Fair-Value Measurements

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

Fair-Value Measurements

Fair-Value Measurements

We classify financial assets and liabilities into the following three levels based on the inputs used to measure fair value:    

    (1)    Level 1 fair values are based on observable inputs such as quoted prices in active markets for identical assets and liabilities;

    (2)    Level 2 fair values are based on pricing inputs other than quoted prices in active markets for identical assets and liabilities and are either directly or indirectly observable as of the measurement date; and

    (3)    Level 3 fair values are based on unobservable inputs in which little or no market data exists.

As required by fair value accounting guidance, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Our assessment of the significance of a particular input to the fair value requires judgment and may affect the placement of assets and liabilities within the fair value hierarchy levels.

The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2024 and 2023.

	December 31, 2024						December 31, 2023
Recurring Fair Value Measures	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Commodity derivatives:
Assets	$	3,297	$	2,088	$	—	$	1,951	$	3,710	$	—
Liabilities	$	(3,245)	$	(7,848)	$	—	$	(12,504)	$	(5,536)	$	—

Our commodity derivatives include exchange-traded futures and exchange-traded options contracts. The fair value of these exchange-traded derivative contracts is based on unadjusted quoted prices in active markets and is, therefore, included in Level 1 of the fair value hierarchy. The fair value of the swaps contracts was determined using market price quotations and a pricing model. The swap contracts were considered a Level 2 input in the fair value hierarchy at December 31, 2024 and 2023.

Rollforward of Level 3 Fair Value Measurements

The following table provides a reconciliation of changes in fair value at the beginning and ending balances for our derivatives classified as level 3:

Balance as of December 31, 2021	(83,210)
Net loss for the period including earnings	(18,584)
Reclassification to Mezzanine Equity	101,794
Balance as of December 31, 2022	$	—

The fair value of the embedded derivative feature was based on a valuation model that estimates the fair value of the convertible preferred units with and without a Rate Reset Election and is included in Level 3 of the fair value hierarchy. This model contained inputs, including our common unit price relative to the issuance price, the current dividend yield, the discount yield (which is adjusted periodically for changes associated with the industry’s credit markets), default probabilities, equity volatility, U.S. Treasury yields and timing estimates which involved management judgment. Our equity volatility rate used to value our embedded derivative feature was 50% at September 29, 2022, which represented the final valuation date of the embedded derivative due to the Rate Reset Election.

See Note 19 for additional information on our derivative instruments.

Nonfinancial Assets and Liabilities

We utilize fair value on a non-recurring basis to perform impairment tests as required on our property, plant and equipment, goodwill and intangible assets. Assets and liabilities acquired in business combinations are recorded at their fair value as of the date of acquisition. The inputs used to determine such fair value are primarily based upon internally developed cash flow models and would generally be classified as Level 3. See Note 4 for more information regarding the assets and liabilities acquired during 2023.

When performing a quantitative assessment of our goodwill as part of our annual evaluation (see Note 2), we use Level 3 inputs to estimate the fair value of our refinery services reporting unit using the income approach. This includes assumptions regarding future cash flows based on projected sales volumes and pricing, the terminal value and discount rate. Changes to any one or a combination of these factors would result in a change to the reporting unit fair value, which could lead to future impairment charges.

Additionally, we use fair value to determine the inception value of our asset retirement obligations. The inputs used to determine such fair value are primarily based upon costs incurred historically for similar work, as well as estimates from independent third parties for costs that would be incurred to restore leased property to the contractually stipulated condition, and would generally be classified in Level 3.

Other Fair Value Measurements

We believe the debt outstanding under our senior secured credit facility approximates fair value as the stated rate of interest approximates current market rates of interest for similar instruments with comparable maturities. At December 31, 2024 our senior unsecured notes had a carrying value of $3.5 billion and fair value of $3.5 billion, compared to a carrying value of $3.1 billion and fair value of $3.2 billion at December 31, 2023. The fair value of the senior unsecured notes is determined based on trade information in the financial markets of our public debt and is considered a Level 2 fair value measurement. At December 31, 2024, our Alkali senior secured notes had a carrying value and fair value of $0.4 billion. The fair value of the Alkali senior secured notes is determined based on trade information in the financial market of securities with similar features and is considered a Level 2 fair value measurement.