Derivatives And Fair Value
|6 Months Ended|
Jun. 30, 2018
|Derivatives And Fair Value [Abstract]|
|Derivatives And Fair Value||
11. DERIVATIVES AND FAIR VALUE
We use derivative financial instruments to achieve a more predictable cash flow from oil production by reducing our exposure to price fluctuations.
Commodity Swaps - During the three months ended June 30, 2018, we entered into commodity swaps at a Dated Brent weighted average of $74 per barrel for the period from and including June 2018 through June 2019 for a quantity of approximately 400,000 barrels. If a liability position exceeds $10.0 million, we would be required to provide a bank letter of credit or deposit cash into an escrow account for the amount by which the liability exceeds $10.0 million. These swaps settle on a monthly basis. At June 30, 2018, our unexpired commodity swaps represented a fair value liability position of $1.0 million in “Accrued liabilities and other” line of our condensed consolidated balance sheet.
Put options - During 2016, we executed crude oil put contracts as market conditions allowed in order to economically hedge anticipated 2016 and 2017 cash flows from crude oil producing activities. At December 31, 2017, our crude oil put contracts expired.
While these commodity swaps and crude oil puts are intended to be an economic hedge to mitigate the impact of a decline in oil prices, we have not elected hedge accounting. The contracts are being measured at fair value each period, with changes in fair value recognized in net income. We do not enter into derivative instruments for speculative or trading proposes.
We record balances resulting from commodity risk management activities in the condensed consolidated balance sheets as either assets or liabilities measured at fair value. Gains and losses from the change in fair value of derivative instruments and cash settlements on commodity derivatives are presented in the “Other, net” line item located within the “Other income (expense)” section of the condensed consolidated statements of operations.
The entire disclosure for derivatives and fair value of assets and liabilities.
Reference 1: http://www.xbrl.org/2003/role/presentationRef