XML 28 R17.htm IDEA: XBRL DOCUMENT
v3.7.0.1

Derivative Activities | 6 Months Ended
--- | ---
Jun. 30, 2017
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
Derivative Activities | (12) DERIVATIVE ACTIVITIES We use commodity-based derivative contracts to manage exposure to commodity price fluctuations. We do not enter into these arrangements for speculative or trading purposes. We typically do not utilize complex derivatives, as we utilize commodity swaps, collars, options or combinations thereof to (1) reduce the effect of price volatility of the commodities we produce and sell and (2) support our annual capital budget and expenditure plans. The fair value of our derivative contracts, represented by the estimated amount that would be realized upon termination, based on a comparison of the contract price and a reference price, generally the New York Mercantile Exchange (“NYMEX”) for natural gas and crude oil or Mont Belvieu for NGLs, approximated a net asset of $99.8 million at June 30, 2017. These contracts expire monthly through December 2019. The following table sets forth our commodity-based derivative volumes by year as of June 30, 2017, excluding our basis and freight swaps which are discussed separately below:
Period |  | Contract Type |  | Volume Hedged |  | Weighted Average Hedge Price
Natural Gas |  |  |  |  |  |
2017 |  | Swaps (1) |  | 865,000 Mmbtu/day |  | $ 3.21
2018 |  | Swaps |  | 417,260 Mmbtu/day |  | $ 3.25
2017 |  | Collars (1) |  | 122,609 Mmbtu/day |  | $ 3.45–$ 4.11
2018 |  | Collars |  | 60,000 Mmbtu/day |  | $ 3.40–$ 3.76
2017 |  | Purchased Puts (1) |  | 185,870 Mmbtu/day |  | $ 3.50 (2)
2017 |  | Sold Calls |  | 23,370 Mmbtu/day |  | $ 3.70 (3)
Crude Oil |  |  |  |  |  |
2017 |  | Swaps (1) |  | 8,761 bbls/day |  | $ 56.38
2018 |  | Swaps |  | 5,250 bbls/day |  | $ 53.20
2019 |  | Swaps |  | 500 bbls/day |  | $ 51.75
NGLs (C2-Ethane) |  |  |  |  |  |
2017 |  | Swaps |  | 3,000 bbls/day |  | $ 0.27/gallon
2018 |  | Swaps |  | 250 bbls/day |  | $ 0.29/gallon
NGLs (C3-Propane) |  |  |  |  |  |
2017 |  | Swaps |  | 13,826 bbls/day |  | $ 0.57/gallon
2018 |  | Swaps |  | 7,199 bbls/day |  | $0.65/gallon
NGLs (NC4-Normal Butane) |  |  |  |  |  |
2017 |  | Swaps |  | 7,875 bbls/day |  | $ 0.75/gallon
2018 |  | Swaps |  | 4,250 bbls/day |  | $ 0.81/gallon
NGLs (C5-Natural Gasoline) |  |  |  |  |  |
2017 |  | Swaps |  | 5,500 bbls/day |  | $ 1.07/gallon
2018 |  | Swaps |  | 1,500 bbls/day |  | $ 1.19/gallon
(1) Includes derivative instruments assumed in connection with the MRD Merger. (2) Weighted average deferred premium is ($0.32). (3) Weighted average deferred premium is $0.27. Every derivative instrument is required to be recorded on the balance sheet as either an asset or a liability measured at its fair value. If the derivative does not qualify as a hedge or is not designated as a hedge, changes in fair value of these non-hedge derivatives are recognized in earnings as derivative fair value income or loss. Basis Swap Contracts In addition to the swaps described above, at June 30, 2017, we had natural gas basis swap contracts which lock in the differential between NYMEX and certain of our physical pricing indices primarily in Appalachia. These contracts settle