Derivative Instruments

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Note 11— Derivative Instruments

Although we are a UK company, we define foreign currency as any non-US dollar denominated currency. Our functional currency is the US Dollar. We are exposed to risks on future cash flows to the extent that expenses denominated in a foreign currency are not equal to revenues denominated in the same foreign currency. The Company uses foreign currency forward contracts to manage our net exposure to fluctuations in currency exchange rates. Currencies of the Company’s derivative instruments include DKK, the Australian dollar (“AUD”) and the British pound sterling (“GBP”). Currency derivatives are mainly realized within one year. We did not enter into any derivative contracts during the three and nine months ended September 30, 2022.

We have exposure related to changes in interest rates on borrowings under the 2023 Revolving Credit Facility and may be subject to similar exposure on future borrowing arrangements. The Company may use interest rate swap contracts to manage our exposure to fluctuations in interest rates. The Company did not enter into any interest rate swap contracts during the nine months ended September 30, 2023 or 2022.

Derivative financial instruments are recognized on the trading date and measured at fair value using generally accepted valuation techniques based on relevant observable inputs. The Company does not enter into derivative transactions for speculative purposes and for accounting purposes we have not elected to apply hedge accounting for these transactions. Realized gains and losses as well as changes in the fair values of derivative financial instruments are recognized in the income statement in “Interest income and other, net” on our Condensed Consolidated Statements of Operations.

The following tables summarize notional value of currency derivative contracts as of September 30, 2023 and December 31, 2022:

	September 30, 2023		December 31, 2022
	Foreign Currency	USD Equivalent	Foreign Currency	USD Equivalent
DKK to USD	88,571	12,843	484,593	68,840
AUD to USD	10,373	7,156	51,139	35,257
GBP to USD	1,957	2,401	9,083	10,922

The following gains (losses) from derivative instruments were recognized on our Condensed Consolidated Statements of Operations:

Derivative Instrument	Description	Three Months Ended September 30, 2023	Nine Months Ended September 30, 2023
Foreign currency forward contracts	Realized gain (loss)	363	826
Foreign currency forward contracts	Unrealized gain (loss)	(984)	(1,889)