Derivative Instruments and Hedging Activities (Tables)
|
9 Months Ended |
Sep. 30, 2019 |
|---|
| Derivative Instruments and Hedging Activities Disclosure [Abstract] |
|
| Schedule of Price Risk Derivatives |
These contingent payments are summarized in the tables below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year of Potential Settlement |
|
Threshold (a)
|
|
Contingent Payment Amount |
|
Threshold (a)
|
|
Contingent Payment Amount |
|
Fair Value as of September 30, 2019 (b)
|
|
Aggregate Settlements Limit(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
60,000 |
|
2019 |
|
Greater than $60/bbl, less than $65/bbl |
|
$9,000 |
|
Equal to or greater than $65/bbl |
|
$20,833 |
|
$116 |
|
|
2020 |
|
Greater than $60/bbl, less than $65/bbl |
|
$9,000 |
|
Equal to or greater than $65/bbl |
|
$20,833 |
|
$3,977 |
|
|
2021 |
|
Greater than $60/bbl, less than $65/bbl |
|
$9,000 |
|
Equal to or greater than $65/bbl |
|
$20,833 |
(c) |
$3,496 |
|
|
|
|
(a) |
The price used to determine whether the specified thresholds have been met is the average of the final monthly settlements for each month during each annual period end for NYMEX Light Sweet Crude Oil Futures, as reported by the CME Group Inc. |
|
|
(b) |
Contingent consideration to be received will be classified as cash flows from financing activities up to the initial recognition fair value of $8,512; amounts in excess of the initial recognition fair value will be classified as cash flows from operating activities.
|
(c)
In the event that the 2019 and 2020 prices exceed the $65/bbl threshold, the aggregate amount of contingent consideration is limited to $60,000, resulting in the potential reduction in settlement for 2021 to $18,334.
|
| Fair Value of Derivative Instruments |
The following table reflects the fair value of the Company’s derivative instruments for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2019 |
Derivative Instrument |
|
Balance Sheet Presentation |
|
Asset |
|
Liability |
|
Net Asset (Liability) |
Commodity - Oil |
|
Fair value of derivatives - Current |
|
$ |
23,487 |
|
|
$ |
(8,795 |
) |
|
$ |
14,692 |
|
Commodity - Natural gas |
|
Fair value of derivatives - Current |
|
1,429 |
|
|
(146 |
) |
|
1,283 |
|
Contingent consideration arrangement |
|
Fair value of derivatives - Current |
|
116 |
|
|
— |
|
|
116 |
|
Commodity - Oil |
|
Fair value of derivatives - Non-current |
|
3,736 |
|
|
(2,233 |
) |
|
1,503 |
|
Commodity - Natural gas |
|
Fair value of derivatives - Non-current |
|
— |
|
|
(340 |
) |
|
(340 |
) |
Contingent consideration arrangement |
|
Fair value of derivatives - Non-current |
|
7,473 |
|
|
— |
|
|
7,473 |
|
Totals |
|
|
|
$ |
36,241 |
|
|
$ |
(11,514 |
) |
|
$ |
24,727 |
|
|
|
|
|
|
|
|
|
|
As of December 31, 2018 |
Derivative Instrument |
|
Balance Sheet Presentation |
|
Asset |
|
Liability |
|
Net Asset (Liability) |
Commodity - Oil |
|
Fair value of derivatives - Current |
|
$ |
60,097 |
|
|
$ |
(10,480 |
) |
|
$ |
49,617 |
|
Commodity - Natural gas |
|
Fair value of derivatives - Current |
|
5,017 |
|
|
— |
|
|
5,017 |
|
Commodity - Oil |
|
Fair value of derivatives - Non-current |
|
— |
|
|
(5,672 |
) |
|
(5,672 |
) |
Commodity - Natural gas |
|
Fair value of derivatives - Non-current |
|
— |
|
|
(1,768 |
) |
|
(1,768 |
) |
Totals |
|
|
|
$ |
65,114 |
|
|
$ |
(17,920 |
) |
|
$ |
47,194 |
|
|
| Schedule of Offsetting Assets |
The following presents the impact of this presentation to the Company’s recognized assets and liabilities for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2019 |
