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Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2019
Derivative Instruments Not Designated as Hedging Instruments [Abstract]  
Derivative Instruments and Hedging Activities Disclosure [Text Block] COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS

Our results of operations and operating cash flows are affected by changes in market prices for crude oil, natural gas and NGLs. To manage a portion of our exposure to price volatility from producing crude oil and natural gas we enter into commodity derivative contracts to protect against price declines in future periods. While we structure these commodity derivatives to reduce our exposure to decreases in commodity prices, they also limit the benefit we might otherwise receive from price increases.
 
We believe our commodity derivative instruments continue to be effective in achieving the risk management objectives for which they were intended. As of March 31, 2019, we had derivative instruments, which were comprised of collars, fixed-price swaps and basis protection swaps, in place for a portion of our anticipated 2019, 2020 and 2021 production. Our commodity derivative contracts have been entered into at no upfront cost to us as we hedge our anticipated production at the then-prevailing commodity market prices, without adjustment for premium or discount.

As of March 31, 2019, we had the following outstanding derivative contracts. When aggregating multiple contracts, the weighted average contract price is disclosed.
 
 
Collars
 
Fixed-Price Swaps
 
 
Commodity/ Index/
Maturity Period
 
Quantity
(Crude oil -
MBls
Natural Gas - BBtu)
 
Weighted-Average
Contract Price
 
Quantity (Crude Oil - MBbls
Gas and Basis-
BBtu )
 
Weighted-
Average
Contract
Price
 
Fair Value
March 31,
2019 (1)
(in thousands)
 
 
Floors
 
Ceilings
 
 
 
Crude Oil
 
 
 
 
 
 
 
 
 
 
 
 
NYMEX
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
2,050

 
$
56.22

 
$
67.77

 
6,150

 
$
54.25

 
$
(35,191
)
2020
 
3,600

 
55.00

 
71.68

 
5,600

 
61.55

 
27,831

2021
 
—

 
—

 
—

 
600

 
57.23

 
350

Total Crude Oil
 
5,650

 
 
 
 
 
12,350

 
 
 
$
(7,010
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Natural Gas
 
 
 
 
 
 
 
 
 
 
 
 
NYMEX
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
—

 
$
—

 
$
—

 
22,746

 
$
2.91

 
$
2,641

Dominion South
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
—

 
—

 
—

 
113

 
2.56

 
6

2020
 
—

 
—

 
—

 
14

 
2.54

 
—

Total Natural Gas
 
—

 
 
 
 
 
22,873

 
 
 
$
2,647

 
 
 
 
 
 
 
 
 
 
 
 
 
Basis Protection - Natural Gas
 
 
 
 
 
 
 
 
 
 
 
 
CIG
 
 
 
 
 
 
 
 
 
 
 
 
2019
 
—

 
$
—

 
$
—

 
22,683

 
$
(0.76
)
 
$
(3,796
)
Total Basis Protection - Natural Gas
 
—

 
 
 
 
 
22,683

 
 
 
$
(3,796
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Commodity Derivatives Fair Value
 
 
 
 
 
 
 
$
(8,159
)
_____________
(1)
Approximately 43.6 percent of the fair value of our commodity derivative assets and 7.4 percent of the fair value of our commodity derivative liabilities were measured using significant unobservable inputs (Level 3).

We have not elected to designate any of our derivative instruments as cash flow hedges; therefore, these instruments do not qualify for hedge accounting. Accordingly, changes in the fair value of our derivative instruments are recorded in the condensed consolidated statements of operations.

The following table presents the balance sheet location and fair value amounts of our derivative instruments on the condensed consolidated balance sheets:
 
 
 
 
 
Fair Value
Derivative Instruments:
 
Condensed Consolidated Balance Sheet Line Item
 
March 31, 2019
 
December 31, 2018
 
 
 
 
 
(in thousands)
Derivative assets:
Current
 
 
 
 
 
 
 
Commodity derivative contracts
 
Fair value of derivatives
 
$
13,330

 
$
84,492

 
Non-current
 
 
 
 
 
 
 
Commodity derivative contracts
 
Fair value of derivatives
 
24,225

 
93,722

Total derivative assets
 
 
 
$
37,555

 
$
178,214

 
 
 
 
 
 
 
 
Derivative liabilities:
Current
 
 
 
 
 
 
 
Commodity derivative contracts
 
Fair value of derivatives
 
$
40,103

 
$
748

 
Basis protection derivative contracts
 
Fair value of derivatives
 
3,796

 
2,616

 
 
 
 
 
43,899

 
3,364

 
Non-current
 
 
 
 
 
 
 
Commodity derivative contracts
 
Fair value of derivatives
 
1,815

 
1,364

Total derivative liabilities
 
 
 
$
45,714

 
$
4,728


    
The following table presents the impact of our derivative instruments on our condensed consolidated statements of operations:
 
 
Three Months Ended March 31,
Condensed Consolidated Statement of Operations Line Item
 
2019
 
2018
 
 
(in thousands)
Commodity price risk management loss, net
 
 
 
 
Net settlements
 
$
(8,452
)
 
$
(26,038
)
Net change in fair value of unsettled derivatives
 
(181,622
)
 
(21,202
)
Total commodity price risk management loss, net
 
$
(190,074
)
 
$
(47,240
)
 
 
 
 
 


Our financial derivative agreements contain master netting provisions that provide for the net settlement of contracts through a single payment in the event of early termination. We have elected not to offset the fair value positions recorded on our condensed consolidated balance sheets.

The following table reflects the impact of netting agreements on gross derivative assets and liabilities:
As of March 31, 2019
 
Derivative Instruments, Gross
 
Effect of Master Netting Agreements
 
Derivative Instruments, Net
 
 
(in thousands)
Asset derivatives:
 
 
 
 
 
 
Derivative instruments, at fair value
 
$
37,555

 
$
(27,793
)
 
$
9,762

 
 
 
 
 
 
 
Liability derivatives:
 
 
 
 
 
 
Derivative instruments, at fair value
 
$
45,714

 
$
(27,793
)
 
$
17,921

 
 
 
 
 
 
 

As of December 31, 2018
 
Derivative Instruments, Gross
 
Effect of Master Netting Agreements
 
Derivative Instruments, Net
 
 
(in thousands)
Asset derivatives:
 
 
 
 
 
 
Derivative instruments, at fair value
 
$
178,214

 
$
(3,985
)
 
$
174,229

 
 
 
 
 
 
 
Liability derivatives:
 
 
 
 
 
 
Derivative instruments, at fair value
 
$
4,728

 
$
(3,985
)
 
$
743