Hedging Program and Derivatives

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Hedging Program and Derivatives

Hedging Program and Derivatives

The derivative instruments we utilize are based on index prices that may and often do differ from the actual oil and gas prices realized in our operations.  Management has elected not to apply hedge accounting as prescribed by ASC 815. Accordingly, fluctuations in the market value of the derivative contracts are recognized in earnings during the current period.

The following table sets forth our derivative contracts at March 31, 2014:

	Fixed Price Swap
	Oil – WTI			Oil - Brent			Oil - LLS			Natural Gas - NYMEX
Contract Periods	Daily Volume (Bbl)	Swap Price (per Bbl)		Daily Volume (Bbl)	Swap Price (per Bbl)		Daily Volume (Bbl)	Swap Price (per Bbl)		Daily Volume (Mcf)	Swap Price (per Mcf)
2014	1,510	$	92.75	—	$	—	98	$	101.26	3,167	$	4.06
2015	553	$	85.00	494	$	97.04	—	$	—	1,450	$	4.08
2016	948	$	84.10	—	$	—	—	$	—	—	$	—
2017	494	$	84.18	—	$	—	—	$	—	—	$	—

At March 31, 2014, the aggregate fair value of our commodity derivative contracts was a liability of approximately $4.6 million.

The following table illustrates the impact of derivative contracts on the Company’s balance sheet:

Fair Value of Derivative Instruments as of March 31, 2014
	Asset Derivatives			Liability Derivatives
Derivatives not designated as hedging instruments	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity price derivatives	Derivatives – current	$	218	Derivatives – current	$	2,860
Commodity price derivatives	Derivatives - long-term	547		Derivatives - long-term	2,510
		$	765		$	5,370

Fair Value of Derivative Instruments as of December 31, 2013
	Asset Derivatives			Liability Derivatives
Derivatives not designated as hedging instruments	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity price derivatives	Derivatives – current	$	85	Derivatives – current	$	2,728
Commodity price derivatives	Derivatives – long-term	925		Derivatives – long-term	2,274
		$	1,010		$	5,002

Gains and losses from derivative activities are reflected as “Loss on derivative contracts” in the accompanying condensed consolidated statements of operations.