Derivative instruments

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative instruments

Derivative instruments

The Company's policy allows the use of derivative instruments as part of an overall energy price, foreign currency and interest rate risk management program to efficiently manage and minimize commodity price, foreign currency and interest rate risk. As of June 30, 2016, the Company had no outstanding commodity, foreign currency or interest rate hedges.

The fair value of derivative instruments must be estimated as of the end of each reporting period and is recorded on the Consolidated Balance Sheets as an asset or a liability.

Fidelity

At June 30, 2015, Fidelity held oil swap agreements with total forward notional volumes of 1.1 million Bbl and natural gas swap agreements with total forward notional volumes of 1.8 million MMBtu. At June 30, 2016 and December 31, 2015, Fidelity had no outstanding derivative agreements. Fidelity historically utilized these derivative instruments to manage a portion of the market risk associated with fluctuations in the price of oil and natural gas on its forecasted sales of oil and natural gas production. The realized and unrealized gains and losses on the commodity derivative instruments, which were not designated as hedges, were both included in loss from discontinued operations and the associated assets and liabilities were classified as held for sale.

Centennial

Centennial has historically entered into interest rate derivative instruments to manage a portion of its interest rate exposure on the forecasted issuance of long-term debt. As of June 30, 2016 and 2015, and December 31, 2015, Centennial had no outstanding interest rate swap agreements.

Fidelity and Centennial

The gains and losses on derivative instruments were as follows:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2016		2015			2016		2015
	(In thousands)
Interest rate derivatives designated as cash flow hedges:
Amount of loss reclassified from accumulated other comprehensive loss into interest expense (effective portion), net of tax	$	91	$	100		$	183	$	199
Commodity derivatives not designated as hedging instruments:
Amount of loss recognized in discontinued operations, before tax	—		(8,101		)	—		(19,309		)

Over the next 12 months net losses of approximately $400,000 (after tax) are estimated to be reclassified from accumulated other comprehensive income (loss) into earnings, as the hedged transactions affect earnings.

The location and fair value of the gross amount of the Company's derivative instruments on the Consolidated Balance Sheets were as follows:

Asset Derivatives	Location on Consolidated Balance Sheets	Fair Value at June 30, 2015
		(In thousands)
Not designated as hedges:
Commodity derivatives	Current assets held for sale	$	2,537
Total asset derivatives		$	2,537

Liability Derivatives	Location on Consolidated Balance Sheets	Fair Value at June 30, 2015
		(In thousands)
Not designated as hedges:
Commodity derivatives	Current liabilities held for sale	$	3,511
Total liability derivatives		$	3,511

All of the Company's commodity derivative instruments at June 30, 2015, were subject to legally enforceable master netting agreements. However, the Company's policy is to not offset fair value amounts for derivative instruments and, as a result, the Company's derivative assets and liabilities are presented gross on the Consolidated Balance Sheets. The gross derivative assets and liabilities (excluding settlement receivables and payables that may be subject to the same master netting agreements) presented on the Consolidated Balance Sheets and the amount eligible for offset under the master netting agreements is presented in the following table:

June 30, 2015	Gross Amounts Recognized on the Consolidated Balance Sheets		Gross Amounts Not Offset on the Consolidated Balance Sheets			Net
	(In thousands)
Assets:
Commodity derivatives	$	2,537	$	(2,537	)	$	—
Total assets	$	2,537	$	(2,537	)	$	—
Liabilities:
Commodity derivatives	$	3,511	$	(2,537	)	$	974
Total liabilities	$	3,511	$	(2,537	)	$	974