XML 38 R17.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Derivative Financial Instruments | 12 Months Ended
--- | ---
Dec. 31, 2017
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. As of December 31, 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 for oil, and swap arrangements for gas and NGLs. 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 December 31, 2017, the Company had commodity derivative contracts outstanding through the second quarter of 2020, as summarized in the tables below. Oil Swaps
Contract Period |  | NYMEX WTI Volumes |  | Weighted-Average Contract Price
|  | (MBbl) |  | (per Bbl)
First quarter 2018 |  | 1,075 |  |  | $ | 50.16 |
Second quarter 2018 |  | 1,534 |  |  | $ | 49.57 |
Third quarter 2018 |  | 1,769 |  |  | $ | 49.77 |
Fourth quarter 2018 |  | 1,894 |  |  | $ | 49.87 |
2019 |  | 1,940 |  |  | $ | 50.70 |
Total |  | 8,212 |  |  |
Oil Collars
Contract Period |  | NYMEX WTI Volumes |  | Weighted-Average Floor Price |  | Weighted-Average Ceiling Price
|  | (MBbl) |  | (per Bbl) |  | (per Bbl)
First quarter 2018 |  | 1,445 |  |  | $ | 50.00 |  |  | $ | 59.07 |
Second quarter 2018 |  | 1,459 |  |  | $ | 50.00 |  |  | $ | 59.03 |
Third quarter 2018 |  | 1,948 |  |  | $ | 50.00 |  |  | $ | 58.61 |
Fourth quarter 2018 |  | 2,222 |  |  | $ | 50.00 |  |  | $ | 58.44 |
2019 |  | 5,908 |  |  | $ | 47.65 |  |  | $ | 59.19 |
Total |  | 12,982 |  |  |  |  |
Oil Basis Swaps
Contract Period |  | Midland-Cushing Volumes |  | Weighted-Average Contract Price(1)
|  | (MBbl) |  | (per Bbl)
First quarter 2018 |  | 2,113 |  |  | $ | (1.15 | )
Second quarter 2018 |  | 2,392 |  |  | $ | (1.03 | )
Third quarter 2018 |  | 3,018 |  |  | $ | (1.06 | )
Fourth quarter 2018 |  | 3,327 |  |  | $ | (1.08 | )
2019 |  | 5,788 |  |  | $ | (1.09 | )
Total |  | 16,638 |  |  |
____________________________________________
(1) | Represents the price differential between WTI prices at Midland, Texas and WTI prices at Cushing, Oklahoma.
Gas Swaps
Contract Period |  | Sold Volumes |  | Weighted-Average Contract Price |  | Purchased Volumes |  | Weighted-Average Contract Price |  | Net Volumes
|  | (BBtu) |  | (per MMBtu) |  | (BBtu) |  | (per MMBtu) |  | (BBtu)
First quarter 2018 |  | 28,910 |  |  | $ | 3.55 |  |  | (8,121 | ) |  | $ | 4.34 |  |  | 20,789 |
Second quarter 2018 |  | 23,507 |  |  | $ | 3.31 |  |  | (7,795 | ) |  | $ | 4.24 |  |  | 15,712 |
Third quarter 2018 |  | 24,627 |  |  | $ | 3.29 |  |  | (7,480 | ) |  | $ | 4.23 |  |  | 17,147 |
Fourth quarter 2018 |  | 25,856 |  |  | $ | 3.29 |  |  | (7,210 | ) |  | $ | 4.27 |  |  | 18,646 |
2019 |  | 41,394 |  |  | $ | 3.76 |  |  | (24,415 | ) |  | $ | 4.34 |  |  | 16,979 |
Total (1) |  | 144,294 |  |  |  |  | (55,021 | ) |  |  |  | 89,273 |
____________________________________________
(1) | Total net volumes of gas swaps are comprised of IF HSC (99%) and IF El Paso Permian (1%).
