Hedging Program and Derivatives

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Hedging Program and Derivatives

Note 5.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 September 30, 2014:

	Fixed Price Swap
	Oil – WTI			Oil - Brent (1)			Oil - LLS			Gas
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	1,586	$	90.74	—	$	—	98	$	101.26	3,101	$	4.10
2015	921	$	85.00	125	$	96.78	—	$	—	1,450	$	4.08
2016	948	$	84.10	—	$	—	—	$	—	—	$	—
2017	493	$	84.18	—	$	—	—	$	—	—	$	—

(1) The Brent swap was monetized in October 2014 for $0.1 million and replaced with a $85.30 WTI swap for 3,800 Bbl per month for 2015.

At September 30, 2014, the aggregate fair value of our commodity derivative contracts was a liability of approximately $1.6 million.

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

Fair Value of Derivative Instruments as of September 30, 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	$	332	Derivatives – current	$	924
Commodity price derivatives	Derivatives - long-term	7		Derivatives - long-term	1,024
		$	339		$	1,948

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 “(Gain) loss on derivative contracts” in the accompanying condensed consolidated statements of operations.