Derivatives and Risk Management (Tables)

6 Months Ended

Jun. 30, 2018

Derivatives and Risk Management [Abstract]

Schedule of Derivative Instruments Notional Amount, Weighted Average Contract Prices and Fair Value

Financial Protection on Production
		Weighted Average Price per MMBtu
	Volume (Bcf)	Swaps		Sold Puts		Purchased Puts		Sold Calls		Basis Differential		Fair Value at June 30, 2018 ($ in millions)
Natural Gas
2018
Sold fixed price swaps	156	$	2.96	$	–	$	–	$	–	$	–	$	1
Two-way costless collars	6		–		–		2.90		3.27		–		–
Three-way costless collars	143		–		2.40		2.97		3.37		–		13
Total	305											$	14
2019
Sold fixed price swaps	147	$	2.93	$	–	$	–	$	–	$	–	$	25
Two-way costless collars	53		–		–		2.80		2.98		–		6
Three-way costless collars	133		–		2.49		2.93		3.34		–		12
Total	333											$	43
2020
Sold fixed price swaps	2	$	2.77	$	–	$	–	$	–	$	–	$	–
Three-way costless collars	47		–		2.43		2.80		3.09		–		1
Total	49											$	1
Sold Basis Swaps
2018	44	$	–	$	–	$	–	$	–	$	(0.58)	$	(2)
2019	11		–		–		–		–		1.24		(3)
Total	55											$	(5)

	Volume (MBbls)	Weighted Average Strike Price per Bbl		Fair Value at June 30, 2018 ($ in millions)
Propane
2018
Sold fixed price swaps	1,555	$	34.86	$	(7)
2019
Sold fixed price swaps	1,324	$	32.43	$	(2)
Ethane
2018
Sold fixed price swaps	1,398	$	11.85	$	(2)
2019
Sold fixed price swaps	1,734	$	11.59	$	–

Other Derivative Contracts
	Volume (Bcf)	Weighted Average Strike Price per MMBtu		Fair Value at June 30, 2018 ($ in millions)
Purchased Call Options - Natural Gas
2020	68	$	3.63	$	3
2021	57		3.52		3
Total	125			$	6
Sold Call Options - Natural Gas
2018	31	$	3.50	$	–
2019	52		3.50		(3)
2020	137		3.39		(10)
2021	114		3.33		(8)
Total	334			$	(21)
	Volume (MBbl)	Weighted Average Strike Price per Bbl		Fair Value at June 30, 2018 ($ in millions)
Sold Call Options - Oil
2018	552	$	65.00	$	(5)
2019	270		65.00		(2)
Total	822			$	(7)

	Volume (Bcf)	Weighted Average Strike Price per MMBtu		Basis Differential		Fair Value at June 30, 2018 ($ in millions)
Storage (1)
2018
Purchased fixed price swaps	1	$	2.76	$	–	$	–
Sold fixed price swaps	–		2.89		–		–
Purchased basis swaps	1		–		(0.88)		–
Sold basis swaps	–		–		(0.63)		–
Total	2					$	–
2019
Sold fixed price swaps	1	$	3.03	$	–	$	–
Sold basis swaps	1		–		(0.44)		–
Total	2					$	–

(1) The Company has entered into certain derivatives to protect the value of volumes of natural gas injected into a storage facility that will be withdrawn at a later date.

Balance Sheet Classification of Derivative Financial Instruments

Derivative Assets
	Balance Sheet Classification		Fair Value
			June 30, 2018		December 31, 2017
Derivatives not designated as hedging instruments:		(in millions)
Sold fixed price swaps - natural gas	Derivative assets		$	19	$	38
Two-way costless collars - natural gas	Derivative assets			8		5
Three-way costless collars - natural gas	Derivative assets			39		82
Sold basis swaps - natural gas	Derivative assets			5		2
Purchased call options - natural gas	Derivative assets			–		2
Sold fixed price swaps - natural gas	Other long-term assets			15		18
Two-way costless collars - natural gas	Other long-term assets			6		–
Three-way costless collars - natural gas	Other long-term assets			31		39
Purchased call options - natural gas	Other long-term assets			6		–
Interest rate swaps	Other long-term assets			1		–
Total derivative assets			$	130	$	186	(1)
Derivative Liabilities
	Balance Sheet Classification		Fair Value
			June 30, 2018		December 31, 2017
Derivatives not designated as hedging instruments:			(in millions)
Sold fixed price swaps - natural gas	Derivative liabilities		$	8	$	–
Sold fixed price swaps - propane	Derivative liabilities			9		–
Sold fixed price swaps - ethane	Derivative liabilities			2		–
Two-way costless collars - natural gas	Derivative liabilities			5		1
Three-way costless collars - natural gas	Derivative liabilities			22		36
Sold basis swaps - natural gas	Derivative liabilities			10		23
Sold call options - natural gas	Derivative liabilities			3		3
Sold call options - oil	Derivative liabilities			7		–
Interest rate swaps	Derivative liabilities			–		1
Sold fixed price swaps - natural gas	Other long-term liabilities			–		1
Two-way costless collars - natural gas	Other long-term liabilities			3		–
Three-way costless collars - natural gas	Other long-term liabilities			22		30
Sold call options - natural gas	Other long-term liabilities			18		15
Total derivative liabilities			$	109	$	110

