Note 8 – Derivative Instruments

The Company utilizes fixed price swaps and basis swaps to manage the price risk associated with the sale of its oil and natural gas production. Fixed price swaps are settled monthly based on differences between the fixed price specified in the contract and the referenced settlement price. Basis swaps are settled monthly based on differences between a fixed price differential and the applicable market price differential, or Panhandle Eastern Pipeline. When the referenced settlement price is less than the price specified in the contract, the Company receives an amount from the counterparty based on the price difference multiplied by the volume. Similarly, when the referenced settlement price exceeds the price specified in the contract, the Company pays the counterparty an amount based on the price difference multiplied by the volume.

The following table reflects the Company’s open commodity contracts at September 30, 2018:



	2018		2019		2020		Total
Oil fixed price swaps
Volume (Bbl)	1,233,180		5,540,670		1,599,500		8,373,350
Weighted-average price	$	57.09	$	59.86	$	63.14	$	60.08
Natural gas fixed price swaps
Volume (MMBtu)	8,004,000		29,200,000		12,325,000		49,529,000
Weighted-average price	$	2.94	$	2.86	$	2.63	$	2.81
Natural gas basis swaps
Volume (MMBtu)	4,600,000		21,900,000		3,640,000		30,140,000
Weighted-average price	$	0.54	$	0.58	$	0.62	$	0.58

The Company nets the fair value of derivative instruments by counterparty in the accompanying condensed consolidated balance sheets where the right to offset exists. See Note 9 – Fair Value Measurements for further information regarding the fair value measurement of the Company’s derivatives.

As the Company has elected to not account for commodity derivative instruments as hedging instruments, gains or losses resulting from the change in fair value along with the gains or losses resulting in settlement of derivative contracts are reflected in (loss) gain on derivative contracts included in the consolidated statement of operations.

The following table presents the Company’s (loss) gain on derivative contracts and net cash (paid) received upon settlement of its derivative contracts for the three and nine months ended September 30, 2018 and 2017:



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
	(in thousands)
(Loss) gain on derivative contracts	$	(36,704	)	$	131	$	(100,920	)	$	2,385
Net cash (paid) received upon settlement of derivative contracts	$	(13,551	)	$	2,255	$	(27,462	)	$	2,385
Net cash received upon settlement of derivative contracts prior to contractual maturity	$	—		2,255		$	377		$	2,255