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Derivatives
 12 Months Ended
Dec. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives

The Company has not designated any of its derivative contracts as hedges for accounting purposes. The Company records all derivative contracts at fair value. Changes in derivative contract fair values are recognized in earnings.

Commodity Derivatives 

The Company is exposed to commodity price risk, which impacts the predictability of its cash flows from the sale of oil and natural gas. The Company seeks to manage this risk through the use of commodity derivative contracts, which allow the Company to limit its exposure to commodity price volatility on a portion of its forecasted oil and natural gas sales. The Company has not designated any of its derivative contracts as hedges for accounting purposes and records all derivative contracts at fair value with changes in derivative contract fair values recognized in (gain) loss on derivative contracts in the condensed consolidated statements of operations. None of the Company’s commodity derivative contracts may be terminated prior to contractual maturity solely as a result of a downgrade in the credit rating of a party to the contract. Commodity derivative contracts are settled on a monthly basis. On a quarterly basis, the commodity derivative contract valuations are adjusted to the mark-to-market valuation. At December 31, 2017, the Company’s commodity derivative contracts consisted of fixed price swaps under which the Company receives a fixed price for the contract and pays a floating market price to the counterparty over a specified period for a contracted volume.

The Successor Company recorded (gain) loss on commodity derivative contracts of $(24.1) million and $25.7 million for the year ended December 31, 2017 and the Successor 2016 Period, respectively, as reflected in the accompanying consolidated statements of operations, which includes net cash receipts upon settlement of $7.3 million and $7.7 million, respectively.

The Predecessor Company recorded loss (gain) on commodity derivative contracts of $4.8 million and $(73.1) million for the Predecessor 2016 Period and the year ended December 31, 2015, respectively, as reflected in the accompanying consolidated statements of operations, which includes net cash receipts upon settlement of $72.6 million and $327.7 million, respectively. The net receipts for the Predecessor 2016 Period include settlements of contracts prior to their contractual maturity (“early settlements”) after the Chapter 11 filings occurred, resulting in $17.9 million of cash receipts.

Derivatives Agreements with Royalty Trusts. During the year ended December 31, 2015, the Company was party to derivatives agreements with the Mississippian Trust I, Permian Trust and Mississippian Trust II to provide each of the Royalty Trusts with the economic effect of certain oil and natural gas derivative contracts entered into by the Company with third parties. The derivatives agreements with the Mississippian Trust I and the Mississippian Trust II contained commodity derivative contracts that covered volumes of oil and natural gas production through December 31, 2015, and the derivatives agreement with the Permian Trust contained commodity derivative contracts that covered volumes of oil production through March 31, 2015. All activity related to the contracts underlying the derivatives agreements with the Royalty Trusts have been included in the Company’s consolidated derivative disclosures.

Master Netting Agreements and the Right of Offset. The Company has master netting agreements with all of its commodity derivative counterparties and has presented its derivative assets and liabilities with the same counterparty on a net basis by commodity type in the consolidated balance sheets. As a result of the netting provisions, the Company's maximum amount of loss under commodity derivative transactions due to credit risk is limited to the net amounts due from its counterparties. As of December 31, 2017, the counterparties to the Company’s open commodity derivative contracts consisted of seven financial institutions, all of which are also lenders under the Company’s credit facility. The Company is not required to post additional collateral under its commodity derivative contracts as all of the counterparties to the Company’s commodity derivative contracts share in the collateral supporting the Company’s credit facility.
    
The following tables summarize (i) the Company's commodity derivative contracts on a gross basis, (ii) the effects of netting assets and liabilities for which the right of offset exists based on master netting arrangements and (iii) for the Company’s net derivative liability positions, the applicable portion of shared collateral under the credit facility as of December 31, 2017 and the First Lien Exit Facility as of December 31, 2016 (in thousands):

December 31, 2017
 
 
Gross Amounts
 
Gross Amounts Offset
 
Amounts Net of Offset
 
Financial Collateral
 
Net Amount
Assets
 
 
 
 
 
 
 
 
 
 
Derivative contracts - current
 
$
5,582

 
$
(4,272
)
 
$
1,310

 
$
—

 
$
1,310

Derivative contracts - noncurrent
 
—

 
—

 
—

 
—

 
—

Total
 
$
5,582

 
$
(4,272
)
 
$
1,310

 
$
—

 
$
1,310

 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Derivative contracts - current
 
$
14,899

 
$
(4,272
)
 
$
10,627

 
$
(10,627
)
 
$
—

Derivative contracts - noncurrent
 
3,568

 
—

 
3,568

 
(3,568
)
 
—

Total
 
$
18,467

 
$
(4,272
)
 
$
14,195

 
$
(14,195
)
 
$
—

 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
Gross Amounts
 
Gross Amounts Offset
 
Amounts Net of Offset
 
Financial Collateral
 
Net Amount
Liabilities
 
 
 
 
 
 
 
 
 
 
Derivative contracts - current
 
$
27,538

 
$
—

 
$
27,538

 
$
(27,538
)
 
$
—

Derivative contracts - noncurrent
 
2,176

 
—

 
2,176

 
(2,176
)
 
—

Total
 
$
29,714

 
$
—

 
$
29,714

 
$
(29,714
)
 
$
—



At December 31, 2017, the Company’s open commodity derivative contracts consisted of the following:

Oil Price Swaps 
 
Notional (MBbls)
 
Weighted Average
Fixed Price
January 2018 - December 2018
3,464

 
$
55.08

January 2019 - December 2019
1,460

 
$
53.34


Natural Gas Price Swaps 
 
Notional (MMcf)
 
Weighted Average
Fixed Price
January 2018 - December 2018
17,300

 
$
3.16






Fair Value of Derivatives 

The following table presents the fair value of the Company’s derivative contracts on a gross basis without regard to same-counterparty netting (in thousands):
 
 
 
 
December 31,
 
December 31,
Type of Contract
 
Balance Sheet Classification
 
2017
 
2016
Derivative assets
 
 
 
 
 
 
Oil price swaps
 
Derivative contracts - current
 
$
—

 
$
—

Natural gas price swaps
 
Derivative contracts - current
 
5,582

 
—

Oil price swaps
 
Derivative contracts - noncurrent
 
—

 
—

Natural gas price swaps
 
Derivative contracts - noncurrent
 
—

 
—

Derivative liabilities
 
 
 
 
 
 
Oil price swaps
 
Derivative contracts - current
 
(14,899
)
 
(13,395
)
Natural gas price swaps
 
Derivative contracts - current
 
—

 
(14,143
)
Oil price swaps
 
Derivative contracts - noncurrent
 
(3,568
)
 
(2,105
)
Natural gas price swaps
 
Derivative contracts - noncurrent
 
—

 
(71
)
Total net derivative contracts
 
$
(12,885
)
 
$
(29,714
)


See Note 7 for additional discussion of the fair value measurement of the Company’s derivative contracts.