Risk Management and Derivative Instruments (Tables)
 12 Months Ended
Dec. 31, 2014
Open Commodity Positions

At December 31, 2014, the Partnership had the following open commodity positions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

 

2019

 

Natural Gas Derivative Contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swap contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (MMBtu)

 

2,605,278

 

 

 

2,692,442

 

 

 

2,450,067

 

 

 

2,160,000

 

 

 

1,914,583

 

Weighted-average fixed price

$

4.28

 

 

$

4.40

 

 

$

4.31

 

 

$

4.51

 

 

$

4.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collar contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (MMBtu)

 

350,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Weighted-average floor price

$

4.62

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Weighted-average ceiling price

$

5.80

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Call spreads (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (MMBtu)

 

80,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Weighted-average sold strike price

$

5.25

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Weighted-average bought strike price

$

6.75

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis swaps:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (MMBtu)

 

2,940,000

 

 

 

2,508,333

 

 

 

415,000

 

 

 

115,000

 

 

 

—

 

Spread

$

(0.12

)

 

$

(0.04

)

 

$

0.00

 

 

$

0.15

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude Oil Derivative Contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swap contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (Bbls)

 

314,281

 

 

 

332,813

 

 

 

326,600

 

 

 

312,000

 

 

 

160,000

 

Weighted-average fixed price

$

90.96

 

 

$

85.83

 

 

$

84.38

 

 

$

83.74

 

 

$

85.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collar contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (Bbls)

 

5,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Weighted-average floor price

$

80.00

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Weighted-average ceiling price

$

94.00

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis swaps:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (Bbls)

 

97,500

 

 

 

95,000

 

 

 

—

 

 

 

—

 

 

 

—

 

Spread

$

(7.07

)

 

$

(9.56

)

 

$

—

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NGL Derivative Contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swap contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (Bbls)

 

149,200

 

 

 

84,600

 

 

 

—

 

 

 

—

 

 

 

—

 

Weighted-average fixed price

$

43.02

 

 

$

41.49

 

 

$

—

 

 

$

—

 

 

$

—

 

 

(1)      These transactions were entered into for the purpose of eliminating the ceiling portion of certain collar arrangements, which effectively converted the applicable collars into swaps.

 
Interest Rate Swap Open Positions

At December 31, 2014, we had the following interest rate swap open positions:

 

 

 

2015

 

 

2016

 

 

2017

 

Average Monthly Notional (in thousands)

 

$

314,167

 

 

$

250,000

 

 

$

250,000

 

Weighted-average fixed rate

 

 

1.349

%

 

 

1.029

%

 

 

1.620

%

Floating rate

 

1 Month LIBOR

 

 

1 Month LIBOR

 

 

1 Month LIBOR

 

 
Gross Fair Value of Derivative Instruments by Appropriate Balance Sheet

The following table summarizes both: (i) the gross fair value of derivative instruments by the appropriate balance sheet classification even when the derivative instruments are subject to netting arrangements and qualify for net presentation in the balance sheet and (ii) the net recorded fair value as reflected on the balance sheet at December 31, 2014 and 2013. There was no cash collateral received or pledged associated with our derivative instruments since most of the counterparties, or certain of their affiliates, to our derivative contracts are lenders under our credit agreement. 

 

 

 

 

 

Asset Derivatives

 

 

Liability Derivatives

 

 

 

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

Type

 

Balance Sheet Location

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

 

 

(In thousands)

 

Commodity contracts

 

Short-term derivative instruments

 

$

225,882

 

 

$

18,578

 

 

$

17,297

 

 

$

17,120

 

Interest rate swaps

 

Short-term derivative instruments

 

 

—

 

 

 

845

 

 

 

3,289

 

 

 

2,699

 

Gross fair value

 

 

 

 

225,882

 

 

 

19,423

 

 

 

20,586

 

 

 

19,819

 

Netting arrangements

 

Short-term derivative instruments

 

 

(17,297

)

 

 

(11,823

)

 

 

(17,297

)

 

 

(11,823

)

Net recorded fair value

 

Short-term derivative instruments

 

$

208,585

 

 

$

7,600

 

 

$

3,289

 

 

$

7,996

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity contracts

 

Long-term derivative instruments

 

$

339,031

 

 

$

77,348

 

 

$

28,534

 

 

$

38,456

 

Interest rate swaps

 

Long-term derivative instruments

 

 

1,305

 

 

 

27

 

 

 

—

 

 

 

2,137

 

Gross fair value

 

 

 

 

340,336

 

 

 

77,375

 

 

 

28,534

 

 

 

40,593

 

Netting arrangements

 

Long-term derivative instruments

 

 

(28,534

)

 

 

(34,718

)

 

 

(28,534

)

 

 

(34,718

)

Net recorded fair value

 

Long-term derivative instruments

 

$

311,802

 

 

$

42,657

 

 

$

—

 

 

$

5,875

 

 
Unrealized and Realized Gains and Losses Related to Derivative Instruments

The following table details the gains and losses related to derivative instruments for the years ending December 31, 2014, 2013, and 2012 (in thousands):

 

 

 

Statements of

 

For the Year Ended December 31,

 

 

 

Operations Location

 

2014

 

 

2013

 

 

2012

 

Commodity derivative contracts

 

(Gain) loss on commodity derivatives

 

$

(492,254

)

 

$

(26,133

)

 

$

(24,405

)

Interest rate derivatives

 

Interest expense, net

 

 

(151

)

 

 

(548

)

 

 

4,839

 

 
Disaggregated Basis Swap [Member]  
Open Commodity Positions

Our basis swaps included in the table above are presented on a disaggregated basis below:

 

 

2015

 

 

2016

 

 

2017

 

 

2018

 

Natural Gas Derivative Contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NGPL TexOk basis swaps:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (MMBtu)

 

2,280,000

 

 

 

2,103,333

 

 

 

300,000

 

 

 

—

 

Spread

$

(0.11

)

 

$

(0.06

)

 

$

(0.05

)

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HSC basis swaps:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (MMBtu)

 

150,000

 

 

 

135,000

 

 

 

115,000

 

 

 

115,000

 

Spread

$

(0.08

)

 

$

0.07

 

 

$

0.14

 

 

$

0.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CIG basis swaps:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (MMBtu)

 

210,000

 

 

 

—

 

 

 

—

 

 

 

—

 

Spread

$

(0.25

)

 

$

—

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TETCO STX basis swaps:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (MMBtu)

 

300,000

 

 

 

270,000

 

 

 

—

 

 

 

—

 

Spread

$

(0.09

)

 

$

0.06

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude Oil Derivative Contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Midway-Sunset basis swaps:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (Bbls)

 

57,500

 

 

 

55,000

 

 

 

—

 

 

 

—

 

Spread - Brent

$

(9.73

)

 

$

(13.35

)

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Midland basis swaps:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Monthly Volume (Bbls)

 

40,000

 

 

 

40,000

 

 

 

—

 

 

 

—

 

Spread - WTI

$

(3.25

)

 

$

(4.34

)

 

$

—

 

 

$

—