monthly through October 2018 and include a total volume of 71,212,500 Mmbtu. The fair value of these contracts was a loss of $10.5 million on June 30, 2017. At June 30, 2017, we also had propane spread swap contracts which lock in the differential between Mont Belvieu and international propane indices. The contracts settle monthly through December 2018 and include a total volume of 910,500 barrels in 2017 and 750,000 barrels in 2018. The fair value of these contracts was a gain of $2.6 million on June 30, 2017. Freight Swap Contracts In connection with our international propane spread swaps, at June 30, 2017, we had freight swap contracts which lock in the freight rate for a specific trade route on the Baltic Exchange. These contracts settle monthly in fourth quarter 2017 through December 2018 and cover 5,000 metric tons per month with a fair value gain of $109,000 on June 30, 2017. Derivative Assets and Liabilities The combined fair value of derivatives included in the accompanying consolidated balance sheets as of June 30, 2017 and December 31, 2016 is summarized below. The assets and liabilities are netted where derivatives with both gain and loss positions are held by a single counterparty and we have master netting arrangements. The tables below provide additional information relating to our master netting arrangements with our derivative counterparties (in thousands):
|  |  | June 30, 2017 |
|  |  | Gross Amounts of Recognized Assets |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of Assets Presented in the Balance Sheet |
Derivative assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Natural gas | –swaps |  | $ | 48,423 |  |  | $ | (17,824 | ) |  | $ | 30,599 |
| –basis swaps |  |  | 1,412 |  |  |  | (2,632 | ) |  |  | (1,220 | )
| –collars |  |  | 10,629 |  |  |  | (804 | ) |  |  | 9,825 |
| –puts |  |  | 17,314 |  |  |  | — |  |  |  | 17,314 |
| –calls |  |  | — |  |  |  | (134 | ) |  |  | (134 | )
Crude oil | –swaps |  |  | 25,230 |  |  |  | (798 | ) |  |  | 24,432 |
NGLs | –C2 ethane swaps |  |  | 482 |  |  |  | (36 | ) |  |  | 446 |
| –C3 propane swaps |  |  | 7,025 |  |  |  | (6,803 | ) |  |  | 222 |
| –C3 propane spread swaps |  |  | 9,016 |  |  |  | (6,426 | ) |  |  | 2,590 |
| –NC4 butane swaps |  |  | 9,957 |  |  |  | (1,561 | ) |  |  | 8,396 |
| –C5 natural gasoline swaps |  |  | 5,760 |  |  |  | (910 | ) |  |  | 4,850 |
Freight | –swaps |  |  | 109 |  |  |  | — |  |  |  | 109 |
|  |  | $ | 135,357 |  |  | $ | (37,928 | ) |  | $ | 97,429 |
|  |  | June 30, 2017 |
|  |  | Gross Amounts of Recognized (Liabilities) |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of (Liabilities) Presented in the Balance Sheet |
Derivative liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |
Natural gas | –swaps |  | $ | (15,527 | ) |  | $ | 17,824 |  |  | $ | 2,297 |
| –basis swaps |  |  | (11,930 | ) |  |  | 2,632 |  |  |  | (9,298 | )
| –collars |  |  | — |  |  |  | 804 |  |  |  | 804 |
| –calls |  |  | (134 | ) |  |  | 134 |  |  |  | — |
Crude oil | –swaps |  |  | (137 | ) |  |  | 798 |  |  |  | 661 |
NGLs | –C2 ethane swaps |  |  | (36 | ) |  |  | 36 |  |  |  | — |
| –C3 propane swaps |  |  | (6,708 | ) |  |  | 6,803 |  |  |  | 95 |
