Fair Value

Fair value is the exchange price that would be the amount received for an asset or paid to transfer a liability in an orderly transaction between market participants. In arriving at a fair value measurement, we use a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable. The three levels of inputs used to establish fair value are the following:


•	Level 1 — Quoted prices in active markets for identical assets or liabilities;


•	Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and


•	Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Non-financial assets measured at fair value on a non-recurring basis principally include real estate assets, oil and gas properties, assets held for sale, goodwill and other intangible assets, which are measured for impairment.

In first nine months 2015, we recognized proved oil and gas properties non-cash impairment charges of $90,417,000 principally due to a significant decline in oil and gas prices and an increased likelihood that certain non-core oil and gas assets will be sold. The fair value of these properties was determined using Level 3 inputs and the income valuation method. We used a discount rate of ten percent as of third quarter-end 2015 which is commensurate with current market and risk conditions associated with realizing the expected cash flows projected for these investments. Fair value of assets held for sale was based on net realizable value less cost to sell. Fair value of certain unproved leasehold interests that were impaired was based on market comparables.

In first nine months 2015, we recognized real estate non-cash asset impairment of $729,000, of which $504,000 was recognized in first quarter 2015 related to a residential development with golf course and country club property located near Fort Worth which was sold in April 2015 and $225,000 was recognized in second quarter 2015 related to an owned project near Atlanta where the remaining lots were sold in August 2015.

Non-financial assets measured at fair value on a non-recurring basis are as follows:



	Third Quarter-End 2015								Year-End 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Non-Financial Assets and Liabilities:
Real estate	$	—	$	—	$	—	$	—	$	—	$	970	$	—	$	970
Proved oil and gas properties	$	—	$	—	$	80,551	$	80,551	$	—	$	—	$	3,655	$	3,655
Unproved leasehold interests	$	—	$	1,226	$	11,489	$	12,715	$	—	$	—	$	—	$	—
Assets held for sale - oil and gas properties	$	—	$	1,534	$	—	$	1,534	$	—	$	—	$	—	$	—

We elected not to use the fair value option for cash and cash equivalents, accounts receivable, other current assets, variable debt, accounts payable and other current liabilities. The carrying amounts of these financial instruments approximate their fair values due to their short-term nature or variable interest rates. We determine the fair value of fixed rate financial instruments using quoted prices for similar instruments in active markets.

Information about our fixed rate financial instruments not measured at fair value follows:



	Third Quarter-End 2015						Year-End 2014
	Carrying Amount			Fair Value			Carrying Amount			Fair Value			Valuation Technique
	(In thousands)
Loan secured by real estate	$	—		$	—		$	3,574		$	4,859		Level 2
Fixed rate debt	$	(366,571	)	$	(357,857	)	$	(370,348	)	$	(359,131	)	Level 2