We are exposed to market risk from changes in energy commodity prices within our operations. We utilize derivatives to manage exposure to the variability in expected future cash flows from forecasted sales of crude oil, natural gas and natural gas liquids attributable to commodity price risk.

We produce, buy and sell crude oil, natural gas and natural gas liquids at different locations throughout the United States. To reduce exposure to a decrease in revenues from fluctuations in commodity market prices, we enter into futures contracts, swap agreements, and financial option contracts to mitigate the price risk on forecasted sales of crude oil, natural gas and natural gas liquids. We have also entered into basis swap agreements to reduce the locational price risk associated with our producing basins. Our financial option contracts are either purchased or sold options, or a combination of options that comprise a net purchased option, zero-cost collar or swaptions.

The following table sets forth the derivative notional volumes of the net long (short) positions that are economic hedges of production volumes, which are included in our commodity derivatives portfolio as of December 31, 2019.


Commodity	Period	Contract Type (a)	Location	Notional Volume (b)	Weighted Average Price (c)
Crude Oil
Crude Oil	2020	Fixed Price Swaps(d)	WTI	(65,129)	$	57.07
Crude Oil	2020	Fixed Price Costless Collars	WTI	(20,000)	53.33 -63.48

Crude Oil	2020	Basis Swaps	Midland/Cushing	(7,486)	$	(1.31)
Crude Oil	2020	Basis Swaps	Brent/WTI Spread	(5,000)	$	8.36
Crude Oil	2021	Basis Swaps	Brent/WTI Spread	(1,000)	$	8.00
Crude Oil	2021	Fixed Price Swaptions	WTI	(20,000)	$	57.02
Crude Oil	2022	Basis Swaps	Brent/WTI Spread	(1,000)	$	7.75

Natural Gas
Natural Gas	2020	Basis Swaps	Waha	(60)	$	(0.79)
Natural Gas	2021	Basis Swaps	Waha	(70)	$	(0.59)
Natural Gas	2022	Basis Swaps	Waha	(70)	$	(0.57)
Natural Gas	2023	Basis Swaps	Waha	(70)	$	(0.51)

(a) Derivatives related to crude oil production are fixed price swaps settled on the business day average, basis swaps, fixed price calls, collars or swaptions. The derivatives related to natural gas production are fixed price swaps, basis swaps, fixed price calls and swaptions. In connection with swaps, we may sell call options or swaptions to the swap counterparties in exchange for receiving premium hedge prices on the swaps. The sold call or swaption establishes a maximum price we will receive for the volumes under contract and are financially settled. Basis swaps for the Nymex CMA (Calendar Monthly Average) Roll location are pricing adjustments to the trade month versus the delivery month for contract pricing. Basis swaps for the Brent/WTI location are priced off the Brent and WTI futures spread.

Our derivatives are presented as separate line items in our Consolidated Balance Sheets as current and noncurrent derivative assets and liabilities. Derivatives are classified as current or noncurrent based on the contractual timing of expected future net cash flows of individual contracts. The expected future net cash flows for derivatives classified as current are expected to occur within the next 12 months. The fair value amounts are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under the terms of our master netting arrangements. Further, our derivatives do not include cash held on deposit in margin accounts that we have received or remitted to collateralize certain derivative positions.

We enter into commodity derivative contracts that serve as economic hedges but are not designated as cash flow hedges for accounting purposes as we do not utilize this method of accounting for derivative instruments. The following table presents the net gain (loss) related to our energy commodity derivatives.


	Years Ended December 31,
	2019		2018		2017
	(Millions)
Gain (loss) from derivatives related to production(a)	$	(150)	$	78	$	3
Gain (loss) from derivatives related to physical marketing agreements(b)	(3)		3		—
Net gain (loss) on derivatives	$	(153)	$	81	$	3

(a) Includes settlements totaling $12 million for the year ended December 31, 2019, payments totaling $237 million for the year ended December 31, 2018, and settlements totaling $4 million for the year ended December 31, 2017.


	Gross Amount Presented on Balance Sheet		Netting Adjustments (a)		Net Amount
December 31, 2019	(Millions)
Derivative assets with right of offset or master netting agreements	$	67	$	(45)	$	22
Derivative liabilities with right of offset or master netting agreements	$	(91)	$	45	$	(46)

December 31, 2018
Derivative assets with right of offset or master netting agreements	$	178	$	(37)	$	141
Derivative liabilities with right of offset or master netting agreements	$	(37)	$	37	$	—

(a) With all of our financial trading counterparties, we have agreements in place that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements. Additionally, we have negotiated master netting agreements with some of our counterparties. These master netting agreements allow multiple entities that have multiple underlying agreements the ability to net derivative assets and derivative liabilities at settlement or in the event of a default or a termination under one or more of the underlying contracts.

