| Fair Value |
Fair Value
Recurring
Fair Value Methods and Assumptions - Financial Assets and Liabilities.
We used the following methods and assumptions in estimating fair value for our financial assets and liabilities:
| | • | Energy commodity derivatives contracts. These include NYMEX futures and exchange-traded butane futures agreements related to petroleum products. These contracts are carried at fair value on our consolidated balance sheets and are valued based on quoted prices in active markets. See Note 9 – Derivative Financial Instruments for further disclosures regarding these contracts. |
| | • | Long-term receivables. These include lease payments receivable under a direct-financing leasing arrangement and insurance receivables. Fair value was determined by estimating the present value of future cash flows using current market rates. |
| | • | Debt. The fair value of our publicly traded notes was based on the prices of those notes at December 31, 2013 and June 30, 2014; however, where recent observable market trades were not available, prices were determined using adjustments to the last traded value for that debt issuance or by adjustments to the prices of similar debt instruments of peer entities that are actively traded. The carrying amount of borrowings, if any, under our revolving credit facility and our commercial paper program approximates fair value due to the frequent repricing of these obligations. |
Fair Value Measurements - Financial Assets and Liabilities
The following tables summarize the carrying amounts, fair values and recurring fair value measurements recorded or disclosed as of December 31, 2013 and June 30, 2014, based on the three levels established by ASC 820; Fair Value Measurements and Disclosures (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2013 | Assets (Liabilities) | | | | | | Fair Value Measurements using: | | Carrying Amount | | Fair Value | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | Energy commodity derivatives contracts (liabilities) | | $ | (4,502 | ) | | $ | (4,502 | ) | | $ | (4,502 | ) | | $ | — |
| | $ | — |
| Long-term receivables | | $ | 2,730 |
| | $ | 2,658 |
| | $ | — |
| | $ | — |
| | $ | 2,658 |
| Debt | | $ | (2,685,287 | ) | | $ | (2,815,210 | ) | | $ | — |
| | $ | (2,815,210 | ) | | $ | — |
|
| | | | | | | | | | | | | | | | | | | | | | | | As of June 30, 2014 | Assets (Liabilities) | | | | | | Fair Value Measurements using: | | Carrying Amount | | Fair Value | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | Energy commodity derivatives contracts (liabilities) | | $ | (14,657 | ) | | $ | (14,657 | ) | | $ | (14,657 | ) | | $ | — |
| | $ | — |
| Long-term receivables | | $ | 30,028 |
| | $ | 31,451 |
| | $ | — |
| | $ | — |
| | $ | 31,451 |
| Debt | | $ | (2,910,496 | ) | | $ | (3,175,687 | ) | | $ | — |
| | $ | (3,175,687 | ) | | $ | — |
|
Non-recurring
During second quarter 2014, we recognized a $9.4 million impairment to a certain pipeline terminal and related assets. The inputs for the valuation models used in determining the fair value of this pipeline terminal and related assets were Level 3—Significant Unobservable Inputs. Management is considering divesting these assets and their carrying values were adjusted to an estimated sales value. The impairment was recorded to depreciation, amortization and impairments. The terminal and related assets are part of our Refined Products segment. As of June 30, 2014, the carrying amount and fair value of this asset were $10.0 million. |