Annual report pursuant to Section 13 and 15(d)

Derivative Instruments (Tables)

v3.19.3.a.u2
Derivative Instruments (Tables)
 12 Months Ended
Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of open fixed price swap positions Below is a summary of the Company's open fixed price swap positions as of December 31, 2019.
 
Index
Daily Volume (MMBtu/day)
 
Weighted
Average Price
2020
NYMEX Henry Hub
548,000

 
$
2.88

 
Index
Daily Volume
(Bbls/day)
 
Weighted
Average Price
2020
NYMEX WTI
6,000

 
59.82

 
Index
Daily Volume (Bbls/day)
 
Weighted
Average Price
2020
Mont Belvieu C3
500

 
$
21.63


In the third quarter of 2019, the Company sold call options in exchange for a premium, and used the associated premiums received to enhance the fixed price for a portion of the fixed price natural gas swaps primarily for 2020 listed above. Each short call option has an established ceiling price. When the referenced settlement price is above the price ceiling established by these short call options, the Company pays its counterparty an amount equal to the difference between the referenced settlement price and the price ceiling multiplied by the hedged contract volumes.
 
Index
Daily Volume (MMBtu/day)
 
Weighted
Average Price
2022
NYMEX Henry Hub
628,000

 
$
2.90

2023
NYMEX Henry Hub
628,000

 
$
2.90


Schedule of natural gas basis swap positions As of December 31, 2019, the Company had the following natural gas basis swap positions open:
 
Gulfport Pays
Gulfport Receives
Daily Volume (MMBtu/day)
 
Weighted Average Fixed Spread
2020
Transco Zone 4
NYMEX Plus Fixed Spread
60,000


$
(0.05
)
2020
Fixed Spread
ONEOK Minus NYMEX
10,000


$
(0.54
)

Schedule of purchase and sale agreement for sale of the company's non-core assets
The purchase and sale agreement for the sale of the Company's non-core assets located in the WCBB and Hackberry fields of Louisiana included a contingent consideration arrangement that entitles the Company to receive bonus payments if commodity prices exceed specified thresholds. The calculated fair value of this contingent payment arrangement was approximately $1.1 million as of the closing date of the divestiture. See below for threshold and potential payment amounts.
Period
Threshold(1)
Payment to be received(2)
July 2020 - June 2021
Greater than or equal to $60.65
$
150,000

 
Between $52.62 - $60.65
Calculated Value(3)

 
Less than or equal to $52.62
$
—

_____________________
(1)
Based on the "WTI NYMEX + Argus LLS Differential," as published by Argus Media.
(2)
Payment will be assessed monthly from July 2020 through June 2021. If threshold is met, payment shall be received within five business days after the end of each calendar month.
(3)
If average daily price, as defined in (1), is greater than $52.62 but less than $60.65, payment received will be $150,000 multiplied by a fraction, the numerator of which is the amount determined by subtracting $52.62 from such average daily price, and the denominator of which is $8.03.
Schedule of derivative instruments on a gross basis The following table presents the fair value of the Company's derivative instruments on a gross basis at December 31, 2019 and 2018:
 
December 31,
 
2019
 
2018
 
(In thousands)
Commodity derivative instruments
125,383

 
21,352

Contingent consideration arrangement
818

 
—

Total short-term derivative instruments – asset
126,201

 
21,352

 
 
 
 
Commodity derivative instruments
—

 
—

Contingent consideration arrangement
563

 
—

Total long-term derivative instruments – asset
563

 
—

 
 
 
 
Total short-term derivative instruments – liability
303

 
$
20,401

 
 
 
 
Total long-term derivative instruments – liability
53,135

 
$
13,992

Schedule of net gain (loss) on derivatives
The following table presents the gain and loss recognized in net gain (loss) on natural gas, oil and NGL derivatives in the accompanying consolidated statements of operations for the years ended December 31, 2019, 2018, and 2017.
 
Net gain (loss) on derivative instruments
 
For the Year Ended December 31,
 
2019
 
2018
 
2017
 
(In thousands)
Natural gas derivatives
$
194,450

 
$
(116,130
)
 
$
232,143

Oil derivatives
7,035

 
(13,084
)
 
(3,350
)
NGL derivatives
6,632

 
5,735

 
(15,114
)
Contingent consideration arrangement
243

 
—

 
—

Total
$
208,360

 
$
(123,479
)
 
$
213,679


Schedule of recognized derivative assets The following table presents the gross amounts of recognized derivative assets and liabilities in the consolidated balance sheets and the amounts that are subject to offsetting under master netting arrangements with counterparties, all at fair value.
 
As of December 31, 2019
 
Derivative instruments, gross
 
Netting adjustments
 
Derivative instruments, net
 
(In thousands)
Derivative assets
$
126,764

 
$
(53,438
)
 
$
73,326

Derivative liabilities
$
(53,438
)
 
$
53,438

 
$
—

 
As of December 31, 2018
 
Derivative instruments, gross
 
Netting adjustments
 
Derivative instruments, net
 
(In thousands)
Derivative assets
$
21,352

 
$
(19,289
)
 
$
2,063

Derivative liabilities
$
(34,393
)
 
$
19,289

 
$
(15,104
)

Schedule of recognized derivative liabilities The following table presents the gross amounts of recognized derivative assets and liabilities in the consolidated balance sheets and the amounts that are subject to offsetting under master netting arrangements with counterparties, all at fair value.
 
As of December 31, 2019
 
Derivative instruments, gross
 
Netting adjustments
 
Derivative instruments, net
 
(In thousands)
Derivative assets
$
126,764

 
$
(53,438
)
 
$
73,326

Derivative liabilities
$
(53,438
)
 
$
53,438

 
$
—

 
As of December 31, 2018
 
Derivative instruments, gross
 
Netting adjustments
 
Derivative instruments, net
 
(In thousands)
Derivative assets
$
21,352

 
$
(19,289
)
 
$
2,063

Derivative liabilities
$
(34,393
)
 
$
19,289

 
$
(15,104
)