Derivative Commodity Instruments

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Commodity Instruments

DERIVATIVE COMMODITY INSTRUMENTS

The following table details gain (loss) on derivative instruments, net, as follows:

Years ended December 31, (in thousands)	2015			2014		2013
Open non-cash mark-to-market gains (losses) on derivative instruments	$	(281,752	)	$	315,445	$	(47,832	)
Closed gains (losses) on derivative instruments	397,045			19,574		(2,192		)
Gain (loss) on derivative instruments, net	$	115,293		$	335,019	$	(50,024	)

The following tables detail the offsetting of derivative assets and liabilities as well as the fair values of derivatives on the balance sheets:

(in thousands)	December 31, 2015
								Gross Amounts Not Offset in the Balance Sheets
	Gross Amounts Recognized at Fair Value		Gross Amounts Offset in the Balance Sheets			Net Amount Presented in the Balance Sheets		Financial Instruments		Cash Collateral Received		Net Fair Value Presented in the Balance Sheets
Derivatives not designated as hedging instruments
Assets
Derivative instruments	$	72,563	$	(15,600	)	$	56,963	$	—	$	—	$	56,963
Liabilities
Derivative instruments	16,059		(15,600		)	459		—		—		459
Total derivatives	$	56,504	$	—		$	56,504	$	—	$	—	$	56,504

(in thousands)	December 31, 2014
								Gross Amounts Not Offset in the Balance Sheets
	Gross Amounts Recognized at Fair Value		Gross Amounts Offset in the Balance Sheets			Net Amount Presented in the Balance Sheets		Financial Instruments		Cash Collateral Received		Net Fair Value Presented in the Balance Sheets
Derivatives not designated as hedging instruments
Assets
Derivative instruments	$	339,977	$	(17,640	)	$	322,337	$	—	$	—	$	322,337
Liabilities
Derivative instruments	18,628		(17,640		)	988		—		—		988
Total derivatives	$	321,349	$	—		$	321,349	$	—	$	—	$	321,349

*All derivative instruments were current at December 31, 2015 and 2014.

Due to the volatility of commodity prices, the estimated fair value of our derivative instruments is subject to fluctuation from period to period, which could result in significant differences between the current estimated fair value and the ultimate settlement price. Additionally, Energen is at risk of economic loss based upon the creditworthiness of our counterparties. We were in a net gain position with eleven of our active counterparties and in a net loss position with the remaining one at December 31, 2015. The largest counterparty net gain positions at December 31, 2015, Morgan Stanley Capital Group Inc. and BP Corporation North America Inc., constituted approximately $18.1 million, and $10.7 million, respectively, of Energen’s total net gain on fair value of derivatives.

The following table details the effect of derivative commodity instruments in cash flow hedging relationships on the financial statements:

Years ended December 31, (in thousands)	Location on Statements of Income	2014		2013
Net gain (loss) recognized in other comprehensive income on derivatives (effective portion), net of tax of $23 and ($6,660)	—	$	37	$	(10,866	)
Gain reclassified from accumulated other comprehensive income into income (effective portion)	Gain (loss) on derivative instruments, net	$	21,612	$	34,293
Gain (loss) recognized in income on derivatives (ineffective portion and amount excluded from effectiveness testing)	Gain (loss) on derivative instruments, net	$	—	$	835

The following table details the effect of open and closed derivative commodity instruments not designated as hedging instruments on the income statement:

Years ended December 31, (in thousands)	Location on Statements of Income	2015		2014		2013
Gain (loss) recognized in income on derivatives	Gain (loss) on derivative instruments, net	$	115,293	$	313,408	$	(73,980	)

As of December 31, 2015, Energen entered into the following transactions for 2016 and subsequent years:

Production Period	Total Hedged Volumes		Average Contract Price	Description
Oil
2016	1,086	MBbl	$63.80 Bbl	NYMEX Swaps
Oil Basis Differential
2016	7,524	MBbl	$(1.92) Bbl	WTI/WTI Basis Swaps
2016	2,117	MBbl	$(1.63) Bbl	WTS/WTI Basis Swaps
WTI - West Texas Intermediate/Midland, WTI - West Texas Intermediate/Cushing
WTS - West Texas Sour/Midland, WTI - West Texas Intermediate/Cushing

As of December 31, 2015, the maximum term over which Energen has hedged exposures to the variability of cash flows is through December 31, 2016.