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
|  | (MBbl) | (per Bbl) |  | (MBbl) | (per Bbl) |  | (MBbl) | (per Bbl) |  | (MBbl) | (per Bbl) |  | (MBbl) | (per Bbl)
First quarter 2018 |  | 923 |  | $ | 10.90 |  |  | 629 |  | $ | 25.39 |  |  | 206 |  | $ | 35.83 |  |  | 167 |  | $ | 35.76 |  |  | 188 |  | $ | 49.40 |
Second quarter 2018 |  | 915 |  | $ | 10.87 |  |  | 554 |  | $ | 24.94 |  |  | 84 |  | $ | 35.69 |  |  | 66 |  | $ | 35.07 |  |  | 109 |  | $ | 49.57 |
Third quarter 2018 |  | 1,033 |  | $ | 10.99 |  |  | 610 |  | $ | 24.27 |  |  | 93 |  | $ | 35.70 |  |  | 70 |  | $ | 35.07 |  |  | 118 |  | $ | 49.56 |
Fourth quarter 2018 |  | 1,146 |  | $ | 11.18 |  |  | 671 |  | $ | 24.39 |  |  | 102 |  | $ | 35.70 |  |  | 76 |  | $ | 35.07 |  |  | 129 |  | $ | 49.57 |
2019 |  | 3,533 |  | $ | 12.31 |  |  | 1,503 |  | $ | 27.83 |  |  | 154 |  | $ | 35.64 |  |  | 117 |  | $ | 35.70 |  |  | 197 |  | $ | 50.93 |
2020 |  | 539 |  | $ | 11.13 |  |  | — |  | $ | — |  |  | — |  | $ | — |  |  | — |  | $ | — |  |  | — |  | $ | — |
Total |  | 8,089 |  |  |  | 3,967 |  |  |  | 639 |  |  |  | 496 |  |  |  | 741 |  |
Commodity Derivative Contracts Entered Into After December 31, 2017 Subsequent to December 31, 2017, the Company entered into NGL Swap contracts for 2018 for approximately 228 MBbl of OPIS Natural Gasoline Mont Belvieu Non-TET NGL production at a contract price of $53.34 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 Company does not designate its derivative commodity contracts as hedging instruments. The fair value of the derivative commodity contracts was a net liability of $139.4 million at December 31, 2017, and net liability of $91.7 million at December 31, 2016. The following tables detail the fair value of derivatives recorded in the accompanying balance sheets, by category:
| As of December 31, 2017
| Derivative Assets |  | Derivative Liabilities
| Balance Sheet Classification |  | Fair Value |  | Balance Sheet Classification |  | Fair Value
| (in thousands)
Commodity contracts | Current assets |  | $ | 64,266 |  |  | Current liabilities |  | $ | 172,582 |
Commodity contracts | Noncurrent assets |  | 40,362 |  |  | Noncurrent liabilities |  | 71,402 |
Total commodity contracts |  |  | $ | 104,628 |  |  |  |  | $ | 243,984 |
| 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 |
Total commodity contracts |  |  | $ | 122,096 |  |  |  |  | $ | 213,804 |
Offsetting of Derivative Assets and Liabilities As of December 31, 2017, and 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 December 31, |  | As of December 31,
Offsetting of Derivative Assets and Liabilities |  | 2017 |  | 2016 |  | 2017 |  | 2016
|  | (in thousands)
Gross amounts presented in the accompanying balance sheets |  | $ | 104,628 |  |  | $ | 122,096 |  |  | $ | (243,984 | ) |  | $ | (213,804 | )
Amounts not offset in the accompanying balance sheets |  | (100,035 | ) |  | (118,080 | ) |  | 100,035 |  |  | 118,080 |
Net amounts |  | $ | 4,593 |  |  | $ | 4,016 |  |  | $ | (143,949 | ) |  | $ | (95,724 | )
The Company recognizes all gains and losses from changes in commodity derivative fair values immediately in earnings rather than deferring any such amounts in accumulated other comprehensive income (loss). The Company had no derivatives designated as hedging instruments for the years ended December 31, 2017, 2016, and 2015. 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 net derivative (gain) loss presented in the accompanying statements of operations:
| For the Years Ended December 31,
| 2017 |  | 2016 |  | 2015
| (in thousands)
Derivative settlement (gain) loss: |  |  |  |  |
Oil contracts | $ | 31,176 |  |  | $ | (243,102 | ) |  | $ | (362,219 | )
Gas contracts (1) | (87,857 | ) |  | (94,936 | ) |  | (123,180 | )
NGL contracts | 35,447 |  |  | 8,560 |  |  | (27,167 | )
Total derivative settlement gain | $ | (21,234 | ) |  | $ | (329,478 | ) |  | $ | (512,566 | )
Net derivative (gain) loss: |  |  |  |  |
Oil contracts | $ | 71,502 |  |  | $ | 85,370 |  |  | $ | (191,165 | )
Gas contracts | (76,315 | ) |  | 81,060 |  |  | (189,734 | )
NGL contracts | 31,227 |  |  | 84,203 |  |  | (27,932 | )
Total net derivative (gain) loss | $ | 26,414 |  |  | $ | 250,633 |  |  | $ | (408,831 | )
____________________________________________
(1) | Gas derivative settlements for the year ended December 31, 2015, include $15.3 million of early settlements of futures contracts as a result of divesting assets in the Company’s Mid-Continent region.
Credit Related Contingent Features As of December 31, 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. The Company’s obligations under its Credit Agreement and derivative contracts are secured by 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
- 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