More than a decade has passed since, in the Berkshire Hathaway 2002 annual report, Warren Buffet likened derivatives to “financial weapons of mass destruction” and to “time bombs”. Many of his comments and concerns focused on derivative contracts that were not collateralized or otherwise guaranteed. But much has changed since then. At that time, according to ISDA, the total notional amounts for swaps outstanding was a bit over $100 trillion. At the end of 2012, that number had grown to over $600 trillion. Perhaps one of the biggest changes in the marketplace affecting the swaps markets and hedging programs has been the passage, and ongoing implementation, of the Dodd-Frank Wall Street and Consumer Protection Act (Dodd-Frank). For upstream oil and gas companies, much attention has been focused on certain mineral extraction and disclosure provisions – especially Section 1504 of Dodd-Frank, which requires certain companies engaged in the commercial development of oil and gas to disclose certain payments made to the U.S. and non-U.S. governments.

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