Derivatives

For further information regarding the fair value measurement of derivative instruments see Note 15. See Note 1 for discussion of the types of derivatives we may use and the reasons for them. All of our commodity derivatives and historical interest rate derivatives are/were subject to enforceable master netting arrangements or similar agreements under which we 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.



	December 31, 2018
(In millions)	Asset		Liability		Net Asset (Liability)			Balance Sheet Location
Not Designated as Hedges
Commodity	$	131	$	—	$	131		Other current assets
Commodity	—		4		(4		)	Deferred credits and other liabilities
Total Not Designated as Hedges	$	131	$	4	$	127



	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, in the third quarter of 2017 we terminated our forward starting interest rate swaps for proceeds of $54 million. We recognized a gain of $46 million, related to deferred gains reclassified from accumulated other comprehensive income, in net interest and other during 2017. See Note 16 for further detail.

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).



	Year Ended December 31,
(In millions)	2018		2017			2016
Interest Rate Swaps
Beginning balance	$	—	$	60		$	—
Change in fair value recognized in other comprehensive income	—		(13		)	64
Reclassification from other comprehensive income	—		(47		)	(4		)
Ending balance	$	—	$	—		$	60

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 sales through 2020. These commodity derivatives consist of three-way collars, basis swaps, and NYMEX roll 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 December 31, 2018 and the weighted average prices for those contracts:



	2019				2020
Crude Oil	First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Full Year
Three-Way Collars
Volume (Bbls/day)	70,000	70,000	50,000	50,000	—
Weighted average price per Bbl:
Ceiling	$71.21	$71.21	$75.88	$75.88	—
Floor	$55.86	$55.86	$57.80	$57.80	—
Sold put	$48.71	$48.71	$50.80	$50.80	—
Basis Swaps ^(a)(b)
Volume (Bbls/day)	10,000	10,000	10,000	10,000	15,000
Weighted average price per Bbl	$(0.82)	$(0.82)	$(0.82)	$(0.82)	$(0.94)
NYMEX Roll Basis Swaps
Volume (Bbls/day)	60,000	60,000	60,000	60,000	—
Weighted average price per Bbl	$0.38	$0.38	$0.38	$0.38	—
Natural Gas
Three-Way Collars
Volume (MMBtu/day)	200,000	—	—	—	—
Weighted average price per MMBtu:
Ceiling	$5.25	—	—	—	—
Floor	$3.43	—	—	—	—
Sold put	$2.88	—	—	—	—

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

^(b) Between January 1, 2019 and February 12, 2019, we entered into 5,000 Bbls/day of Midland basis swaps for July - December 2019 with an average price of $(2.55) and 1,000 Bbls/day of Clearbrook basis swaps for March - December 2019 with an average price of $(3.50).

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 years ended December 31, 2018, 2017, and 2016. The December 31, 2018, 2017, and 2016 mark-to-market impact was a net gain of $267 million, a net loss of $81 million and a net loss of $110 million, respectively. Net settlements of commodity derivative instruments for the years ended December 31, 2018, 2017, and 2016 were a loss of $281 million, a gain of $45 million and a gain of $44 million, respectively.