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Derivative Instruments | 3 Months Ended
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Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments The Company utilizes derivative financial instruments to manage risks related to changes in oil and natural gas prices. The Company’s crude oil and natural gas contracts will settle monthly based on the average NYMEX West Texas Intermediate crude oil index price (“WTI”) and the average NYMEX Henry Hub natural gas index price (“Henry Hub”), respectively. At March 31, 2017, the Company utilized swaps and two-way and three-way costless collar options to reduce the volatility of oil and natural gas prices on a significant portion of its future expected oil and natural gas production. A swap is a sold call and a purchased put established at the same price (both ceiling and floor). A two-way collar is a combination of options: a sold call and a purchased put. The purchased put establishes a minimum price (floor) and the sold call establishes a maximum price (ceiling) the Company will receive for the volumes under contract. A three-way collar is a combination of options: a sold call, a purchased put and a sold put. The purchased put establishes a minimum price (floor), unless the market price falls below the sold put (sub-floor), at which point the minimum price would be the NYMEX index price plus the difference between the purchased put and the sold put strike price. The sold call establishes a maximum price (ceiling) the Company will receive for the volumes under contract. All derivative instruments are recorded on the Company’s Condensed Consolidated Balance Sheet as either assets or liabilities measured at fair value (see Note 4 – Fair Value Measurements). The Company has not designated any derivative instruments as hedges for accounting purposes and does not enter into such instruments for speculative trading purposes. If a derivative does not qualify as a hedge or is not designated as a hedge, the changes in fair value are recognized in the other income (expense) section of the Company’s Condensed Consolidated Statement of Operations as a net gain or loss on derivative instruments. The Company’s cash flow is only impacted when the actual settlements under the derivative contracts result in making a payment to or receiving a payment from the counterparty. These cash settlements represent the cumulative gains and losses on the Company’s derivative instruments and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled. Cash settlements are reflected as investing activities in the Company’s Condensed Consolidated Statement of Cash Flows. At March 31, 2017, the Company had the following outstanding commodity derivative instruments:
Commodity |  | Settlement Period |  | Derivative Instrument |  | Volumes |  | Weighted Average Prices |  | Fair Value Asset (Liability)
|  |  |  | Swap |  | Sub-Floor |  | Floor |  | Ceiling |
|  |  |  |  |  |  |  |  |  |  | (In thousands)
Crude oil |  | 2017 |  | Swaps |  | 5,225,000 |  | Bbl |  | $ | 49.60 |  |  |  |  |  |  |  |  | $ | (9,309 | )
Crude oil |  | 2017 |  | Two-way collar |  | 2,200,000 |  | Bbl |  |  |  |  |  | $ | 46.25 |  |  | $ | 54.37 |  |  | (1,707 | )
Crude oil |  | 2017 |  | Three-way collar |  | 1,650,000 |  | Bbl |  |  |  | $ | 31.67 |  |  | $ | 45.83 |  |  | $ | 59.94 |  |  | 562 |
Crude oil |  | 2018 |  | Swaps |  | 2,440,000 |  | Bbl |  | $ | 52.93 |  |  |  |  |  |  |  |  | 2,375 |
Crude oil |  | 2018 |  | Two-way collar |  | 582,000 |  | Bbl |  |  |  |  |  | $ | 48.40 |  |  | $ | 55.13 |  |  | 28 |
Crude oil |  | 2018 |  | Three-way collar |  | 186,000 |  | Bbl |  |  |  | $ | 31.67 |  |  | $ | 45.83 |  |  | $ | 59.94 |  |  | 58 |
Crude oil |  | 2019 |  | Swaps |  | 155,000 |  | Bbl |  | $ | 53.88 |  |  |  |  |  |  |  |  | 351 |
Crude oil |  | 2019 |  | Two-way collar |  | 31,000 |  | Bbl |  |  |  |  |  | $ | 50.00 |  |  | $ | 55.70 |  |  | 32 |
Natural gas |  | 2017 |  | Swaps |  | 4,675,000 |  | MMBtu |  | $ | 3.30 |  |  |  |  |  |  |  |  | (55 | )
Natural gas |  | 2018 |  | Swaps |  | 3,650,000 |  | MMBtu |  | $ | 3.00 |  |  |  |  |  |  |  |  | (121 | )
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (7,786 | )
The following table summarizes the location and amounts of gains and losses from the Company’s commodity derivative instruments recorded in the Company’s Condensed Consolidated Statement of Operations for the periods presented:
