|
Derivative Activities (Tables)
|
12 Months Ended |
|
Dec. 31, 2013
|
| Derivative Volumes Hedged and Average Hedge Prices |
We use commodity-based derivative contracts to manage exposure to commodity price fluctuations. We do not enter into these arrangements for speculative or trading purposes. We do not utilize complex derivatives as we typically utilize commodity swap or collar contracts to (1) reduce the effect of price volatility of the commodities we produce and sell and (2) support our annual capital budget and expenditure plans. Their fair value, represented by the estimated amount that would be realized upon termination, based on a comparison of the contract price and a reference price, generally NYMEX, approximated a net unrealized pre-tax loss of $16.5 million at December 31, 2013. These contracts expire monthly through December 2016. The following table sets forth the derivative volumes by year as of December 31, 2013:
Period |
|
Contract Type |
|
Volume Hedged |
|
Weighted Average Hedge Price |
Natural Gas |
|
|
|
|
|
|
2014 |
|
Collars |
|
447,500 Mmbtu/day |
|
$3.84–$4.48 |
2015 |
|
Collars |
|
145,000 Mmbtu/day |
|
$4.07–$4.56 |
2014 |
|
Swaps |
|
219,397 Mmbtu/day |
|
$4.17 |
2015 |
|
Swaps |
|
154,966 Mmbtu/day |
|
$4.16 |
2016 |
|
Swaps |
|
20,000 Mmbtu/day |
|
$4.16 |
Crude Oil |
|
|
|
|
|
|
2014 |
|
Collars |
|
2,000 bbls/day |
|
$85.55–$100.00 |
2014 |
|
Swaps |
|
9,004 bbls/day |
|
$94.43 |
2015 |
|
Swaps |
|
4,000 bbls/day |
|
$89.60 |
NGLs (C3 - Propane) |
|
|
|
|
|
|
2014 |
|
Swaps |
|
11,000 bbls/day |
|
$1.01/gallon |
NGLs (NC4 - Normal Butane) |
|
|
|
|
|
|
2014 |
|
Swaps |
|
3,000 bbls/day |
|
$1.33/gallon |
|
| Combined Fair Value of Derivatives, by Consolidated Balance Sheets |
The combined fair value of derivatives included in the accompanying consolidated balance sheets as of December 31, 2013 and 2012 is summarized below. As of December 31, 2013, we are conducting derivative activities with thirteen financial institutions, of which all but two are secured lenders in our bank credit facility. We believe all of these institutions are acceptable credit risks. At times, such risks may be concentrated with certain counterparties. The credit worthiness of our counterparties is subject to periodic review. The assets and liabilities are netted where derivatives with both gain and loss positions are held by a single counterparty and we have master netting arrangements (in thousands).
|
|
December 31, 2013 |
|
|
|
Gross Amounts of
Recognized Assets |
|
|
Gross Amounts
Offset in the
Balance Sheet |
|
|
Net Amounts of
Assets Presented in the
Balance Sheet |
|
Derivative assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas |
–swaps |
$ |
4,240 |
|
|
$ |
(1,218 |
) |
|
$ |
3,022 |
|
|
–collars |
|
16,057 |
|
|
|
(7,671 |
) |
|
|
8,386 |
|
|
–basis swaps |
|
7,686 |
|
|
|
(7,686 |
) |
|
|
¾ |
|
Crude oil |
–swaps |
|
3,567 |
|
|
|
(1,321 |
) |
|
|
2,246 |
|
NGLs |
–C3 swaps |
|
826 |
|
|
|
(826 |
) |
|
|
¾ |
|
|
–C4 swaps |
|
863 |
|
|
|
(863 |
) |
|
|
¾ |
|
|
–C5 swaps |
|
121 |
|
|
|
(121 |
) |
|
|
¾ |
|
|
|
$ |
33,360 |
|
|
$ |
(19,706 |
) |
|
$ |
13,654 |
|
|
|
December 31, 2013 |
|
|
|
Gross Amounts of
Recognized (Liabilities) |
|
|
Gross Amounts
Offset in the
Balance Sheet |
|
|
Net Amounts of
(Liabilities) Presented in the
Balance Sheet |
|
Derivative (liabilities): |
|
|
|
|
|
|
|
|
|
|
|
Natural gas |
–swaps |
$ |
(4,790 |
) |
|
$ |
1,218 |
|
|
$ |
(3,572 |
) |
|
–collars |
|
(13,345 |
) |
|
|
7,671 |
|
|
|
(5,674 |
) |
|
–basis swaps |
|
(3,756 |
) |
|
|
7,686 |
|
|
|
3,930 |
|
Crude oil |
–swaps |
|
(4,711 |
) |
|
|
1,321 |
|
|
|
(3,390 |
) |
|
–collars |
|
(398 |
) |
|
|
¾ |
|
|
|
(398 |
) |
NGLs |
–C3 swaps |
|
(18,172 |
) |
|
|
826 |
|
|
|
(17,346 |
) |
|
–C4 swaps |
|
(757 |
) |
|
|
863 |
|
|
|
106 |
|
|
–C5 swaps |
|
¾ |
|
|
|
121 |
|
|
|
121 |
|
|
|
$ |
(45,929 |
