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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2021
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements Financial Assets and Liabilities The following fair value hierarchy table presents information about the Company's financial assets and liabilities measured at fair value on a recurring basis:
(In millions) | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Balance at December 31, 2021
Assets |  |  |  |  |  |  |
Deferred compensation plan | $ | 47 |  |  | $ | — |  |  | $ | — |  |  | $ | 47 |
Derivative instruments | — |  |  | — |  |  | 27 |  |  | 27 |
Total assets | $ | 47 |  |  | $ | — |  |  | $ | 27 |  |  | $ | 74 |
Liabilities |  |  |  |  |  |  |
Deferred compensation plan | $ | 56 |  |  | $ | — |  |  | $ | — |  |  | $ | 56 |
Derivative instruments | — |  |  | — |  |  | 179 |  |  | 179 |
Total liabilities | $ | 56 |  |  | $ | — |  |  | $ | 179 |  |  | $ | 235 |
(In millions) | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Balance at December 31, 2020
Assets |  |  |  |  |  |  |
Deferred compensation plan | $ | 22 |  |  | $ | — |  |  | $ | — |  |  | $ | 22 |
Derivative instruments | — |  |  | 2 |  |  | 24 |  |  | 26 |
Total assets | $ | 22 |  |  | $ | 2 |  |  | $ | 24 |  |  | $ | 48 |
Liabilities |  |  |  |  |  |  |
Deferred compensation plan | $ | 31 |  |  | $ | — |  |  | $ | — |  |  | $ | 31 |
Derivative instruments | — |  |  | — |  |  | — |  |  | — |
Total liabilities | $ | 31 |  |  | $ | — |  |  | $ | — |  |  | $ | 31 |
The Company's investments associated with its deferred compensation plan consist of mutual funds and deferred shares of the Company's common stock that are publicly traded and for which market prices are readily available. The derivative instruments were measured based on quotes from the Company's counterparties or internal models. Such quotes and models have been derived using an income approach that considers various inputs, including current market and contractual prices for the underlying instruments, quoted forward commodity prices, basis differentials, volatility factors and interest rates for a similar length of time as the derivative contract term as applicable. Estimates are derived from or verified using relevant NYMEX futures contracts and/or are compared to multiple quotes obtained from counterparties for reasonableness. The determination of the fair values presented above also incorporates a credit adjustment for non-performance risk. The Company measured the non-performance risk of its counterparties by reviewing credit default swap spreads for the various financial institutions with which it has derivative contracts while non-performance risk of the Company is evaluated using a market credit spread provided by several of the Company's banks. The Company has not incurred any losses related to non-performance risk of its counterparties and does not anticipate any material impact on its financial results due to non-performance by third parties. The most significant unobservable inputs relative to the Company's Level 3 derivative contracts are basis differentials and volatility factors. An increase (decrease) in these unobservable inputs would result in an increase (decrease) in fair value, respectively. The Company does not have access to the specific assumptions used in its counterparties' valuation models. Consequently, additional disclosures regarding significant Level 3 unobservable inputs were not provided. The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy:
| Year Ended December 31,
(In millions) | 2021 |  | 2020 |  | 2019
Balance at beginning of period | $ | 24 |  |  | $ | — |  |  | $ | 22 |
Total gain (loss) included in earnings | (532) |  |  | 41 |  |  | 25 |
Settlement (gain) loss | 356 |  |  | (17) |  |  | (47) |
Transfers in and/or out of Level 3 | — |  |  | — |  |  | — |
Balance at end of period | $ | (152) |  |  | $ | 24 |  |  | $ | — |
Change in unrealized gains (losses) relating to assets and liabilities still held at the end of the period | $ | (154) |  |  | $ | 24 |  |  | $ | — |
Non-Financial Assets and Liabilities The Company discloses or recognizes its non-financial assets and liabilities, such as impairments of oil and gas properties or acquisitions, at fair value on a nonrecurring basis. On October 1, 2021, the Company and Cimarex completed the Merger. In connection with the Merger, the assets acquired and liabilities assumed were recorded at fair value. The most significant fair value determinations for non-financial assets and liabilities related to oil and gas properties acquired. Refer to Note 2, “Acquisitions,” for additional information. As none of the Company's other non-financial assets and liabilities were measured at fair value as of December 31, 2021, 2020 and 2019, additional disclosures were not required. The estimated fair value of the Company's asset retirement obligations at inception is determined by utilizing the income approach by applying a credit-adjusted risk-free rate, which takes into account the Company's credit risk, the time value of money, and the current economic state to the undiscounted expected abandonment cash flows. Given the unobservable nature of the inputs, the measurement of the asset retirement obligations was classified as Level 3 in the fair value hierarchy. Fair Value of Other Financial Instruments The estimated fair value of other financial instruments is the amount at which the instrument could be exchanged currently between willing parties. The carrying amounts reported in the Consolidated Balance Sheet for cash and cash equivalents and restricted cash approximate fair value due to the short-term maturities of these instruments. Cash and cash equivalents and restricted cash are classified as Level 1 in the fair value hierarchy and the remaining financial instruments are classified as Level 2. The fair value of the New Coterra Notes and Existing Cimarex Notes is based on quoted market prices, which is classified as Level 1 in the fair value hierarchy. We use available market data and valuation methodologies to estimate the fair value of our private placement senior notes. The fair value of the private placement senior notes is the estimated amount we would have to pay a third party to assume the debt, including a credit spread for the difference between the issue rate and the period end market rate. The credit spread is our default or repayment risk. The credit spread (premium or discount) is determined by comparing our senior notes and revolving credit facility to new issuances (secured and unsecured) and secondary trades of similar size and credit statistics for both public and private debt. The fair value of the private placement senior notes is based on interest rates currently available to us. The Company’s private placement senior notes are valued using an income approach and are classified as Level 3 in the fair value hierarchy. The carrying amount and fair value of debt is as follows:
| December 31, 2021 |  | December 31, 2020
(In millions) | Carrying Amount |  | Estimated Fair Value |  | Carrying Amount |  | Estimated Fair Value
Long-term debt | $ | 3,125 |  |  | $ | 3,163 |  |  | $ | 1,134 |  |  | $ | 1,214 |
Current maturities | — |  |  | — |  |  | (188) |  |  | (189) |
Long-term debt, excluding current maturities | $ | 3,125 |  |  | $ | 3,163 |  |  | $ | 946 |  |  | $ | 1,025 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
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