XML 29 R17.htm IDEA: XBRL DOCUMENT
v3.7.0.1

Derivative Financial Instruments | 6 Months Ended
--- | ---
Jun. 30, 2017
Derivative Instruments Not Designated as Hedging Instruments [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. As of June 30, 2017, all derivative counterparties were members of the Company’s credit facility lender group and all contracts were entered into for other-than-trading purposes. The Company’s commodity derivative contracts consist of swap and collar arrangements. 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. For collar arrangements, the Company receives the difference between an agreed upon index and the floor price if the index price is below the floor price. The Company pays the difference between the agreed upon ceiling price and the index price if the index price is above the ceiling price. No amounts are paid or received if the index price is between the floor and ceiling prices. As of June 30, 2017, the Company had commodity derivative contracts outstanding as summarized in the tables below: Oil Swaps
Contract Period |  | NYMEX WTI Volumes |  | Weighted-Average Contract Price
|  | (MBbls) |  | (per Bbl)
Third quarter 2017 |  | 1,340 |  |  | $ | 46.66 |
Fourth quarter 2017 |  | 1,254 |  |  | $ | 46.35 |
2018 |  | 1,493 |  |  | $ | 46.82 |
Total |  | 4,087 |  |  |
Subsequent to June 30, 2017, the Company entered into derivative fixed price swap contracts for 2018 for a total of 2.0 million Bbls of oil production at a weighted-average contract price of $50.37 per Bbl. Oil Collars
Contract Period |  | NYMEX WTI Volumes |  | Weighted- Average Floor Price |  | Weighted- Average Ceiling Price
|  | (MBbls) |  | (per Bbl) |  | (per Bbl)
Third quarter 2017 |  | 583 |  |  | $ | 45.00 |  |  | $ | 54.05 |
Fourth quarter 2017 |  | 1,086 |  |  | $ | 47.51 |  |  | $ | 56.05 |
2018 |  | 5,030 |  |  | $ | 50.00 |  |  | $ | 58.07 |
2019 |  | 3,128 |  |  | $ | 50.00 |  |  | $ | 58.84 |
Total |  | 9,827 |  |  |  |  |
Oil Basis Swaps
Contract Period |  | Midland-Cushing Volumes |  | Weighted-Average Contract Price (1)
|  | (MBbls) |  | (per Bbl)
Third quarter 2017 |  | 566 |  |  | $ | (1.62 | )
Fourth quarter 2017 |  | 1,798 |  |  | $ | (1.52 | )
2018 |  | 6,868 |  |  | $ | (1.39 | )
2019 |  | 3,963 |  |  | $ | (1.45 | )
Total |  | 13,195 |  |  |
____________________________________________
(1) | Represents the price differential between WTI prices at Midland, Texas and WTI prices at Cushing, Oklahoma.
Natural Gas Swaps
Contract Period |  | Sold Volumes |  | Weighted-Average Contract Price |  | Purchased Volumes (1) |  | Weighted- Average Contract Price |  | Net Volumes
|  | (BBtu) |  | (per MMBtu) |  | (BBtu) |  | (per MMBtu) |  | (BBtu)
Third quarter 2017 |  | 23,657 |  |  | $ | 4.01 |  |  | — |  |  | $ | — |  |  | 23,657 |
Fourth quarter 2017 |  | 22,001 |  |  | $ | 3.98 |  |  | — |  |  | $ | — |  |  | 22,001 |
2018 |  | 93,014 |  |  | $ | 3.41 |  |  | (30,606 | ) |  | $ | 4.27 |  |  | 62,408 |
2019 |  | 41,394 |  |  | $ | 3.76 |  |  | (24,415 | ) |  | $ | 4.34 |  |  | 16,979 |
Total (2) |  | 180,066 |  |  |  |  | (55,021 | ) |  |  |  | 125,045 |
____________________________________________
(1) | During 2016, the Company restructured certain of its natural gas derivative contracts by buying fixed price volumes to 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 other cash or other consideration was included as part of the restructuring.
(2) | Total net volumes of natural gas swaps are comprised of IF El Paso Permian (1%), IF HSC (97%), 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 |  | OPIS Natural Gasoline 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 |  | Volumes | Weighted-Average Contract Price
|  | (MBbls) | (per Bbl) |  | (MBbls) | (per Bbl) |  | (MBbls) | (per Bbl) |  | (MBbls) | (per Bbl) |  | (MBbls) | (per Bbl)
Third quarter 2017 |  | 906 |  | $ | 9.48 |  |  | 588 |  | $ | 21.91 |  |  | 163 |  | $ | 32.42 |  |  | 140 |  | $ | 33.28 |  |  | 222 |  | $ | 48.43 |
Fourth quarter 2017 |  | 966 |  | $ | 9.65 |  |  | 550 |  | $ | 21.91 |  |  | 149 |  | $ | 32.34 |  |  | 128 |  | $ | 33.23 |  |  | 203 |  | $ | 48.41 |
