NOTE 10 — DERIVATIVES

We have entered into derivatives to reduce our exposure to price risk for oil and gas. Substantially all of our derivatives are executed by lenders under the Alta Mesa RBL, and are collateralized by the security interests thereunder. The derivatives settle monthly. No derivatives have been entered into for trading or speculative purposes, however none have been designated as hedges under GAAP.

From time to time, we may enter into interest rate swap agreements to mitigate the risk of changes in interest rates, but as of December 31, 2018, we have none.

The following summarizes the fair value and classification of our derivatives:



	December 31, 2018 (Successor)
Balance sheet location	Gross fair value of assets		Gross liabilities offset against assets in the Balance Sheet			Net fair value of assets presented in the Balance Sheet
	(in thousands)
Derivatives, current assets	$	22,512	$	(6,089	)	$	16,423
Derivatives, long-term assets	7,910		(4,963		)	2,947
Total	$	30,422	$	(11,052	)	$	19,370



Balance sheet location	Gross fair value of liabilities		Gross assets offset against liabilities in the Balance Sheet			Net fair value of liabilities presented in the Balance Sheet
	(in thousands)
Derivatives, current liabilities	$	7,799	$	(6,089	)	$	1,710
Derivatives, long-term liabilities	5,143		(4,963		)	180
Total	$	12,942	$	(11,052	)	$	1,890



	December 31, 2017 (Predecessor)
Balance sheet location	Gross fair value of assets		Gross liabilities offset against assets in the Balance Sheet			Net fair value of assets presented in the Balance Sheet
	(in thousands)
Derivatives, current assets	$	1,406	$	(1,190	)	$	216
Derivatives, long-term assets	3,010		(3,002		)	8
Total	$	4,416	$	(4,192	)	$	224



Balance sheet location	Gross fair value of liabilities		Gross assets offset against liabilities in the Balance Sheet			Net fair value of liabilities presented in the Balance Sheet
	(in thousands)
Derivatives, current liabilities	$	20,493	$	(1,190	)	$	19,303
Derivatives, long-term liabilities	4,116		(3,002		)	1,114
Total	$	24,609	$	(4,192	)	$	20,417

The following table summarizes the effect of our derivatives in the statements of operations (in thousands):



	Successor			Predecessor
	February 9, 2018			January 1, 2018
Derivatives not	Through			Through		Year Ended			Year Ended
designated as hedges	December 31, 2018			February 8, 2018		December 31, 2017			December 31, 2016
Gain (loss) on derivatives -
Oil commodity contracts	$	(3,559	)	$	4,796	$	1,450		$	(36,572	)
Natural gas commodity contracts	(6,688		)	1,867		7,288			(2,410		)
Natural gas liquids commodity contracts	—			—		(451		)	(1,478		)
Total gain (loss) on derivatives	$	(10,247	)	$	6,663	$	8,287		$	(40,460	)

Other receivables at December 31, 2018 and 2017 include $1.3 million and $1.4 million, respectively, of derivative positions covering the month of December scheduled to be settled in January of the succeeding year.

We periodically monitor the creditworthiness of our counterparties. Although our counterparties provide no collateral, the agreements with each counterparty allow us to set-off unpaid amounts against the outstanding balance under the Alta Mesa RBL.

We had the following call and put derivatives at December 31, 2018:

OIL



	Volume	Weighted		Range
Settlement Period and Type of Contract	in bbls	Average		High		Low
2019
Price Swap Contracts	182,500	$	63.03	$	63.03	$	63.03
Collar Contracts
Short Call Options	2,701,000	66.31		75.20		56.50
Long Put Options	2,883,500	53.80		62.00		50.00
Short Put Options	2,883,500	42.72		52.00		37.50
2020
Collar Contracts
Short Call Options	585,600	64.32		73.80		59.55
Long Put Options	1,537,200	55.54		62.50		50.00
Short Put Options	1,537,200	44.64		50.00		37.50

GAS



	Volume in	Weighted		Range
Settlement Period and Type of Contract	MMBtu	Average		High		Low
2019
Price Swap Contracts	10,905,000	$	2.69	$	3.09	$	2.64
Collar Contracts
Short Call Options	4,000,000	3.31		3.75		3.17
Long Put Options	3,550,000	2.81		2.90		2.70
Short Put Options	2,425,000	2.27		2.40		2.20
2020
Collar Contracts
Short Call Options	2,275,000	3.19		3.20		3.17
Long Put Options	9,150,000	2.57		2.70		2.50
Short Put Options	9,150,000	2.07		2.20		2.00
2021
Collar Contracts
Long Put Options	2,250,000	2.65		2.65		2.65
Short Put Options	2,250,000	2.15		2.15		2.15

In those instances where contracts are identical as to time period, counterparty, volume and strike price, but opposite as to direction (long and short), the volumes and average prices have been netted in the two tables above. Prices stated in the table above for oil may settle against either the NYMEX index or may reflect a mix of positions settling on various combinations of these benchmarks.

We had the following basis swaps at December 31, 2018:



Total Gas Volumes in MMBtuover Remaining Term⁽¹⁾	Reference Price 1 ⁽¹⁾	Reference Price 2 ⁽¹⁾	Period			Weighted Average Spread ($ per MMBtu)
460,000	OneOK	NYMEX Henry Hub	Jul '19	—	Dec '19	$	(0.93	)
17,950,000	Tex/OKL Panhandle Eastern Pipeline	NYMEX Henry Hub	Jan '19	—	Dec '19	(0.68		)
910,000	Tex/OKL Panhandle Eastern Pipeline	NYMEX Henry Hub	Jan '20	—	Mar '20	(0.49		)
2,365,000	San Juan	NYMEX Henry Hub	Jan '19	—	Oct '19	(0.78		)

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(1)	Represents short swaps that fix the basis differentials between OneOK, Tex/OKL Panhandle Eastern Pipeline (“PEPL”), San Juan and NYMEX Henry Hub.