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 June 30, 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 gain on derivative instruments, net in the Condensed Consolidated Statements of Operations.

As of June 30, 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.

In June 2023, the Company modified its then outstanding interest rate swap agreements to replace the underlying benchmark interest rate from LIBOR to SOFR with all other material terms remaining unchanged. As discussed in Note 2. Significant Accounting Policies and Pronouncements, the Company utilized certain expedients under ASU 2020-04 to account for these modifications as continuations of existing agreements which had no impact on our condensed consolidated financial statements.

As of June 30, 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 June 30, 2023 and December 31, 2022 is as follows:


	Fair Value of Derivative Assets/(Liabilities)
	Balance Sheet Location	June 30, 2023		December 31, 2022
Derivatives designated as hedging instruments
Interest rate contracts - interest rate swaps
	Fair value of derivative assets - current	$	8,434	$	8,479
	Fair value of derivative assets - noncurrent	6,331		8,184
		$	14,765	$	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 and six months ended June 30, 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 into Earnings
	Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022			June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Interest rate contracts
Interest rate swaps	$	3,319	$	2,252	$	2,721	$	10,536	Interest expense	$	2,284	$	82	$	4,545	$	(315)

Further information on the effect of these instruments on the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022 is as follows:


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Accumulated other comprehensive income, beginning balance	$	13,690	$	10,567	$	16,549	$	1,886
Gain recognized in Other Comprehensive Income/(Loss)	3,319		2,252		2,721		10,536
(Gain)/loss reclassified from Other Comprehensive Income/(Loss) into earnings	(2,284)		(82)		(4,545)		315
Accumulated other comprehensive income, ending balance	$	14,725	$	12,737	$	14,725	$	12,737

Of the amount recorded in Accumulated other comprehensive income as of June 30, 2023, $8.6 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 September 30, 2023 - Buy Positions	$	14,289	(720)
Quarter ending September 30, 2023 - Sell Positions	$	14,976	765
Quarter ending December 31, 2023 - Buy Positions	$	13,896	(705)
Quarter ending December 31, 2023 - Sell Positions	$	14,855	795

As of June 30, 2023, the Company had outstanding bunker swap agreements to purchase 7,350 metric tons of low sulphur fuel oil with prices ranging between $469 and $544 with contracts expiring between July 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 June 30, 2023 and December 31, 2022 is as follows:


	Fair Value of Derivative Assets/(Liabilities)
	Balance Sheet Location	June 30, 2023		December 31, 2022
Derivatives not designated as hedging instruments
Commodity contracts - FFAs
	Fair value of derivative assets - current	$	1,380	$	—

		$	1,380	$	—

	Fair value of derivative liabilities - current	$	(8)	$	(70)

		$	(8)	$	(70)

Commodity contracts - bunker swaps




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

		$	—	$	(93)

The effect of these instruments on the Condensed Consolidated Statements of Operations, which is presented in Realized and unrealized gain on derivative instruments, net for the three and six months ended June 30, 2023 and 2022 is as follows:


	(Gain)/Loss Recognized in Earnings
	Three Months Ended				Six Months Ended
Derivatives not designated as hedging instruments	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Commodity contracts
FFAs - realized (gain)/loss	$	(900)	$	5,572	$	(757)	$	3,799
Bunker swaps - realized loss/(gain)	130		(2,620)		120		(4,394)
	(770)		2,952		(637)		(595)
FFAs - unrealized (gain)/loss	(1,933)		(13,133)		(1,700)		1,119
Bunker swaps - unrealized (gain)/loss	(88)		291		(85)		(2,512)
	(2,021)		(12,842)		(1,785)		(1,393)
Realized and unrealized gain on derivative instruments, net	$	(2,791)	$	(9,890)	$	(2,422)	$	(1,988)