Derivative instruments are utilized to manage exposure to commodity price fluctuations and achieve a more predictable cash flow in connection with natural gas and oil sales from production and borrowing related activities. These instruments limit exposure to declines in prices, but also limit the benefits that would be realized if prices increase.

Certain inherent business risks are associated with commodity derivative contracts, including market risk and credit risk. Market risk is the risk that the price of natural gas or oil will change, either favorably or unfavorably, in response to changing market conditions. Credit risk is the risk of loss from nonperformance by the counterparty to a contract. It is our policy to enter into derivative contracts, only with creditworthy counterparties, which generally are financial institutions, deemed by management as competent and competitive market makers. Some of the lenders, or certain of their affiliates, under our previous and current credit agreements are counterparties to our derivative contracts. While collateral is generally not required to be posted by counterparties, credit risk associated with derivative instruments is minimized by limiting exposure to any single counterparty and entering into derivative instruments only with creditworthy counterparties that are generally large financial institutions. Additionally, master netting agreements are used to mitigate risk of loss due to default with counterparties on derivative instruments. We have also entered into International Swaps and Derivatives Association Master Agreements (“ISDA Agreements”) with each of our counterparties. The terms of the ISDA Agreements provide us and each of our counterparties with rights of set-off upon the occurrence of defined acts of default by either us or our counterparty to a derivative, whereby the party not in default may set-off all liabilities owed to the defaulting party against all net derivative asset receivables from the defaulting party. Had all counterparties failed completely to perform according to the terms of the existing contracts, we would have had the right to offset $99.1 million against amounts outstanding under our Revolving Credit Facility at March 31, 2020, reducing our maximum credit exposure to approximately $5.7 million, all of which was with one counterparty. See Note 8 for additional information regarding our Revolving Credit Facility.

We may use a combination of commodity derivatives (e.g., floating-for-fixed swaps, put options, costless collars and three-way collars) to manage exposure to commodity price volatility. We recognize all derivative instruments at fair value.

Subsequent Events. In April 2020, the company monetized a portion of its 2021 crude oil hedges for total cash proceeds of approximately $18.0 million.

We enter into natural gas derivative contracts that are indexed to NYMEX-Henry Hub. We also enter into oil derivative contracts indexed to NYMEX-WTI. Our NGL derivative contracts are primarily indexed to OPIS Mont Belvieu.

	Remaining
	2020			2021			2022
Natural Gas Derivative Contracts:
Fixed price swap contracts:
Average monthly volume (MMBtu)		650,000			487,500			300,000
Weighted-average fixed price	$	2.54		$	2.48		$	2.46

Collar contracts:
Two-way collars
Average monthly volume (MMBtu)		420,000			162,500			—
Weighted-average floor price	$	2.60		$	2.58		$	—
Weighted-average ceiling price	$	2.88		$	2.84		$	—

Natural Gas Basis Swaps:
PEPL basis swaps:
Average monthly volume (MMBtu)		600,000			500,000			—
Weighted-average spread	$	(0.46	)	$	(0.40	)	$	—

Crude Oil Derivative Contracts:
Fixed price swap contracts:
Average monthly volume (Bbls)		209,300			116,250			30,000
Weighted-average fixed price	$	57.44		$	56.05		$	55.32

Collar contracts:
Two-way collars
Average monthly volume (Bbls)		14,300			—			—
Weighted-average floor price	$	55.00		$	—		$	—
Weighted-average ceiling price	$	62.10		$	—		$	—

Three-way collars
Average monthly volume (Bbls)		30,500			—			—
Weighted-average ceiling price	$	65.75		$	—		$	—
Weighted-average floor price	$	50.00		$	—		$	—
Weighted-average sub-floor price	$	40.00		$	—		$	—

NGL Derivative Contracts:
Fixed price swap contracts:
Average monthly volume (Bbls)		65,450			22,800			—
Weighted-average fixed price	$	25.27		$	24.25		$	—

Periodically, we enter into interest rate swaps to mitigate exposure to market rate fluctuations by converting variable interest rates such as those in our credit agreement to fixed interest rates. At March 31, 2020, we had the following interest rate swap open positions:

The following table summarizes both: (i) the gross fair value of derivative instruments by the appropriate balance sheet classification even when the derivative instruments are subject to netting arrangements and qualify for net presentation in the balance sheet and (ii) the net recorded fair value as reflected on the balance sheet at March 31, 2020 and December 31, 2019. There was no cash collateral received or pledged associated with our derivative instruments since most of the counterparties, or certain of their affiliates, to our derivative contracts are lenders under our credit agreement.

		Asset Derivatives			Liability Derivatives			Asset Derivatives			Liability Derivatives
		March 31,			March 31,			December 31,			December 31,
Type	Balance Sheet Location	2020			2020			2019			2019
		(In thousands)
Commodity contracts	Short-term derivative instruments	$	83,477		$	4,139		$	11,518		$	5,887
Interest rate swaps	Short-term derivative instruments		—			1,621			248			253
Gross fair value			83,477			5,760			11,766			6,140
Netting arrangements			(5,070	)		(5,070	)		(5,887	)		(5,887	)
Net recorded fair value	Short-term derivative instruments	$	78,407		$	690		$	5,879		$	253

Commodity contracts	Long-term derivative instruments	$	28,036		$	513		$	6,990		$	973
Interest rate swaps	Long-term derivative instruments		—			1,981			347			305
Gross fair value			28,036			2,494			7,337			1,278
Netting arrangements			(581	)		(581	)		(973	)		(973	)
Net recorded fair value	Long-term derivative instruments	$	27,455		$	1,913		$	6,364		$	305

We do not designate derivative instruments as hedging instruments for accounting and financial reporting purposes. Accordingly, all gains and losses, including changes in the derivative instruments’ fair values, have been recorded in the accompanying Unaudited Condensed Statements of Consolidated Operations. The following table details the gains and losses related to derivative instruments for the periods indicated (in thousands):