Derivatives

For further information regarding the fair value measurement of derivative instruments, see Note 13. All of our commodity derivatives and historical interest rate derivatives are subject to enforceable master netting arrangements or similar agreements under which we may report net amounts. The following tables present the gross fair values of derivative instruments and the reported net amounts along with where they appear on the consolidated balance sheets.



	June 30, 2018
(In millions)	Asset		Liability		Net Asset (Liability)			Balance Sheet Location
Not Designated as Hedges
Commodity	$	9	$	—	$	9		Other long-term assets
Commodity	—		231		$	(231	)	Other current liabilities
Commodity	—		6		$	(6	)	Deferred credits and other liabilities
Total Not Designated as Hedges	$	9	$	237	$	(228	)



	December 31, 2017
(In millions)	Asset		Liability		Net Asset (Liability)			Balance Sheet Location
Not Designated as Hedges
Commodity	$	—	$	138	$	(138	)	Other current liabilities
Commodity	—		2		(2		)	Deferred credits and other liabilities
Total Not Designated as Hedges	$	—	$	140	$	(140	)

Derivatives Not Designated as Hedges

Terminated Interest Rate Swaps

During the third quarter of 2016, we entered into forward starting interest rate swaps to hedge the variations in cash flows related to fluctuations in long term interest rates from debt that were probable to be refinanced by us in 2018, specifically interest rate risk associated with future changes in the benchmark treasury rate. During the second quarter of 2017, we de-designated the forward starting interest rate swaps previously designated as cash flow hedges. In the third quarter of 2017, the forecasted transaction consummated and we issued $1 billion in senior unsecured notes. As a result, we terminated our forward starting interest rate swaps during the third quarter of 2017.

The following table sets forth the net impact of the terminated forward starting interest rate swap derivatives de-designated as cash flow hedges on other comprehensive income (loss).



	Three Months Ended June 30,					Six Months Ended June 30,
(In millions)	2018		2017			2018		2017
Interest Rate Swaps
Beginning balance	$	—	$	61		$	—	$	60
Change in fair value recognized in other comprehensive income	—		(14		)	—		(13		)
Reclassification from other comprehensive income	—		(1		)	—		(1		)
Ending balance	$	—	$	46		$	—	$	46

Commodity Derivatives

We have entered into multiple crude oil and natural gas derivatives indexed to NYMEX WTI and Henry Hub related to a portion of our forecasted United States E&P sales through 2020. These commodity derivatives consist of three-way collars and basis swaps. Three-way collars consist of a sold call (ceiling), a purchased put (floor) and a sold put. The ceiling price is the maximum we will receive for the contract volumes; the floor is the minimum price we will receive, unless the market price falls below the sold put strike price. In this case, we receive the NYMEX WTI/Henry Hub price plus the difference between the floor and the sold put price. These commodity derivatives were not designated as hedges. The following table sets forth outstanding derivative contracts as of June 30, 2018 and the weighted average prices for those contracts:



Crude Oil	3Q 2018	4Q 2018	FY 2019	FY 2020
Three-Way Collars
Volume (Bbls/day)	95,000	95,000	50,000	—
Weighted average price per Bbl:
Ceiling	$57.65	$57.65	$71.74	—
Floor	$52.11	$52.11	$56.01	—
Sold put	$45.21	$45.21	$48.91	—
Basis Swaps ^(a)
Volume (Bbls/day)	10,000	10,000	10,000	15,000
Weighted average price per Bbl	$(0.67)	$(0.67)	$(0.82)	$(0.94)

Natural Gas	3Q 2018	4Q 2018
Three-Way Collars
Volume (MMBtu/day)	160,000	160,000
Weighted average price per MMBtu:
Ceiling	$3.61	$3.61
Floor	$3.00	$3.00
Sold put	$2.50	$2.50


^(a)	The basis differential price is between WTI Midland and WTI Cushing.

The mark-to-market impact and settlement of these commodity derivative instruments appears in net gain (loss) on commodity derivatives in our consolidated statements of income for the three and six month periods ended June 30, 2018 and 2017. The mark-to-market impact for the three and six month periods ended June 30, 2018 was a loss of $45 million and a loss of $88 million compared to a gain of $43 million and $120 million for the same respective periods in 2017. Net settlements of commodity derivative instruments for the three and six month periods ended June 30, 2018 was a loss of $107 million and $166 million compared to a gain of $13 million and $17 million for the respective periods in 2017.