Derivative instruments

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative instruments

Derivative instruments

Our results of operations, financial condition and capital resources are highly dependent upon the prevailing market prices of, and demand for, oil, natural gas and natural gas liquids. These commodity prices are subject to wide fluctuations and market uncertainties. To mitigate a portion of this exposure, we enter into various types of derivative instruments, including commodity price swaps, collars, and basis protection swaps.

The following table summarizes our crude oil derivatives outstanding as of June 30, 2020:

		Weighted average fixed price per Bbl
Period and type of contract	Volume MBbls	Swaps
2020
Oil swaps	1,026	$	50.56
Oil roll swaps	180	$	0.30
2021
Oil swaps	689	$	46.24
Oil roll swaps	150	$	0.30

The following table summarizes our natural gas derivatives outstanding as of June 30, 2020:

Period and type of contract	Volume BBtu	Weighted average fixed price per MMBtu
2020
Natural gas swaps	3,000	$	2.75
Natural gas basis swaps	3,000	$	(0.46)

Effect of derivative instruments on the consolidated balance sheets

All derivative financial instruments are recorded on the balance sheet at fair value. See “Note 7: Fair value measurements” for additional information regarding fair value measurements. The estimated fair values of derivative instruments are provided below. The carrying amounts of these instruments are equal to the estimated fair values.

	As of June 30, 2020						As of December 31, 2019
	Assets		Liabilities		Net value		Assets		Liabilities		Net value
Natural gas derivative contracts	$	2,288	$	(500)	$	1,788	$	3,552	$	(1)	$	3,551
Crude oil derivative contracts	15,399		—		15,399		391		(22,196)		(21,805)
NGL derivative contracts	—		—		—		2,868		(699)		2,169
Total derivative instruments	17,687		(500)		17,187		6,811		(22,896)		(16,085)
Less:
Netting adjustments (1)	(500)		500		—		(5,864)		5,864		—
Derivative instruments - current	15,197		—		15,197		947		(11,957)		(11,010)
Derivative instruments - long-term	$	1,990	$	—	$	1,990	$	—	$	(5,075)	$	(5,075)

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(1)Amounts represent the impact of master netting agreements that allow us to net settle positive and negative positions with the same counterparty. Positive and negative positions with counterparties are netted only to the extent that they relate to the same current versus noncurrent classification on the balance sheet.

Effect of derivative instruments on the consolidated statements of operations

We do not apply hedge accounting to any of our derivative instruments. As a result, all gains and losses associated with our derivative contracts are recognized immediately as “Derivative gains (losses)” in the consolidated statements of operations.

“Derivative gains (losses)” in the consolidated statements of operations consist of the following:

	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Change in fair value of commodity price derivatives	$	(35,934)	$	17,596	$	33,272	$	(33,935)
Net settlements received on commodity price derivatives	22,915		138		32,089		653
Total derivative gains (losses)	$	(13,019)	$	17,734	$	65,361	$	(33,282)

Pursuant to the Limited Forbearance Agreement with the lenders under our Credit Agreement, we terminated all our outstanding derivatives contracts on July 27, 2020 and applied a certain portion of the proceeds thereof toward partial repayment of the outstanding amount under the Credit Agreement, which we discuss in “Note 11: Subsequent events.”