|  | Three Months Ended March 31,
Statement of Operations Location |  | 2017 |  | 2016
|  | (In thousands)
Net gain on derivative instruments |  | $ | 56,075 |  |  | $ | 14,375 |
In accordance with the FASB’s authoritative guidance on disclosures about offsetting assets and liabilities, the Company is required to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting agreement. The Company’s derivative instruments are presented as assets and liabilities on a net basis by counterparty, as all counterparty contracts provide for net settlement. No margin or collateral balances are deposited with counterparties, and as such, gross amounts are offset to determine the net amounts presented in the Company’s Condensed Consolidated Balance Sheet. The following table summarizes the location and fair value of all outstanding commodity derivative instruments recorded in the Company’s Condensed Consolidated Balance Sheet:
|  |  |  | March 31, 2017
Commodity |  | Balance Sheet Location |  | Gross Recognized Asset/Liabilities |  | Gross Amount Offset |  | Net Recognized Fair Value Asset/Liability
|  |  |  | (In thousands)
Derivatives assets: |  |  |  |  |  |  |  |
Commodity contracts |  | Derivative instruments — current assets |  | $ | 5,178 |  |  | $ | (2,152 | ) |  | $ | 3,026 |
Commodity contracts |  | Derivative instruments — non-current assets |  | 5,148 |  |  | (1,333 | ) |  | 3,815 |
Total derivatives assets |  |  |  | $ | 10,326 |  |  | $ | (3,485 | ) |  | $ | 6,841 |
Derivatives liabilities: |  |  |  |  |  |  |  |
Commodity contracts |  | Derivative instruments — current liabilities |  | $ | 21,480 |  |  | $ | (6,853 | ) |  | $ | 14,627 |
Total derivatives liabilities |  | $ | 21,480 |  |  | $ | (6,853 | ) |  | $ | 14,627 |
|  |  |  | December 31, 2016
Commodity |  | Balance Sheet Location |  | Gross Recognized Asset/Liabilities |  | Gross Amount Offset |  | Net Recognized Fair Value Asset/Liability
|  |  |  | (In thousands)
Derivatives assets: |  |  |  |  |  |  |  |
Commodity contracts |  | Derivative instruments — current assets |  | $ | 482 |  |  | $ | (120 | ) |  | $ | 362 |
Total derivatives assets |  |  |  | $ | 482 |  |  | $ | (120 | ) |  | $ | 362 |
Derivatives liabilities: |  |  |  |  |  |  |  |
Commodity contracts |  | Derivative instruments — current liabilities |  | $ | 66,838 |  |  | $ | (6,369 | ) |  | $ | 60,469 |
Commodity contracts |  | Derivative instruments — non-current liabilities |  | 14,164 |  |  | (2,450 | ) |  | 11,714 |
Total derivatives liabilities |  | $ | 81,002 |  |  | $ | (8,819 | ) |  | $ | 72,183 |

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- 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 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 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=64837297&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 2 -URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41620-113959 Reference 4: 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=64837297&loc=SL5624163-113959 Reference 5: 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=64837297&loc=SL5579240-113959 Reference 6: 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=64837297&loc=SL5624177-113959 Reference 7: 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=35736893&loc=d3e80784-113994 Reference 8: 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=64837297&loc=d3e41641-113959 Reference 9: 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=64837297&loc=SL5579245-113959 Reference 10: 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=64837297&loc=SL5624258-113959 Reference 11: 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=35736893&loc=d3e80748-113994 Reference 12: 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=64837297&loc=SL5708775-113959 Reference 13: 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=64837297&loc=SL5708773-113959 Reference 14: 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=64837297&loc=SL5618551-113959 Reference 15: 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=64837297&loc=SL5580258-113959 Reference 16: 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=64837297&loc=SL5624181-113959 Reference 17: 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 18: 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=64837297&loc=d3e41638-113959 Reference 19: 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 + Details
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