Derivative Instruments

The Company uses financial derivative instruments as part of its price risk management program to achieve a more predictable cash flow from its production revenues by reducing its exposure to commodity price fluctuations. The Company has entered into financial commodity swap contracts and costless collars related to the sale of a portion of the Company's production. The Company does not enter into derivative instruments for speculative or trading purposes.

In addition to financial contracts, the Company may at times be party to various physical commodity contracts for the sale of oil, natural gas and NGLs that have varying terms and pricing provisions. These physical commodity contracts qualify for the normal purchase and normal sale exception and, therefore, are not subject to hedge or mark-to-market accounting. The financial impact of physical commodity contracts is included in oil, natural gas and NGL production revenues at the time of settlement.

All derivative instruments, other than those that meet the normal purchase and normal sale exception, as mentioned above, are recorded at fair value and included on the Consolidated Balance Sheets as assets or liabilities. The following table summarizes the location, as well as the gross and net fair value amounts, of all derivative instruments presented on the Consolidated Balance Sheets as of the dates indicated.



	As of December 31, 2018
Balance Sheet	Gross Amounts of Recognized Assets			Gross Amounts Offset in the Balance Sheet				Net Amounts of Assets Presented in the Balance Sheet
				(in thousands)
Derivative assets current	$	82,205		$	(1,039	)	⁽¹⁾	$	81,166
Derivative assets non-current	27,289			—				27,289
Total derivative assets	$	109,494		$	(1,039	)		$	108,455

	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Balance Sheet				Net Amounts of Liabilities Presented in the Balance Sheet
				(in thousands)
Derivative liabilities	$	(1,039	)	$	1,039		⁽¹⁾	$	—
Derivatives and other noncurrent liabilities	—			—				—
Total derivative liabilities	$	(1,039	)	$	1,039			$	—

	As of December 31, 2017
Balance Sheet	Gross Amounts of Recognized Assets			Gross Amounts Offset in the Balance Sheet				Net Amounts of Assets Presented in the Balance Sheet
				(in thousands)
Derivative assets current	$	594		$	(594	)	⁽¹⁾	$	—
Derivative assets non-current	62			(62		)	⁽¹⁾	—
Total derivative assets	$	656		$	(656	)		$	—

	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Balance Sheet				Net Amounts of Liabilities Presented in the Balance Sheet
				(in thousands)
Derivative liabilities	$	(21,534	)	$	594		⁽¹⁾	$	(20,940	)
Derivatives and other noncurrent liabilities	(4,180		)	62			⁽¹⁾	(4,118		)
Total derivative liabilities	$	(25,714	)	$	656			$	(25,058	)


(1)	Asset and liability balances with the same counterparty are presented as a net asset or liability on the Consolidated Balance Sheets.

As of December 31, 2018, the Company had swap contracts in place to hedge the following volumes for the periods indicated:



	For the Year 2019			For the Year 2020
	Derivative Volumes	Weighted Average Price		Derivative Volumes	Weighted Average Price
Oil (Bbls)	6,704,184	$	58.85	2,469,000	$	60.79
Natural Gas (MMbtu)	3,050,000	2.46		—	—

As of December 31, 2018 , the Company had cashless collars (purchased put options and written call options) in place to hedge the following volumes for the periods indicated:



	For the Year 2019
	Derivative Volumes	Weighted Average Floor Price		Weighted Average Ceiling Price
Oil (Bbls)	552,000	$	55.00	$	77.56
Natural Gas (MMbtu)	225,000	3.25		4.45

The Company's derivative financial instruments are generally executed with major financial or commodities trading institutions. The instruments expose the Company to market and credit risks and may, at times, be concentrated with certain counterparties or groups of counterparties. The Company had derivatives in place with eight different counterparties as of December 31, 2018. Although notional amounts are used to express the volume of these contracts, the amounts potentially subject to credit risk in the event of non-performance by the counterparties are substantially smaller. The creditworthiness of counterparties is subject to continual review by management, and the Company believes all of these institutions currently are acceptable credit risks. Full performance is anticipated, and the Company has no past due receivables from any of its counterparties.

It is the Company's policy to enter into derivative contracts with counterparties that are lenders in the Amended Credit Facility, affiliates of lenders in the Amended Credit Facility or potential lenders in the Amended Credit Facility. The Company's derivative contracts are documented using an industry standard contract known as a Schedule to the Master Agreement and International Swaps and Derivative Association, Inc. ("ISDA") Master Agreement or other contracts. Typical terms for these contracts include credit support requirements, cross default provisions, termination events and set-off provisions. The Company is not required to provide any credit support to its counterparties other than cross collateralization with the properties securing the Amended Credit Facility. The Company has set-off provisions in its derivative contracts with lenders under its Amended Credit Facility which, in the event of a counterparty default, allow the Company to set-off amounts owed to the defaulting counterparty under the Amended Credit Facility or other obligations against monies owed the Company under derivative contracts. Where the counterparty is not a lender under the Company's Amended Credit Facility, the Company may not be able to set-off amounts owed by the Company under the Amended Credit Facility, even if such counterparty is an affiliate of a lender under such facility. The Company does not have any derivative balances that are offset by cash collateral.