Stock-based compensation. We follow the fair value based method in accounting for equity-based compensation. Under the fair value based method, compensation cost is measured at the grant date based on the fair value of the award and is recognized on a straight-line basis over the award vesting period. In recent years, we have not entered into any material transactions with our officers or directors apart from the compensation they are provided for their services. We also have not entered into any business transactions with our significant stockholders or any other related parties. Our financial condition, results of operations and capital resources are highly dependent upon the prevailing market prices of oil and natural gas. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond our control. Factors influencing oil and natural gas prices include the level of global demand for oil, the foreign supply of oil and natural gas, the establishment of and compliance with production quotas by oil exporting countries, weather conditions which determine the demand for natural gas, the price and availability of alternative fuels and overall economic conditions. It is impossible to predict future oil and natural gas prices with any degree of certainty. Sustained weakness in oil and natural gas prices may adversely affect our financial condition and results of operations, and may also reduce the amount of oil and natural gas reserves that we can produce economically. Any reduction in our oil and natural gas reserves, including reductions due to price fluctuations, can have an adverse affect on our ability to obtain capital for our exploration and development activities. Similarly, any improvements in oil and natural gas prices can have a favorable impact on our financial condition, results of operations and capital resources. Based on our oil and natural gas production in 2013, a $1.00 change in the price per barrel of oil would have resulted in a change in our cash flow for such period by approximately $2.2 million and a $0.10 change in the price per Mcf of natural gas would have changed our cash flow by approximately $7.9 million. We have entered into oil price swap agreements covering 2.0 million barrels of our expected 2014 oil production that fix the NYMEX West Texas Intermediate (“WTI”) price at $96.31 per barrel. As of December 31, 2013, our outstanding oil swap agreements had a fair value of $1.0 million. The change in the fair value of our oil swaps that would result from a 10% change in commodities prices at December 31, 2013 would be $12.2 million. Such a change in fair value could be a gain or a loss depending on whether prices increase or decrease. At December 31, 2013, we had $798.7 million of long-term debt. Of this amount, $300.0 million bears interest at a fixed rate of 7 $^{3}$⁄ 4% and $300.0 million bears interest at a fixed rate of 9 $^{1}$⁄ 2%. The fair market value of our fixed rate debt as of December 31, 2013 was $650.3 million based on the market price of approximately 110% of the face amount. At December 31, 2013, we had $210.0 million of debt outstanding under our bank credit facility, which is subject to variable rates of interest that are tied to LIBOR or a corporate base rate, at our option. Any increase in these interest rates would have an adverse impact on our results of operations and cash flow. Based on borrowings outstanding at December 31, 2013, a 100 basis point change in interest rates would change our annual interest expense on our variable rate debt by approximately $2.1 million. We had no interest rate derivatives in 2013 or at December 31, 2013. Interest Rates ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Oil and Natural Gas Prices Related Party Transactions 57