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Derivative Instruments
 6 Months Ended
Jun. 30, 2017
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, 2017, the Company's derivative instruments were designated as effective cash flow hedges.

Oil and gas sales include additions related to the settlement of gas hedges of $108,000 and $1,155,000 for the three months ended June 30, 2017 and 2016, respectively. Oil and gas sales include (reductions) additions related to the settlement of gas hedges of ($214,000) and $2,187,000 for the six months ended June 30, 2017 and 2016, respectively.
As of June 30, 2017, the Company had entered into the following commodity derivative instruments:
Production Period
Instrument
Type
 
Daily Volumes
 
Weighted
Average Price
Natural Gas:
 
 
 
 
 
July - December 2017
Swap
 
30,000 Mmbtu
 
$3.22
October - December 2017
Swap
 
10,000 Mmbtu
 
$3.22
January - March 2018
Swap
 
35,000 Mmbtu
 
$3.24

At June 30, 2017, the Company had recognized accumulated other comprehensive income of approximately $0.3 million related to the estimated fair value of its effective cash flow hedges. Based on estimated future commodity prices as of June 30, 2017, the Company would reclassify approximately $0.3 million, net of taxes, of accumulated other comprehensive income into oil and gas sales during the next twelve months.
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 Sheets at June 30, 2017 and December 31, 2016:    
 
Commodity Derivatives
Period
Balance Sheet
Location
Fair Value
June 30, 2017
Derivative asset
$
966

June 30, 2017
Derivative liability
$
(457
)
December 31, 2016
Derivative liability
$
(3,947
)
December 31, 2016
Other long-term liabilities
$
(803
)

Effect of Cash Flow Hedges on the Consolidated Statements of Operations and Comprehensive Loss for the three months ended June 30, 2017 and 2016:
Instrument
Amount of Gain (Loss)
Recognized in Other
Comprehensive Income
 
Location of
Gain Reclassified
into Income
 
Amount of Gain Reclassified into
oil and gas sales
Commodity Derivatives at June 30, 2017
$
2,179

 
Oil and gas sales
 
$
108

Commodity Derivatives at June 30, 2016
$
(595
)
 
Oil and gas sales
 
$
1,155



Effect of Cash Flow Hedges on the Consolidated Statements of Operations and Comprehensive Loss for the six months ended June 30, 2017 and 2016:
Instrument
Amount of Gain  Recognized in Other
Comprehensive Income
 
Location of
Gain Reclassified
into Income
 
Amount of Gain (Loss) Reclassified into oil and gas sales
Commodity Derivatives at June 30, 2017
$
5,045

 
Oil and gas sales
 
$
(214
)
Commodity Derivatives at June 30, 2016
$
206

 
Oil and gas sales
 
$
2,187