Derivatives and Risk Management (Tables)

9 Months Ended

Sep. 30, 2018

Derivatives and Risk Management [Abstract]

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

Financial Protection on Production (1)
		Weighted Average Price per MMBtu
	Volume (Bcf)	Swaps		Sold Puts		Purchased Puts		Sold Calls		Basis Differential		Fair Value at September 30, 2018 ($ in millions)
Natural Gas
2018
Sold fixed price swaps	42	$	2.91	$	–	$	–	$	–	$	–	$	(5)
Two-way costless collars	6		–		–		2.90		3.27		–		–
Three-way costless collars	72		–		2.40		2.97		3.37		–		3
Total	120											$	(2)
2019
Sold fixed price swaps	156	$	2.92	$	–	$	–	$	–	$	–	$	29
Two-way costless collars	53		–		–		2.80		2.98		–		8
Three-way costless collars	163		–		2.47		2.89		3.26		–		13
Total	372											$	50
2020
Sold fixed price swaps	2	$	2.77	$	–	$	–	$	–	$	–	$	–
Three-way costless collars	47		–		2.43		2.80		3.09		–		3
Total	49											$	3
Sold Basis Swaps
2018	16	$	–	$	–	$	–	$	–	$	(0.55)	$	(2)
2019	32		–		–		–		–		0.23		(8)
Total	48											$	(10)

(1) Excludes derivatives associated with the Fayetteville Shale sale (see Note 2).

	Volume (MBbls)	Weighted Average Strike Price per Bbl		Fair Value at September 30, 2018 ($ in millions)
Propane
2018
Sold fixed price swaps	778	$	34.86	$	(8)
2019
Sold fixed price swaps	1,506	$	32.63	$	(11)
Ethane
2018
Sold fixed price swaps	1,389	$	13.30	$	(13)
2019
Sold fixed price swaps	3,322	$	13.38	$	(16)

Other Derivative Contracts
	Volume (Bcf)	Weighted Average Strike Price per MMBtu		Fair Value at September 30, 2018 ($ in millions)
Purchased Call Options - Natural Gas
2020	68	$	3.63	$	2
2021	57		3.52		2
Total	125			$	4
Sold Call Options - Natural Gas
2018	16	$	3.50	$	–
2019	52		3.50		(2)
2020	136		3.39		(8)
2021	114		3.33		(6)
Total	318			$	(16)
	Volume (MBbl)	Weighted Average Strike Price per Bbl		Fair Value at September 30, 2018 ($ in millions)
Sold Call Options - Oil
2018	276	$	65.00	$	(2)
2019	270		65.00		(3)
Total	546			$	(5)

	Volume (Bcf)	Weighted Average Strike Price per MMBtu		Basis Differential		Fair Value at September 30, 2018 ($ in millions)
Storage (1)
2018
Purchased fixed price swaps	0.2	$	2.77	$	–	$	–
Sold fixed price swaps	0.2		2.89		–		–
Purchased basis swaps	0.1		–		(0.89)		–
Sold basis swaps	0.1		–		(0.62)		–
Total	0.6					$	–
2019
Sold fixed price swaps	0.8	$	3.03	$	–	$	–
Sold basis swaps	0.7		–		(0.44)		–
Total	1.5					$	–

(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
			September 30, 2018			December 31, 2017
Derivatives not designated as hedging instruments:		(in millions)
Sold fixed price swaps - natural gas	Derivative assets		$	46	(1)	$	38
Two-way costless collars - natural gas	Derivative assets			12			5
Three-way costless collars - natural gas	Derivative assets			40			82
Sold basis swaps - natural gas	Derivative assets			5			2
Purchased call options - natural gas	Derivative assets			–			3	(2)
Interest rate swaps	Derivative assets			1			–
Sold fixed price swaps - natural gas	Other long-term assets			6			18
Two-way costless collars - natural gas	Other long-term assets			2			–
Three-way costless collars - natural gas	Other long-term assets			24			39
Purchased call options - natural gas	Other long-term assets			4			–
Interest rate swaps	Other long-term assets			1			–
Total derivative assets			$	141		$	187
Derivative Liabilities
	Balance Sheet Classification		Fair Value
			September 30, 2018			December 31, 2017
Derivatives not designated as hedging instruments:			(in millions)
Sold fixed price swaps - natural gas	Derivative liabilities		$	6		$	–
Sold fixed price swaps - propane	Derivative liabilities			19			–
Sold fixed price swaps - ethane	Derivative liabilities			31			–
Two-way costless collars - natural gas	Derivative liabilities			5			1
Three-way costless collars - natural gas	Derivative liabilities			28			36
Sold basis swaps - natural gas	Derivative liabilities			15			23
Sold call options - natural gas	Derivative liabilities			2			3
Sold call options - oil	Derivative liabilities			5			–
Interest rate swaps	Derivative liabilities			–			1
Sold fixed price swaps - natural gas	Other long-term liabilities			–			1
Sold fixed price swaps - propane	Other long-term liabilities			2			–
Sold fixed price swaps - ethane	Other long-term liabilities			2			–
Two-way costless collars - natural gas	Other long-term liabilities			1			–
Three-way costless collars - natural gas	Other long-term liabilities			17			30
Sold call options - natural gas	Other long-term liabilities			14			15
Total derivative liabilities			$	147		$	110

