XML 38 R18.htm IDEA: XBRL DOCUMENT
v3.3.1.900

Derivative Financial Instruments | 12 Months Ended
--- | ---
Dec. 31, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Note 10 – Derivative Financial Instruments Summary of Oil, Gas, and NGL Derivative Contracts in Place The Company has entered into various commodity derivative contracts to mitigate a portion of its exposure to potentially adverse market changes in commodity prices and the associated impact on cash flows. All contracts are entered into for other-than-trading purposes. The Company’s derivative contracts consist of swap arrangements for oil, gas, and NGLs. As of December 31, 2015, the Company had commodity derivative contracts outstanding through the second quarter of 2020 for a total of 5.6 million Bbls of oil production, 172.7 million MMBtu of gas production, and 13.0 million Bbls of NGL production. In a typical commodity swap agreement, if the agreed upon published third-party index price (“index price”) is lower than the swap fixed price, the Company receives the difference between the index price and the agreed upon swap fixed price. If the index price is higher than the swap fixed price, the Company pays the difference. The following tables summarize the approximate volumes and average contract prices of contracts the Company had in place as of December 31, 2015: Oil Swaps
Contract Period |  | NYMEX WTI Volumes |  | Weighted- Average Contract Price
|  | (Bbls) |  | (per Bbl)
First quarter 2016 |  | 1,868,000 |  |  | $ | 86.93 |
Second quarter 2016 |  | 1,752,000 |  |  | $ | 86.73 |
Third quarter 2016 |  | 1,170,000 |  |  | $ | 90.29 |
Fourth quarter 2016 |  | 780,000 |  |  | $ | 90.05 |
All oil swaps |  | 5,570,000 |  |  |
Natural Gas Swaps
Contract Period |  | Volumes |  | Weighted- Average Contract Price
|  | (MMBtu) |  | (per MMBtu)
First quarter 2016 |  | 23,341,000 |  |  | $ | 3.82 |
Second quarter 2016 |  | 20,780,000 |  |  | $ | 3.40 |
Third quarter 2016 |  | 18,829,000 |  |  | $ | 3.38 |
Fourth quarter 2016 |  | 17,236,000 |  |  | $ | 3.82 |
2017 |  | 37,528,000 |  |  | $ | 4.09 |
2018 |  | 30,606,000 |  |  | $ | 4.27 |
2019 |  | 24,415,000 |  |  | $ | 4.34 |
All gas swaps* |  | 172,735,000 |  |  |
____________________________________________ *Natural gas swaps are comprised of IF El Paso Permian (2%), IF HSC (95%), IF NGPL TXOK (1%), and IF NNG Ventura (2%). NGL Swaps
|  | OPIS Purity Ethane Mont Belvieu |  | OPIS Propane Mont Belvieu Non-TET |  | OPIS Normal Butane Mont Belvieu Non-TET |  | OPIS Isobutane Mont Belvieu Non-TET
Contract Period |  | Volumes | Weighted-Average Contract Price |  | Volumes | Weighted-Average Contract Price |  | Volumes | Weighted-Average Contract Price |  | Volumes | Weighted-Average Contract Price
|  | (Bbls) | (per Bbl) |  | (Bbls) | (per Bbl) |  | (Bbls) | (per Bbl) |  | (Bbls) | (per Bbl)
First quarter 2016 |  | 926,000 |  | $ | 8.29 |  |  | 1,059,000 |  | $ | 19.60 |  |  | 143,000 |  | $ | 25.62 |  |  | 122,000 |  | $ | 25.87 |
Second quarter 2016 |  | 828,000 |  | $ | 8.28 |  |  | 949,000 |  | $ | 19.64 |  |  | 130,000 |  | $ | 25.62 |  |  | 111,000 |  | $ | 25.87 |
Third quarter 2016 |  | 751,000 |  | $ | 8.70 |  |  | 862,000 |  | $ | 19.03 |  |  | — |  | $ | — |  |  | — |  | $ | — |
Fourth quarter 2016 |  | 688,000 |  | $ | 8.71 |  |  | 791,000 |  | $ | 18.53 |  |  | — |  | $ | — |  |  | — |  | $ | — |
2017 |  | 2,271,000 |  | $ | 9.16 |  |  | — |  | $ | — |  |  | — |  | $ | — |  |  | — |  | $ | — |
2018 |  | 1,671,000 |  | $ | 10.65 |  |  | — |  | $ | — |  |  | — |  | $ | — |  |  | — |  | $ | — |
2019 |  | 1,200,000 |  | $ | 10.92 |  |  | — |  | $ | — |  |  | — |  | $ | — |  |  | — |  | $ | — |
2020 |  | 539,000 |  | $ | 11.13 |  |  | — |  | $ | — |  |  | — |  | $ | — |  |  | — |  | $ | — |
Total NGL swaps |  | 8,874,000 |  |  |  | 3,661,000 |  |  |  | 273,000 |  |  |  | 233,000 |  |
Commodity Derivative Contracts Entered Into After December 31, 2015 Subsequent to December 31, 2015, the Company restructured certain of its gas derivative contracts by buying fixed price volumes to exactly offset existing 2018 and 2019 fixed price swap contracts totaling 55.0 million MMBtu. The Company then entered into new 2017 fixed price swap contracts totaling 38.6 million MMBtu with a contract price of $4.43 per MMBtu. No cash or other consideration was included as part of the restructuring. The net result of buying fixed price volumes in 2018 and 2019 is that the Company no longer has protection against natural gas price volatility in those years. These updated contracts are reflected in the following table, which summarizes the approximate gas volumes and average contract prices of contracts the Company had in place as of February 17, 2016, including derivatives contracts for settlement anytime during the first quarter of 2016 and later periods: Natural Gas Swaps
