Derivative Financial Instruments

3 Months Ended

Sep. 30, 2015

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

(6) Derivative Financial Instruments

We utilize derivative instruments in the form of natural gas and crude oil put, swap and collar arrangements and combinations of these instruments in order to manage the price risk associated with future crude oil and natural gas production.Derivative financial instruments are recorded at fair value and included as either assets or liabilities in the consolidated balance sheets. We net derivative assets and liabilities for counterparties where we have a legal right of offset.   Any premiums paid or financed on derivative financial instruments are capitalized as part of the derivative assets or derivative liabilities, as appropriate, at the time the premiums are paid or financed. Changes in fair value of these outstanding derivative financial instruments are recognized in earnings and included in gain (loss) on derivative financial instruments as a component of revenues in the accompanying consolidated statements of operations.

The following table sets forth our derivative instruments outstanding as of September 30, 2015.

Oil Contracts

							Weighted Average Contract Price
					Volume		Sub
Remaining Contract Term	Type of Contract		Index		(MBbls)		Floor	Floor	Ceiling
October 2015 - December 2015		Three-Way Collars		ARGUS-LLS		1,012	$        32.73	$      45.00	$      75.45

Gas Contracts

							Swap Fixed
					Volume		Price
Remaining Contract Term	Type of Contract		Index		(MMBtu)		(4/Mmbtu)
October 2015 - December 2015		Fixed Price Swaps		NYMEX-HH		369	$          4.31

The effect of derivative financial instruments on our consolidated statements of operations was as follows:

	Three Months Ended
	September 30,
Gain (loss) on derivative financial instruments	2015		2014
Cash settlements, net of purchased put premium amortization	$	714	$	1,812
Change in fair value		2,064		20,045
Total gain on derivative financial instruments	$	2,778	$	21,857

We monitor the creditworthiness of our counterparties. However, we are not able to predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, we may be limited in our ability to mitigate an increase in counterparty credit risk. Possible actions would be to transfer our position to another counterparty or request a voluntary termination of the derivative contracts resulting in a cash settlement. Should one of these financial counterparties not perform, we may not realize the benefit of some of our derivative instruments under lower commodity prices and could incur a loss. At September 30, 2015, we had no deposits for collateral with our counterparties.