Derivative Instruments And Risk Management Activities

3 Months Ended

Mar. 31, 2012

Derivative Instruments And Risk Management Activities [Abstract]

Derivative Instruments And Risk Management Activities

Note 12 — Derivative Instruments and Risk Management Activities

At March 31, 2012, we had the following derivative contracts in place:

						Net Fair Value Asset (Liability) (1)
Period	Type	Volumes		Price		Current			Noncurrent
				$/Unit		($000)			($000)
Oil (Bbl) – Gulf of Mexico
Remainder of 2012	Swaps		2,268,750		97.36		(39,546	)		—
2013	Swaps		1,002,500		107.22		(2,028	)		(211	)
Remainder of 2012	Prepaid Swaps (2)		574,500		—		(66,287	)		—
Remainder of 2012	Basis Swap (3)		754,000		11.71		(2,528	)		—
2013	Basis Swap (3)		783,000		4.44		(636	)		(911	)
Remainder of 2012	Swaption (4)		365,000		96.50		(4,268	)		—
Total							(115,293	)		(1,122	)
Natural Gas (MMBtu)
North Sea
Remainder of 2012	Swaps		1,375,000		8.88		(1,993	)		—
2013	Swaps		180,000		11.28		(186	)		—
Gulf of Mexico
Remainder of 2012	Calls		2,750,000		5.37		(11	)		—
Total							(2,190	)		—
Total Liability							(117,483	)		(1,122	)

(1) None of the derivatives outstanding is designated as a hedge for accounting purposes.

(2) In March 2012, we entered into certain commodity price derivative contracts which have provided us with cash advances of $29.5 million and obligate us to pay market prices at the time of settlement. These contracts are similar to those we entered into in 2011.

(3) In March 2012, we entered into certain commodity price derivative contracts which fix for us the basis differential between West Texas Intermediate oil and Louisiana Light Sweet oil at specified amounts. These contracts help us to align more closely the existing commodity price derivative contracts we have entered into with the actual price we receive for our production.

(4) In January 2012, we entered into certain commodity price derivative contracts which give the counterparty the right, for a period of time, to bind us in agreed-upon oil price swap contracts in exchange for a premium paid to us. The oil price swap contracts to which we would be bound settle the same as other swaps we currently have and would be accounted for similarly. Should the counterparty elect not to bind us to the swap contract, the option to do so terminates and there is no further financial exposure to either party.

At December 31, 2011, we had the following derivative contracts in place:

						Net Fair Value Asset (Liability) (1)
Period	Type	Volumes		Price		Current			Noncurrent
				$/Unit		($000)			($000)
Oil (Bbl) – Gulf of Mexico
2012	Swaps		3,408,250		95.87		(20,115	)		—
2013	Swaps		90,000		90.40		—			(522	)
2012	Prepaid Swaps (2)		476,950		—		(48,424	)		—
Total							(68,539	)		(522	)
Natural Gas (MMBtu)
North Sea
2012	Swaps		1,646,000		8.48		(213	)		—
Gulf of Mexico
2012	Calls (3)		3,660,000		5.35		(64	)		—
2012	Fixed-price physicals		1,365,000		4.64		2,194			—
Total							1,917			—
Total asset							2,194			—
Total liability							(68,816	)		(522	)
Total							(66,622	)		(522	)

(1) None of the derivatives outstanding was designated as a hedge for accounting purposes.

(2) In order to manage our exposure to oil price volatility and provide a current source of financing, in the second half of 2011, we entered into certain off-market oil swap derivative contracts which provided us with $87.9 million of cash advances from the counterparty and obligated us to pay market prices at the time of settlement.

(3) During the first quarter of 2011, we sold U.S. gas call options and received premiums of $2.1 million.

During the three months ended March 31, 2012, we paid net cash settlements of $49.0 million related to our derivatives. Additional information about derivatives is presented in Note 15 "Fair Value Measurements". Our derivative expense is based entirely on nondesignated derivatives and consists of the following (in thousands):

	Three Months Ended March 31,
	2012		2011
Losses from:
Settlements of contracts	$	5,517	$	7,406
Early terminations of contracts		10,696		—
Unrealized losses on open contracts		42,758		42,856
Derivative expense	$	58,971	$	50,262