Contract Period |  | Volumes |  | Weighted- Average Contract Price |  | Purchased Volumes |  | Weighted- Average Contract Price |  | Total Volumes
|  | (MMBtu) |  | (per MMBtu) |  | (MMBtu) |  | (per MMBtu) |  | (MMBtu)
First quarter 2016 |  | 23,341,000 |  |  | $ | 3.82 |  |  | — |  |  | $ | — |  |  | 23,341,000 |
Second quarter 2016 |  | 20,780,000 |  |  | $ | 3.40 |  |  | — |  |  | $ | — |  |  | 20,780,000 |
Third quarter 2016 |  | 18,829,000 |  |  | $ | 3.38 |  |  | — |  |  | $ | — |  |  | 18,829,000 |
Fourth quarter 2016 |  | 17,236,000 |  |  | $ | 3.82 |  |  | — |  |  | $ | — |  |  | 17,236,000 |
2017 |  | 76,135,000 |  |  | $ | 4.26 |  |  | — |  |  | $ | — |  |  | 76,135,000 |
2018 |  | 30,606,000 |  |  | $ | 4.27 |  |  | (30,606,000 | ) |  | $ | 4.27 |  |  | — |
2019 |  | 24,415,000 |  |  | $ | 4.34 |  |  | (24,415,000 | ) |  | $ | 4.34 |  |  | — |
All gas swaps* |  | 211,342,000 |  |  |  |  | (55,021,000 | ) |  |  |  | 156,321,000 |
____________________________________________ *Total volumes of natural gas swaps are comprised of IF El Paso Permian (2%), IF HSC (96%), IF NGPL TXOK (1%), and IF NNG Ventura (1%). Additionally, subsequent to December 31, 2015, the Company entered into NGL fixed price swap contracts for 1.6 million Bbls of ethane production through 2018 with an average contract price of $8.67 per Bbl and 235,000 Bbls of isobutane production through the fourth quarter of 2016 with a contract price of $22.58 per Bbl. Derivative Assets and Liabilities Fair Value The Company’s commodity derivatives are measured at fair value and are included in the accompanying balance sheets as derivative assets and liabilities. The fair value of the commodity derivative contracts was a net asset of $488.4 million and $592.1 million at December 31, 2015 and 2014, respectively. The following tables detail the fair value of derivatives recorded in the accompanying balance sheets, by category:
| As of December 31, 2015
| Derivative Assets |  | Derivative Liabilities
| Balance Sheet Classification |  | Fair Value |  | Balance Sheet Classification |  | Fair Value
| (in thousands)
Commodity Contracts | Current assets |  | $ | 367,710 |  |  | Current liabilities |  | $ | 8 |
Commodity Contracts | Noncurrent assets |  | 120,701 |  |  | Noncurrent liabilities |  | — |
Derivatives not designated as hedging instruments |  |  | $ | 488,411 |  |  |  |  | $ | 8 |
| As of December 31, 2014
| Derivative Assets |  | Derivative Liabilities
| Balance Sheet Classification |  | Fair Value |  | Balance Sheet Classification |  | Fair Value
| (in thousands)
Commodity Contracts | Current assets |  | $ | 402,668 |  |  | Current liabilities |  | $ | — |
Commodity Contracts | Noncurrent assets |  | 189,540 |  |  | Noncurrent liabilities |  | 70 |
Derivatives not designated as hedging instruments |  |  | $ | 592,208 |  |  |  |  | $ | 70 |
Offsetting of Derivative Assets and Liabilities As of December 31, 2015 and 2014, all derivative instruments held by the Company were subject to master netting arrangements by various financial institutions. In general, the terms of the Company’s agreements provide for offsetting of amounts payable or receivable between it and the counterparty, at the election of both parties, for transactions that settle on the same date and in the same currency. The Company’s agreements also provide that in the event of an early termination, the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty. The Company’s accounting policy is to not offset these positions in its accompanying balance sheets. The following table provides a reconciliation between the gross assets and liabilities reflected on the accompanying balance sheets and the potential effects of master netting arrangements on the fair value of the Company’s derivative contracts:
|  | Derivative Assets |  | Derivative Liabilities
|  | As of December 31, |  | As of December 31,
Offsetting of Derivative Assets and Liabilities |  | 2015 |  | 2014 |  | 2015 |  | 2014
|  | (in thousands)
Gross amounts presented in the accompanying balance sheets |  | $ | 488,411 |  |  | $ | 592,208 |  |  | $ | (8 | ) |  | $ | (70 | )
Amounts not offset in the accompanying balance sheets |  | (8 | ) |  | (70 | ) |  | 8 |  |  | 70 |
Net amounts |  | $ | 488,403 |  |  | $ | 592,138 |  |  | $ | — |  |  | $ | — |
