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Fair Value Measurements
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements

(9) Fair Value Measurements

We use a market approach for our recurring fair value measurements and endeavor to use the best information available. Accordingly, valuation techniques that maximize the use of observable inputs are favored. As of December 31, 2024, a portion of our natural gas instruments contain swaptions (Level 3 inputs) where the counterparty has the right, but not the obligation, to enter into a fixed price swap on a pre-determined date. If exercised, the swaption contract becomes a swap treated consistently with our fixed-price swaps. At December 31, 2024, we used a weighted average implied volatility of 24% for our swaptions. The following is a reconciliation of the beginning and ending balances for derivative instruments classified as Level 3 in the fair value hierarchy (in thousands):

 

Year Ended
December 31, 2024

 

Balance at December 31, 2023

$

(1,161

)

Total gains included in earnings

 

—

 

Additions

 

(13,240

)

Settlements

 

1,161

 

Balance at December 31, 2024

$

(13,240

)

 

The following table presents the carrying amounts and the fair values of our financial instruments as of December 31, 2024 and 2023 (in thousands):

 

December 31, 2024

 

 

December 31, 2023

 

 

Carrying
Value

 

 

Fair
Value

 

 

Carrying
Value

 

 

Fair
Value

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Commodity derivatives (a)

$

87,098

 

 

$

87,098

 

 

$

442,971

 

 

$

442,971

 

Marketable securities (b)

 

60,989

 

 

 

60,989

 

 

 

71,989

 

 

 

71,989

 

(Liabilities):

 

 

 

 

 

 

 

 

 

 

 

Commodity derivatives (a)

 

(20,122

)

 

 

(20,122

)

 

 

(329

)

 

 

(329

)

Bank credit facility (c)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

4.875% senior notes due 2025 (c)

 

(608,702

)

 

 

(607,363

)

 

 

(688,388

)

 

 

(679,363

)

8.25% senior notes due 2029 (c)

 

(600,000

)

 

 

(618,114

)

 

 

(600,000

)

 

 

(624,816

)

4.75% senior notes due 2030 (c)

 

(500,000

)

 

 

(469,285

)

 

 

(500,000

)

 

 

(463,085

)

Deferred compensation plan (d)

 

(86,882

)

 

 

(86,882

)

 

 

(117,125

)

 

 

(117,125

)

 

(a) Fair values for commodity derivatives utilize Level 2 inputs with the exception of swaptions, which utilize Level 3 inputs. Fair value of swaption contracts as of December 31, 2024 was a net derivative liability of $13.2 million.

(b) Marketable securities, which are held in our deferred compensation plans, are actively traded on major exchanges, which is a Level 1 input.

(c) The book value of our bank debt approximates fair value because of its floating rate structure. The fair value of our senior notes is based on end of period market quotes. Debt is presented on the balance sheet at carrying value.

(d) The fair value of our deferred compensation plan is updated to the closing price on the balance sheet date, which is a Level 1 input.

Our current assets and liabilities contain financial instruments, the most significant of which are trade accounts receivables and payables. We believe the carrying values of our current assets and liabilities approximate fair value. Our fair value assessment incorporates a variety of considerations, including (1) the short-term duration of the instruments and (2) our historical incurrence of and expected future insignificance of bad debt expense. Non-financial liabilities initially measured at fair value include asset retirement obligations, operating lease liabilities and the divestiture contract obligation that we incurred in conjunction with the sale of our North Louisiana assets. See Note 8 for information regarding the fair value of derivative instruments and Note 10 for information regarding the fair value of stock-based compensation awards.