Derivative Instruments and Hedging Activities (Tables)
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12 Months Ended |
Dec. 31, 2014
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Derivative Instruments and Hedging Activities Disclosure [Abstract] |
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value |
The following table reflects the fair value of the Company’s derivative instruments for the periods presented:
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Balance Sheet Presentation
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Asset Fair Value
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Liability Fair Value
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Net Derivative Fair Value
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Commodity
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Classification
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Line Description
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12/31/2014
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12/31/2013
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12/31/2014
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12/31/2013
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12/31/2014
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12/31/2013
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Derivatives not designated as Hedging Instruments under ASC 815
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Natural gas
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Current
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Fair value of derivatives
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$
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1,262
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$
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60
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$
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(7)
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$
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—
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$
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1,255
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$
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60
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Natural gas
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Non-current
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Other long-term liabilities
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—
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—
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—
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(72)
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—
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(72)
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Oil
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Current
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Fair value of derivatives
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26,588
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—
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(1,242)
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(1,036)
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25,346
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(1,036)
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Total
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$
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27,850
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$
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60
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$
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(1,249)
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$
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(1,108)
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$
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26,601
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$
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(1,048)
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As previously discussed, the Company’s derivative contracts are subject to master netting arrangements. The Company’s policy is to present the fair value of derivative contracts on a net basis in the consolidated balance sheet. The following presents the impact of this presentation to the Company’s recognized assets and liabilities for the periods indicated:
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For the Year Ended December 31, 2014
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Presented without
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As Presented with
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Effects of Netting
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Effects of Netting
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Effects of Netting
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Current assets: Fair value of derivatives
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$
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27,850
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$
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—
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$
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27,850
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Current liabilities: Fair value of derivatives
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$
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(1,249)
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$
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—
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$
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(1,249)
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For the Year Ended December 31, 2013
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Presented without
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As Presented with
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Effects of Netting
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Effects of Netting
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Effects of Netting
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Current assets: Fair value of derivatives
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$
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8
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$
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52
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$
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60
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Current liabilities: Fair value of derivatives
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1,088
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(52)
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1,036
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Long-term liabilities: Fair value of derivatives
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$
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(72)
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$
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—
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$
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(72)
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Schedule of Gain or Loss on Derivative Contracts |
For the periods indicated, the Company recorded the following related to its derivatives in the consolidated statement of operations as gain or loss on derivative contracts:
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For the Year Ended December 31,
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2014
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2013
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2012
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Natural gas derivatives
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Net gain (loss) on settlements
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$
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(84)
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$
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(148)
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$
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34
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Net gain (loss) on fair value adjustments
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1,267
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230
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(241)
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Total gain (loss)
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$
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1,183
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$
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82
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$
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(207)
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Oil derivatives
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Net gain (loss) on settlements
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$
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4,170
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$
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1,518
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$
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—
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Net gain (loss) on fair value adjustments
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26,383
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(2,960)
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1,924
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Total gain (loss)
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$
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30,553
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$
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(1,442)
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$
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1,924
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Total gain (loss) on derivative contracts
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$
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31,736
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$
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(1,360)
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$
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1,717
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Derivatives designated as hedging instruments under ASC 815
The Company’s derivative contracts executed prior to December 31, 2012 were designated as accounting hedges. The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations as an increase to oil and natural gas sales:
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For the Year Ended December 31,
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2014
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2013
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2012
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Amount of gain reclassified from OCI into income
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$
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—
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$
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—
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$
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1,420
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Schedule of Outstanding Oil and Natural Gas Derivative Contracts |
Listed in the tables below are the outstanding oil and natural gas derivative contracts as of December 31, 2014:
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For the Three Months Ended
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March 31,
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June 30,
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September 30,
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December 31,
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Oil contracts
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2015
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2015
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2015
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2015
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Collar contracts combined with short puts (three-way collar):
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Volume (MBbls)
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158
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159
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—
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—
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Price per Bbl
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Ceiling (short call)
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$
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99.10
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$
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99.10
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$
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—
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$
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—
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Floor (long put)
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$
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90.00
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$
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90.00
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$
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—
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$
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—
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Short put
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$
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75.00
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$
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75.00
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$
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—
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$
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—
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Swap contracts:
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Total volume (MBbls)
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171
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136
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129
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74
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Weighted average price per Bbl
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$
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92.25
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$
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92.18
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$
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92.25
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$
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92.20
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Put spreads:
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Volume (MBbls)
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—
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—
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138
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138
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Long put price per Bbl
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$
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—
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$
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—
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$
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90.00
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$
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90.00
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Short put price per Bbl
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$
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—
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$
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—
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$
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75.00
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$
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75.00
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For the Three Months Ended
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March 31,
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June 30,
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September 30,
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December 31,
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Natural gas contracts
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2015
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2015
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2015
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2015
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Collar contracts combined with short
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puts (three-way collar):
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Volume (BBtu)
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248
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227
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207
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161
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Weighted average price per MMBtu
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Ceiling (short call)
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$
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4.67
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$
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4.32
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$
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4.32
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$
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4.32
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Floor (long put)
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$
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4.00
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$
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3.85
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$
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3.85
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$
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3.85
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Short put
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$
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3.50
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$
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3.25
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$
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3.25
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$
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3.25
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Swap contracts:
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Total volume (BBtu)
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271
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237
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219
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228
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Weighted average price per MMBtu
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$
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3.98
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$
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3.98
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$
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3.98
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$
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3.96
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Short call contract:
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Short call volume (BBtu)
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108
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109
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110
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111
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Short call price per MMBtu
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$
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5.00
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$
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5.00
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$
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5.00
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$
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5.00
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Subsequent to December 31, 2014, the Company restructured its portfolio of benchmark West Texas Intermediate oil hedges for 2015 and separately entered into new swap arrangements. The Company converted all of its three-way collars and put spreads into new swap contracts with fixed swap prices that received a premium to prevailing swap price levels at the time to reflect the value of the monetized put spreads embedded in the converted non-swap structures. Following the restructuring transaction and addition of new swap contracts, we currently have an average of 4,165 barrels of oil per day hedged at a weighted average swap price of $70.89 per barrel for calendar year 2015.
In addition, the Company recently entered into basis differential swaps that provide for a fixed price spread between the Midland and NYMEX prices for West Texas Intermediate oil. The Company hedged an average of approximately 4,120 barrels of oil per day from March 2015 to December 2015 at a weighted average Midland swap spread of ($2.39) per barrel.
The following derivative contracts for oil were executed subsequent to December 31, 2014:
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For the Three Months Ended
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March 31,
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June 30,
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September 30,
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December 31,
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Oil contracts
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2015
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2015
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2015
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2015
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Swap contracts:
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Total volume (MBbls)
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231
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273
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253
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253
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Weighted average price per Bbl
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$
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60.77
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$
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60.09
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$
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59.83
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$
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59.83
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Swap contracts (Differentials):
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Total volume (MBbls)
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152
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400
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382
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326
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Weighted average price per Bbl
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$
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(2.41)
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$
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(2.40)
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$
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(2.39)
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$
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(2.38)
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