Discontinuance of Cash Flow Hedge Accounting As of January 1, 2011, the Company elected to de-designate all of its commodity derivative contracts that had been previously designated as cash flow hedges at December 31, 2010. Fair values at December 31, 2010, were frozen in AOCL as of the de-designation date and were reclassified into earnings as the original derivative transactions settled. As of September 30, 2013, all commodity derivative contracts that had been previously designated as cash flow hedges had settled and had been reclassified into earnings from AOCL. Subsequent to December 31, 2010, the Company recognizes all gains and losses from changes in commodity derivative fair values immediately in earnings rather than deferring any such amounts in AOCL. The Company had no derivatives designated as cash flow hedges for the years ended December 31, 2015, 2014, and 2013, and no new gains or losses were deferred to AOCL during these respective years. Please refer to Note 11 - Fair Value Measurements for more information regarding the Company’s derivative instruments, including its valuation techniques. The following table summarizes the components of derivative gain presented in the accompanying statements of operations:
| For the Years Ended December 31,
| 2015 |  | 2014 |  | 2013
| (in thousands)
Derivative settlement (gain) loss: |  |  |  |  |
Oil contracts | $ | (362,219 | ) |  | $ | (28,410 | ) |  | $ | 15,161 |
Gas contracts (1) | (123,180 | ) |  | 26,706 |  |  | (30,338 | )
NGL contracts | (27,167 | ) |  | (10,911 | ) |  | (6,885 | )
Total derivative settlement gain | $ | (512,566 | ) |  | $ | (12,615 | ) |  | $ | (22,062 | )
Total derivative (gain) loss: |  |  |  |  |
Oil contracts | $ | (191,165 | ) |  | $ | (457,082 | ) |  | $ | 14,665 |
Gas contracts | (189,734 | ) |  | (93,267 | ) |  | (14,053 | )
NGL contracts | (27,932 | ) |  | (32,915 | ) |  | (3,692 | )
Total derivative gain | $ | (408,831 | ) |  | $ | (583,264 | ) |  | $ | (3,080 | )
____________________________________________
(1) | Natural gas derivative settlements for the years ended December 31, 2015, and 2014, include $15.3 million and $5.6 million, respectively, of early settlements of futures contracts as a result of divesting assets in the Company’s Mid-Continent region.
The following table details the effect of derivative instruments on AOCL and the accompanying statements of operations (net of income tax):
|  |  | Location on Accompanying Statements of Operations |  | For the Years Ended December 31,
| Derivatives |  |  | 2015 |  | 2014 |  | 2013
|  |  |  |  | (in thousands)
Amount reclassified from AOCL | Commodity Contracts |  | Other operating revenues |  | $ | — |  |  | $ | — |  |  | $ | 1,115 |
The realized net hedge loss for the year ended December 31, 2013, shown net of income tax in the table above, is comprised of realized settlements on commodity derivative contracts that were previously designated as cash flow hedges. Realized hedge gains or losses from the settlement of commodity derivatives previously designated as cash flow hedges are reported in the other operating revenues line item on the accompanying statements of operations. The Company realized a pre-tax net loss of $1.8 million from its commodity derivative contracts that were previously designated as cash flow hedges for the year ended December 31, 2013. Credit Related Contingent Features As of December 31, 2015, and through the filing date of this report, all of the Company’s derivative counterparties were members of the Company’s credit facility lender group. The Company’s obligations under its credit facility and derivative contracts are secured by mortgages on assets having a value equal to at least 75 percent of the total value of the Company’s proved oil and gas properties.

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 -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=56946850&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=56946850&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=56946850&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=56946850&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=56946850&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=56946850&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=56946850&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=56946850&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=56946850&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=56946850&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=56946850&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=56946850&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=56946850&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=56946850&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
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration