We use derivative instruments to reduce our exposure to fluctuations in future commodity prices and to protect our expected operating cash flow against significant market movements or volatility. All of our oil, natural gas and NGL derivative instruments are net settled based on the difference between the fixed-price payment and the floating-price payment, resulting in a net amount due to or from the counterparty. None of our open oil, natural gas and NGL derivative instruments were designated for hedge accounting as of December 31, 2020 and 2019.

•Swaps: We receive a fixed price and pay a floating market price to the counterparty for the hedged commodity. In exchange for higher fixed prices on certain of our swap trades, we may sell call options and call swaptions.

•Options: We sell, and occasionally buy, call options in exchange for a premium. At the time of settlement, if the market price exceeds the fixed price of the call option, we pay the counterparty the excess on sold call options and we receive the excess on bought call options. If the market price settles below the fixed price of the call option, no payment is due from either party.

•Call Swaptions: We sell call swaptions to counterparties in exchange for a premium. Swaptions allow the counterparty, on a specific date, to extend an existing fixed-price swap for a certain period of time or to increase the notional volumes of an existing fixed-price swap.

•Collars: These instruments contain a fixed floor price (put) and ceiling price (call). If the market price exceeds the call strike price or falls below the put strike price, we receive the fixed price and pay the market price. If the market price is between the put and the call strike prices, no payments are due from either party. Three-way collars include the sale by us of an additional put option in exchange for a more favorable strike price on the call option. This eliminates the counterparty’s downside exposure below the second put option strike price.

•Basis Protection Swaps: These instruments are arrangements that guarantee a fixed price differential to NYMEX from a specified delivery point. We receive the fixed price differential and pay the floating market price differential to the counterparty for the hedged commodity.


	December 31, 2020			December 31, 2019
	Notional Volume	Fair Value		Notional Volume	Fair Value
		($ in millions)			($ in millions)
Oil (mmbbl):
Fixed-price swaps	27	$	(136)	24	$	(7)
Collars	—	—		2	14
Basis protection swaps	7	(1)		8	(2)
Total oil	34	(137)		34	5
Natural gas (bcf):
Fixed-price swaps	728	10		265	125
Collars	53	8		—	—
Call options (sold)	—	—		22	—
Call swaptions	—	—		29	(2)
Basis protection swaps	66	1		30	2
Total natural gas	847	19		346	125
Total estimated fair value		$	(118)		$	130

We have terminated certain commodity derivative contracts that were previously designated as cash flow hedges for which the original contract months are yet to occur. See further discussion below under Effect of Derivative Instruments – Accumulated Other Comprehensive Income (Loss).

The following table presents the fair value and location of each classification of derivative instrument included in the consolidated balance sheets as of December 31, 2020 and 2019 on a gross basis and after same-counterparty netting:


Balance Sheet Classification	Gross Fair Value		Amounts Netted in the Consolidated Balance Sheets		Net Fair Value Presented in the Consolidated Balance Sheets
	($ in millions)
As of December 31, 2020
Commodity Contracts:
Short-term derivative asset	$	84	$	(65)	$	19
Long-term derivative asset	5		(5)		—
Short-term derivative liability	(158)		65		(93)
Long-term derivative liability	(49)		5		(44)
Total derivatives	$	(118)	$	—	$	(118)

As of December 31, 2019
Commodity Contracts:
Short-term derivative asset	$	174	$	(40)	$	134
Short-term derivative liability	(42)		40		(2)
Long-term derivative liability	(2)		—		(2)
Total derivatives	$	130	$	—	$	130


	Years Ended December 31,
	2020		2019		2018
	($ in millions)
Oil, natural gas and NGL revenues	$	2,745	$	4,517	$	5,189
Gains on undesignated oil, natural gas and NGL derivatives	629		40		—
Losses on terminated cash flow hedges	(33)		(35)		(34)
Total oil, natural gas and NGL revenues	$	3,341	$	4,522	$	5,155


	Years Ended December 31,
	2020		2019		2018
	($ in millions)
Marketing revenues	$	1,869	$	3,971	$	5,069
Gains (losses) on undesignated marketing natural gas derivatives	—		(4)		7
Total marketing revenues	$	1,869	$	3,967	$	5,076