) |
|
$ |
19,706 |
|
|
$ |
(26,223 |
) |
|
|
December 31, 2012 |
|
|
|
Gross Amounts of
Recognized Assets |
|
|
Gross Amounts
Offset in the
Balance Sheet |
|
|
Net Amounts of
Assets Presented in the
Balance Sheet |
|
Derivative assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas |
–swaps |
$ |
10,746 |
|
|
$ |
(3,242 |
) |
|
$ |
7,504 |
|
|
–collars |
|
128,410 |
|
|
|
(6,155 |
) |
|
|
122,255 |
|
|
–basis swaps |
|
993 |
|
|
|
— |
|
|
|
993 |
|
Crude oil |
–swaps |
|
9,650 |
|
|
|
— |
|
|
|
9,650 |
|
|
–collars |
|
2,222 |
|
|
|
— |
|
|
|
2,222 |
|
NGLs |
–C5 swaps |
|
13,055 |
|
|
|
(2,412 |
) |
|
|
10,643 |
|
|
|
$ |
165,076 |
|
|
$ |
(11,809 |
) |
|
$ |
153,267 |
|
|
|
December 31, 2012 |
|
|
|
Gross Amounts of
Recognized (Liabilities) |
|
|
Gross Amounts
Offset in the
Balance Sheet |
|
|
Net Amounts of
(Liabilities) Presented in the
Balance Sheet |
|
Derivative (liabilities): |
|
|
|
|
|
|
|
|
|
|
|
Natural gas |
–swaps |
$ |
(3,242 |
) |
|
$ |
3,242 |
|
|
$ |
¾ |
|
|
–collars |
|
(9,618 |
) |
|
|
6,155 |
|
|
|
(3,463 |
) |
NGLs |
–C3 swaps |
|
(6,746 |
) |
|
|
¾ |
|
|
|
(6,746) |
|
|
–C5 swaps |
|
(137 |
) |
|
|
2,412 |
|
|
|
2,275 |
|
|
|
$ |
(19,743 |
) |
|
$ |
11,809 |
|
|
$ |
(7,934 |
) |
|
| Effects of Cash Flow Hedges and Other Hedges on Accumulated Other Comprehensive Income |
The effects of our cash flow hedges (or those derivatives that qualified for hedge accounting) on AOCI in the accompanying consolidated balance sheets is summarized below:
|
Year Ended December 31, |
|
|
Change in Hedge
Derivative Fair Value |
|
|
Realized Gain
Reclassified from OCI
Into Revenue (a) |
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swaps |
$ |
125 |
|
|
$ |
46,371 |
|
|
$ |
15,171 |
|
|
$ |
78,779 |
|
Put options |
|
¾ |
|
|
|
(1,955 |
) |
|
|
¾ |
|
|
|
(1,955 |
) |
Collars |
|
(7,015 |
) |
|
|
74,766 |
|
|
|
105,272 |
|
|
|
159,481 |
|
Income taxes |
|
2,687 |
|
|
|
(47,466 |
) |
|
|
(46,973 |
) |
|
|
(91,871 |
) |
|
$ |
(4,203 |
) |
|
$ |
71,716 |
|
|
$ |
73,470 |
|
|
$ |
144,434 |
|
(a) | For realized gains upon contract settlement, the reduction in AOCI is offset by an increase in natural gas, NGLs and oil sales. For realized losses upon contract settlement, the increase in AOCI is offset by a decrease in natural gas, NGLs and oil sales. |
|
| Effects of Non-Hedge Derivatives on Consolidated Statements of Operations |
The effects of our non-hedge derivatives (or those derivatives that do not qualify or are not designated for hedge accounting) and the ineffective portion of our hedge derivatives on our consolidated statements of operations are summarized below:
|
Year Ended December 31, |
|
|
Gain (Loss) Recognized in
Income (Non-hedge Derivatives) |
|
|
Gain (Loss) Recognized in
Income (Ineffective Portion) |
|
|
Derivative Fair Value
(Loss) Income |
|
|
2013 |
|
|
2012 |
|
|
2011 |
|
|
2013 |
|
|
2012 |
|
|
2011 |
|
|
2013 |
|
|
2012 |
|
|
2011 |
|
Swaps |
$ |
(48,492 |
) |
|
$ |
11,601 |
|
|
$ |
24,767 |
|
|
$ |
(2,034 |
) |
|
$ |
(657 |
) |
|
$ |
767 |
|
|
$ |
(50,526 |
) |
|
$ |
10,944 |
|
|
$ |
25,534 |
|
Re-purchased swaps |
|
1,323 |
|
|
|
9,313 |
|
|
|
— |
|
|
|
¾ |
|
|
|
— |
|
|
|
— |
|
|
|
1,323 |
|
|
|
9,313 |
|
|
|
— |
|
Collars |
|
(15,166 |
) |
|
|
5,126 |
|
|
|
5,266 |
|
|
|
(896 |
) |
|
|
1,782 |
|
|
|
8,777 |
|
|
|
(16,062 |
) |
|
|
6,908 |
|
|
|
14,043 |
|
Call options |
|
¾ |
|
|
|
13,178 |
|
|
|
553 |
|
|
|
¾ |
|
|
|
— |
|
|
|
— |
|
|
|
¾ |
|
|
|
13,178 |
|
|
|
553 |
|
Put options |
|
¾ |
|
|
|
(30 |
) |
|
|
— |
|
|
|
¾ |
|
|
|
— |
|
|
|
— |
|
|
|
¾ |
|
|
|
(30 |
) |
|
|
— |
|
Basis swaps |
|
3,440 |
|
|
|
1,124 |
|
|
|
(43 |
) |
|
|
¾ |
|
|
|
— |
|
|
|
— |
|
|
|
3,440 |
|
|
|
1,124 |
|
|
|
(43 |
) |
Total |
$ |
(58,895 |
) |
|
$ |
40,312 |
|
|
$ |
30,543 |
|
|
$ |
(2,930 |
) |
|
$ |
1,125 |
|
|
$ |
9,544 |
|
|
$ |
(61,825 |
) |
|
$ |
41,437 |
|
|
$ |
40,087 |
|
|