Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 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. 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.

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 September 30, 2015, the following crude oil derivative contracts were outstanding:

				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
2015	Swaps	NYMEX WTI	27,000	$	88.80		$	—	$	—	$	—
2015	Swaps	Dated Brent	8,000	100.31			—		—		—
2015	Swaps (1)	(2)	12,000	89.81		—	—		—		—
2015	Two-Way Collars	NYMEX WTI	5,000	—			—		50.00		64.94
2015	Two-Way Collars (1)	(2)	8,000	—			—		55.00		84.80
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
1H16 (4)	Swaps	NYMEX WTI	15,000	70.31			—		—		—
2H16 (4)	Swaps	NYMEX WTI	12,000	74.47			—		—		—
2016	Swaps	Dated Brent	9,000	97.96			—		—		—
2016	Swaps (1)	(2)	6,000	90.28		—	—		—		—
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
2H16 (4)	Call (3)	NYMEX WTI	3,000	—			—		—		53.65
2017	Call (3)	NYMEX WTI	3,000	—			—		—		57.00

⁽¹⁾  Includes derivative instruments assumed by our subsidiary, NBL Texas, LLC, in connection with the Rosetta Merger.

⁽²⁾  The index for these derivative instruments is NYMEX WTI and Argus LLS indices.

⁽³⁾ We have entered into crude oil derivative enhanced swaps with strike prices that are above the market value as of trade commencement. To effect the enhanced swap structure, we sold call options to the applicable counterparty to receive the above market terms.

⁽⁴⁾ We have entered into NYMEX WTI swap contracts for 3,000 Bbls per day for the first half of 2016 resulting in the difference in hedge volumes for the full year.

As of September 30, 2015, the following natural gas derivative contracts were outstanding:

				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
2015	Swaps	NYMEX HH	140,000	$	4.30	$	—	$	—	$	—
2015	Swaps (1)	(2)	50,000	$	4.13	$	—	$	—	$	—
2015	Three-Way Collars	NYMEX HH	150,000	—		3.58		4.25		5.04
2015	Two-Way Collars (1)	(2)	50,000	—		—		3.60		5.04
2016	Swaps (3)	NYMEX HH	40,000	3.60		—		—		—
2016	Swaps (1)	(2)	30,000	4.04		—		—		—
2016	Two-Way Collars	NYMEX HH	30,000	—		—		3.00		3.50
2016	Two-Way Collars (1)	(2)	30,000	—		—		3.50		5.60
2016	Three-Way Collars	NYMEX HH	90,000	—		2.83		3.42		3.90

⁽¹⁾  Includes derivative instruments assumed by our subsidiary, NBL Texas, LLC, in connection with the Rosetta Merger.

⁽²⁾  The index for these derivative instruments includes a combination of Houston Ship Channel and Tennessee Zone 0 indices.

⁽³⁾  We have entered into certain natural gas derivative contracts (swaptions), 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.

As of September 30, 2015, we had assumed the following natural gas liquid derivative instruments, all of which were assumed by our subsidiary, NBL Texas, LLC, in connection with the Rosetta Merger. The index for these derivative instruments is the Mont Belvieu index.

				Swaps		Collars
Settlement Period	Type of Contract	Index	Gallons Per Day	Weighted Average Fixed Price		Weighted Average  Short Put  Price		Weighted Average Floor Price		Weighted Average  Ceiling Price
2015	Swaps	NGL-Ethane	104,000	$	0.27	$	—	$	—	$	—
2015	Swaps	NGL-Propane	73,500	1.03		—		—		—
2015	Swaps	NGL-Isobutane	25,900	1.26		—		—		—
2015	Swaps	NGL-Normal Butane	24,300	1.25		—		—		—
2015	Swaps	NGL-Pentanes Plus	24,300	1.85		—		—		—

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
	September 30, 2015			December 31, 2014			September 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	$	650	Current Assets	$	710	Current Liabilities	$	—	Current Liabilities	$	—
	Noncurrent Assets	104		Noncurrent Assets	180		Noncurrent Liabilities	6		Noncurrent Liabilities	—
Total		$	754		$	890		$	6		$	—

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

	Three Months Ended September 30,						Nine Months Ended September 30,
(millions)	2015			2014			2015			2014
Cash (Received) Paid in Settlement of Commodity Derivative Instruments
Crude Oil	$	(235	)	$	14		$	(578	)	$	87
Natural Gas	(42		)	(2		)	(98		)	8
NGLs	(7		)	—			(7		)	—
Total Cash (Received) Paid in Settlement of Commodity Derivative Instruments	(284		)	12			(683		)	95
Non-cash Portion of (Gain) Loss on Commodity Derivative Instruments
Crude Oil	4			(374		)	301			(155		)
Natural Gas	3			(23		)	41			(14		)
NGLs	10			—			10			—
Total Non-cash Portion of (Gain) Loss on Commodity Derivative Instruments	17			(397		)	352			(169		)
(Gain) Loss on Commodity Derivative Instruments
Crude Oil	(231		)	(360		)	(277		)	(68		)
Natural Gas	(39		)	(25		)	(57		)	(6		)
NGLs	3			—			3			—
Total (Gain) Loss on Commodity Derivative Instruments	$	(267	)	$	(385	)	$	(331	)	$	(74	)