Derivative Instruments

Crude oil and natural gas derivatives

From time to time the Company has entered into crude oil and natural gas swap and collar derivative contracts to economically hedge against the variability in cash flows associated with future sales of crude oil and natural gas production. The Company recognizes all derivative instruments on the balance sheet as either assets or liabilities measured at fair value. The Company has not designated its crude oil and natural gas derivative instruments as hedges for accounting purposes and, as a result, marks such derivative instruments to fair value and recognizes the changes in fair value in the consolidated statements of comprehensive income (loss) under the caption “Gain (loss) on crude oil and natural gas derivatives, net.”

The Company's natural gas derivative contracts are settled based upon reported NYMEX Henry Hub settlement prices. The estimated fair value of derivatives is based upon various factors, including commodity exchange prices, over-the-counter quotations, and, in the case of collars and written call options, volatility, the risk-free interest rate, and the time to expiration. The calculation of the fair value of collars and written call options requires the use of an option-pricing model. See Note 6. Fair Value Measurements.

With respect to a natural gas fixed price swap contract, the counterparty is required to make a payment to the Company if the settlement price for any settlement period is less than the swap price, and the Company is required to make a payment to the counterparty if the settlement price for any settlement period is greater than the swap price. For a natural gas collar contract, the counterparty is required to make a payment to the Company if the settlement price for any settlement period is below the floor price and the Company is required to make a payment to the counterparty if the settlement price for any settlement period is above the ceiling price. Neither party is required to make a payment to the other party if the settlement price for any settlement period is between the floor price and the ceiling price.

At December 31, 2018, the Company had outstanding natural gas derivative contracts as set forth in the table below. The volumes reflected below represent an aggregation of multiple derivative contracts having similar remaining durations expected to be realized ratably over the reflected periods. At December 31, 2018 the Company had no outstanding crude oil derivative contracts.



				Floors				Ceilings
Period and Type of Contract	MMBtus	Swaps Weighted Average Price		Range		Weighted average price		Range	Weighted average price
January 2019 - March 2019
Swaps - Henry Hub	4,950,000	$	4.70
April 2019 - December 2019
Swaps - Henry Hub	95,425,000	$	2.78
January 2019 - March 2019
Collars - Henry Hub	4,950,000			$	4.25	$	4.25	$5.50 - $5.58	$	5.52

Crude oil and natural gas derivative gains and losses

Cash receipts and payments in the following table reflect the gain or loss on derivative contracts which matured during the period, calculated as the difference between the contract price and the market settlement price of matured contracts. Non-cash gains and losses below represent the change in fair value of derivative instruments which continue to be held at period end and the reversal of previously recognized non-cash gains or losses on derivative contracts that matured during the period.



	Year ended December 31,
In thousands	2018			2017			2016
Cash received (paid) on derivatives:
Natural gas fixed price swaps	$	(36,939	)	$	40,095		$	88,823
Natural gas collars	—			(10,539		)	—
Cash received (paid) on derivatives, net	(36,939		)	29,556			88,823
Non-cash gain (loss) on derivatives:
Crude oil written call options	—			—			38
Natural gas fixed price swaps	7,527			18,960			(120,784		)
Natural gas collars	5,482			43,131			(39,936		)
Non-cash gain (loss) on derivatives, net	13,009			62,091			(160,682		)
Gain (loss) on crude oil and natural gas derivatives, net	$	(23,930	)	$	91,647		$	(71,859	)

Diesel fuel derivatives

The Company previously entered into diesel fuel swap derivative contracts, all of which matured on or before December 31, 2017, to economically hedge against the variability in cash flows associated with purchases of diesel fuel for use in drilling activities. The Company did not designate its diesel fuel derivatives as hedges for accounting purposes and, as a result, marked the derivative instruments to fair value and recognized the changes in fair value in the consolidated statements of comprehensive income (loss) under the caption “Operating costs and expenses—Net gain on sale of assets and other.”

Cash receipts in the following table reflect gains on diesel fuel derivatives which matured during the respective period, calculated as the difference between the contract price and the market settlement price of matured contracts. Non-cash gains and losses below represent the change in fair value of diesel fuel derivatives held at period end, if any, and the reversal of previously recognized non-cash gains or losses on derivative contracts that matured during the respective period.



	Year ended December 31,
In thousands	2017			2016
Cash received on diesel fuel derivatives	$	2,845		$	699
Non-cash gain (loss) on diesel fuel derivatives	(4,060		)	4,060
Gain (loss) on diesel fuel derivatives, net	$	(1,215	)	$	4,759

Balance sheet offsetting of derivative assets and liabilities

The Company’s derivative contracts are recorded at fair value in the consolidated balance sheets under the captions “Derivative assets”, “Noncurrent derivative assets”, “Derivative liabilities”, and “Noncurrent derivative liabilities”, as applicable. Derivative assets and liabilities with the same counterparty that are subject to contractual terms which provide for net settlement are reported on a net basis in the consolidated balance sheets.

The following table presents the gross amounts of recognized natural gas derivative assets and liabilities, as applicable, the amounts offset under netting arrangements with counterparties, and the resulting net amounts presented in the consolidated balance sheets for the periods presented, all at fair value.



	December 31,
In thousands	2018			2017
Commodity derivative assets:
Gross amounts of recognized assets	$	16,789		$	2,603
Gross amounts offset on balance sheet	(1,177		)	—
Net amounts of assets on balance sheet	15,612			2,603
Commodity derivative liabilities:
Gross amounts of recognized liabilities	(1,177		)	—
Gross amounts offset on balance sheet	1,177			—
Net amounts of liabilities on balance sheet	$	—		$	—

The following table reconciles the net amounts disclosed above to the individual financial statement line items in the consolidated balance sheets.



	December 31,
In thousands	2018		2017
Derivative assets	$	15,612	$	2,603
Noncurrent derivative assets	—		—
Net amounts of assets on balance sheet	15,612		2,603
Derivative liabilities	—		—
Noncurrent derivative liabilities	—		—
Net amounts of liabilities on balance sheet	—		—
Total derivative assets, net	$	15,612	$	2,603