2018 |  | 4,017 |  | $ | 11.00 |  |  | 2,021 |  | $ | 23.38 |  |  | 225 |  | $ | 33.99 |  |  | 188 |  | $ | 33.56 |  |  | 305 |  | $ | 48.62 |
2019 |  | 3,112 |  | $ | 12.27 |  |  | 214 |  | $ | 22.66 |  |  | — |  | $ | — |  |  | — |  | $ | — |  |  | — |  | $ | — |
2020 |  | 539 |  | $ | 11.13 |  |  | — |  | $ | — |  |  | — |  | $ | — |  |  | — |  | $ | — |  |  | — |  | $ | — |
Total |  | 9,540 |  |  |  | 3,373 |  |  |  | 537 |  |  |  | 456 |  |  |  | 730 |  |
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 $61.9 million as of June 30, 2017, and a net liability of $91.7 million as of December 31, 2016. The following tables detail the fair value of derivatives recorded in the accompanying balance sheets, by category:
| As of June 30, 2017
| Derivative Assets |  | Derivative Liabilities
| Balance Sheet Classification |  | Fair Value |  | Balance Sheet Classification |  | Fair Value
| (in thousands)
Commodity contracts | Current assets |  | $ | 85,962 |  |  | Current liabilities |  | $ | 36,296 |
Commodity contracts | Noncurrent assets |  | 82,194 |  |  | Noncurrent liabilities |  | 69,915 |
Derivatives not designated as hedging instruments |  |  | $ | 168,156 |  |  |  |  | $ | 106,211 |
| As of December 31, 2016
| Derivative Assets |  | Derivative Liabilities
| Balance Sheet Classification |  | Fair Value |  | Balance Sheet Classification |  | Fair Value
| (in thousands)
Commodity contracts | Current assets |  | $ | 54,521 |  |  | Current liabilities |  | $ | 115,464 |
Commodity contracts | Noncurrent assets |  | 67,575 |  |  | Noncurrent liabilities |  | 98,340 |
Derivatives not designated as hedging instruments |  |  | $ | 122,096 |  |  |  |  | $ | 213,804 |
Offsetting of Derivative Assets and Liabilities As of June 30, 2017, and December 31, 2016, all derivative instruments held by the Company were subject to master netting arrangements with 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 |  | As of
Offsetting of Derivative Assets and Liabilities |  | June 30, 2017 |  | December 31, 2016 |  | June 30, 2017 |  | December 31, 2016
|  | (in thousands)
Gross amounts presented in the accompanying balance sheets |  | $ | 168,156 |  |  | $ | 122,096 |  |  | $ | (106,211 | ) |  | $ | (213,804 | )
Amounts not offset in the accompanying balance sheets |  | (64,628 | ) |  | (118,080 | ) |  | 64,628 |  |  | 118,080 |
Net amounts |  | $ | 103,528 |  |  | $ | 4,016 |  |  | $ | (41,583 | ) |  | $ | (95,724 | )
The following table summarizes the components of the net derivative (gain) loss presented in the accompanying statements of operations:
| For the Three Months Ended June 30, |  | For the Six Months Ended June 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
| (in thousands)
Derivative settlement (gain) loss: |  |  |  |  |  |  |
Oil contracts | $ | 2,754 |  |  | $ | (72,164 | ) |  | $ | 11,838 |  |  | $ | (172,156 | )
Gas contracts | (21,751 | ) |  | (31,439 | ) |  | (39,257 | ) |  | (72,492 | )
NGL contracts | 2,694 |  |  | 1,893 |  |  | 11,109 |  |  | (4,090 | )
Total derivative settlement gain | $ | (16,303 | ) |  | $ | (101,710 | ) |  | $ | (16,310 | ) |  | $ | (248,738 | )
Total net derivative (gain) loss: |  |  |  |  |  |  |
Oil contracts | $ | (38,194 | ) |  | $ | 60,773 |  |  | $ | (87,784 | ) |  | $ | 50,341 |
Gas contracts | (6,038 | ) |  | 62,489 |  |  | (50,506 | ) |  | 38,466 |
NGL contracts | (10,957 | ) |  | 40,089 |  |  | (31,673 | ) |  | 60,316 |
Total net derivative (gain) loss | $ | (55,189 | ) |  | $ | 163,351 |  |  | $ | (169,963 | ) |  | $ | 149,123 |
Credit Related Contingent Features As of June 30, 2017, and through the filing of this report, all of the Company’s derivative counterparties were members of the Company’s credit facility lender group. Under the Credit Agreement and derivative contracts, the Company is required to secure mortgages on assets having a value equal to at least 90 percent of the total PV-9 of the Company’s proved oil and gas properties evaluated in the most recent reserve report.

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

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsNotDesignatedAsHedgingInstrumentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration