Derivatives and Risk Management (Tables)

3 Months Ended

Mar. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

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

The following tables provide information about the Company’s financial instruments that are sensitive to changes in commodity prices and that are used to protect the Company’s exposure. None of the financial instruments below are designated for hedge accounting treatment.  The tables present the notional amount, the weighted average contract prices and the fair value by expected maturity dates as of March 31, 2019:

Financial Protection on Production
		Weighted Average Price per MMBtu
	Volume (Bcf)	Swaps		Sold Puts		Purchased Puts		Sold Calls		Basis Differential			Fair Value at March 31, 2019 (in millions)
Natural Gas
2019
Fixed price swaps	195	$	2.90	$	—	$	—	$	—	$	—		$	23
Two-way costless collars	44	—		—		2.78		2.92		—			3
Three-way costless collars	101	—		2.46		2.88		3.22		—			13
Total	340												$	39
2020
Fixed price swaps	24	$	2.88	$	—	$	—	$	—	$	—		$	3
Three-way costless collars	122	—		2.35		2.68		2.96		—			(2		)
Total	146												$	1
2021
Three-way costless collars	37	$	—	$	2.35	$	2.60	$	2.93	$	—		$	(2	)
Basis Swaps
2019	85	$	—	$	—	$	—	$	—	$	(0.50	)	$	(13	)
2020	59	—		—		—		—		(0.44		)	(8		)
Total	144												$	(21	)

	Volume (MBbls)	Weighted Average Strike Price per Bbl								Fair Value at March 31, 2019 (in millions)
		Swaps		Sold Puts		Purchased Puts		Sold Calls
Oil
2019
Fixed price swaps (1)	921	$	62.13	$	—	$	—	$	—	$	1
Two-way costless collars	248	—		—		65.00		72.30		1
Three-way costless collars	412	—		45.00		55.00		63.67		—
Total	1,581									$	2
2020
Fixed price swaps	366	$	65.68	$	—	$	—	$	—	$	3
Two-way costless collars	366	—		—		60.00		69.80		2
Total	732									$	5
Propane
2019
Fixed price swaps	2,028	$	31.25	$	—	$	—	$	—	$	7
2020
Fixed price swaps	824	$	27.35	$	—	$	—	$	—	$	—
Two-way costless collars	366	—		—		25.20		29.40		—
Total	1,190									$	—
Ethane
2019
Fixed price swaps	2,778	$	13.90	$	—	$	—	$	—	$	10
2020
Fixed price swaps	732	$	13.49	$	—	$	—	$	—	$	2

(1) Includes 206 MBbls of purchased fixed price oil swaps hedged at $69.10 per barrel with a fair value of ($2) million and 1,127 MBbls of sold fixed price oil swaps hedged at $63.41 with a fair value of $3 million.

Other Derivative Contracts
	Volume (Bcf)	Weighted Average Strike Price per MMBtu		Fair Value at March 31, 2019 (in millions)
Purchased Call Options – Natural Gas
2019	30	$	3.50	$	—
2020	68	3.63		3
2021	57	3.52		3
Total	155			$	6
Sold Call Options – Natural Gas
2019	39	$	3.50	$	(1	)
2020	137	3.39		(10		)
2021	114	3.33		(9		)
Total	290			$	(20	)

໿

	Volume (Bcf)	Weighted Average Strike Price per MMBtu		Basis Differential per MMBtu			Fair Value at March 31, 2019 ($ in millions)
Storage (1)
2019
Purchased fixed price swaps	1	$	2.87	$	—		$	—
Purchased basis swaps	1	—		(0.53		)	—
Total							$	—
2020
Fixed price swap	1	$	3.14	$	—		$	—

(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

The balance sheet classification of the assets and liabilities related to derivative financial instruments (none of which are designated for hedge accounting treatment) is summarized below as of March 31, 2019 and December 31, 2018:

Derivative Assets
	Balance Sheet Classification	Fair Value
(in millions)		March 31, 2019			December 31, 2018
Derivatives not designated as hedging instruments:
Fixed price swaps – natural gas	Derivative assets	$	25		$	32
Fixed price swaps – oil	Derivative assets	5			13
Fixed price swaps – propane	Derivative assets	7			11
Fixed price swaps – ethane	Derivative assets	11			7
Two-way costless collars – natural gas	Derivative assets	5			11
Two-way costless collars – oil	Derivative assets	2			6
Three-way costless collars – natural gas	Derivative assets	25			41
Three-way costless collars – oil	Derivative assets	1			—
Basis swaps – natural gas	Derivative assets	2			8
Purchased call options – natural gas	Derivative assets	3		(1)	—
Interest rate swaps	Derivative assets	1			1
Fixed price swaps – natural gas	Other long-term assets	4			6
Fixed price swaps – oil	Other long-term assets	2			6
Fixed price swaps – ethane	Other long-term assets	1			1
Two-way costless collars – oil	Other long-term assets	2			5
Three-way costless collars – natural gas	Other long-term assets	28			34
Basis swaps – natural gas	Other long-term assets	—			3
Purchased call options – natural gas	Other long-term assets	4			6
Total derivative assets		$	128		$	191

