(7) Price-Risk Management Activities

Derivatives are recorded on the balance sheet at fair value with changes in fair value recognized in earnings. The changes in the fair value of our derivatives are recognized in "Price-risk management and other, net" on the accompanying condensed consolidated statements of operations. We have a price-risk management policy to use derivative instruments to protect against declines in oil and natural gas prices, mainly through the purchase of price swaps.

During the three months ended September 30, 2016 (successor) and for the period of April 23, 2016 through September 30, 2016 (successor) there was a $2.6 million gain and $7.3 million loss, respectively. There were no cash settlements for derivatives during the period of April 23, 2016 through June 30, 2016. The Company made net cash payments of $1.1 million for settled derivative contracts during the three months ended September 30, 2016 (successor). During the three and nine months ended September 30, 2015 (predecessor) there was a net gain of less than $0.1 million and a net gain of $0.3 million, respectively, related to our derivative activities. There were no derivative instruments outstanding during the period of January 1, 2016 through April 22, 2016.

At September 30, 2016, we had $0.1 million in receivables for settled derivatives which were recognized on the accompanying condensed consolidated balance sheet in “Accounts receivable” and were subsequently collected in October 2016. At September 30, 2016, we also had $0.4 million in payables for settled derivatives which were recognized on the accompanying condensed consolidated balance sheet in "Accounts payable and accrued liabilities" and were subsequently paid in October 2016.

The fair values of our derivatives are computed using commonly accepted industry-standard models and are periodically verified against quotes from brokers. There was $0.2 million in current unsettled derivative assets, while our long-term unsettled derivative assets were not material. There was $5.0 million and $1.1 million in current and long-term unsettled derivative liabilities, respectively, as of September 30, 2016.

The Company uses an International Swap and Derivatives Association "ISDA" master agreement for our derivative contracts. This is an industry standardized contract containing the general conditions of our derivative transactions including provisions relating to netting derivative settlement payments under certain circumstances (such as default). For reporting purposes, the Company has elected to not offset the asset and liability fair value amounts of its derivatives on the accompanying balance sheets. Under the right of set-off, there was $5.9 million in net fair value liability at September 30, 2016. For further discussion related to the fair value of the Company's derivatives, refer to Note 8 of these condensed consolidated financial statements.

The following tables summarize the weighted average prices as well as future production volumes for our unsettled derivative contracts in place as of September 30, 2016:



Oil Derivative Swaps (NYMEX WTI Settlements)	Total Volumes (Bbls)	Weighted Average Price
2016 Contracts
4Q16	155,997	$	48.28

2017 Contracts
1Q17	106,245	$	48.04
2Q17	97,401	$	48.13
3Q17	90,000	$	48.16
4Q17	84,798	$	48.18



Natural Gas Derivative Swaps (NYMEX Henry Hub Settlements)	Total Volumes (MMBtu)	Weighted Average Price
2016 Contracts
4Q16	3,500,002	$	2.75

2017 Contracts
1Q17	3,975,000	$	2.89
2Q17	3,625,005	$	2.80
3Q17	3,339,999	$	2.81
4Q17	3,125,001	$	2.83



Natural Gas Basis Derivative Swap (East Texas Houston Ship Channel vs NYMEX Settlements)	Total Volumes (MMBtu)	Weighted Average Price
2016 Contracts
4Q16	3,500,002	$	(0.06	)

2017 Contracts
1Q17	3,975,000	$	(0.06	)
2Q17	3,625,005	$	(0.04	)
3Q17	3,339,999	$	(0.04	)
4Q17	3,125,001	$	(0.05	)