Quarterly report pursuant to Section 13 or 15(d)

DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT (Tables)

v3.20.2
DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT (Tables)
6 Months Ended
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of non-cash gains or losses on derivative contracts
The following table presents settlements on commodity derivative instruments and unsettled gains and losses on open commodity derivative instruments for the periods presented which is recorded in the revenue section of our condensed financial statements:
  Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands) 2020 2019 2020 2019
Gain on Settled Commodity Derivatives $ 77,439    $ 4,734    $ 108,944    $ 17,280   
Gain (Loss) on Unsettled Commodity Derivatives (150,077)   31,857    194,999    (120,311)  
Gain (Loss) on Commodity Derivatives, Net $ (72,638)   $ 36,591    $ 303,943    $ (103,031)  
Schedule of weighted average price of open commodity derivative contracts The following table reflects the weighted average price of open commodity price swap derivative contracts as of June 30, 2020, by year with associated volumes.
Year Volumes (Bbl) Weighted
Average Price ($)
2020 4,873,710    58.25   
2021(1)
7,808,624    54.67   
2022(2)
—    —   
______________
(1)The Company has entered into crude oil derivative contracts that give counterparties the option to extend certain current derivative contracts for additional periods. Options covering a notional volume of 0.3 million barrels for 2021 are exercisable on or about December 31, 2020. If the counterparties exercise all such options, the notional volume of the Company’s existing crude oil derivative contracts will increase by 0.3 million barrels at a weighted average price of $57.84 per barrel for 2021.
(2)The Company has entered into crude oil derivative contracts that give counterparties the option to extend certain current derivative contracts for additional periods. Options covering a notional volume of 3.1 million barrels for 2022 are exercisable on or about December 31, 2021. If the counterparties exercise all such options, the notional volume of the Company’s existing crude oil derivative contracts will increase by 3.1 million barrels at a weighted average price of $52.68 per barrel for 2022. Additionally, counterparties have options covering a notional volume of 0.7 million barrels for 2023 at a weighted average price of $44.86 per barrel.
The following table reflects the weighted average price of open commodity natural gas price swap derivative contracts as of June 30, 2020, by year with associated volumes.
Year Volumes (MMBtu) Weighted
Average Price ($)
2020 3,220,000    2.35   
2021 9,575,000    2.43   
Schedule of derivatives
The following table sets forth the amounts, on a gross basis, and classification of the Company’s outstanding derivative financial instruments at June 30, 2020 and December 31, 2019, respectively.  Certain amounts may be presented on a net basis on the condensed financial statements when such amounts are with the same counterparty and subject to a master netting arrangement.

Type of Contract Balance Sheet Location June 30, 2020 Estimated Fair Value December 31, 2019 Estimated Fair Value
Derivative Assets:   (In thousands)
Commodity Price Swap Contracts Current Assets $ 156,436    $ 20,164   
Interest Rate Swap Contracts Current Assets —    —   
Commodity Price Swap Contracts Noncurrent Assets 45,982    16,069   
Interest Rate Swap Contracts Noncurrent Assets —    —   
Total Derivative Assets   $ 202,418    $ 36,233   
Derivative Liabilities:      
Commodity Price Swap Contracts Current Liabilities $ (616)   $ (25,834)  
Interest Rate Swap Contracts Current Liabilities (583)   —   
Commodity Price Swap Contracts Noncurrent Liabilities (582)   (5,273)  
Interest Rate Swap Contracts Noncurrent Liabilities (846)   —   
Commodity Price Swaptions Contracts Noncurrent Liabilities (11,416)   (10,321)  
Total Derivative Liabilities   $ (14,043)   $ (41,428)  

The use of derivative transactions involves the risk that the counterparties will be unable to meet the financial terms of such transactions.  When the Company has netting arrangements with its counterparties that provide for offsetting payables against receivables from separate derivative instruments these assets and liabilities are netted on the balance sheet.  The tables presented below provide reconciliation between the gross assets and liabilities and the amounts reflected on the balance sheet.  The amounts presented exclude derivative settlement receivables and payables as of the balance sheet dates.

  Estimated Fair Value at June 30, 2020
(In thousands) Gross Amounts of
Recognized Assets (Liabilities)
Gross Amounts Offset
on the Balance Sheet
Net Amounts of Assets (Liabilities) Presented in the Balance Sheet
Offsetting of Derivative Assets:  
Current Assets $ 156,436    $ —    $ 156,436   
Noncurrent Assets 45,982    (11,416)   34,566   
Total Derivative Assets $ 202,418    $ (11,416)   $ 191,002   
Offsetting of Derivative Liabilities:  
Current Liabilities $ (1,198)   $ —    $ (1,198)  
Noncurrent Liabilities (12,844)   11,416    (1,428)  
Total Derivative Liabilities $ (14,042)   $ 11,416    $ (2,626)  
  Estimated Fair Value at December 31, 2019
 (In thousands) Gross Amounts of
Recognized Assets (Liabilities)
Gross Amounts Offset
on the Balance Sheet
Net Amounts of Assets (Liabilities) Presented in the Balance Sheet
Offsetting of Derivative Assets:  
Current Assets $ 20,164    $ (14,536)   $ 5,628   
Non-Current Assets 16,069    (7,515)   8,554   
Total Derivative Assets $ 36,233    $ (22,051)   $ 14,182   
Offsetting of Derivative Liabilities:  
Current Liabilities $ (25,834)   $ 14,536    $ (11,298)  
Non-Current Liabilities (15,594)   7,515    (8,079)  
Total Derivative Liabilities $ (41,428)   $ 22,051    $ (19,377)