Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2018

In connection with the ExL Acquisition and in each of the divestitures of the Company’s assets in the Niobrara in the first quarter of 2018 and the Marcellus and Utica in the fourth quarter of 2017, the Company agreed to contingent consideration arrangements that could allow the Company to receive or be required to pay certain amounts if commodity prices are above specific thresholds, which are summarized in the table below. See “Note 3. Acquisitions and Divestitures of Oil and Gas Properties” included in this Quarterly Report on Form 10-Q as well as “Note 3. Acquisitions and Divestitures of Oil and Gas Properties” included in the 2017 Annual Report for details of the ExL Acquisition and each of the divestitures discussed above.



			Contingent Receipt (Payment) - Annual			Contingent Receipt (Payment) - Aggregate Limit
Contingent Consideration Arrangements	Years	Threshold ⁽¹⁾	(In thousands)
Contingent ExL Consideration	2018	$50.00		($50,000	)
	2019	50.00	(50,000		)
	2020	50.00	(50,000		)
	2021	50.00	(50,000		)		($125,000	)

Contingent Niobrara Consideration	2018	$55.00		$5,000
	2019	55.00	5,000
	2020	60.00	5,000			—

Contingent Marcellus Consideration	2018	$3.13		$3,000
	2019	3.18	3,000
	2020	3.30	3,000				$7,500

Contingent Utica Consideration	2018	$50.00		$5,000
	2019	53.00	5,000
	2020	56.00	5,000			—

(1)

The price used to determine whether the specific threshold for each year has been met is the average daily closing spot price of a barrel of West Texas Intermediate crude oil as measured by the U.S. Energy Information Administration for the Contingent ExL Consideration, Contingent Niobrara Consideration, and Contingent Utica Consideration and the average settlement price of a MMBtu of Henry Hub natural gas for the next calendar month, as determined on the last business day preceding each calendar month as measured by the CME Group Inc. for the Contingent Marcellus Consideration.

Schedule of Derivative Instrument Fair Value Assets and Liabilities

The combined derivative instrument fair value assets and liabilities, including deferred premium obligations, recorded in the consolidated balance sheets as of June 30, 2018 and December 31, 2017 are summarized below:



	June 30, 2018
	Gross Amounts Recognized			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amounts Presented in the Consolidated Balance Sheets
	(In thousands)
Commodity derivative instruments		$32,422			($31,259	)		$1,163
Contingent Niobrara Consideration	4,820			—			4,820
Contingent Marcellus Consideration	130			—			130
Contingent Utica Consideration	4,815			—			4,815
Derivative assets		$42,187			($31,259	)		$10,928
Commodity derivative instruments	13,418			(13,418		)	—
Contingent Niobrara Consideration	5,150			—			5,150
Contingent Marcellus Consideration	1,400			—			1,400
Contingent Utica Consideration	5,730			—			5,730
Other assets		$25,698			($13,418	)		$12,280

Commodity derivative instruments		($118,953	)		$21,813			($97,140	)
Deferred premium obligations	(9,446		)	9,446			—
Contingent ExL Consideration	(48,380		)	—			(48,380		)
Derivative liabilities-current		($176,779	)		$31,259			($145,520	)
Commodity derivative instruments	(40,006		)	5,748			(34,258		)
Deferred premium obligations	(7,670		)	7,670			—
Contingent ExL Consideration	(53,675		)	—			(53,675		)
Derivative liabilities-non current		($101,351	)		$13,418			($87,933	)



	December 31, 2017
	Gross Amounts Recognized			Gross Amounts Offset in the Consolidated Balance Sheets			Net Amounts Presented in the Consolidated Balance Sheets
	(In thousands)
Commodity derivative instruments		$4,869			($4,869	)		$—
Derivative assets		$4,869			($4,869	)		$—
Commodity derivative instruments	9,505			(9,505		)	—
Contingent Niobrara Consideration	—			—			—
Contingent Marcellus Consideration	2,205			—			2,205
Contingent Utica Consideration	7,985			—			7,985
Other assets		$19,695			($9,505	)		$10,190

Commodity derivative instruments		($52,671	)		($4,450	)		($57,121	)
Deferred premium obligations	(9,319		)	9,319			—
Derivative liabilities-current		($61,990	)		$4,869			($57,121	)
Commodity derivative instruments	(24,609		)	(2,098		)	(26,707		)
Deferred premium obligations	(11,603		)	11,603			—
Contingent ExL Consideration	(85,625		)	—			(85,625		)
Derivative liabilities-non current		($121,837	)		$9,505			($112,332	)

Schedule of (Gain) Loss on Derivative Instruments

The effects of commodity derivative instruments, deferred premium obligations and contingent consideration arrangements in the consolidated statements of income for the three and six months ended June 30, 2018 and 2017 are summarized below:



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
	(In thousands)
(Gain) Loss on Derivatives, Net
Crude oil derivatives		$53,437			($29,736	)		$82,948			($48,163	)
NGL derivatives	6,564			—			4,799			—
Natural gas derivatives	153			(3,883		)	(2,892		)	(10,719		)
Deferred premium obligations	—			7,554			—			7,501
Contingent ExL Consideration	10,600			—			16,430			—
Contingent Niobrara Consideration	(1,705		)	—			(2,090		)	—
Contingent Marcellus Consideration	205			—			675			—
Contingent Utica Consideration	(1,540		)	—			(2,560		)	—
(Gain) Loss on Derivatives, Net		$67,714			($26,065	)		$97,310			($51,381	)