	Years Ended December 31,
	2020				2019				2018
	Before Tax		After Tax		Before Tax		After Tax		Before Tax		After Tax
	($ in millions)
Balance, beginning of period	$	(45)	$	12	$	(80)	$	(23)	$	(114)	$	(57)
Losses reclassified to income	33		33		35		35		34		34
Balance, end of period	$	(12)	$	45	$	(45)	$	12	$	(80)	$	(23)

The accumulated other comprehensive loss as of December 31, 2020 represents the net deferred loss associated with commodity derivative contracts that were previously designated as cash flow hedges for which the original contract months are yet to occur. Remaining deferred gain or loss amounts will be recognized in earnings in the month for which the original contract months are to occur. As we early adopted ASU 2019-12 in 2020, the tax effect will be recognized in earnings in the year ended December 31, 2022. As of December 31, 2020, we expect to transfer approximately $8 million of net loss included in accumulated other comprehensive income to net income (loss) during the next 12 months. The remaining amounts will be transferred by December 31, 2022.

Our derivative instruments expose us to our counterparties’ credit risk. To mitigate this risk, we enter into derivative contracts only with counterparties that are highly rated or deemed by us to have acceptable credit strength and deemed by management to be competent and competitive market-makers, and we attempt to limit our exposure to non-performance by any single counterparty. As of December 31, 2020, our oil, natural gas and NGL derivative instruments were spread among 7 counterparties.

Certain of our hedging arrangements are with counterparties that were also lenders (or affiliates of lenders) under our DIP Credit Facility. The contracts entered into with these counterparties are secured by the same collateral that secures the pre-petition revolving credit facility. The counterparties’ obligations must be secured by cash or letters of credit to the extent that any mark-to-market amounts owed to us exceed defined thresholds.

The fair value of our derivatives is based on third-party pricing models which utilize inputs that are either readily available in the public market, such as oil, natural gas and NGL forward curves and discount rates, or can be corroborated from active markets or broker quotes. These values are compared to the values given by our counterparties for reasonableness. Since oil, natural gas and NGL swaps do not include optionality and therefore generally have no unobservable inputs, they are classified as Level 2. All other derivatives have some level of unobservable input, such as volatility curves, and are therefore classified as Level 3. Derivatives are also subject to the risk that either party to a contract will be unable to meet its obligations. We factor non-performance risk into the valuation of our derivatives using current published credit default swap rates. To date, this has not had a material impact on the values of our derivatives.


	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
			($ in millions)
As of December 31, 2020
Derivative Assets (Liabilities):
Commodity assets	$	—	$	78	$	10	$	88
Commodity liabilities	—		(204)		(2)		(206)
Total derivatives	$	—	$	(126)	$	8	$	(118)

As of December 31, 2019
Derivative Assets (Liabilities):
Commodity assets	$	—	$	160	$	14	$	174
Commodity liabilities	—		(42)		(2)		(44)
Total derivatives	$	—	$	118	$	12	$	130


	Commodity Derivatives		Utica Contingent Consideration
	($ in millions)
Balance, as of January 1, 2020	$	12	$	—
Total gains (losses) (realized/unrealized):
Included in earnings(a)	11		—
Total purchases, issuances, sales and settlements:
Settlements	(15)		—
Balance, as of December 31, 2020	$	8	$	—

Balance, as of January 1, 2019	$	87	$	7
Total gains (losses) (realized/unrealized):
Included in earnings(a)	(59)		(7)
Total purchases, issuances, sales and settlements:
Settlements	(16)		—
Balance, as of December 31, 2019	$	12	$	—

___________________________________________


(a)		Commodity Derivatives				Utica Contingent Consideration

		2020		2019		2020		2019
		($ in millions)
	Total gains (losses) included in earnings for the period	$	11	$	(59)	$	—	$	(7)
	Change in unrealized gains (losses) related to assets still held at reporting date	$	—	$	(19)	$	—	$	—

The significant unobservable inputs for Level 3 derivative contracts include market volatility. Changes in market volatility impact the fair value measurement of our derivative contracts, which is based on an estimate derived from option models. For example, an increase or decrease in the forward prices and volatility of oil and natural gas prices decreases or increases the fair value of oil and natural gas derivatives. The following table presents quantitative information about Level 3 inputs used in the fair value measurement of our commodity derivative contracts as of December 31, 2020: