|
|
 | | | |
- close
- close
- close
- close
These excerpts taken from the DVN 10-K filed Feb 27, 2009. Interest
Rate Swaps
We also recognize unrealized changes in the fair values of our
interest rate swaps each reporting period. We estimate the fair
values of our interest rate swap financial instruments primarily
by using internal discounted cash flow calculations based upon
forward interest-rate yields. From time to time, we validate our
valuation techniques by comparing our internally generated fair
value estimates with those obtained from contract counterparties
or brokers.
The most significant variable to our cash flow calculations is
our estimate of future interest rate yields. We base our
estimate of future yields upon our own internal model that
utilizes forward curves such as the LIBOR or the Federal Funds
Rate provided by a third party. Based on the notional amount
subject to the interest rate swaps at December 31, 2008, a
10% increase in these forward curves would have decreased our
2008 unrealized gain for our interest rate swaps by
approximately $3 million.
Table of Contents
During 2008, we recorded a $104 million unrealized gain as
a result of changes in interest rates subsequent to the trade
dates of our contracts.
As previously discussed for our commodity derivative contracts,
counterparty credit risk is also a component of interest rate
derivative valuations. We have mitigated our exposure to any
single counterparty by contracting with numerous counterparties.
Our interest rate derivative contracts are held with five
separate counterparties and have cash collateral posting
requirements. Additionally, the credit ratings of all our
counterparties were investment grade as of December 31,
2008.
Interest
Rate Swaps
We also recognize unrealized changes in the fair values of our
interest rate swaps each reporting period. We estimate the fair
values of our interest rate swap financial instruments primarily
by using internal discounted cash flow calculations based upon
forward interest-rate yields. From time to time, we validate our
valuation techniques by comparing our internally generated fair
value estimates with those obtained from contract counterparties
or brokers.
The most significant variable to our cash flow calculations is
our estimate of future interest rate yields. We base our
estimate of future yields upon our own internal model that
utilizes forward curves such as the LIBOR or the Federal Funds
Rate provided by a third party. Based on the notional amount
subject to the interest rate swaps at December 31, 2008, a
10% increase in these forward curves would have decreased our
2008 unrealized gain for our interest rate swaps by
approximately $3 million.
Table of Contents
During 2008, we recorded a $104 million unrealized gain as
a result of changes in interest rates subsequent to the trade
dates of our contracts.
As previously discussed for our commodity derivative contracts,
counterparty credit risk is also a component of interest rate
derivative valuations. We have mitigated our exposure to any
single counterparty by contracting with numerous counterparties.
Our interest rate derivative contracts are held with five
separate counterparties and have cash collateral posting
requirements. Additionally, the credit ratings of all our
counterparties were investment grade as of December 31,
2008.
Interest Rate Swaps We also recognize unrealized changes in the fair values of our interest rate swaps each reporting period. We estimate the fair values of our interest rate swap financial instruments primarily by using internal discounted cash flow calculations based upon forward interest-rate yields. From time to time, we validate our valuation techniques by comparing our internally generated fair value estimates with those obtained from contract counterparties or brokers. The most significant variable to our cash flow calculations is our estimate of future interest rate yields. We base our estimate of future yields upon our own internal model that utilizes forward curves such as the LIBOR or the Federal Funds Rate provided by a third party. Based on the notional amount subject to the interest rate swaps at December 31, 2008, a 10% increase in these forward curves would have decreased our 2008 unrealized gain for our interest rate swaps by approximately $3 million.
Table of ContentsDuring 2008, we recorded a $104 million unrealized gain as a result of changes in interest rates subsequent to the trade dates of our contracts. As previously discussed for our commodity derivative contracts, counterparty credit risk is also a component of interest rate derivative valuations. We have mitigated our exposure to any single counterparty by contracting with numerous counterparties. Our interest rate derivative contracts are held with five separate counterparties and have cash collateral posting requirements. Additionally, the credit ratings of all our counterparties were investment grade as of December 31, 2008. Interest Rate Swaps We also recognize unrealized changes in the fair values of our interest rate swaps each reporting period. We estimate the fair values of our interest rate swap financial instruments primarily by using internal discounted cash flow calculations based upon forward interest-rate yields. From time to time, we validate our valuation techniques by comparing our internally generated fair value estimates with those obtained from contract counterparties or brokers. The most significant variable to our cash flow calculations is our estimate of future interest rate yields. We base our estimate of future yields upon our own internal model that utilizes forward curves such as the LIBOR or the Federal Funds Rate provided by a third party. Based on the notional amount subject to the interest rate swaps at December 31, 2008, a 10% increase in these forward curves would have decreased our 2008 unrealized gain for our interest rate swaps by approximately $3 million.
Table of ContentsDuring 2008, we recorded a $104 million unrealized gain as a result of changes in interest rates subsequent to the trade dates of our contracts. As previously discussed for our commodity derivative contracts, counterparty credit risk is also a component of interest rate derivative valuations. We have mitigated our exposure to any single counterparty by contracting with numerous counterparties. Our interest rate derivative contracts are held with five separate counterparties and have cash collateral posting requirements. Additionally, the credit ratings of all our counterparties were investment grade as of December 31, 2008. | EXCERPTS ON THIS PAGE:
|
| |||||||
