Quarterly report pursuant to Section 13 or 15(d)

Derivative Instruments and Hedging Activities (Tables)

v2.4.0.6
Derivative Instruments and Hedging Activities (Tables)
 9 Months Ended
Sep. 30, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Outstanding Oil and Natural Gas Derivative Contracts

Listed in the table below are the outstanding oil and natural gas derivative contracts as of September 30, 2012:
Commodity
 
Instrument
 
Average Notional Volumes per Month
 
Quantity Type
 
Average Floor Price per Instrument
 
Average Ceiling Price per Instrument
 
Period
 
Designation under ASC 815
Crude oil
 
Collar (1)
 
25
 
Bbls
 
$
90.00

 
$
122.00

 
Oct12 - Dec12
 
Designated
Crude oil
 
Collar (1)
 
25
 
Bbls
 
$
95.00

 
$
125.00

 
Oct12 - Dec12
 
Designated
Crude oil
 
Collar (1)
 
40
 
Bbls
 
$
90.00

 
$
116.00

 
Jan13 - Dec13
 
Not Designated
Natural gas
 
Swap (2)
 
91
 
MMbtu
 
$
3.52

 
$
3.52

 
Oct12 - Dec13
 
Not Designated
Natural gas
 
Put Option (2)
 
91
 
MMbtu
 
$
3.00

 
n/a

 
Jan13-Dec13
 
Not Designated
Natural gas
 
Call Option (2)
 
38
 
MMbtu
 
n/a

 
$
4.75

 
Jan14-Dec14
 
Not Designated

(1) A collar is a combination of a sold call option (ceiling) and a purchased put option (floor).

(2) The natural gas swap, put and call option were executed contemporaneously. The "above market" swap price the Company received was offset by the value of the two options sold by the Company. The short natural gas put option, when combined with the swap, creates the potential for a reduction in the effective swap price if NYMEX natural gas prices are below $3.00/MMbtu in 2013. The short natural gas call option, when combined with the Company's long production position, represents a "covered call," and creates a $4.75/MMbtu ceiling during the covered period.

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value
The following table reflects the fair values of the Company's derivative instruments:
 
 
Balance Sheet Presentation
 
Asset Fair Value
 
Liability Fair Value
 
Net Derivative Fair Value
Commodity
 
Classification
 
Line Description
 
09/30/12
 
12/31/11
 
09/30/12
 
12/31/11
 
09/30/12
 
12/31/11
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives designated as Hedging Instruments under ASC 815
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Natural gas
 
Current
 
Fair market value of derivatives
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Natural gas
 
Non-current
 
Other long-term assets
 
—

 
—

 
—

 
—

 
—

 
—

Crude oil
 
Current
 
Fair market value of derivatives
 
469

 
2,499

 
—

 
—

 
469

 
2,499

Crude oil
 
Non-current
 
Other long-term liabilities
 
—

 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subtotals
 
 
 
$
469

 
$
2,499

 
$
—

 
$
—

 
$
469

 
$
2,499

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives not designated as Hedging Instruments under ASC 815
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Natural gas
 
Current
 
Fair market value of derivatives
 
$
—

 
$
—

 
$
(224
)
 
$
—

 
$
(224
)
 
$
—

Natural gas
 
Non-current
 
Other long-term liabilities
 
—

 
—

 
(312
)
 
—

 
(312
)
 
—

Crude oil
 
Current
 
Fair market value of derivatives
 
1,544

 
—

 
—

 
—

 
1,544

 
—

Crude oil
 
Non-current
 
Other long-term assets
 
969

 
—

 
—

 
—

 
969

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subtotals
 
 
 
$
2,513

 
$
—

 
$
(536
)
 
$
—

 
$
1,977

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Totals
 
 
 
$
2,982

 
$
2,499

 
$
(536
)
 
$
—

 
$
2,446

 
$
2,499


Schedule of Derivatives Designated as Hedging Instruments, Gain (Loss) in Statement of Financial Performance
The tables below present the effect of the Company's derivative financial instruments on the consolidated statements of operations as an increase (decrease) to crude oil revenues for the effective portion and as an increase (decrease) to other (income) expense for the ineffective portion and amounts excluded from effectiveness testing:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2012
 
2011
 
2012
 
2011
Amount of gain (loss) reclassified from OCI into income (effective portion)
 
$
260

 
$
88

 
$
772

 
$
(361
)
Amount of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)
 
(282
)
 
159

 
40

 
177

Schedule of Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance
For the periods indicated, the Company recorded the following related to its derivative instruments that were not designated as accounting hedges:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2012
 
2011
 
2012
 
2011
Natural gas derivatives
 
 
 
 
 
 
 
 
     Realized gain (loss), net
 
$
—

 
$
—

 
$
—

 
$
—

     Unrealized gain (loss), net
 
(205
)
 
—

 
(536
)
 
—

          Sub-total gain (loss), net
 
$
(205
)
 
$
—

 
$
(536
)
 
$
—

 
 
 
 
 
 
 
 
 
Crude oil derivatives
 
 
 
 
 
 
 
 
     Realized gain (loss), net
 
$
—

 
$
—

 
$
—

 
$
—

     Unrealized gain (loss), net
 
(1,393
)
 
—

 
2,513

 
—

          Sub-total gain (loss), net
 
$
(1,393
)
 
$
—

 
$
2,513

 
$
—

 
 
 
 
 
 
 
 
 
Total gain (loss) on derivative instruments, net
 
$
(1,598
)
 
$
—

 
$
1,977

 
$
—