Changes in the fair value of derivative contracts from December 31, 2017 to March 31, 2018, are presented below:
Commodity derivative contracts
Net fair value of oil and gas derivative contracts outstanding at December 31, 2017
Change in oil and gas prices on futures markets
Net fair value of oil and gas derivative contracts outstanding at March 31, 2018
The following table shows the sensitivity of the fair value of oil and gas derivative contracts to changes in the market price of oil, gas and basis differentials:
March 31, 2018
Net fair value – asset (liability)
Fair value if market prices of oil, gas and basis differentials decline by 10%
Fair value if market prices of oil, gas and basis differentials increase by 10%
Utilizing the actual derivative contractual volumes, a 10% increase in underlying commodity prices would reduce the fair value of these instruments by $14.1 million, while a 10% decrease in underlying commodity prices would increase the fair value of these instruments by $14.3 million as of March 31, 2018. However, a gain or loss eventually would be offset by the actual sales value of the physical production covered by the derivative instruments. For additional information regarding the Company's commodity derivative transactions, refer to Note 7 – Derivative Contracts in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Interest Rate Risk Management
The Company's ability to borrow and the rates offered by lenders can be adversely affected by illiquid credit markets and the Company's credit rating, as described in the risk factors in Item 1A of Part I of its 2017 Form 10-K. The Company's revolving credit facility has a floating interest rate, which exposes QEP to interest rate risk if QEP has borrowings outstanding. At March 31, 2018, the Company had $385.0 million of borrowings outstanding under its revolving credit facility. If interest rates were to increase or decrease 10% during the three months ended March 31, 2018, at our average level of borrowing for those same periods, the Company's interest expense would increase or decrease by $0.2 million for the three months ended March 31, 2018, or less than 1% of total interest expense.
The remaining $2,099.3 million of the Company's debt is senior notes with fixed interest rates; therefore, it is not affected by interest rate movements. For additional information regarding the Company's debt instruments, refer to Note 9 – Debt, in Item I of Part I of this Quarterly Report on Form 10-Q.