|
Presented without |
|
|
|
As Presented with |
|
Effects of Netting |
|
Effects of Netting |
|
Effects of Netting |
Current assets: Fair value of commodity derivatives |
$ |
35,936 |
|
|
$ |
(11,020 |
) |
|
$ |
24,916 |
|
Long-term assets: Fair value of commodity derivatives |
7,464 |
|
|
(3,728 |
) |
|
3,736 |
|
|
|
|
|
|
|
Current liabilities: Fair value of commodity derivatives |
$ |
(19,961 |
) |
|
$ |
11,020 |
|
|
$ |
(8,941 |
) |
Long-term liabilities: Fair value of commodity derivatives |
(6,301 |
) |
|
3,728 |
|
|
(2,573 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2018 |
|
Presented without |
|
|
|
As Presented with |
|
Effects of Netting |
|
Effects of Netting |
|
Effects of Netting |
Current assets: Fair value of commodity derivatives |
$ |
78,091 |
|
|
$ |
(12,977 |
) |
|
$ |
65,114 |
|
|
|
|
|
|
|
Current liabilities: Fair value of commodity derivatives |
$ |
(23,457 |
) |
|
$ |
12,977 |
|
|
$ |
(10,480 |
) |
Long-term liabilities: Fair value of commodity derivatives |
(7,440 |
) |
|
— |
|
|
(7,440 |
) |
|
| Schedule of Offsetting Liabilities |
The following presents the impact of this presentation to the Company’s recognized assets and liabilities for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2019 |
|
Presented without |
|
|
|
As Presented with |
|
Effects of Netting |
|
Effects of Netting |
|
Effects of Netting |
Current assets: Fair value of commodity derivatives |
$ |
35,936 |
|
|
$ |
(11,020 |
) |
|
$ |
24,916 |
|
Long-term assets: Fair value of commodity derivatives |
7,464 |
|
|
(3,728 |
) |
|
3,736 |
|
|
|
|
|
|
|
Current liabilities: Fair value of commodity derivatives |
$ |
(19,961 |
) |
|
$ |
11,020 |
|
|
$ |
(8,941 |
) |
Long-term liabilities: Fair value of commodity derivatives |
(6,301 |
) |
|
3,728 |
|
|
(2,573 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2018 |
|
Presented without |
|
|
|
As Presented with |
|
Effects of Netting |
|
Effects of Netting |
|
Effects of Netting |
Current assets: Fair value of commodity derivatives |
$ |
78,091 |
|
|
$ |
(12,977 |
) |
|
$ |
65,114 |
|
|
|
|
|
|
|
Current liabilities: Fair value of commodity derivatives |
$ |
(23,457 |
) |
|
$ |
12,977 |
|
|
$ |
(10,480 |
) |
Long-term liabilities: Fair value of commodity derivatives |
(7,440 |
) |
|
— |
|
|
(7,440 |
) |
|
| Schedule of Gain or Loss on Derivative Contracts |
For the periods indicated, the Company recorded the following in the consolidated statements of operations as a gain or loss on derivative contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Oil derivatives |
|
|
|
|
|
|
|
Net gain (loss) on settlements |
$ |
(1,045 |
) |
|
$ |
(9,306 |
) |
|
$ |
(7,048 |
) |
|
$ |
(26,353 |
) |
Net gain (loss) on fair value adjustments |
25,767 |
|
|
(24,476 |
) |
|
(27,750 |
) |
|
(28,720 |
) |
Total gain (loss) on oil derivatives |
24,722 |
|
|
(33,782 |
) |
|
(34,798 |
) |
|
(55,073 |
) |
Natural gas derivatives |
|
|
|
|
|
|
|
Net gain (loss) on settlements |
2,056 |
|
|
67 |
|
|
6,612 |
|
|
675 |
|
Net gain (loss) on fair value adjustments |
(733 |
) |
|
(624 |
) |
|
(2,306 |
) |
|
(976 |
) |
Total gain (loss) on natural gas derivatives |
1,323 |
|
|
(557 |
) |
|
4,306 |
|
|
(301 |
) |
Contingent consideration arrangement |
|
|
|
|
|
|
|
Net gain (loss) on fair value adjustments |
(4,236 |
) |
|
— |
|
|
(923 |
) |
|
— |
|
Total gain (loss) on derivatives |
$ |
21,809 |
|
|
$ |
(34,339 |
) |
|
$ |
(31,415 |
) |
|
$ |
(55,374 |
) |
|
