Derivative Instruments

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

The Company seeks to reduce its exposure to commodity price volatility by hedging a portion of its production through commodity derivative instruments. When the conditions for hedge accounting are met, the Company may designate its commodity derivatives as cash flow hedges. The changes in fair value of derivative instruments that qualify for hedge accounting treatment are recorded in other comprehensive income (loss) until the hedged oil or natural gas quantities are produced. If a derivative does not qualify for hedge accounting treatment, the changes in the fair value of the derivative are recorded in the income statement as derivative income (expense). At June 30, 2015, all of the Company's derivative instruments were designated as effective cash flow hedges.

Oil and gas sales include additions (reductions) related to the settlement of gas hedges of $4,181,000 and ($2,170,000), oil hedges of ($288,000) and ($672,000) and Ngl hedges of $136,000 and zero for the three months endedJune 30, 2015 and 2014, respectively. For the six month periods ended June 30, 2015 and 2014, oil and gas sales include additions (reductions) related to the settlement of gas hedges of $6,505,000 and ($5,139,000), oil hedges of ($261,000) and ($1,106,000) and Ngl hedges of $157,000zero, respectively.

As of June 30, 2015, the Company had entered into the following commodity derivative instruments:

Production Period	Instrument Type	Daily Volumes	Weighted Average Price
Natural Gas:
July 2015 - December 2015	Swap	40,000 Mmbtu	$3.62
July 2015 - June 2016	Swap	10,000 Mmbtu	$3.22
July 2015 - September 2015	Swap	5,000 Mmbtu	$2.89
Crude Oil:
July 2015 - December 2015	Swap (LLS)	500 Bbls	$56.68
Propane:
July 2015 - December 2015	Swap	250 Bbls	$25.62

LLS - Louisiana Light Sweet

At June 30, 2015, the Company had recognized accumulated other comprehensive income of approximately $3.6 million related to the estimated fair value of its effective cash flow hedges. Based on estimated future commodity prices as of June 30, 2015, the Company would reclassify approximately $3.6 million, net of taxes, of accumulated other comprehensive income into earnings during the next 12 months. These gains are expected to be reclassified to oil and gas sales based on the schedule of oil and gas volumes stipulated in the derivative contracts.

Derivatives designated as hedging instruments:

The following tables reflect the fair value of the Company’s effective cash flow hedges in the consolidated financial statements (in thousands):

Effect of Cash Flow Hedges on the Consolidated Balance Sheet at June 30, 2015 and December 31, 2014:

	Commodity Derivatives
Period	Balance Sheet Location	Fair Value
June 30, 2015	Derivative asset	$	6,247
June 30, 2015	Derivative liability	$	(572	)
December 31, 2014	Derivative asset	$	8,631

Effect of Cash Flow Hedges on the Consolidated Statement of Operations for the three months ended June 30, 2015 and 2014:

Instrument	Amount of Loss Recognized in Other Comprehensive Income			Location of Gain (Loss) Reclassified into Income	Amount of Gain (Loss) Reclassified into Income
Commodity Derivatives at June 30, 2015	$	(1,471	)	Oil and gas sales	$	4,029
Commodity Derivatives at June 30, 2014	$	(1,982	)	Oil and gas sales	$	(2,842	)

Effect of Cash Flow Hedges on the Consolidated Statement of Operations for the six months ended June 30, 2015 and 2014 :

Instrument	Amount of Gain (Loss) Recognized in Other Comprehensive Income			Location of Gain (Loss) Reclassified into Income	Amount of Gain (Loss) Reclassified into Income
Commodity Derivatives at June 30, 2015	$	3,446		Oil and gas sales	$	6,401
Commodity Derivatives at June 30, 2014	$	(8,803	)	Oil and gas sales	$	(6,245	)