Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 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 September 30, 2013.

Oil Contracts

	Fixed-Price Swaps
	Daily Average				Average
	Volume		Volume		Swap Price
Remaining Contract Term	(Bbls)		(Bbls)		($/Bbl)
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		7,045		648,150		103.63
January 2014		14,350		444,850		100.00
February 2014		14,350		401,800		100.00
March 2014		14,350		444,850		100.00
April 2014		13,350		400,500		99.83
May 2014		13,350		413,850		99.83
June 2014		13,350		400,500		99.83
July 2014		12,350		382,850		99.46
August 2014		6,750		209,250		98.83
September 2014		6,750		202,500		98.83
October 2014		6,750		209,250		98.83
November 2014		6,750		202,500		98.83
December 2014		9,700		300,700		98.52
2014 Total		10,996		4,013,400		99.54
January 2015 - December 2015		1,500		547,500		97.70

	Collars
	Daily Average				Average
	Volume		Volume		Swap Price
Remaining Contract Term	(Bbls)		(Bbls)		($/Bbl)
October 2013—December 2013		1,000		92,000	$	80.00/104.10

Gas Contracts

	Fixed-Price Swaps
	Daily Average				Average
	Volume		Volume		Swap Price
Remaining Contract Term	(Mmbtu)		(Mmbtu)		($/Mmbtu)
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		7,332		674,500		3.68
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 (loss) on derivative instruments.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
	(in thousands)
Derivative contracts:
Unrealized gain (loss) due to change in fair value	$	(26,478)	$	(22,010)	$	822	$	(8,052)
Realized loss on settlement		(3,534)		(98)		(7,855)		(3,813)
Total loss on derivative instruments	$	(30,012)	$	(22,108)	$	(7,033)	$	(11,865)