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Derivative Financial Instruments
 9 Months Ended
Sep. 30, 2020
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 such as collars, fixed-price swaps and basis protection swaps, to protect against price declines in future periods. We do not enter into derivative contracts for speculative or trading purposes.

Collars are designed to establish floor and ceiling prices on anticipated future oil or gas production, while swaps establish a fixed price for anticipated future oil or gas production. 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. Depending on changes in oil and gas futures markets and management’s view of underlying supply and demand trends, we may increase or decrease our derivative positions from current levels. As of September 30, 2020, we had derivative instruments in place for a portion of our anticipated 2020, 2021 and 2022 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 September 30, 2020, we had the following outstanding derivative contracts. When aggregating multiple contracts, the weighted-average contract price is shown.
 CollarsFixed-Price Swaps 
Commodity/ Index/
Maturity Period
Quantity
(Crude oil -
MBbls
Natural Gas - BBtu)
Weighted-Average
Contract Price
Quantity (Crude Oil - MBbls
Gas and Basis-
BBtu)
Weighted-
Average
Contract
Price
Fair Value
September 30,
2020 (1)
(in thousands)
FloorsCeilings
Crude Oil
NYMEX
2020900 $55.00 $71.68 3,174 $58.90 $71,119 
2021996 35.00 46.22 9,180 46.90 40,547 
2022— — — 3,984 40.01 (13,433)
Total Crude Oil1,896 16,338 $98,233 
Natural Gas
NYMEX
202017,308 $2.02 $2.34 1,000 $2.30 $(6,576)
202162,625 2.46 2.86 31,800 2.40 (31,070)
20228,700 2.50 2.79 8,700 2.62 (21)
Total Natural Gas88,633 41,500 $(37,667)
Basis Protection - Natural Gas
CIG
2020— $— $— 17,350 $(0.48)$(4,627)
2021— — — 94,425 (0.46)(13,433)
2022— — — 17,400 (0.36)(733)
Waha
2020— — — 1,000 (1.40)(511)
Total Basis Protection - Natural Gas— 130,175 $(19,304)
Commodity Derivatives Fair Value$41,262 
_____________
(1)Approximately 14 percent of the fair value of our commodity derivative assets and 28 percent of the fair value of our commodity derivative liabilities were measured using significant unobservable inputs (Level 3).

Subsequent to September 30, 2020, we entered into the following commodity derivative positions covering our natural gas production:

 CollarsFixed-Price Swaps
Commodity/ Index/
Maturity Period
Quantity
(BBtu)
Weighted-Average
Contract Price
Quantity
(BBtu)
Weighted-
Average
Contract
Price
FloorsCeilings
NYMEX
20228,700 $2.50 $3.00 — — 
Basis Protection
CIG
2022— — — 8,700 $(0.31)

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 condensed consolidated balance sheet line item and fair value amounts of our derivative instruments as of September 30, 2020 and December 31, 2019:
Fair Value
Derivative Instruments:Condensed Consolidated Balance Sheet Line ItemSeptember 30, 2020December 31, 2019
(in thousands)
Derivative assets:Current
Commodity derivative contracts Fair value of derivatives$138,652 $27,766 
Basis protection derivative contracts Fair value of derivatives— 312 
138,652 28,078 
Non-current
Commodity derivative contracts Fair value of derivatives13,027 3,746 
Total derivative assets$151,679 $31,824 
Derivative liabilities:Current
Commodity derivative contracts Fair value of derivatives$50,969 $529 
Basis protection derivative contracts Fair value of derivatives12,988 2,392 
63,957 2,921 
Non-current
Commodity derivative contracts Fair value of derivatives40,144 692 
Basis protection derivative contracts Fair value of derivatives6,316 — 
46,460 692 
Total derivative liabilities$110,417 $3,613 
    
The following table presents the impact of our derivative instruments on our condensed consolidated statements of operations:
Three Months Ended September 30,Nine Months Ended September 30,
Condensed Consolidated Statement of Operations Line Item2020201920202019
(in thousands)
Commodity price risk management gain (loss), net
Net settlements$66,895 $1,845 $227,513 $(19,800)
Net change in fair value of unsettled derivatives(134,956)53,022 18,338 (68,058)
Total commodity price risk management gain (loss), net$(68,061)$54,867 $245,851 $(87,858)

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 September 30, 2020Derivative Instruments, GrossEffect of Master Netting AgreementsDerivative Instruments, Net
(in thousands)
Derivative assets:
Derivative instruments, at fair value$151,679 $(51,823)$99,856 
Derivative liabilities:
Derivative instruments, at fair value$110,417 $(51,823)$58,594 
As of December 31, 2019Derivative Instruments, GrossEffect of Master Netting AgreementsDerivative Instruments, Net
(in thousands)
Derivative assets:
Derivative instruments, at fair value$31,824 $(2,619)$29,205 
Derivative liabilities:
Derivative instruments, at fair value$3,613 $(2,619)$994