The Company uses interest rate swaps to manage its exposure to interest rate risk on its debt. Generally, the Company enters into interest rate swaps with the objective of effectively converting debt from a floating-rate to a fixed-rate obligation. As of March 31, 2023, the Company’s outstanding interest rate swaps were designated as hedging instruments and qualified as cash flow hedges.

The Company uses forward freight agreements (“FFAs”) and bunker swaps to manage its exposure to changes in charter hire rates and market bunker prices, respectively. Generally, the Company enters into FFAs with the objective of effectively fixing charter hire rates for future charter transactions and the Company enters into bunker swaps with the objective of effectively fixing forecasted bunker transactions. The Company utilizes these derivative instruments to economically hedge these risks and does not designate them as hedging instruments.

For derivative instruments that are not designated as hedging instruments, changes in the fair value of the instruments and the gain or loss ultimately realized upon settlement of the derivative are reported in Realized and unrealized loss on derivative instruments, net in the Condensed Consolidated Statements of Operations.

As of March 31, 2023, the Company has International Swaps and Derivatives Association agreements with five financial institutions which contain netting provisions. In addition to a master agreement with the Company supported by a primary parent guarantee on either side, the Company also has associated credit support agreements in place with the one counterparty which, among other things, provide the circumstances under which either party is required to post eligible collateral when the market value of transactions covered by these agreements exceeds specified thresholds.

As of March 31, 2023, the Company had the following outstanding interest rate swaps that were designated and qualified as cash flow hedges.

The effect of these derivative instruments on the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 is as follows:


	Fair Value of Derivative Assets/(Liabilities)
	Balance Sheet Location	March 31, 2023		December 31, 2022
Derivatives designated as hedging instruments
Interest rate contracts - interest rate swaps
	Fair value of derivative assets - current	$	7,734	$	8,479
	Fair value of derivative assets - noncurrent	6,022		8,184
		$	13,756	$	16,663

The effect of these instruments on the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022 is as follows:

Derivatives in Cash Flow Hedging Relationships

Gain/(Loss) Recognized in Other Comprehensive Income/(Loss)

Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings

Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income/(Loss) into Earnings

Three Months Ended

March 31, 2023

March 31, 2022

March 31, 2023

March 31, 2022

Interest rate contracts

Interest rate swaps

(598)

8,284

Interest expense

2,261

(397)

Further information on the effect of these instruments on the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022 is as follows:


	March 31, 2023		March 31, 2022
Accumulated other comprehensive income, beginning balance	$	16,549	$	1,886
Gain/(loss) recognized in Other Comprehensive Income/(Loss)	(598)		8,284
Gain/(loss) reclassified from Other Comprehensive Income/(Loss) into earnings	(2,261)		397
Accumulated other comprehensive income, ending balance	$	13,690	$	10,567

Of the amount recorded in Accumulated other comprehensive income as of March 31, 2023, $7.9 million is expected to be reclassified into earnings within the next twelve months.


FFA Period	Average FFA Contract Price(1)		Number of Days Hedged
Quarter ending June 30, 2023 - Buy Positions	$	14,297	(240)
Quarter ending June 30, 2023 - Sell Positions	$	15,007	630
Quarter ending September 30, 2023 - Buy Positions	$	14,297	(240)
Quarter ending September 30, 2023 - Sell Positions	$	15,007	630
Quarter ending December 31, 2023 - Buy Positions	$	13,915	(195)
Quarter ending December 31, 2023 - Sell Positions	$	15,007	630

As of March 31, 2023, the Company had outstanding bunker swap agreements to purchase 7,850 metric tons of low sulphur fuel oil with prices ranging between $499 and $592 with contracts expiring between April and December 2023. The Company does not expect non-performance by any of the counterparties to the Company’s bunker swap transactions.

The effect of these derivative instruments on the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 is as follows:


	Fair Value of Derivative Assets/(Liabilities)
	Balance Sheet Location	March 31, 2023		December 31, 2022
Derivatives not designated as hedging instruments
Commodity contracts - FFAs




	Fair value of derivative liabilities - current	$	(249)	$	(70)

		$	(249)	$	(70)

Commodity contracts - bunker swaps




	Fair value of derivative liabilities - current	$	(96)	$	(93)

		$	(96)	$	(93)

The effect of these instruments on the Condensed Consolidated Statements of Operations, which is presented in Realized and unrealized loss on derivative instruments, net for the three months ended March 31, 2023 and 2022 is as follows:


	Loss/(Gain) Recognized in Earnings
	Three Months Ended
Derivatives not designated as hedging instruments	March 31, 2023		March 31, 2022
Commodity contracts
FFAs - realized loss/(gain)	$	142	$	(1,772)
Bunker swaps - realized gain	(9)		(1,774)
	133		(3,546)
FFAs - unrealized loss	233		14,252
Bunker swaps - unrealized loss/(gain)	3		(2,803)
	236		11,449
Realized and unrealized loss on derivative instruments, net	$	369	$	7,903