| 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 September 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Remainder |
|
For the Full Year |
|
For the Full Year |
|
Oil contracts (WTI) |
of 2019 |
|
of 2020 |
|
of 2021 |
|
Puts |
|
|
|
|
|
|
Total volume (Bbls) |
230,000 |
|
|
— |
|
|
— |
|
|
Weighted average price per Bbl |
$ |
65.00 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Put spreads |
|
|
|
|
|
|
Total volume (Bbls) |
230,000 |
|
|
— |
|
|
— |
|
|
Weighted average price per Bbl |
|
|
|
|
|
|
Floor (long put) |
$ |
65.00 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Floor (short put) |
$ |
42.50 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Collar contracts with short puts (three-way collars) |
|
|
|
|
|
|
Total volume (Bbls) |
1,196,000 |
|
|
5,124,000 |
|
|
— |
|
|
Weighted average price per Bbl |
|
|
|
|
|
|
Ceiling (short call) |
$ |
67.46 |
|
|
$ |
65.46 |
|
|
$ |
— |
|
|
Floor (long put) |
$ |
56.54 |
|
|
$ |
55.45 |
|
|
$ |
— |
|
|
Floor (short put) |
$ |
43.65 |
|
|
$ |
44.66 |
|
|
$ |
— |
|
|
Collar contracts (two-way collars) |
|
|
|
|
|
|
Total volume (Bbls) |
276,000 |
|
|
— |
|
|
— |
|
|
Weighted average price per Bbl |
|
|
|
|
|
|
Ceiling (short call) |
$ |
60.00 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Floor (long put) |
$ |
55.00 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Short call |
|
|
|
|
|
|
Total volume (Bbls) |
— |
|
|
— |
|
|
1,825,000 |
|
(a) |
Weighted average price per Bbl |
$ |
— |
|
|
$ |
— |
|
|
$ |
63.00 |
|
|
Swap contracts |
|
|
|
|
|
|
Total volume (Bbls) |
276,000 |
|
|
1,098,000 |
|
|
— |
|
|
Weighted average price per Bbl |
$ |
60.17 |
|
|
$ |
56.17 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
Oil contracts (Brent ICE) |
|
|
|
|
|
|
Collar contracts with short puts (three-way collars) |
|
|
|
|
|
|
Total volume (Bbls) |
— |
|
|
837,500 |
|
|
— |
|
|
Weighted average price per Bbl |
|
|
|
|
|
|
Ceiling (short call) |
$ |
— |
|
|
$ |
70.00 |
|
|
$ |
— |
|
|
Floor (long put) |
$ |
— |
|
|
$ |
58.24 |
|
|
$ |
— |
|
|
Floor (short put) |
$ |
— |
|
|
$ |
50.00 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
Oil contracts (Midland basis differential) |
|
|
|
|
|
|
Swap contracts |
|
|
|
|
|
|
Total volume (Bbls) |
2,176,000 |
|
|
4,576,000 |
|
|
1,095,000 |
|
|
Weighted average price per Bbl |
$ |
(2.50 |
) |
|
$ |
(1.29 |
) |
|
$ |
1.00 |
|
|
|
|
|
|
|
|
|
Oil contracts (Argus Houston MEH basis differential) |
|
|
|
|
|
|
Swap contracts |
|
|
|
|
|
|
Total volume (Bbls) |
— |
|
|
1,439,205 |
|
|
— |
|
|
Weighted average price per Bbl |
$ |
— |
|
|
$ |
2.40 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
Natural gas contracts (Henry Hub) |
|
|
|
|
|
|
Collar contracts (two-way collars) |
|
|
|
|
|
|
Total volume (MMBtu) |
598,000 |
|
|
— |
|
|
— |
|
|
Weighted average price per MMBtu |
|
|
|
|
|
|
Ceiling (short call) |
$ |
3.50 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Floor (long put) |
$ |
3.13 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Swap contracts |
|
|
|
|
|
|
Total volume (MMBtu) |
155,000 |
|
|
— |
|
|
— |
|
|
Weighted average price per MMBtu |
$ |
2.87 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
Natural gas contracts (Waha basis differential) |
|
|
|
|
|
|
Swap contracts |
|
|
|
|
|
|
Total volume (MMBtu) |
2,116,000 |
|
|
4,758,000 |
|
|
— |
|
|
Weighted average price per MMBtu |
$ |
(1.18 |
) |
|
$ |
(1.12 |
) |
|
$ |
— |
|
|
(a) Premiums from the sale of call options were used to increase the fixed price of certain simultaneously executed price swaps.
|