Certain of our derivative contracts contain credit-risk-related provisions that would require us, under certain events, to post additional collateral in support of our net derivative liability positions. These credit-risk-related provisions require us to post collateral in the form of cash or letters of credit when our net liability positions exceed an established credit threshold. The credit thresholds are typically based on our senior unsecured debt ratings from Standard and Poor’s and/or Moody’s Investment Services. Under these contracts, a credit ratings decline would lower our credit thresholds, thus requiring us to post additional collateral. We also have contracts that contain adequate assurance provisions giving the counterparty the right to request collateral in an amount that corresponds to the outstanding net liability.

As of December 31, 2019, we did not have any collateral posted to derivative counterparties to support the aggregate fair value of our net $46 million derivative liability position (reflecting master netting arrangements in place with certain counterparties) which includes a reduction of less than $1 million to our liability balance for our own nonperformance risk. As of December 31, 2018, we did not have any collateral posted to derivative counterparties to support the aggregate fair value of our net less than $1 million derivative liability position (reflecting master netting arrangements in place with certain counterparties) which includes a reduction of $1 million to our liability balance for our own nonperformance risk. The additional collateral that we would have been required to post, assuming our credit thresholds were eliminated and a call for adequate assurance under the credit risk provisions in our derivative contracts was triggered, was $46 million and less than $1 million at December 31, 2019 and 2018, respectively.


	December 31,
	2019		2018
	(Millions)
Receivables by product or service:
Sale of natural gas, crude and related products and services	$	336	$	269
Joint interest owners	88		98
Income tax receivable	19		38
Other	7		—
Total	$	450	$	405

Oil and natural gas customers include pipelines, distribution companies, producers, marketers and industrial users primarily located in the southwestern United States and North Dakota. As a general policy, collateral is not required for receivables, but customers’ financial condition and credit worthiness are evaluated regularly.

We have a risk of loss from counterparties not performing pursuant to the terms of their contractual obligations. Counterparty performance can be influenced by changes in the economy and regulatory issues, among other factors. Risk of loss is impacted by several factors, including credit considerations and the regulatory environment in which a counterparty transacts. We attempt to minimize credit-risk exposure to derivative counterparties and brokers through formal credit policies, consideration of credit ratings from public ratings agencies, monitoring procedures, master netting agreements and collateral support under certain circumstances. Collateral support could include letters of credit, payment under margin agreements and guarantees of payment by creditworthy parties.

We also enter into master netting agreements to mitigate counterparty performance and credit risk. During 2019, 2018 and 2017, we did not incur any significant losses due to counterparty bankruptcy filings. We assess our credit exposure on a net basis to reflect master netting agreements in place with certain counterparties. We offset our credit exposure to each counterparty with amounts we owe the counterparty under derivative contracts.

Our gross and net credit exposure from our derivative contracts were $67 million and $22 million, respectively, as of December 31, 2019. All of our credit exposure is with investment grade financial institutions. We determine investment grade primarily using publicly available credit ratings. We consider counterparties with a minimum S&P’s rating of BBB- or Moody’s Investors Service rating of Baa3 to be investment grade.

Our five largest net counterparty positions represent approximately 98 percent of our net credit exposure. Under our marginless hedging agreements with key banks, neither party is required to provide collateral support related to hedging activities.

The following companies accounted for more than 10 percent of our total consolidated revenues adjusted for net gain (loss) on derivatives in any given year presented below. Management believes that the loss of any individual purchaser would not have a long-term material adverse impact on the financial position or results of operations of the Company.


	Year ended December 31,
	2019	2018	2017
United Energy Trading LLC	20%	23%	(a)
Occidental Energy Marketing	18%	16%	(a)
Crestwood Midstream Partners LP	(a)	(a)	21%
St. Paul Refining	(a)	(a)	16%
NGL Crude Logistics	13%	14%	13%
Delek Refining, Ltd	(a)	(a)	10%
BP Products North America, Inc.	11%	(a)	(a)

of business, we sell crude oil to a subsidiary of NGL Energy, noted in the table above as NGL Crude Logistics. In addition, a subsidiary of NGL Energy provides water disposal services for WPX that represent less than 2 percent of operating expenses.