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Derivative financial instruments
 6 Months Ended
Jun. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative financial instruments

Note 7. Derivative financial instruments

The Company uses derivative financial instruments to manage its exposure to commodity price fluctuations. Commodity derivative instruments are used to (i) reduce the effect of the volatility of price changes on the oil and natural gas the Company produces and sells, (ii) support the Company’s capital budget and expenditure plans and (iii) support the economics associated with acquisitions. The Company does not enter into derivative financial instruments for speculative or trading purposes. The Company also enters into fixed-price forward physical power purchase contracts to manage the volatility of the price of power needed for ongoing operations. The Company may also enter into physical delivery contracts to effectively provide commodity price hedges. Because these physical contracts are not expected to be net cash settled, the Company has elected normal purchase or normal sale treatment and are thus recorded at cost.

The Company does not designate its derivative instruments to qualify for hedge accounting. Accordingly, the Company reflects changes in the fair value of its derivative instruments in its consolidated statements of operations as they occur.

The following table summarizes the amounts reported in earnings related to the commodity derivative instruments for the three and six months ended June 30, 2017 and 2016:

Three Months EndedSix Months Ended
June 30,June 30,
(in millions)2017201620172016
Gain (loss) on derivatives:
Oil derivatives$199$(281)$465$(209)
Natural gas derivatives10(17)30(8)
Total $209$(298)$495$(217)
The following table represents the Company’s net cash receipts from (payments on) derivatives for the three and six months ended June 30, 2017 and 2016:
Three Months EndedSix Months Ended
June 30,June 30,
(in millions)2017201620172016
Net cash receipts from (payments on) derivatives:
Oil derivatives$70$160$101$412
Natural gas derivatives (2) 8 (5) 15
Total $68$168$96$427

Commodity derivative contracts at June 30, 2017. The following table sets forth the Company’s outstanding derivative contracts at June 30, 2017. When aggregating multiple contracts, the weighted average contract price is disclosed. All of the Company’s derivative contracts at June 30, 2017 are expected to settle by December 31, 2019.

FirstSecondThirdFourth
QuarterQuarterQuarterQuarterTotal
Oil Price Swaps: (a)
2017:
Volume (Bbl) 7,966,3707,188,08015,154,450
Price per Bbl $51.69$51.87$51.77
2018:
Volume (Bbl) 6,581,6296,131,1705,765,3185,455,00723,933,124
Price per Bbl $52.01$51.84$51.68$51.54$51.78
2019:
Volume (Bbl) 3,772,0003,604,0003,460,0003,324,00014,160,000
Price per Bbl $53.60$53.58$53.59$53.61$53.59
Oil Basis Swaps: (b)
2017:
Volume (Bbl) 6,302,0006,302,00012,604,000
Price per Bbl $(0.57)$(0.57)$(0.57)
2018:
Volume (Bbl) 6,586,0006,156,0005,765,0005,488,00023,995,000
Price per Bbl $(1.05)$(1.04)$(1.04)$(1.04)$(1.04)
2019:
Volume (Bbl) 3,771,0003,609,0003,434,0003,311,00014,125,000
Price per Bbl $(1.18)$(1.18)$(1.19)$(1.19)$(1.19)
Natural Gas Price Swaps: (c)
2017:
Volume (MMBtu) 15,895,44114,673,00030,568,441
Price per MMBtu$3.12$3.10$3.11
2018:
Volume (MMBtu) 11,156,00010,641,00010,219,0009,904,00041,920,000
Price per MMBtu$3.06$3.05$3.05$3.04$3.05
2019:
Volume (MMBtu) 2,791,5332,681,3872,578,5372,489,53510,540,992
Price per MMBtu$2.86$2.85$2.85$2.85$2.85
(a) The index prices for the oil price swaps are based on the NYMEX – West Texas Intermediate (“WTI”) monthly average futures price.
(b) The basis differential price is between Midland – WTI and Cushing – WTI.
(c) The index prices for the natural gas price swaps are based on the NYMEX – Henry Hub last trading day futures price.

Derivative counterparties.  The Company uses credit and other financial criteria to evaluate the creditworthiness of counterparties to its derivative instruments. The Company believes that all of its derivative counterparties are currently acceptable credit risks. Other than provided by the Company’s credit facility, the Company is not required to provide credit support or collateral to any counterparties under its derivative contracts, nor are they required to provide credit support to the Company. Under the terms of the Company’s credit facility, certain events could occur that would cause any obligations under the Company’s credit facility to no longer be secured by the Company’s oil and natural gas properties.

At June 30, 2017, the Company had a net asset position of $225 million as a result of outstanding derivative contracts which are reflected in the accompanying consolidated balance sheets. The Company assessed this balance for concentration risk and noted balances of approximately $32 million, $32 million, $24 million, $22 million and $20 million with Wells Fargo Bank, N.A., J.P. Morgan Chase Bank, Citibank, N.A., ING Bank and Societe Generale, respectively.