Derivative Instruments

12 Months Ended

Dec. 31, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Note 7—Derivative Instruments

Commodity derivatives

The Company is exposed to market risk from changes in energy commodity prices within its operations. The Company utilizes derivatives to manage exposure to the variability in expected future cash flows from forecasted sales of natural gas and oil. The Company currently uses a mix of over-the-counter fixed price swaps, basis swaps and put options spreads and collars to manage its exposure to commodity price fluctuations. All of the Company’s derivative instruments are used for risk management purposes and none are held for trading or speculative purposes.

By using derivative instruments to hedge exposures to changes in commodity prices, the Company is exposed to the credit risk of its counterparties. Credit risk is the potential failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty is expected to owe the Company, which creates credit risk. To minimize the credit risk in derivative instruments, it is the Company’s policy to enter into derivative contracts only with counterparties that are creditworthy financial institutions deemed by management as competent and competitive market makers. The creditworthiness of counterparties is subject to periodic review. As of December 31, 2019, the Company’s derivative instruments were with Bank of Montreal, BP Energy Company, Capital One N.A., Citibank, Citizens Bank N.A., EDF Energy, J Aron, KeyBank, N.A., Morgan Stanley, Royal Bank of Canada, and Wells Fargo. The Company has not experienced any issues of non-performance by derivative counterparties. Below is a summary of the Company’s derivative instrument positions, as of December 31, 2019, for future production periods:

Natural Gas Derivatives:

Description	Volume (MMBtu/d)		Production Period	Weighted Average Price ($/MMBtu)
Natural Gas Swaps:
		50,000	January 2020 – December 2020	$	2.67
		20,000	January 2020 – March 2020	$	2.80
		80,000	January 2020 – June 2020	$	2.67
		20,000	April 2020 – June 2020	$	2.75
		30,000	July 2020 – December 2020	$	2.60
		25,000	January 2020 – March 2021	$	2.60
		20,000	July 2020 – March 2021	$	2.58
Natural Gas Collars:
Floor purchase price (put)		50,000	January 2020 – December 2020	$	2.49
Ceiling sold price (call)		50,000	January 2020 – December 2020	$	2.88
Floor purchase price (put)		30,000	January 2020 – March 2020	$	2.65
Ceiling sold price (call)		30,000	January 2020 – March 2020	$	2.98
Floor purchase price (put)		15,000	April 2020 – June 2020	$	2.50
Ceiling sold price (call)		15,000	April 2020 – June 2020	$	2.80
Natural Gas Three-way Collars:
Floor purchase price (put)		30,000	January 2020 – December 2020	$	2.70
Floor sold price (put)		30,000	January 2020 – December 2020	$	2.40
Ceiling sold price (call)		30,000	January 2020 – December 2020	$	3.05
Floor purchase price (put)		30,000	January 2020 – March 2020	$	2.72
Floor sold price (put)		30,000	January 2020 – March 2020	$	2.25
Ceiling sold price (call)		30,000	January 2020 – March 2020	$	3.15
Floor purchase price (put)		50,000	January 2020 – June 2020	$	2.82
Floor sold price (put)		50,000	January 2020 – June 2020	$	2.40
Ceiling sold price (call)		50,000	January 2020 – June 2020	$	3.11
Floor purchase price (put)		45,000	January 2021 – December 2021	$	2.55
Floor sold price (put)		45,000	January 2021 – December 2021	$	2.25
Ceiling sold price (call)		45,000	January 2021 – December 2021	$	2.81
Natural Gas Call/Put Options:
Floor sold price (put)		50,000	January 2020 – December 2020	$	2.30
Floor sold price (put)		50,000	January 2020 – June 2020	$	2.25
Swaption sold price (call)		50,000	January 2021 – December 2021	$	2.75
Swaption sold price (call)		50,000	January 2022 – December 2022	$	3.00
Basis Swaps:
Appalachia - Dominion		12,500	April 2020 – October 2020	$	(0.52	)
Appalachia - Dominion		20,000	January 2020 – December 2020	$	(0.59	)
Appalachia - Dominion		20,000	January 2020 – March 2020	$	(0.39	)

Oil Derivatives:

Description	Volume (Bbls/d)		Production Period	Weighted Average Price ($/Bbl)
Oil Swaps:
		1,500	January 2020 – December 2020	$	57.07
		1,000	July 2020 – December 2020	$	56.53
		250	July 2020 – March 2021	$	53.20
		250	January 2021 – March 2021	$	53.00
Oil Collars:
Floor purchase price (put)		500	January 2020 – December 2020	$	50.00
Ceiling sold price (call)		500	January 2020 – December 2020	$	64.00
Floor purchase price (put)		500	July 2020 – December 2020	$	52.00
Ceiling sold price (call)		500	July 2020 – December 2020	$	60.00
Floor purchase price (put)		500	January 2020 – March 2020	$	60.00
Ceiling sold price (call)		500	January 2020 – March 2020	$	67.00
Oil Three-way Collars:
Floor purchase price (put)		2,000	January 2020 – June 2020	$	62.50
Floor sold price (put)		2,000	January 2020 – June 2020	$	55.00
Ceiling sold price (call)		2,000	January 2020 – June 2020	$	74.00
Oil Call/Put Options:
Swaption sold price (call)		500	January 2021 – December 2021	$	56.80
Floor sold price (put)		500	July 2020 – December 2020	$	45.00

NGL Derivatives:

Description

Volume

(Bbls/d)

Production Period

Weighted Average

Price ($/Bbl)

Propane Swaps:

750

January 2020 – December 2020

21.46

Fair values and gains (losses)

The following table summarizes the fair value of the Company’s derivative instruments on a gross basis and on a net basis as presented in the Consolidated Balance Sheets (in thousands). None of the derivative instruments are designated as hedges for accounting purposes.

As of December 31, 2019	Gross Amount			Netting Adjustments(a)			Net Amount Presented in Balance Sheets			Balance Sheet Location
Assets
Commodity derivatives - current	$	33,762		$	(3,719	)		30,043		Other current assets
Commodity derivatives - noncurrent		833			(45	)		788		Other assets
Total assets	$	34,595		$	(3,764	)	$	30,831

Liabilities
Commodity derivatives - current	$	(5,081	)	$	3,719		$	(1,362	)	Accrued liabilities
Commodity derivatives - noncurrent		(2,397	)		45			(2,352	)	Other liabilities
Total liabilities	$	(7,478	)	$	3,764		$	(3,714	)

As of December 31, 2018	Gross Amount			Netting Adjustments(a)			Net Amount Presented in Balance Sheets			Balance Sheet Location
Assets
Commodity derivatives - current	$	4,960		$	(845	)	$	4,115		Other current assets
Commodity derivatives - noncurrent		1,910			—			1,910		Other assets
Total assets	$	6,870		$	(845	)	$	6,025

Liabilities
Commodity derivatives - current	$	(845	)	$	845		$	—		Accrued liabilities
Commodity derivatives - noncurrent		(326	)		—			(326	)	Other liabilities
Total liabilities	$	(1,171	)	$	845		$	(326	)

(a)	The Company has agreements in place that allow for the financial right to offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements.

The following table presents the Company’s reported gains and losses on derivative instruments and where such values are recorded in the Consolidated Statements of Operations for the periods presented (in thousands):

		For the Year Ended December 31,
	Location of Gain (Loss)	2019		2018			2017
Commodity derivatives	Gain (loss) on derivative instruments	$	48,596	$	(21,169	)	$	45,365