Revenue recognition and natural gas imbalances In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09). The FASB and the International Accounting Standards Board jointly issued this comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB issued additional ASUs that primarily clarified the implementation guidance on principal versus agent considerations, performance obligations and licensing, collectability, presentation of sales taxes and other similar taxes collected from customers, and non-cash consideration. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2017 and permits the use of either the retrospective or cumulative effect transition method. We adopted ASU No. 2014-09, Revenue from Contracts with Customers and related updates in the first quarter of 2018 based on the modified retrospective method of adoption. The adoption of this standard did not have an impact on our consolidated financial condition and results of operations. We have implemented processes to ensure new contracts are reviewed for the appropriate accounting treatment and to generate the disclosures required under the new standard. Overview of marketing arrangements We produce oil and natural gas. We do not refine or process the oil or natural gas we produce. We sell the majority of the oil we produce under contracts using market sensitive pricing. The majority of our oil contracts are based on NYMEX pricing, which is typically calculated as the average of the daily closing prices of oil to be delivered one month in the future. We also sell a portion of our oil at F.O.B. field prices posted by the principal purchaser of oil where our producing properties are located. Our sales contracts are of a type common within the industry, and we usually negotiate a separate contract for each area. Generally, we sell our oil to purchasers and refiners near the areas of our producing properties. We sell the majority of our natural gas under individually negotiated gas purchase contracts using market sensitive pricing. Our sales contracts vary in length from spot market sales of a single day to term agreements that may extend for a month or more. Our natural gas customers primarily include natural gas marketing companies. The natural gas purchase contracts define the terms and conditions unique to each of these sales. The price received for natural gas sold on the spot market varies daily, reflecting changing market conditions. Revenue recognition under ASC 606 We use the sales method of accounting for oil and natural gas revenues. We record sales revenue based on an estimate of the volumes delivered at estimated prices as determined by the applicable sales agreement. We estimate our sales volumes primarily on company-measured volume readings. We then adjust our oil and natural gas sales in subsequent periods based on the data received from our purchasers that reflects actual volumes and prices received. Natural gas imbalances at December 31, 2018 were 0.7 Bcf and were reflected as a reduction to our Proved Reserves. Natural gas imbalances at December 31, 2017 were not significant. We generally sell oil and natural gas under two types of agreements that are common in our industry. Both types of agreements include transportation charges. We evaluate whether we are the principal or the agent in each transaction. The first type of agreement is a net-back arrangement, under which we sell oil or natural gas at the wellhead and collect a price, net of the transportation costs incurred by the purchaser. The purchaser takes custody, title and risk of loss of the oil or natural gas at the wellhead. In this case, we record revenue when the control transfers to the purchaser at the wellhead based on the price received, net of the transportation costs. Under the second type of agreement, we sell oil or natural gas at a specific delivery point, pay transportation to a third-party and receive proceeds from the purchaser with no transportation deduction. The purchaser takes custody, title, and risk of loss of the oil or natural gas at the specific delivery point. In this case, we are deemed to be the principal and the ultimate third-party purchaser is deemed to be the customer. We recognize revenue when control transfers to the purchaser at the specific delivery point based on the price received from the purchaser. The costs that we incur to transport the oil or natural gas are recorded as gathering and transportation expenses. As such, our computed realized prices include revenues that are recognized under two separate bases. Raider Marketing, LP (Raider) is a wholly owned subsidiary focused on the marketing of oil and natural gas. Raider purchases and resells natural gas from third-party producers, as well as oil and natural gas from operated wells in Texas and Louisiana, and charges a fee for marketing services to certain working interest owners in the related wells. Raider takes custody, title and risk of loss from the third-party producer upon the purchase of natural gas and then sells the natural gas to a separate third-party purchaser further downstream. The price paid for the purchase of natural gas from the third-party producer is not dependent on the price received from the ultimate purchaser. We are deemed to be the principal in these transactions. As such, third party purchases and sales are reported on a gross basis as Purchased natural gas expenses and Purchased natural gas and marketing revenues, respectively. The marketing fee charged by Raider to certain working interest owners in our operated wells is reported as Purchased natural gas and marketing revenues. Transaction price allocated to remaining performance obligations Our sales are short-term in nature with a contract term of one year or less. We have utilized the practical expedient in ASC 606-10-50-14 exempting us from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. Contract balances Under our oil and natural gas sales contracts, we invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our oil and natural gas sales contracts do not give rise to contract assets or liabilities under ASC 606. Prior-period performance obligations We record revenue in the month production is delivered to the purchaser. However, settlement statements for certain oil and natural gas sales may not be received for 30 to 90 days after the date production is delivered, and as a result, we are required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. We record the differences between our estimates and the actual amounts received for product sales in the month that payment is received from the purchaser. We have internal controls for our revenue estimation process and related accruals, and any identified differences between our revenue estimates and actual revenue received historically have not been significant. For the year ended December 31, 2018 , revenue recognized in the reporting period related to performance obligations satisfied in prior reporting periods was not material.