Derivative Activities (Tables)

6 Months Ended

Jun. 30, 2014

Derivative Volumes Hedged and Average Hedge Prices

The following table sets forth our commodity-based derivative volumes by year as of June 30, 2014, excluding our basis swaps which are discussed separately below:

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	260,000 Mmbtu/day	$ 4.18
2015	Swaps	287,432 Mmbtu/day	$ 4.22
2016	Swaps	90,000 Mmbtu/day	$ 4.21
Crude Oil
2014	Collars	2,000 bbls/day	$ 85.55–$ 100.00
2014	Swaps	9,500 bbls/day	$ 94.35
2015	Swaps	9,626 bbls day	$ 90.57
2016	Swaps	501 bbls/day	$ 91.10
NGLs (C3-Propane)
2014	Swaps	12,000 bbls/day	$ 1.02/gallon
2015	Swaps	1,000 bbls/day	$ 1.10/gallon
NGLs (NC4-Normal butane)
2014	Swaps	4,000 bbls/day	$ 1.34/gallon
NGLs (C5-Natural Gasoline)
2014	Swaps	3,500 bbls/day	$ 2.17/gallon
2015	Swaps	500 bbls/day	$ 2.14/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 June 30, 2014 and December 31, 2013 is summarized below. 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. The tables below provide additional information relating to our master netting arrangements with our derivative counterparties (in thousands):

		June 30, 2014
		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	$	4,967	$	(1,606	)	$	3,361
	–collars		3,594		(3,826	)		(232	)
	–basis swaps		19,606		(9,559	)		10,047
Crude oil	–swaps		84		(2,305	)		(2,221	)
NGLs	–C3 swaps		1,538		(2,160	)		(622	)
	–NC4 swap		1,227		(1,227	)		—
	–C5 swaps		86		(196	)		(110	)
		$	31,102	$	(20,879	)	$	10,223

		June 30, 2014
		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	$	(19,095	)	$	1,606	$	(17,489	)
	–collars		(15,750	)		3,826		(11,924	)
	–basis swaps		(10,934	)		9,559		(1,375	)
Crude oil	–swaps		(36,628	)		2,305		(34,323	)
	–collars		(1,693	)		—		(1,693	)
NGLs	–C3 swaps		(6,246	)		2,160		(4,086	)
	–NC4 swaps		(120	)		1,227		1,107
	–C5 swaps		(479	)		196		(283	)
		$	(90,945	)	$	20,879	$	(70,066	)

		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	)		—
Crude oil	–swaps		3,567		(1,321	)		2,246
NGLs	–C3 swaps		826		(826	)		—
	–NC4 swaps		863		(863	)		—
	–C5 swaps		121		(121	)		—
		$	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	)		—		(398	)
NGLs	–C3 swaps		(18,172	)		826		(17,346	)
	–NC4 swaps		(757	)		863		106
	–C5 swaps		—			121		121
		$	(45,929	)	$	19,706	$	(26,223	)

Effects of Cash Flow Hedges and Other Hedges on Accumulated Other Comprehensive Income

The effects of our cash flow hedges (or those derivatives that previously qualified for hedge accounting) on AOCI in the accompanying consolidated balance sheets is summarized below (in thousands):

	Three Months Ended June 30,										Six Months Ended June 30,
	Change in Hedge Derivative Fair Value				Realized Gain (Loss) Reclassified from OCI into Revenue (a)						Change in Hedge Derivative Fair Value					Realized Gain (Loss) Reclassified from OCI into Revenue (a)
	2014		2013		2014			2013			2014		2013			2014			2013
Swaps	$	—	$	¾	$	1,052		$	3,875		$	¾	$	125		$	1,889		$	11,922
Collars		—		¾		3,860			27,540			¾		(7,015	)		5,188			58,272
Income taxes		—		¾		(1,866	)		(12,252	)		¾		2,687			(2,791	)		(27,376	)
	$	—	$	¾	$	3,046		$	19,163		$	¾	$	(4,203	)	$	4,286		$	42,818

^(a) For realized gains upon derivative contract settlement, the reduction in AOCI is offset by an increase in revenues, NGLs and oil sales. For realized losses upon derivative contract settlement, the increase in AOCI is offset by a decrease in revenues. See additional discussion above regarding the discontinuance of hedge accounting.

Effects of Non-Hedge Derivatives on Consolidated Statements of Operations

The effects of our non-hedge derivatives (or those derivatives that do not qualify for hedge accounting) and the ineffective portion of our hedge derivatives on our consolidated statements of operations is summarized below (in thousands):

	Three Months Ended June 30,
	Gain (Loss) Recognized in Income (Non-hedge Derivatives)						Gain (Loss) Recognized in Income (Ineffective Portion)				Derivative Fair Value Income (Loss)
	2014			2013			2014		2013		2014			2013
Swaps	$	(38,521	)	$	65,003		$	—	$	—	$	(38,521	)	$	65,003
Re-purchased swaps		—			(1,663	)		—		—		—			(1,663	)
Collars		1,032			74,420			—		—		1,032			74,420
Basis swaps		13,380			—			—		—		13,380			—
Total	$	(24,109	)	$	137,760		$	—	$	¾	$	(24,109	)	$	137,760

	Six Months Ended June 30,
	Gain (Loss) Recognized in Income (Non-hedge Derivatives)						Gain (Loss) Recognized in Income (Ineffective Portion)					Derivative Fair Value Income (Loss)
	2014			2013			2014		2013			2014			2013
Swaps	$	(82,593	)	$	21,927		$	—	$	(1,995	)	$	(82,593	)	$	19,932
Re-purchased swaps		—			(478	)		—		—			—			(478	)
Collars		(38,116	)		19,417			—		(896	)		(38,116	)		18,521
Basis swaps		(50,250	)		(90	)		—		—			(50,250	)		(90	)
Total	$	(170,959	)	$	40,776		$	—	$	(2,891	)	$	(170,959	)	$	37,885