DERIVATIVE INSTRUMENTS:

CNX enters into financial derivative instruments to manage its exposure to commodity price volatility. These natural gas and NGL commodity hedges are accounted for on a mark-to-market basis with changes in fair value recorded in current period earnings.

CNX is exposed to credit risk in the event of non-performance by counterparties. The creditworthiness of counterparties is subject to continuing review. The Company has not experienced any issues of non-performance by derivative counterparties.

None of the Company's counterparty master agreements currently require CNX to post collateral for any of its positions. However, as stated in the counterparty master agreements, if CNX's obligations with one of its counterparties cease to be secured on the same basis as similar obligations with the other lenders under the credit facility, CNX would have to post collateral for instruments in a liability position in excess of defined thresholds. All of the Company's derivative instruments are subject to master netting arrangements with our counterparties. CNX recognizes all financial derivative instruments as either assets or liabilities at fair value on the Consolidated Balance Sheets on a gross basis.

Each of the Company's counterparty master agreements allows, in the event of default, the ability to elect early termination of outstanding contracts. If early termination is elected, CNX and the applicable counterparty would net settle all open hedge positions.

The total notional amounts of production of CNX's derivative instruments at March 31, 2018 and December 31, 2017 were as follows:



	March 31,	December 31,	Forecasted to
	2018	2017	Settle Through
Natural Gas Commodity Swaps (Bcf)	1,143.5	1,067.2	2022
Natural Gas Basis Swaps (Bcf)	766.9	688.1	2022

The gross fair value of CNX's derivative instruments at March 31, 2018 and December 31, 2017 was as follows:



Asset Derivative Instruments					Liability Derivative Instruments
	March 31,		December 31,			March 31,		December 31,
	2018		2017			2018		2017
Commodity Swaps:
Prepaid Expense	$	46,668	$	62,369	Other Accrued Liabilities	$	20,908	$	5,985
Other Assets	80,655		59,281		Other Liabilities	30,369		42,419
Total Asset	$	127,323	$	121,650	Total Liability	$	51,277	$	48,404

Basis Only Swaps:
Prepaid Expense	$	25,922	$	14,965	Other Accrued Liabilities	$	17,864	$	35,306
Other Assets	43,481		24,223		Other Liabilities	15,557		17,179
Total Asset	$	69,403	$	39,188	Total Liability	$	33,421	$	52,485

The effect of derivative instruments on the Company's Consolidated Statements of Income was as follows:



	For the Three Months Ended
	March 31,
	2018			2017
Cash Paid in Settlement of Commodity Derivative Instruments:
Commodity Swaps:
Natural Gas	$	(434	)	$	(24,607	)
Propane	—			(1,216		)
Natural Gas Basis Swaps	(16,557		)	(21,280		)
Total Cash Paid in Settlement of Commodity Derivative Instruments	(16,991		)	(47,103		)

Unrealized Gain (Loss) on Commodity Derivative Instruments:
Commodity Swaps:
Natural Gas	2,800			162,604
Propane	—			1,147
Natural Gas Basis Swaps	49,278			(139,111		)
Total Unrealized Gain on Commodity Derivative Instruments	52,078			24,640

Gain (Loss) on Commodity Derivative Instruments:
Commodity Swaps:
Natural Gas	2,366			137,997
Propane	—			(69		)
Natural Gas Basis Swaps	32,721			(160,391		)
Total Gain (Loss) on Commodity Derivative Instruments	$	35,087		$	(22,463	)

The Company also enters into fixed price natural gas sales agreements that are satisfied by physical delivery. These physical commodity contracts qualify for the normal purchases and sales exception and are not subject to derivative instrument accounting.