Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities [Abstract]

Derivative Instruments and Hedging Activities

(6) Derivative Instruments and Hedging Activities

We enter into derivative transactions to reduce exposure to fluctuations in the price of oil and natural gas for a portion of our production. Our fixed-price swaps fix the sales price for a limited amount of our production and, for the contracted volumes, eliminate our ability to benefit from increases in the sales price of the production. Our collars limit our exposure to declines in the sales price of oil while giving us the ability to benefit from increases to a certain level in the sales price of oil for a limited amount of our production. Derivative instruments are carried at their fair value on the condensed consolidated balance sheets as Fair value of commodity derivative instruments, and all unrealized and realized gains and losses are recorded in Gain (loss) on derivative instruments in Other income (expense) in the condensed consolidated statements of operations. See Note 7 for information regarding fair values of our derivative instruments.

The following table sets forth our derivative instruments outstanding as of June 30, 2013.

Oil Contracts

	Fixed-Price Swaps
	Daily Average				Average
	Volume		Volume		Swap Price
Remaining Contract Term	(Bbls)		(Bbls)		($/Bbl)
July 2013		11,445		354,800		104.87
August 2013		6,219		192,800		104.70
September 2013		6,233		187,000		104.45
October 2013		5,719		177,300		103.94
November 2013		6,233		187,000		103.93
December 2013		9,156		283,850		103.24
2013 Total		7,515		1,382,750		104.21
January 2014		11,250		348,750		101.08
February 2014		11,250		315,000		101.08
March 2014		11,250		348,750		101.08
April 2014		10,250		307,500		101.26
May 2014		10,250		317,750		101.26
June 2014		10,250		307,500		101.26
July 2014		10,250		317,750		101.26
August 2014		6,000		186,000		101.00
September 2014		6,000		180,000		101.00
October 2014		6,000		186,000		101.00
November 2014		6,000		180,000		101.00
December 2014		6,000		186,000		101.00
2014 Total		8,715		3,181,000		101.13
January 2015 - December 2015		1,500		547,500		97.70

	Collars
	Daily Average				Average
	Volume		Volume		Swap Price
Remaining Contract Term	(Bbls)		(Bbls)		($/Bbl)
July 2013—December 2013		1,000		184,000	$	80.00/104.10

Gas Contracts

	Fixed-Price Swaps
	Daily Average				Average
	Volume		Volume		Swap Price
Remaining Contract Term	(Mmbtu)		(Mmbtu)		($/Mmbtu)
July 2013		9,000		279,000		3.53
August 2013		8,500		263,500		3.55
September 2013		8,500		255,000		3.55
October 2013		8,000		248,000		3.58
November 2013		7,500		225,000		3.67
December 2013		6,500		201,500		3.83
2013 Total		8,000		1,472,000		3.61
January 2014 - December 2014		5,000		1,825,000		4.01
January 2015 - December 2015		4,300		1,569,500		4.31

The following table presents information about the components of our gain on derivative instruments.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
	(in thousands)
Derivative contracts:
Unrealized gain due to change in fair value	$	34,683	$	30,500	$	27,300	$	13,958
Realized gain (loss) on settlement		2,247		(195)		(4,321)		(3,715)
Total gain on derivative instruments	$	36,930	$	30,305	$	22,979	$	10,243