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Fair Value Measurements | 3 Months Ended
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Mar. 31, 2024
Fair Value Measurements |
Fair Value Measurements | 14. Fair Value Measurements ​ Assets and Liabilities Measured at Fair Value on a Recurring Basis ​ As of March 31, 2024, we owned a 25% equity interest in ECOTEC (see Note 5 (“Investments in Unconsolidated Affiliates”)). We have elected the fair value option to account for this investment. The fair value determination of this investment primarily consisted of unobservable inputs, which creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement, which was valued through an average of an income approach (discounted cash flow method) and a market approach (guideline public company method), are the WACC and the revenue multiples. Significant increases (decreases) in these inputs in isolation would result in a significantly higher (lower) fair value measurement. As of March 31, 2024, the fair value of our investment in ECOTEC was $14.9 million. ​ This fair value measurement is classified as Level 3. The significant unobservable inputs are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Significant | ​ | Three Months Ended | ​ | Three Months Ended
​ | ​ | Unobservable | ​ | March 31, 2024 | ​ | March 31, 2023
​ | ​ | Inputs | ​ | Range | ​ | Median | ​ | Range | ​ | Median
Valuation technique: |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Discounted cash flow | ​ | WACC | ​ | 0.4% - 20.0% | ​ | ​ | 13.5% | ​ | 0.0% - 22.1% | ​ | ​ | 11.3%
Guideline public company | ​ | Revenue multiple | ​ | 1.5x - 7.2x | ​ | ​ | 3.8x | ​ | 1.7x - 8.0x | ​ | ​ | 3.9x
​ The reconciliation of changes in the fair value of our investment in ECOTEC is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | Three Months Ended
​ | ​ | ​ | March 31,
(in thousands) | ​ | ​ | ​ | 2024 | ​ | ​ | 2023
Balance at beginning of period |  | ​ | $ | 14,905 |  | $ | 12,803
Purchases of equity interests | ​ | ​ | ​ | — | ​ | ​ | 2,000
Unrealized loss (1) | ​ | ​ | ​ | — | ​ | ​ | (254)
Balance at end of period | ​ | ​ | $ | 14,905 | ​ | $ | 14,549
(1) | Included in other expense (income), net in our unaudited condensed consolidated statement of operations.
​ See Note 5 (“Investments in Unconsolidated Affiliates”) for further details. ​ Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis ​ Investment in Ionada As of March 31, 2024, we had a fully diluted ownership equity interest in Ionada of 10% (see Note 5 (“Investments in Unconsolidated Affiliates”)). We have elected the fair value measurement alternative to account for this investment. As of March 31, 2024, the carrying value of our investment in Ionada was $4.3 million. The reconciliation of changes in the carrying value of our investment in Ionada is as follows: ​
​ | ​ | ​ | ​
​ | ​ | Three Months Ended
​ | ​ | March 31,
(in thousands) | ​ | 2024
Balance at beginning of period |  | $ | 4,205
Purchases of equity interests | ​ | ​ | —
Transaction costs capitalized as investment activity | ​ | ​ | 57
Cost basis | ​ | ​ | 4,262
Adjustments | ​ | ​ | —
Carrying value | ​ | $ | 4,262
​ Subject to certain contractual conditions, we will invest, on the same terms and conditions as the initial investment, $1.2 million on November 1, 2024, $1.3 million on November 1, 2025, and $4.8 million prior to July 1, 2026, for a fully diluted ownership interest of 12%, 15% and 24%, respectively. Compressors During the three months ended March 31, 2024, we recorded nonrecurring fair value measurements related to our idle compressors. Our estimate of the compressors’ fair value was primarily based on the expected net sale proceeds compared with other fleet units we recently sold and/or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use. We discounted the expected proceeds, net of selling and other carrying costs, using a weighted average disposal period of four years. These fair value measurements are classified as Level 3. The fair value of our compressors impaired as of March 31, 2024 and December 31, 2023 was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ | ​ | March 31, 2024 | ​ | December 31, 2023
(in thousands) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Impaired compressors | ​ | ​ | ​ | $ | 263 | ​ | $ | 1,423
​ The significant unobservable inputs used to develop the above fair value measurements were weighted by the relative fair value of the compressors being measured. Additional quantitative information related to our significant unobservable inputs follows: ​
​ | ​ | ​ | ​ | ​
​ |  | Range |  | Weighted Average (1)
Estimated net sale proceeds: | ​ | ​ | ​ | ​
As of March 31, 2024 | ​ | $0 - $211 per horsepower | ​ | $50 per horsepower
As of December 31, 2023 | ​ | $0 - $294 per horsepower | ​ | $50 per horsepower
(1) | Calculated based on an estimated discount for market liquidity 30% and 33% as of March 31, 2024 and December 31, 2023, respectively.
​ See Note 10 (“Long-Lived and Other Asset Impairments”) for further details. ​ Other Financial Instruments ​ The carrying amounts of our cash, accounts receivable and accounts payable approximate fair value due to the short–term nature of these instruments. The carrying amount of borrowings outstanding under our Credit Facility approximates fair value due to the variable interest rate. The measurement of the fair value of these outstanding borrowings is a Level 3 measurement. The fair value of our fixed rate debt is estimated using yields observable in active markets, which are Level 2 inputs, and was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | March 31, 2024 |  | December 31, 2023
(in thousands) | ​ | ​ | ​ | ​ | ​ | ​
Carrying amount of fixed rate debt (1) | ​ | $ | 1,298,066 | ​ | $ | 1,297,844
Fair value of fixed rate debt | ​ |  | 1,294,000 | ​ |  | 1,289,000
(1) Carrying amounts are shown net of unamortized premium and deferred financing costs. See Note 6 (“Long-Term Debt”). ​

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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 -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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