| –C3 propane spread swaps |  |  | (6,426 | ) |  |  | 6,426 |  |  |  | — |
| –NC4 butane swaps |  |  | (1,561 | ) |  |  | 1,561 |  |  |  | — |
| –C5 natural gasoline swaps |  |  | (910 | ) |  |  | 910 |  |  |  | — |
|  |  | $ | (43,369 | ) |  | $ | 37,928 |  |  | $ | (5,441 | )
|  |  | December 31, 2016 |
|  |  | Gross Amounts of Recognized Assets |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of Assets Presented in the Balance Sheet |
Derivative assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Natural gas | –swaps |  | $ | 13,213 |  |  | $ | (11,425 | ) |  | $ | 1,788 |
| –basis swaps |  |  | 12,535 |  |  |  | (9,437 | ) |  |  | 3,098 |
| –collars |  |  | 6,298 |  |  |  | (6,298 | ) |  |  | — |
| –puts |  |  | 18,159 |  |  |  | (15,429 | ) |  |  | 2,730 |
Crude oil | –swaps |  |  | 9,356 |  |  |  | (3,489 | ) |  |  | 5,867 |
NGLs | –C2 ethane swaps |  |  | 53 |  |  |  | (53 | ) |  |  | — |
| –C3 propane spread swaps |  |  | 17,396 |  |  |  | (17,396 | ) |  |  | — |
| –NC4 butane swaps |  |  | 4 |  |  |  | (4 | ) |  |  | — |
Freight | –swaps |  |  | 65 |  |  |  | (65 | ) |  |  | — |
|  |  | $ | 77,079 |  |  | $ | (63,596 | ) |  | $ | 13,483 |
|  |  | December 31, 2016 |
|  |  | Gross Amounts of Recognized (Liabilities) |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of (Liabilities) Presented in the Balance Sheet |
Derivative liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |
Natural gas | –swaps |  | $ | (158,359 | ) |  | $ | 11,425 |  |  | $ | (146,934 | )
| –basis swaps |  |  | (687 | ) |  |  | 9,437 |  |  |  | 8,750 |
| –collars |  |  | (2,625 | ) |  |  | 6,298 |  |  |  | 3,673 |
| –puts |  |  | — |  |  |  | 15,429 |  |  |  | 15,429 |
| –calls |  |  | (1,041 | ) |  |  | — |  |  |  | (1,041 | )
Crude oil | –swaps |  |  | (13,206 | ) |  |  | 3,489 |  |  |  | (9,717 | )
NGLs | –C2 ethane swaps |  |  | (1,008 | ) |  |  | 53 |  |  |  | (955 | )
| –C3 propane swaps |  |  | (32,437 | ) |  |  | — |  |  |  | (32,437 | )
| –C3 propane spread swaps |  |  | (18,138 | ) |  |  | 17,396 |  |  |  | (742 | )
| –NC4 butane swaps |  |  | (13,419 | ) |  |  | 4 |  |  |  | (13,415 | )
| –C5 natural gasoline swaps |  |  | (12,176 | ) |  |  | — |  |  |  | (12,176 | )
Freight | –swaps |  |  | — |  |  |  | 65 |  |  |  | 65 |
|  |  | $ | (253,096 | ) |  | $ | 63,596 |  |  | $ | (189,500 | )
The effects of our derivatives on our consolidated statements of operations are summarized below (in thousands):
| Derivative Fair Value Income (Loss) |
|  | Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |
| 2017 |  |  |  | 2016 |  |  |  | 2017 |  |  |  | 2016 |
Commodity swaps | $ | 93,567 |  |  | $ | (158,576 | ) |  | $ | 260,319 |  |  | $ | (78,931 | )
Collars |  | 4,790 |  |  |  | — |  |  |  | 14,265 |  |  |  | — |
Puts |  | 3,012 |  |  |  | — |  |  |  | 9,719 |  |  |  | — |
Calls |  | 529 |  |  |  | — |  |  |  | 1,040 |  |  |  | — |
Basis swaps |  | 9,304 |  |  |  | (4,199 | ) |  |  | (8,668 | ) |  |  | 3,075 |
Freight swaps |  | (7 | ) |  |  | (23 | ) |  |  | 77 |  |  |  | (34 | )
Total | $ | 111,195 |  |  | $ | (162,798 | ) |  | $ | 276,752 |  |  | $ | (75,890 | )

X
- References No definition available. + 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 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration