(8) 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 "Net gain (loss) on commodity derivatives" 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 commodity price swaps and collars as well as basis swaps.

During the three months ended September 30, 2018 and 2017, the Company recorded losses of $13.6 million and $1.6 million, respectively, on its commodity derivatives. During the nine months ended September 30, 2018 and 2017, the Company recorded losses of $30.7 million and gains of $14.5 million, respectively, on its commodity derivatives. The Company made net cash payments of $5.7 million and $2.5 million for settled derivative contracts during the nine months ended September 30, 2018 and 2017, respectively.

At September 30, 2018, there were no receivables for settled derivatives while at December 31, 2017 we had $2.2 million in receivables for settled derivatives which were included on the accompanying condensed consolidated balance sheet in “Accounts receivable, net” and were subsequently collected in January 2018. At September 30, 2018 and December 31, 2017, we also had $2.4 million and $0.4 million, respectively, in payables for settled derivatives which were included on the accompanying condensed consolidated balance sheet in "Accounts payable and accrued liabilities" and were subsequently paid in October 2018 and January 2018, respectively.

The fair values of our derivatives are computed using commonly accepted industry-standard models and are periodically verified against quotes from brokers. At September 30, 2018, there was $2.6 million in current unsettled derivative assets and $2.6 million in long-term unsettled derivative assets and $17.9 million and $8.4 million in current and long-term unsettled derivative liabilities, respectively. At December 31, 2017, there was $5.1 million and $2.6 million in current and long-term unsettled derivative assets and $5.1 million and $2.8 million in current and long-term unsettled derivative liabilities, respectively.

The Company uses an International Swap and Derivatives Association 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 a $21.1 million net fair value liability at September 30, 2018 and a $0.1 million net fair value liability at December 31, 2017. For further discussion, related to the fair value of the Company's derivatives, refer to Note 9 of these notes to 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, 2018:



Oil Derivative Swaps (NYMEX WTI Settlements)	Total Volumes (Bbls)	Weighted Average Price
2018 Contracts
4Q18	122,800	$	52.23

2019 Contracts
1Q19	116,700	$	53.75
2Q19	112,200	$	53.74
3Q19	108,000	$	53.85
4Q19	104,000	$	53.83

2020 Contracts
1Q20	81,300	$	52.42
2Q20	77,850	$	52.38
3Q20	74,700	$	52.34
4Q20	72,000	$	52.29



Natural Gas Derivative Contracts (NYMEX Henry Hub Settlements)	Total Volumes (MMBtu)	Weighted Average Price
2018 Contracts
4Q18	8,273,000	$	2.96

2019 Contracts
1Q19	7,516,000	$	3.08
2Q19	6,060,000	$	2.83
3Q19	5,550,000	$	2.84
4Q19	5,966,000	$	2.84

2020 Contracts
1Q20	5,370,000	$	2.83
2Q20	3,688,000	$	2.76
3Q20	3,585,000	$	2.76
4Q20	3,362,000	$	2.77



NGL Contracts	Total Volumes (Bbls)	Weighted Average Price
2018 Contracts
4Q18	148,200	$	24.79

2019 Contracts
1Q19	150,000	$	27.05
2Q19	150,000	$	27.05
3Q19	150,000	$	27.05
4Q19	150,000	$	27.05



Natural Gas Basis Derivative Swap (East Texas Houston Ship Channel vs NYMEX Settlements)	Total Volumes (MMBtu)	Weighted Average Price
2018 Contracts
4Q18	8,000,000	$	(0.07	)

2019 Contracts
1Q19	11,310,000	$	(0.08	)
2Q19	11,975,000	$	0.04
3Q19	12,095,000	$	0.03
4Q19	12,095,000	$	(0.04	)

2020 Contracts
1Q20	6,279,000	$	(0.08	)
2Q20	6,279,000	$	(0.08	)
3Q20	6,348,000	$	(0.07	)
4Q20	6,348,000	$	(0.08	)



Oil Basis Contracts (Argus Cushing (WTI) and LLS Settlements)	Total Volumes (Bbls)	Weighted Average Price
2018 Contracts
4Q18	80,000	$	4.13

2019 Contracts
1Q19	45,000	$	4.65
2Q19	45,000	$	4.65
3Q19	45,000	$	4.65
4Q19	45,000	$	4.65