(1) Excludes $1 million in premiums paid related to certain natural gas call options recognized as a component of derivative assets within current assets on the condensed consolidated balance sheet at December 31, 2017. As certain natural gas call options settled, the premium was amortized and recognized as a component of gain (loss) on derivatives on the unaudited condensed consolidated statement of operations.

Summary of Before Tax Effect of Fair Value Hedges not Designated for Hedge Accounting

Unsettled Gain (Loss) on Derivatives Recognized in Earnings
	Consolidated Statement of Operations	For the three months ended				For the six months ended
	Classification of Gain (Loss)	June 30,				June 30,
Derivative Instrument	on Derivatives, Unsettled	2018		2017		2018		2017
		(in millions)
Sold fixed price swaps - natural gas	Gain (Loss) on Derivatives	$	(26)	$	58	$	(29)	$	176
Sold fixed price swaps - propane	Gain (Loss) on Derivatives		(12)		–		(9)		–
Sold fixed price swaps - ethane	Gain (Loss) on Derivatives		(2)		–		(2)		–
Two-way costless collars - natural gas	Gain (Loss) on Derivatives		(1)		14		2		45
Three-way costless collars - natural gas	Gain (Loss) on Derivatives		(24)		31		(29)		88
Sold basis swaps - natural gas	Gain (Loss) on Derivatives		(4)		60		16		(43)
Purchased call options - natural gas	Gain (Loss) on Derivatives		(12)		–		4		–
Sold call options - natural gas	Gain (Loss) on Derivatives		31		11		(3)		53
Sold call options - oil	Gain (Loss) on Derivatives		(6)		–		(6)		–
Interest rate swaps	Gain (Loss) on Derivatives		–		(1)		2		–
Total gain (loss) on unsettled derivatives		$	(56)	$	173	$	(54)	$	319

Settled Gain (Loss) on Derivatives Recognized in Earnings (1)
	Consolidated Statement of Operations	For the three months ended				For the six months ended
	Classification of Gain (Loss)	June 30,				June 30,
Derivative Instrument	on Derivatives, Settled	2018		2017		2018			2017
		(in millions)
Sold fixed price swaps - natural gas	Gain (Loss) on Derivatives	$	13	$	(9)	$	13		$	(25)
Sold fixed price swaps - propane	Gain (Loss) on Derivatives		(1)		–		(1)			–
Two-way costless collars - natural gas	Gain (Loss) on Derivatives		–		–		4			(3)
Three-way costless collars - natural gas	Gain (Loss) on Derivatives		12		(1)		19			(5)
Sold basis swaps - natural gas	Gain (Loss) on Derivatives		(3)		(29)		(24)			(30)
Purchased call options - natural gas	Gain (Loss) on Derivatives		–		–		2	(2)		(6)
Sold call options - natural gas	Gain (Loss) on Derivatives		–		–		(1)			–
Sold call options - oil	Gain (Loss) on Derivatives		(1)		–		(1)			–
Interest rate swaps	Gain (Loss) on Derivatives		–		–		–			–
Total gain (loss) on settled derivatives		$	20	$	(39)	$	11		$	(69)
Total gain (loss) on derivatives		$	(36)	$	134	$	(43)		$	250

(1) The Company calculates gain (loss) on derivatives, settled, as the summation of gains and losses on positions that settled within the period.

(2) Includes $1 million amortization of premiums paid related to certain natural gas call options for the six months ended June 30,2018, which is included in gain (loss) on derivatives on the unaudited condensed consolidated statements of operations.