PXD » Topics » Gas Price Sensitivity Derivative Financial Instruments as of December 31, 2005
This excerpt taken from the PXD 10-K filed Feb 17, 2006.
Derivative Financial Instruments as of December 31,
Fair Value at
Average daily notional MMBtu
Weighted average fixed price per
Collar contracts (c)
Weighted average ceiling price per
Weighted average floor price per
Average forward NYMEX gas prices(d)
To minimize basis risk, the Company
enters into basis swaps for a portion of its gas hedges to
convert the index price of the hedging instrument from a NYMEX
index to an index which reflects the geographic area of
production. The Company considers these basis swaps as part of
the associated swap and collar contracts and, accordingly, the
effects of the basis swaps have been presented together with the
See Note J of Notes to
Consolidated Financial Statements included in Item 8.
Financial Statements and Supplementary Data for hedge
volumes and weighted average prices by calendar quarter.
Subsequent to December 31,
2005, the Company reduced its gas hedge positions by terminating
the following gas collar contracts which were included in the
table above: 65,000 MMBtu per day of April through December
2006 gas sales at a weighted average floor price per MMBtu of
$6.74 and a weighted average ceiling price per MMBtu of $14.01.
The aggregate fair value of the terminated gas collar contracts
represented an asset of $4.1 million on the dates of
The average forward NYMEX gas
prices are based on February 15, 2006 market quotes.
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