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Fair Value Measurements
 12 Months Ended
Dec. 31, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements
(11) Fair Value Measurements

In accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures (“Topic 820”), certain assets and liabilities of the Company are measured at fair value on a recurring and nonrecurring basis at December 31, 2023 and 2022. Topic 820 utilizes a fair value hierarchy considering the inputs and valuation techniques used to measure fair value into the following three broad levels:

•Level 1 — Quoted prices in active markets for identical assets or liabilities.
•Level 2 — Observable inputs other than quoted prices included within Level 1 for the asset or liability either directly or indirectly, which include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets and liabilities in markets that are not active.
•Level 3 — Unobservable inputs that are significant to the fair value of the asset or liability, which include valuation techniques that involve significant unobservable inputs and Company’s own assumptions of market inputs/valuation.

Assets and liabilities measured at fair value on a recurring basis

The following tables set forth information about the assets and liabilities measured at fair value on a recurring basis, by input level, as of December 31, 2023 and 2022. Such amounts are presented on a gross basis, before the effects of netting and allocation of collateral. The Company elected to offset the fair value amounts recognized for derivative assets and liabilities executed with the same counterparty under a master netting arrangement, including fair value amounts recognized for the right to reclaim or the obligation to return cash collateral.
December 31, 2023
Fair Value HierarchyTotal gross fair valueContract netting
Collateral netting (1)
Net value
(in millions)Level 1Level 2Level 3
Assets
Commodity derivative instruments$— $31 $— $31 $(6)$— $25 
Liabilities
Commodity derivative instruments— (6)— (6)6 — — 
RFS— (329)— (329)— — (329)
December 31, 2022
Fair Value HierarchyTotal gross fair valueContract netting
Collateral netting (1)
Net value
Level 1Level 2Level 3
Assets
Commodity derivative instruments$— $4 $— $4 $(4)$— $— 
Liabilities
Commodity derivative instruments— (9)— (9)4 1 (4)
RFS— (692)— (692)— — (692)
(1)At December 31, 2023 and 2022, the Company had $13 million and $7 million of collateral under master netting arrangements not offset against the derivatives within Prepaid expenses and other current assets on the Consolidated Balance Sheets, respectively, primarily related to initial margin requirements.

The Petroleum Segment’s commodity derivative contracts consist of exchange traded futures, commodity price swaps, and sale and purchase forwards that are measured at fair value using a market approach based on available broker quoted market prices of identical or similar instruments. Similarly, RFS obligations are measured at fair value using a market approach based on available broker quoted market RIN prices for each specific or closest vintage year.

The Company had no transfers of assets or liabilities between any of the above levels during the years ended December 31, 2023 and 2022.

Assets and liabilities measured at fair value on a nonrecurring basis

CVR Partners performed a nonrecurring fair value measurement of the equity interest received as part of the 45Q Transaction in the first quarter of 2023. Such valuation used a combination of the market approach and the discounted cash flow methodology with key inputs including the discount rate, contractual and expected future cash flows, and market multiples. CVR Partners determined the estimated fair value of the consideration received to be $46 million, which is a nonrecurring Level 3 measurement, as defined by Topic 820, based on the use of CVR Partners’ own assumptions described
above. There are no other assets or liabilities that were measured at fair value on a nonrecurring basis as of December 31, 2023 and 2022.

Assets and liabilities not required to be measured at fair value

CVR Energy holds cash equivalents which consist primarily of bank time deposits with maturities of 90 days or less. Cash and cash equivalents and reserved funds had carrying and fair values of $1.2 billion and $510 million at December 31, 2023 and 2022, respectively, and are classified as Level 1 in the fair value hierarchy.

Long-term debt of $2.1 billion and $1.5 billion at December 31, 2023 and 2022, respectively, had estimated fair values of $2.1 billion and$1.4 billion, respectively, and are classified as Level 2 in the fair value hierarchy.

Other short-term financial assets and liabilities, which consist of reserved funds, restricted cash, accounts receivable, accounts payable, and operating and finance lease obligations, are carried at cost on the Consolidated Balance Sheets and approximate their estimated fair values.