Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Note 12. Derivative Instruments and Hedging Activities

Objective and Strategies for Using Derivative Instruments We enter into crude oil and natural gas price hedging arrangements to mitigate effects of commodity price volatility and enhance the predictability of cash flows for a portion of our crude oil and natural gas 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.

Unsettled Commodity Derivative Instruments As of September 30, 2019, the following crude oil derivative contracts were outstanding:



				Swaps					Collars
Settlement Period	Type of Contract	Index	Bbls Per Day	Weighted Average Differential			Weighted Average Fixed Price		Weighted Average Short Put Price		Weighted Average Floor Price		Weighted Average Ceiling Price
2019	Swaps	NYMEX WTI	35,000	$	—		$	59.04	$	—	$	—	$	—
2019	Three-Way Collars	NYMEX WTI	33,000	—			—		49.35		59.35		72.25
2019	Sold Calls ⁽¹⁾	NYMEX WTI	4,000	—			60.00		—		—		—
2019	Swaps	ICE Brent	5,000	—			57.00		—		—		—
2019	Three-Way Collars	ICE Brent	3,000	—			—		43.00		50.00		64.07
2019	Basis Swaps	⁽²⁾	27,000	(3.23		)	—		—		—		—
2020	Swaption	NYMEX WTI	12,000	—			59.73		—		—		—
2020	Sold Calls ⁽¹⁾	NYMEX WTI	8,000	—			65.59		—		—		—
2020	Swaps	NYMEX WTI	28,000	—			58.09		—		—		—
2020	Three-Way Collars	NYMEX WTI	30,000	—			—		48.33		57.87		64.27
2020	Basis Swaps	⁽²⁾	15,000	(5.01		)	—		—		—		—


⁽¹⁾	We entered into crude oil contracts receiving premiums for establishing a maximum price that would be settled for the notional volumes covered by the respective contracts.


⁽²⁾	We entered into crude oil basis swap contracts to establish a fixed amount for the differential between pricing in Midland, Texas, and Cushing, Oklahoma. The weighted average differential represents the amount of reduction to Cushing, Oklahoma prices for the notional volumes covered by the basis swap contracts.

As of September 30, 2019, the following natural gas derivative contracts were outstanding:



				Swaps					Collars
Settlement Period	Type of Contract	Index	MMBtu Per Day	Weighted Average Differential			Weighted Average Fixed Price		Weighted Average Short Put Price		Weighted Average Floor Price		Weighted Average Ceiling Price
2019	Three-Way Collars	NYMEX HH	104,000	$	—		$	—	$	2.25	$	2.65	$	2.95
2019	Swaps	NYMEX HH	46,000	—			3.00		—		—		—
2019	Basis Swaps	CIG ⁽¹⁾	123,500	(0.64		)	—		—		—		—
2019	Basis Swaps	WAHA ⁽¹⁾	47,500	(1.28		)	—		—		—		—
2020	Swaps	NYMEX HH	90,000	—			2.60		—		—		—
2020	Sold Puts ⁽²⁾	NYMEX HH	90,000	—			—		2.15		—		—
2020	Swaption	NYMEX HH	90,000	—			2.60		—		—		—
2020	Basis Swaps	CIG ⁽¹⁾	54,000	(0.61		)	—		—		—		—
2020	Basis Swaps	WAHA ⁽¹⁾	49,500	(1.05		)	—		—		—		—
2021	Basis Swaps	WAHA ⁽¹⁾	14,000	(0.60		)	—		—		—		—


⁽¹⁾	We entered into natural gas basis swap contracts to establish a fixed amount for the differential between the noted index pricing and NYMEX Henry Hub. The weighted average differential represents the amount of reduction to NYMEX Henry Hub prices for the notional volumes covered by the basis swap contracts.


⁽²⁾	We entered into natural gas contracts receiving premiums for establishing a minimum price that would be settled for the notional volumes covered by the respective contracts.

Fair Value Amounts The fair values of commodity derivative instruments in our consolidated balance sheets were as follows (in millions):



Asset Derivative Instruments					Liability Derivative Instruments
Balance Sheet Location	September 30, 2019		December 31, 2018		Balance Sheet Location	September 30, 2019		December 31, 2018
Other Current Assets	$	90	$	180	Other Current Liabilities	$	10	$	1
Other Noncurrent Assets	25		—		Other Noncurrent Liabilities	3		26
Total	$	115	$	180		$	13	$	27

See Note 13. Fair Value Measurements and Disclosures for a discussion of methods and assumptions used to estimate the fair values of our derivative instruments.

Gains and Losses on Commodity Derivative Instruments The effect of commodity derivative instruments on our consolidated statements of operations and comprehensive income (loss) was as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
(millions)	2019			2018			2019			2018
Cash (Received) Paid in Settlement of Commodity Derivative Instruments
Crude Oil	$	(6	)	$	68		$	(8	)	$	164
Natural Gas	(7		)	(1		)	(20		)	(4		)
Total Cash (Received) Paid in Settlement of Commodity Derivative Instruments	(13		)	67			(28		)	160
Non-cash Portion of (Gain) Loss on Commodity Derivative Instruments
Crude Oil	(115		)	85			54			316
Natural Gas	(1		)	3			(3		)	7
Total Non-cash Portion of (Gain) Loss on Commodity Derivative Instruments	(116		)	88			51			323
(Gain) Loss on Commodity Derivative Instruments
Crude Oil	(121		)	153			46			480
Natural Gas	(8		)	2			(23		)	3
Total (Gain) Loss on Commodity Derivative Instruments	$	(129	)	$	155		$	23		$	483