural gas collars |  | 109.0 |  | Bcf |  | Jul. 2013 - Dec. 2013 |  | $ | 3.09-$4.37 |  | $ | 3.63 |  | $ | 3.98-$5.02 |  | $ | 4.27 |  |  |
Natural gas collars |  | 53.3 |  | Bcf |  | Jul. 2013 - Dec. 2014 |  | $ | 3.60-$3.96 |  | $ | 3.78 |  | $ | 4.55-$4.59 |  | $ | 4.57 |  |  |
Natural gas collars |  | 124.1 |  | Bcf |  | Jan. 2014 - Dec. 2014 |  | $ | 3.86-$4.37 |  | $ | 4.19 |  | $ | 4.63-$4.80 |  | $ | 4.70 |  |  |
Crude oil swaps |  | 552 |  | Mbbl |  | Jul. 2013 - Dec. 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 101.90 |
(1) Natural gas prices are stated per Mcf and crude oil prices are stated per barrel. 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) |  | Balance Sheet Location |  | June 30, 2013 |  | December 31, 2012 |  | June 30, 2013 |  | December 31, 2012 |
Derivatives Designated as Hedging Instruments |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | Derivative instruments (current assets) |  | $ | 69,644 |  | $ | 50,824 |  | $ | — |  | $ | — |
Commodity contracts |  | Derivative instruments (non-current assets) |  | 17,963 |  | — |  | — |  | — |
Commodity contracts |  | Accrued liabilities |  | — |  | — |  | — |  | 192 |
Commodity contracts |  | Derivative instruments (non-current liabilities) |  | — |  | — |  | — |  | — |
|  |  |  | $ | 87,607 |  | $ | 50,824 |  | $ | — |  | $ | 192 |
At June 30, 2013 and December 31, 2012, unrealized gains of $87.6 million ($53.1 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 June 30, 2013, the Company expects to reclassify $42.3 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) |  | June 30, 2013 |  | December 31, 2012 |
Derivative Assets |  |  |  |  |
Gross amounts of recognized assets |  | $ | 89,840 |  | $ | 54,454 |
Gross amounts offset in the statement of financial position |  | (2,233 | ) | (3,630 | )
Net amounts of assets presented in the statement of financial position |  | 87,607 |  | 50,824 |
Gross amounts of financial instruments not offset in the statement of financial position |  | 549 |  | 1,892 |
Net amount |  | $ | 88,156 |  | $ | 52,716 |
Derivative Liabilities |  |  |  |  |
Gross amounts of recognized liabilities |  | $ | 2,233 |  | $ | 3,822 |
Gross amounts offset in the statement of financial position |  | (2,233 | ) | (3,630 | )
Net amounts of liabilities presented in the statement of financial position |  | — |  | 192 |
Gross amounts of financial instruments not offset in the statement of financial position |  | — |  | — |
Net amount |  | $ | — |  | $ | 192 |
Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations Derivatives Designated as Hedging Instruments
|  | Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion) |
|  | Three Months Ended June 30, |  | Six Months Ended June 30, |
(In thousands) |  | 2013 |  | 2012 |  | 2013 |  | 2012 |
Commodity Contracts |  | $ | 115,113 |  | $ | 18,376 |  | $ | 54,167 |  | $ | 89,104 |
Location of Gain (Loss) |  | Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |
Reclassified from Accumulated OCI into |  | Three Months Ended June 30, |  | Six Months Ended June 30, |
Income (In thousands) |  | 2013 |  | 2012 |  | 2013 |  | 2012 |
Natural gas revenues |  | $ | (272 | ) | $ | 69,732 |  | $ | 13,056 |  | $ | 126,728 |
Crude oil and condensate revenues |  | 2,094 |  | 3,110 |  | 4,136 |  | 1,784 |
|  | $ | 1,822 |  | $ | 72,842 |  | $ | 17,192 |  | $ | 128,512 |
For the three and six months ended June 30, 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 Hedging Instruments
|  | Location of Gain (Loss) Recognized in Income on |  | Three Months Ended June 30, |  | Six Months Ended June 30, |
(In thousands) |  | Derivatives |  | 2013 |  | 2012 |  | 2013 |  | 2012 |
Commodity Contracts |  | Natural gas revenues |  | $ | — |  | $ | (342 | ) | $ | — |  | $ | (300 | )
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 liabilities in certain situations.

X
- Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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. + References Reference 1: 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 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624163-113959 Reference 3: 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=26873400&loc=d3e23780-122690 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708773-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 6: 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 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624258-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5618551-113959 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 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80748-113994 Reference 11: 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 12: 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 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41620-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624177-113959 Reference 15: 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 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5580258-113959 Reference 17: 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 18: 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 19: 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 20: 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 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration