Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Objective and Strategies for Using Derivative Instruments   We are exposed to fluctuations in crude oil and natural gas prices on the majority of our production. In order to mitigate the effect of commodity price volatility and enhance the predictability of cash flows relating to the marketing of our global crude oil and domestic natural gas, we enter into crude oil and natural gas price hedging arrangements with respect to a portion of our expected production.

While these instruments mitigate the cash flow risk of future decreases in commodity prices, they may also curtail benefits from future increases in commodity prices. See Note 8. Fair Value Measurements and Disclosures for a discussion of methods and assumptions used to estimate the fair values of our derivative instruments.

Unsettled Commodity Derivative Instruments   As of June 30, 2015, we had entered into the following crude oil derivative instruments: 

				Swaps		Collars
Settlement Period	Type of Contract	Index	Bbls Per Day	Weighted Average Fixed Price		Weighted Average  Short Put  Price		Weighted Average Floor Price		Weighted Average  Ceiling Price
Instruments Entered Into as of June 30, 2015
2015	Swaps	NYMEX WTI	27,000	$	88.80	$	—	$	—	$	—
2015	Swaps	Dated Brent	8,000	100.31		—		—		—
2015	Two-Way Collars	NYMEX WTI	5,000	—		—		50.00		64.94
2015	Three-Way Collars	NYMEX WTI	20,000	—		70.50		87.55		94.41
2015	Three-Way Collars	Dated Brent	13,000	—		76.92		96.00		108.49
2016	Swaps	NYMEX WTI	9,000	80.30		—		—		—
2016	Swaps	Dated Brent	9,000	97.96		—		—		—
2016	Two -Way Collars	NYMEX WTI	1,000	—		—		60.00		70.00
2016	Three-Way Collars	NYMEX WTI	6,000	—		61.00		72.50		86.37
2016	Three-Way Collars	Dated Brent	8,000	—		72.50		86.25		101.79

As of June 30, 2015, we had entered into the following natural gas derivative instruments:

				Swaps		Collars
Settlement Period	Type of Contract	Index	MMBtu Per Day	Weighted Average Fixed Price		Weighted Average Short Put  Price		Weighted Average Floor Price		Weighted Average Ceiling Price
Instruments Entered Into as of June 30, 2015
2015	Swaps	NYMEX HH	140,000	$	4.30	$	—	$	—	$	—
2015	Three-Way Collars	NYMEX HH	150,000	—		3.58		4.25		5.04
2016	Swaps (1)	NYMEX HH	40,000	3.60		—		—		—
2016	Two-Way Collars	NYMEX HH	30,000	—		—		3.00		3.50
2016	Three-Way Collars	NYMEX HH	90,000	—		2.83		3.42		3.90

⁽¹⁾  We have entered into natural gas derivative contracts which give counterparties the option to extend for an additional 12-month period. Options covering a notional volume of 30,000 MMBtu/d are exercisable on December 22 and 23, 2016. If the counterparties exercise all such options, the notional volume of our existing natural gas derivative contracts will increase by 30,000 MMBtu/d at an average price of $3.50 per MMBtu for each month during the period January 1, 2017 through December 31, 2017.

Fair Value Amounts and (Gain) Loss on Commodity Derivative Instruments   The fair values of commodity derivative instruments in our consolidated balance sheets were as follows:

Fair Value of Derivative Instruments
	Asset Derivative Instruments						Liability Derivative Instruments
	June 30, 2015			December 31, 2014			June 30, 2015			December 31, 2014
(millions)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair  Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity DerivativeInstruments	Current Assets	$	456	Current Assets	$	710	Current Liabilities	$	—	Current Liabilities	$	—
	Noncurrent Assets	100		Noncurrent Assets	180		Noncurrent Liabilities	—		Noncurrent Liabilities	—
Total		$	556		$	890		$	—		$	—

The effect of commodity derivative instruments on our consolidated statements of operations was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(millions)	2015			2014			2015			2014
Cash (Received) Paid in Settlement of Commodity Derivative Instruments
Crude Oil	$	(157	)	$	46		$	(342	)	$	73
Natural Gas	(30		)	3			(55		)	10
Total Cash (Received) Paid in Settlement of Commodity Derivative Instruments	(187		)	49			(397		)	83
Non-cash Portion of (Gain) Loss on Commodity Derivative Instruments
Crude Oil	242			192			297			219
Natural Gas	32			(5		)	37			9
Total Non-cash Portion of (Gain) Loss on Commodity Derivative Instruments	274			187			334			228
(Gain) Loss on Commodity Derivative Instruments
Crude Oil	85			238			(45		)	292
Natural Gas	2			(2		)	(18		)	19
Total (Gain) Loss on Commodity Derivative Instruments	$	87		$	236		$	(63	)	$	311