Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v2.4.0.8
Fair Value Measurements
 9 Months Ended
Sep. 30, 2014
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 6 - Fair Value Measurements 

 

The fair value hierarchy outlined in the relevant accounting guidance gives the highest priority to Level 1 inputs, which consist of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuations are derived from inputs that are significant and unobservable, and these valuations have the lowest priority.

 

Fair Value of Financial Instruments

 

Cash, cash equivalents, restricted investments. The carrying amounts for these instruments approximate fair value due to the short-term nature or maturity of the instruments.

 

Debt. The Company’s debt is recorded at the carrying amount in the consolidated balance sheet. The carrying amount of floating-rate debt approximated fair value because the interest rates were variable and reflective of market rates.

 

The following table summarizes the respective carrying and fair values at:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

`

 

 

 

 

 

September 30, 2014

 

December 31, 2013

 

 

Carrying Value

 

Fair Value

 

 

Carrying Value

 

Fair Value

Credit Facility

 

$
20,000 

 

$
20,000 

 

$
22,000 

 

$
22,000 

Second Lien Loan

 

 
82,500 

 

 
82,500 

 

 

—

 

 

—

13% Senior Notes due 2016 (a)

 

 

—

 

 

—

 

 
53,748 

 

 
50,299 

Total

 

$
102,500 

 

$
102,500 

 

$
75,748 

 

$
72,299 

 

(a)

Fair value is calculated only in relation to the $48,481 principal outstanding of the Senior Notes at December 31, 2013 and excludes the remaining $5,267 deferred credit. The fair value of the Senior Notes, which is valued using Level 2 inputs, is based upon estimates provided by an independent investment banking firm. See Note 4 for additional information.

 

Assets and liabilities measured at fair value on a recurring basis

 

Certain assets and liabilities are reported at fair value on a recurring basis in the consolidated balance sheet. The following methods and assumptions were used to estimate fair value:

 

Commodity derivative instruments. The fair value of commodity derivative instruments is derived using an income approach valuation model that utilizes market-corroborated inputs that are observable over the term of the derivative contract. The Company’s fair value calculations also incorporate an estimate of the counterparties’ default risk for derivative assets and an estimate of the Company’s default risk for derivative liabilities. The Company believes that the majority of the inputs used to calculate the commodity derivative instruments fall within Level 2 of the fair-value hierarchy based on the wide availability of quoted market prices for similar commodity derivative contracts. See Note 5 for additional information regarding the Company’s derivative instruments.

 

The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

Balance Sheet Presentation

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments (current)

 

Fair value of derivatives

 

$

—

 

$
4,842 

 

$

—

 

$
4,842 

Derivative financial instruments (non-current)

 

Other long-term assets

 

 

—

 

 
1,169 

 

 

—

 

 
1,169 

    Sub-total assets

 

 

 

$

—

 

$
6,011 

 

$

—

 

$
6,011 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments (current)

 

Fair value of derivatives

 

$

—

 

$
(465)

 

$

—

 

$
(465)

Derivative financial instruments (non-current)

 

Other long-term liabilities

 

 

—

 

 
(865)

 

 

—

 

 
(865)

    Sub-total liabilities

 

 

 

$

—

 

$
(1,330)

 

$

—

 

$
(1,330)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net assets (liabilities)

 

 

 

$

—

 

$
4,681 

 

$

—

 

$
4,681 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

Balance Sheet Presentation

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments (current)

 

Fair value of derivatives

 

$

—

 

$
60 

 

$

—

 

$
60 

Derivative financial instruments (non-current)

 

Other long-term assets

 

 

—

 

 

—

 

 

—

 

 

—

    Sub-total assets

 

 

 

$

—

 

$
60 

 

$

—

 

$
60 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments (current)

 

Fair value of derivatives

 

$

—

 

$
(1,036)

 

$

—

 

$
(1,036)

Derivative financial instruments (non-current)

 

Other long-term liabilities

 

 

—

 

 
(72)

 

 

—

 

 
(72)

    Sub-total liabilities

 

 

 

$

—

 

$
(1,108)

 

$

—

 

$
(1,108)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net assets (liabilities)

 

 

 

$

—

 

$
(1,048)

 

$

—

 

$
(1,048)