Fair Value Measurements

9 Months Ended

Sep. 30, 2023

The accounting standard for fair value measurement establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

•Level 1 — Includes inputs that are observable in active markets for identical assets or liabilities as of the reporting date such as exchange-traded derivatives, listed equities and U.S. government treasury securities.

•Level 2 — Includes inputs that are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Instruments in this category include non-exchange-traded derivatives such as over the counter (OTC) forwards, options and physical exchanges.

•Level 3 — Includes significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Financial Assets and Liabilities

As of September 30, 2023 and December 31, 2022, we held certain assets and liabilities that are required to be measured at fair value on a recurring basis, which include our derivative instruments related to crude oil, NGLs and natural gas. Our derivative instruments consist of forwards, swaps, futures, physical exchanges and options. Our derivative instruments that are traded on the New York Mercantile Exchange have been categorized as Level 1. Our derivative instruments also include OTC contracts, which have been categorized as Level 2.

The following tables summarize the fair value hierarchy of our financial instruments that were reflected in our consolidated balance sheets (in millions):


	September 30, 2023

	Level 1		Level 2		Level 3		Gross Fair Value		Contract Netting(1)		Collateral/Margin Received or Paid		Fair Value
Assets
Assets from price risk management	$	14.5	$	248.6	$	—	$	263.1	$	(213.9)	$	(11.2)	$	38.0
Other investments(2)	2.8		—		—		2.8		—		—		2.8
Total assets at fair value	$	17.3	$	248.6	$	—	$	265.9	$	(213.9)	$	(11.2)	$	40.8

Liabilities
Liabilities from price risk management with credit-risk-related contingent features	$	11.5	$	206.2	$	—	$	217.7	$	(213.9)	$	3.9	$	7.7
Liabilities from price risk management without credit-risk-related contingent features	—		5.5		—		5.5		—		4.4		9.9
Total liabilities at fair value	$	11.5	$	211.7	$	—	$	223.2	$	(213.9)	$	8.3	$	17.6


	December 31, 2022

	Level 1		Level 2		Level 3		Gross Fair Value		Contract Netting(1)		Collateral/Margin Received or Paid		Fair Value
Assets
Assets from price risk management	$	62.8	$	474.3	$	—	$	537.1	$	(452.1)	$	(12.2)	$	72.8
Other investments(2)	2.6		—		—		2.6		—		—		2.6
Total assets at fair value	$	65.4	$	474.3	$	—	$	539.7	$	(452.1)	$	(12.2)	$	75.4

Liabilities
Liabilities from price risk management with credit-risk-related contingent features	$	65.7	$	420.1	$	—	$	485.8	$	(452.1)	$	(25.6)	$	8.1
Liabilities from price risk management without credit-risk-related contingent features	—		11.9		—		11.9		—		3.9		15.8
Total liabilities at fair value	$	65.7	$	432.0	$	—	$	497.7	$	(452.1)	$	(21.7)	$	23.9

(1)Amounts represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions.

(2)Amount primarily relates to our investment in Suburban Propane Partners, L.P. units, which is reflected in other non-current assets on CEQP’s consolidated balance sheets.

Cash, Accounts Receivable and Accounts Payable

As of September 30, 2023 and December 31, 2022, the carrying amounts of cash, accounts receivable and accounts payable approximate fair value based on the short-term nature of these instruments.

Credit Facilities

The fair value of the amounts outstanding under our credit facilities approximates their respective carrying amounts as of September 30, 2023 and December 31, 2022, primarily due to the variable nature of the interest rates of the instruments, which is considered a Level 2 fair value measurement. See Note 8 for a further discussion of our credit facilities.

Senior Notes

We estimate the fair value of our senior notes primarily based on quoted market prices for the same or similar issuances (representing a Level 2 fair value measurement). The following table represents the carrying amount (reduced for deferred financing costs associated with the respective notes) and fair value of our senior notes (in millions):


	September 30, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
2025 Senior Notes	$	498.4	$	491.8	$	497.6	$	486.7
2027 Senior Notes	$	596.1	$	576.7	$	595.3	$	556.9
February 2029 Senior Notes	$	693.1	$	674.4	$	692.1	$	642.1
April 2029 Senior Notes(1)	$	473.5	$	464.2	$	476.7	$	450.0
2031 Senior Notes	$	591.6	$	611.5	$	—	$	—

(1) The carrying amount includes a fair value adjustment we recorded in conjunction with the merger with Oasis Midstream discussed in Note 3. For a further discussion of this fair value adjustment, see Note 8.