Price-Risk Management Activities

Derivatives are recorded on the balance sheet at fair value with changes in fair value recognized in earnings. The changes in the fair value of our derivatives are recognized in "Net gain (loss) on commodity derivatives" on the accompanying consolidated statements of operations. We have a price-risk management policy to use derivative instruments to protect against declines in oil and natural gas prices, mainly through the purchase of commodity price swaps and collars, as well as basis swaps.

For the years ended December 31, 2018 and 2017, the Company recognized a $9.8 million loss and a $17.9 million gain, respectively, relating to our derivative activities. The Company made net cash payments of $19.7 million and $1.4 million for settled derivative contracts for the years ended December 31, 2018 and 2017.

As of December 31, 2018 and 2017 the Company had $0.7 million and $2.2 million in receivables for settled derivatives which were recognized on the accompanying consolidated balance sheet in “Accounts receivable” and were subsequently collected in January 2019 and 2018, respectively. As of December 31, 2018 and 2017, the Company had $2.2 million and $0.4 million, respectively, in payables for settled derivatives which were recognized on the accompanying consolidated balance sheet in "Accounts payable and accrued liabilities" and were subsequently paid in January 2019 and 2018, respectively.

The fair values of our swap contracts are computed using observable market data while our collar contracts are valued using a Black-Scholes pricing model and are periodically verified against quotes from brokers. As of December 31, 2018 and 2017, there was $15.3 million and $5.1 million, respectively, in current unsettled derivative assets, and $4.3 million and $2.6 million, respectively, in long-term unsettled derivative assets. Additionally, as of December 31, 2018 and 2017, the Company had $2.8 million and $5.1 million, respectively, in current unsettled derivative liabilities, and $3.7 million and $2.8 million, respectively, in long-term unsettled derivative liabilities.

The Company uses an International Swap and Derivatives Association master agreement for its derivative contracts. This is an industry standardized contract containing the general conditions of our derivative transactions including provisions relating to netting derivative settlement payments under certain circumstances (such as default). For reporting purposes, the Company has elected to not offset the asset and liability fair value amounts of its derivatives on the accompanying balance sheets. Under the right of set-off, there was a $13.0 million net fair value asset and $0.1 million net fair value liability at December 31, 2018 and December 31, 2017, respectively. For further discussion related to the fair value of the Company's derivatives, refer to Note 10 of these consolidated financial statements.

The following tables summarize the weighted average prices as well as future production volumes for our unsettled derivative contracts in place as of December 31, 2018.



Oil Derivative Swaps (NYMEX WTI Settlements)	Total Volumes (Bbls)	Weighted Average Price
2019 Contracts
1Q19	124,200	$	54.95
2Q19	134,700	$	57.08
3Q19	130,500	$	57.27
4Q19	126,500	$	57.37

2020 Contracts
1Q20	103,800	$	56.28
2Q20	100,350	$	56.38
3Q20	97,200	$	56.49
4Q20	72,000	$	52.29



Natural Gas Derivative Swaps (NYMEX Henry Hub Settlements)	Total Volumes (MMBtu)	Weighted Average Price		Weighted Average Collar Floor Price		Weighted Average Collar Call Price
2019 Contracts
1Q19	5,693,000	$	3.11
2Q19	12,130,000	$	2.80
3Q19	11,990,000	$	2.80
4Q19	9,646,000	$	2.86

2020 Contracts
1Q20	5,370,000	$	2.83
2Q20	3,688,000	$	2.76
3Q20	3,585,000	$	2.76
4Q20	3,362,000	$	2.77

Collar Contracts
1Q19	3,337,500			$	3.34	$	3.82
2Q19	300,000			$	2.90	$	3.15



NGL Derivative Swaps (OPIS Settlements)	Total Volumes (Bbls)	Weighted Average Price
2019 Contracts
1Q19	180,000	$	27.93
2Q19	180,000	$	27.93
3Q19	180,000	$	27.93
4Q19	180,000	$	27.93



Natural Gas Basis Derivative Swaps (East Texas Houston Ship Channel vs NYMEX Settlements)	Total Volumes (MMBtu)	Weighted Average Price
2019 Contracts
1Q19	9,047,500	$	(0.05	)
2Q19	14,477,500	$	0.05
3Q19	14,625,000	$	0.04
4Q19	14,625,000	$	(0.02	)

2020 Contracts
1Q20	11,739,000	$	(0.03	)
2Q20	11,739,000	$	(0.04	)
3Q20	11,868,000	$	(0.03	)
4Q20	11,868,000	$	(0.04	)

2021 Contracts
1Q21	5,400,000	$	(0.004	)
2Q21	5,460,000	$	(0.004	)
3Q21	5,520,000	$	(0.004	)
4Q21	5,520,000	$	(0.004	)



Oil Basis Derivative Swaps (Argus Cushing (WTI) and LLS Settlements)	Total Volumes (Bbls)	Weighted Average Price
2019 Contracts
1Q19	30,000	$	4.65
2Q19	45,000	$	4.65
3Q19	45,000	$	4.65
4Q19	45,000	$	4.65