Annual report pursuant to Section 13 and 15(d)

Derivative Instruments and Hedging Activities (Tables)

v2.4.1.9
Derivative Instruments and Hedging Activities (Tables)
12 Months Ended
Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Presentation

 

Asset Fair Value

 

Liability Fair Value

 

Net Derivative Fair Value

Commodity

 

Classification

 

Line Description

 

12/31/2014

 

12/31/2013

 

12/31/2014

 

12/31/2013

 

12/31/2014

 

12/31/2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as Hedging Instruments under ASC 815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas

 

Current

 

Fair value of derivatives

 

$

1,262 

 

$

60 

 

$

(7)

 

$

 

$

1,255 

 

$

60 

Natural gas

 

Non-current

 

Other long-term liabilities

 

 

 

 

 

 

 

 

(72)

 

 

 

 

(72)

Oil

 

Current

 

Fair value of derivatives

 

 

26,588 

 

 

 

 

(1,242)

 

 

(1,036)

 

 

25,346 

 

 

(1,036)

 

 

Total

 

 

 

$

27,850 

 

$

60 

 

$

(1,249)

 

$

(1,108)

 

$

26,601 

 

$

(1,048)

 

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31, 2014

 

 

Presented without

 

 

 

As Presented with

 

 

Effects of Netting

 

Effects of Netting

 

Effects of Netting

Current assets: Fair value of derivatives

 

$

27,850 

 

$

 

$

27,850 

Current liabilities: Fair value of derivatives

 

$

(1,249)

 

$

 

$

(1,249)

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31, 2013

 

 

Presented without

 

 

 

As Presented with

 

 

Effects of Netting

 

Effects of Netting

 

Effects of Netting

Current assets: Fair value of derivatives

 

$

 

$

52 

 

$

60 

Current liabilities: Fair value of derivatives

 

 

1,088 

 

 

(52)

 

 

1,036 

Long-term liabilities: Fair value of derivatives

 

$

(72)

 

$

 

$

(72)

 

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

 

2014

 

 

2013

 

 

2012

Natural gas derivatives

 

 

 

 

 

 

 

 

 

Net gain (loss) on settlements

 

$

(84)

 

$

(148)

 

$

34 

Net gain (loss) on fair value adjustments

 

 

1,267 

 

 

230 

 

 

(241)

Total gain (loss)

 

$

1,183 

 

$

82 

 

$

(207)

Oil derivatives

 

 

 

 

 

 

 

 

 

Net gain (loss) on settlements

 

$

4,170 

 

$

1,518 

 

$

Net gain (loss) on fair value adjustments

 

 

26,383 

 

 

(2,960)

 

 

1,924 

Total gain (loss)

 

$

30,553 

 

$

(1,442)

 

$

1,924 

 

 

 

 

 

 

 

 

 

 

Total gain (loss) on derivative contracts

 

$

31,736 

 

$

(1,360)

 

$

1,717 

 

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

2014

 

2013

 

2012

Amount of gain reclassified from OCI into income

 

$

 

$

 

$

1,420 

 

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

March 31,

 

June 30,

 

September 30,

 

December 31,

Oil contracts

 

2015

 

2015

 

2015

 

2015

Collar contracts combined with short puts (three-way collar):

 

 

 

 

 

 

 

 

 

 

 

 

  Volume (MBbls)

 

 

158 

 

 

159 

 

 

 

 

  Price per Bbl

 

 

 

 

 

 

 

 

 

 

 

 

     Ceiling (short call)

 

$

99.10 

 

$

99.10 

 

$

 

$

     Floor (long put)

 

$

90.00 

 

$

90.00 

 

$

 

$

     Short put

 

$

75.00 

 

$

75.00 

 

$

 

$

Swap contracts:

 

 

 

 

 

 

 

 

 

 

 

 

  Total volume (MBbls)

 

 

171 

 

 

136 

 

 

129 

 

 

74 

  Weighted average price per Bbl

 

$

92.25 

 

$

92.18 

 

$

92.25 

 

$

92.20 

Put spreads:

 

 

 

 

 

 

 

 

 

 

 

 

  Volume (MBbls)

 

 

 

 

 

 

138 

 

 

138 

  Long put price per Bbl

 

$

 

$

 

$

90.00 

 

$

90.00 

  Short put price per Bbl

 

$

 

$

 

$

75.00 

 

$

75.00 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

March 31,

 

June 30,

 

September 30,

 

December 31,

Natural gas contracts

 

2015

 

2015

 

2015

 

2015

Collar contracts combined with short

 

 

 

 

 

 

 

 

 

 

 

 

puts (three-way collar):

 

 

 

 

 

 

 

 

 

 

 

 

  Volume (BBtu)

 

 

248 

 

 

227 

 

 

207 

 

 

161 

   Weighted average price per MMBtu

 

 

 

 

 

 

 

 

 

 

 

 

     Ceiling (short call)

 

$

4.67 

 

$

4.32 

 

$

4.32 

 

$

4.32 

     Floor (long put)

 

$

4.00 

 

$

3.85 

 

$

3.85 

 

$

3.85 

     Short put

 

$

3.50 

 

$

3.25 

 

$

3.25 

 

$

3.25 

Swap contracts:

 

 

 

 

 

 

 

 

 

 

 

 

  Total volume (BBtu)

 

 

271 

 

 

237 

 

 

219 

 

 

228 

  Weighted average price per MMBtu

 

$

3.98 

 

$

3.98 

 

$

3.98 

 

$

3.96 

Short call contract:

 

 

 

 

 

 

 

 

 

 

 

 

  Short call volume (BBtu)

 

 

108 

 

 

109 

 

 

110 

 

 

111 

  Short call price per MMBtu

 

$

5.00 

 

$

5.00 

 

$

5.00 

 

$

5.00 

 

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

March 31,

 

June 30,

 

September 30,

 

December 31,

Oil contracts

 

2015

 

2015

 

2015

 

2015

Swap contracts:

 

 

 

 

 

 

 

 

 

 

 

 

  Total volume (MBbls)

 

 

231 

 

 

273 

 

 

253 

 

 

253 

  Weighted average price per Bbl

 

$

60.77 

 

$

60.09 

 

$

59.83 

 

$

59.83 

Swap contracts (Differentials):

 

 

 

 

 

 

 

 

 

 

 

 

  Total volume (MBbls)

 

 

152 

 

 

400 

 

 

382 

 

 

326 

  Weighted average price per Bbl

 

$

(2.41)

 

$

(2.40)

 

$

(2.39)

 

$

(2.38)