D. FAIR VALUE

We follow authoritative guidance regarding fair value measurements for all assets and liabilities measured at fair value. That guidance establishes a fair value hierarchy that prioritizes the inputs the Company uses to measure fair value based on the significance level of the following inputs:

• Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations whose inputs or significant value drivers are observable.

• Level 3 - Significant inputs to the valuation model are unobservable.

Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the nonfinancial assets and liabilities and their placement in the fair value hierarchy levels. We determine our estimate of the fair value of derivative instruments using a market approach based on several factors, including quoted prices in active markets, and quotes from third parties.

The following tables list the Company's assets and liabilities that are measured at fair value and their classification within the fair value hierarchy as of December 31, 2014 and December 31, 2013:


	(In thousands)
			Fair Value Measurements at December 31, 2014 Using
	December 31,
Description	2014		(Level 1)		(Level 2)		(Level 3)

Available for sale securities	$	25	$	25	$	--	$	--

Total assets	$	25	$	25	$	--	$	--

Executive retirement program liability	$	1,309	$	--	$	--	$	1,309

Total liabilities	$	1,309	$	--	$	--	$	1,309


			Fair Value Measurements at December 31, 2013 Using
	December 31,
Description	2013		(Level 1)		(Level 2)		(Level 3)

Commodity risk management assets	$	14	$	--	$	14	$	--
Available for sale securities		69		69		--		--

Total assets	$	83	$	69	$	14	$	--

Commodity risk management liability	$	280	$	--	$	280	$	--
Executive retirement program liability		865		--		--		865

Total liabilities	$	1,145	$	--	$	280	$	865

The following table summarizes the change in the fair value of our Level 3 fair value measurements for the year ended December 31, 2014.


	Change in Level 3 Fair Value Measurements

Description	December 31, 2013		Additions and Payments		Revision of Value		December 31, 2014

Executive retirement program liability	$	865	$	444	$	--	$	1,309

The following table summarizes, by major security type, the fair value and unrealized gain of our investments. The unrealized gain is recorded on the consolidated balance sheet as other comprehensive income, a component of stockholders' equity.


	(In thousands)
	December 31, 2014
			Unrealized
Description of Securities	Cost		Gain		Fair Value

Available for sale securities	$	24	$	1	$	25

Total	$	24	$	1	$	25

	December 31, 2013
			Unrealized
Description of Securities	Cost		Gain		Fair Value

Available for sale securities	$	24	$	45	$	69

Total	$	24	$	45	$	69

Fair Value of Available for Sale Securities

The fair value of available for sale securities is based on quoted market prices obtained from independent pricing services. Accordingly, the Company has classified these instruments as Level 1.

Fair Value of Commodity Derivative Instruments

The Company determines its estimate of the fair value of derivative instruments using a market approach based on several factors, including quoted market prices in active markets, quotes from third parties, the credit rating of the counterparty and the Company's own credit rating. In consideration of counterparty credit risk, the Company assessed the likelihood that the counterparty to the derivative would default by failing to make any contractually required payments. Additionally, the Company considers that it is of substantial credit quality and has the financial resources and willingness to meet its potential repayment obligations associated with the derivative transactions. At December 31, 2013, derivative instruments utilized by the Company consisted of "no premium" collars. The crude oil derivative markets are highly active. Although the Company's derivative instruments are valued using indices, the instruments themselves are traded with third-party counterparties and are not openly traded on an exchange. As such, the Company has classified these instruments as Level 2.

Fair Value of Executive Retirement Program

The executive retirement program is a standalone liability for which there is no available market price, principal market, or market participants. The Company records the estimated fair value of the long-term liability for estimated future payments under the executive retirement program based on the discounted value of estimated future payments associated with each individual in the program. The inputs available for this estimate are unobservable and are therefore classified as Level 3 inputs.

Fair Value of Financial Instruments

Our other financial instruments include cash and cash equivalents, accounts receivable, accounts payable, other current liabilities and long-term debt. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximate fair value because of their immediate or short-term maturities. The carrying value of our debt approximates its fair market value as it bears interest at variable rates over the term of the loan. The fair value and carrying value of our debt was $6.0 million as of December 31, 2014.