Schedule of Cash Received for Derivatives

The net cash received (paid) for settlements of commodity derivatives and deferred premium obligations in the consolidated statements of cash flows for the three and six months ended June 30, 2018 and 2017 are summarized below:



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Cash Flows from Operating Activities	(In thousands)
Cash Received (Paid) for Derivative Settlements, Net
Crude oil derivatives		($21,210	)		$409			($33,333	)		$3,441
NGL derivatives	(756		)	—			(1,188		)	—
Natural gas derivatives	488			(104		)	540			(1,253		)
Deferred premium obligations	(2,605		)	(566		)	(4,467		)	(930		)
Cash Received (Paid) for Derivative Settlements, Net		($24,083	)		($261	)		($38,448	)		$1,258

Crude Oil

Derivative [Line Items]

Schedule of Derivative Instruments

The following table sets forth a summary of the Company’s outstanding crude oil derivative positions as of June 30, 2018 at weighted average contract prices:



Period	Type of Contract	Index	Volumes (Bbls/d)	Fixed Price ($/Bbl)			Sub-Floor Price ($/Bbl)		Floor Price ($/Bbl)		Ceiling Price ($/Bbl)
2018
Q3-Q4	Price Swaps	NYMEX WTI	6,000		$49.55			$—		$—		$—
Q3-Q4	Three-Way Collars	NYMEX WTI	24,000	—			39.38		49.06		60.14
Q3-Q4	Basis Swaps	LLS-Cushing WTI ⁽¹⁾	18,000	5.11			—		—		—
Q3-Q4	Basis Swaps	Midland WTI-Cushing WTI ⁽²⁾	6,000	(0.10		)	—		—		—
Q3-Q4	Net Sold Call Options	NYMEX WTI	3,388	—			—		—		71.33
2019
Q1-Q4	Three-Way Collars	NYMEX WTI	15,000	—			41.00		49.72		62.48
Q1-Q2	Basis Swaps	Midland WTI-Cushing WTI ⁽²⁾	3,000	(3.83		)	—		—		—
Q3	Basis Swaps	Midland WTI-Cushing WTI ⁽²⁾	3,500	(4.18		)	—		—		—
Q4	Basis Swaps	Midland WTI-Cushing WTI ⁽²⁾	6,000	(3.71		)	—		—		—
Q1-Q4	Net Sold Call Options	NYMEX WTI	3,875	—			—		—		73.66
2020
Q1-Q4	Net Sold Call Options	NYMEX WTI	4,575	—			—		—		75.98


(1)	The index price paid under these basis swaps is LLS and the index price received is Cushing WTI plus the fixed price differential.


(2)	The index price paid under these basis swaps is Midland WTI and the index price received is Cushing WTI less the fixed price differential.

In August 2018, the Company entered into the following crude oil derivative positions at the weighted average contract prices summarized below:



Period	Type of Contract	Index	Volumes (Bbls/d)	Fixed Price ($/Bbl)
2019
Q1	Basis Swaps	Midland WTI-Cushing WTI ⁽¹⁾	2,500		($6.94	)
Q2	Basis Swaps	Midland WTI-Cushing WTI ⁽¹⁾	3,000	(6.94		)
Q3	Basis Swaps	Midland WTI-Cushing WTI ⁽¹⁾	3,500	(6.94		)
Q4	Basis Swaps	Midland WTI-Cushing WTI ⁽¹⁾	5,000	(4.00		)
2020
Q1	Basis Swaps	Midland WTI-Cushing WTI ⁽¹⁾	1,000	(1.90		)


(1)	The index price paid under these basis swaps is Midland WTI and the index price received is Cushing WTI less the fixed price differential.

Natural Gas Liquids

Derivative [Line Items]

Schedule of Derivative Instruments

The following table sets forth a summary of the Company’s outstanding NGL derivative positions as of June 30, 2018 at weighted average contract prices:



Period	Type of Contract	Index	Volumes (Bbls/d)	Fixed Price ($/Bbl)
2018
Q3-Q4	Price Swaps	Ethane - OPIS Mont Belvieu Non-TET	2,200		$12.01
Q3-Q4	Price Swaps	Propane - OPIS Mont Belvieu Non-TET	1,500	34.23
Q3-Q4	Price Swaps	Butane - OPIS Mont Belvieu Non-TET	200	38.85
Q3-Q4	Price Swaps	Isobutane - OPIS Mont Belvieu Non-TET	600	38.98
Q3-Q4	Price Swaps	Natural Gasoline - OPIS Mont Belvieu Non-TET	600	55.23

Natural Gas

Derivative [Line Items]

Schedule of Derivative Instruments

The following table sets forth a summary of the Company’s outstanding natural gas derivative positions as of June 30, 2018 at weighted average contract prices:



Period	Type of Contract	Index	Volumes (MMBtu/d)	Fixed Price ($/MMBtu)		Ceiling Price ($/MMBtu)
2018
Q3-Q4	Price Swaps	NYMEX HH	25,000		$3.01		$—
Q3-Q4	Sold Call Options	NYMEX HH	33,000	—		3.25
2019
Q1-Q4	Sold Call Options	NYMEX HH	33,000	—		3.25
2020
Q1-Q4	Sold Call Options	NYMEX HH	33,000	—		3.50

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References

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+ Details