(1) Includes $22 million in premiums paid related to certain natural gas fixed price swaps recognized as a component of derivative assets within current assets on the consolidated balance sheet at September 30, 2018. As certain natural gas fixed price swaps settle, the premium will be amortized and recognized as a component of gain (loss) on derivatives on the consolidated statement of operations.

(2) Includes $1 million in premiums paid related to certain natural gas call options recognized as a component of derivative assets within current assets on the 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 consolidated statement of operations.

Schedule of Derivative Assets and Liabilities Held for Sale

Derivative Assets Held for Sale
	Balance Sheet Classification	Fair Value
		September 30, 2018
Derivatives not designated as hedging instruments:		(in millions)
Sold fixed price swaps - natural gas	Derivative assets	$	23
Sold fixed price swaps - natural gas	Other long-term assets		11
Total derivative assets held for sale		$	34
Derivative Liabilities Held for Sale
	Balance Sheet Classification	Fair Value
		September 30, 2018
Derivatives not designated as hedging instruments:		(in millions)
Sold fixed price swaps - natural gas	Derivative liabilities	$	10
Sold fixed price swaps - natural gas	Other long-term liabilities		39
Total derivative liabilities held for sale		$	49

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 nine months ended
	Classification of Gain (Loss)	September 30,				September 30,
Derivative Instrument	on Derivatives, Unsettled	2018		2017		2018		2017
		(in millions)
Sold fixed price swaps - natural gas	Gain (Loss) on Derivatives	$	(17)	$	(2)	$	(46)	$	174
Sold fixed price swaps - propane	Gain (Loss) on Derivatives		(10)		–		(19)		–
Sold fixed price swaps - ethane	Gain (Loss) on Derivatives		(27)		–		(29)		–
Two-way costless collars - natural gas	Gain (Loss) on Derivatives		2		3		4		48
Three-way costless collars - natural gas	Gain (Loss) on Derivatives		(7)		(1)		(36)		87
Sold basis swaps - natural gas	Gain (Loss) on Derivatives		(5)		24		11		(19)
Purchased call options - natural gas	Gain (Loss) on Derivatives		(2)		–		2		–
Sold call options - natural gas	Gain (Loss) on Derivatives		5		6		2		59
Sold call options - oil	Gain (Loss) on Derivatives		1		–		(5)		–
Interest rate swaps	Gain (Loss) on Derivatives		1		1		3		1
Total gain (loss) on unsettled derivatives		$	(59)	$	31	$	(113)	$	350

Settled Gain (Loss) on Derivatives Recognized in Earnings (1)
	Consolidated Statement of Operations	For the three months ended				For the nine months ended
	Classification of Gain (Loss)	September 30,				September 30,
Derivative Instrument	on Derivatives, Settled	2018		2017		2018			2017
		(in millions)
Sold fixed price swaps - natural gas	Gain (Loss) on Derivatives	$	5	$	7	$	18		$	(18)
Sold fixed price swaps - propane	Gain (Loss) on Derivatives		(5)		–		(6)			–
Sold fixed price swaps - ethane	Gain (Loss) on Derivatives		(6)		–		(6)			–
Two-way costless collars - natural gas	Gain (Loss) on Derivatives		–		–		4			(3)
Three-way costless collars - natural gas	Gain (Loss) on Derivatives		5		1		24			(4)
Sold basis swaps - natural gas	Gain (Loss) on Derivatives		(4)		9		(28)			(21)
Purchased call options - natural gas	Gain (Loss) on Derivatives		–		–		2	(2)		–
Sold call options - natural gas (3)	Gain (Loss) on Derivatives		–		(3)		(1)			(9)
Sold call options - oil	Gain (Loss) on Derivatives		(1)		–		(2)			–
Total gain (loss) on settled derivatives		$	(6)	$	14	$	5		$	(55)
Total gain (loss) on derivatives		$	(65)	$	45	$	(108)		$	295

(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 nine months ended September 30, 2018, which is included in gain (loss) on derivatives on the consolidated statements of operations.

(3) Includes $3 million amortization of premiums paid related to certain call options for the three and nine months ended September 30, 2017.