Derivatives

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

We enter into short-duration foreign currency forward derivative contracts to reduce the risk of foreign currency fluctuations. We use these instruments to mitigate our exposure to non-local currency operating working capital. We record these contracts at fair value on our condensed consolidated balance sheets. Although the derivative contracts will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts for hedge accounting treatment. Accordingly, any changes in the fair value of the derivative instruments during a period will be included in our condensed consolidated statements of operations.

As of September 30, 2019 and December 31, 2018, we had the following foreign currency derivative contracts outstanding in U.S. dollars (in thousands):



	September 30, 2019
Derivative Contracts	Notional Amount		Contractual Exchange Rate	Settlement Date
Canadian dollar	$	1,362	1.3220	12/16/2019
Euro	7,457		1.1130	12/16/2019
Norwegian krone	10,254		8.9717	12/16/2019
Pound sterling	16,089		1.2377	12/16/2019



	December 31, 2018
Derivative Contracts	Notional Amount		Contractual Exchange Rate	Settlement Date
Canadian dollar	$	2,248	1.3343	3/18/2019
Euro	6,967		1.1421	3/18/2019
Norwegian krone	7,713		8.5566	3/18/2019
Pound sterling	16,452		1.2655	3/18/2019

The following table summarizes the location and fair value amounts of all derivative contracts in the condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018 (in thousands):



Derivatives not Designated as Hedging Instruments	Consolidated Balance Sheet Location	September 30, 2019		December 31, 2018
Foreign currency contracts	Accounts receivables, net	$	248	$	—
Foreign currency contracts	Accounts payable and accrued liabilities	—		(101		)

The following table summarizes the location and amounts of the realized and unrealized gains and losses on derivative contracts in the condensed consolidated statements of operations (in thousands):



		Three Months Ended					Nine Months Ended
		September 30,					September 30,
Derivatives not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative Contracts	2019		2018			2019		2018
Unrealized gain (loss) on foreign currency contracts	Other income, net	$	553	$	(323	)	$	349	$	442
Realized gain on foreign currency contracts	Other income, net	1,059		447			1,471		572
Total net gain on foreign currency contracts		$	1,612	$	124		$	1,820	$	1,014

Our derivative transactions are governed through International Swaps and Derivatives Association master agreements. These agreements include stipulations regarding the right of offset in the event that we or our counterparty default on our performance obligations. If a default were to occur, both parties have the right to net amounts payable and receivable into a single net settlement between parties. Our accounting policy is to offset derivative assets and liabilities executed with the same counterparty when a master netting arrangement exists.

The following table presents the gross and net fair values of our derivatives at September 30, 2019 and December 31, 2018 (in thousands):



	Derivative Asset Positions					Derivative Liability Positions
	September 30, 2019		December 31, 2018			September 30, 2019		December 31, 2018
Gross position - asset / (liability)	$	248	$	113		$	—	$	(214	)
Netting adjustment	—		(113		)	—		113
Net position - asset / (liability)	$	248	$	—		$	—	$	(101	)