Derivative Liabilities
	Balance Sheet Classification	Fair Value
(in millions)		March 31, 2019		December 31, 2018
Derivatives not designated as hedging instruments:
Purchased fixed price swap – oil	Derivative liabilities	$	2	$	6
Fixed price swaps – natural gas	Derivative liabilities	3		9
Fixed price swaps – oil	Derivative liabilities	1		—
Fixed price swaps – ethane	Derivative liabilities	—		3
Two-way costless collars – natural gas	Derivative liabilities	2		7
Two-way costless collars – oil	Derivative liabilities	1		—
Three-way costless collars – natural gas	Derivative liabilities	17		33
Three-way costless collars – oil	Derivative liabilities	1		—
Basis swaps – natural gas	Derivative liabilities	16		18
Sold call options – natural gas	Derivative liabilities	7		3
Fixed price swaps – natural gas	Other long-term liabilities	—		1
Two-way costless collars – oil	Other long-term liabilities	—		1
Three-way costless collars – natural gas	Other long-term liabilities	27		35
Basis swap – natural gas	Other long-term liabilities	7		4
Sold call options – natural gas	Other long-term liabilities	13		19
Total derivative liabilities		$	97	$	139

(1) Includes $1 million in premiums paid related to certain natural gas purchased call options recognized as a component of derivative assets within current assets on the consolidated balance sheet at March 31, 2019. As certain natural gas purchased call options settle, the premium will be amortized and recognized as a component of gain (loss) on derivatives on the consolidated statements of operations.

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

The following tables summarize the before-tax effect of the Company’s derivative instruments on the consolidated statements of operations for the three months ended March 31, 2019 and 2018:

Unsettled Gain (Loss) on Derivatives Recognized in Earnings
Derivative Instrument	Consolidated Statement of Operations Classification of Gain (Loss) on Derivatives, Unsettled	For the three months ended March 31,
		2019			2018
		(in millions)
Purchased fixed price swaps – oil	Gain (Loss) on Derivatives	$	4		$	—
Fixed price swaps – natural gas	Gain (Loss) on Derivatives	(2		)	(3		)
Fixed price swaps – oil	Gain (Loss) on Derivatives	(13		)	—
Fixed price swaps – propane	Gain (Loss) on Derivatives	(4		)	3
Fixed price swaps – ethane	Gain (Loss) on Derivatives	7			—
Two-way costless collars – natural gas	Gain (Loss) on Derivatives	(1		)	3
Two-way costless collars – oil	Gain (Loss) on Derivatives	(7		)	—
Three-way costless collars – natural gas	Gain (Loss) on Derivatives	2			(5		)
Basis swaps – natural gas	Gain (Loss) on Derivatives	(10		)	20
Purchased call options – natural gas	Gain (Loss) on Derivatives	—			16
Sold call options – natural gas	Gain (Loss) on Derivatives	2			(34		)
Interest rate swaps	Gain (Loss) on Derivatives	—			2
Total gain (loss) on unsettled derivatives		$	(22	)	$	2
Settled Gain (Loss) on Derivatives Recognized in Earnings (1)
Derivative Instrument	Consolidated Statement of Operations Classification of Gain (Loss) on Derivatives, Settled	For the three months ended March 31,
		2019			2018
		(in millions)
Purchased fixed price swaps – oil	Gain (Loss) on Derivatives	$	(1	)	$	—
Sold fixed price swaps – natural gas	Gain (Loss) on Derivatives	(6		)	—
Sold fixed price swaps – oil	Gain (Loss) on Derivatives	2			—
Sold fixed price swaps – propane	Gain (Loss) on Derivatives	2			—
Sold fixed price swaps – ethane	Gain (Loss) on Derivatives	1			—
Two-way costless collars – natural gas	Gain (Loss) on Derivatives	(1		)	4
Two-way costless collars – oil	Gain (Loss) on Derivatives	1			—
Three-way costless collars – natural gas	Gain (Loss) on Derivatives	(4		)	7
Sold basis swaps – natural gas	Gain (Loss) on Derivatives	(4		)	(21		)
Purchased call options – natural gas	Gain (Loss) on Derivatives	—			2			(2)
Sold call options – natural gas	Gain (Loss) on Derivatives	—			(1		)
Total loss on settled derivatives		$	(10	)	$	(9	)
Total loss on derivatives		$	(32	)	$	(7	)

(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 three months ended March 31, 2018, which is included in gain (loss) on derivatives on the consolidated statements of operations.