Fair Value Measurements

3 Months Ended

Mar. 31, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

(8) Fair Value Measurements

FASB ASC 820-10 defines fair value, establishes guidelines for measuring fair value and expands disclosure about fair value measurements. It does not create or modify any current GAAP requirements to apply fair value accounting. However, it provides a single definition for fair value that is to be applied consistently for all prior accounting pronouncements.

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, bank borrowings, and senior notes. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the highly liquid or short-term nature of these instruments.

The fair value of the bank borrowings approximate the carrying amounts as of March 31, 2012 and December 31, 2011, and was determined based upon variable interest rates currently available to us for borrowings with similar terms.

Based upon quoted market prices as of March 31, 2012 and December 31, 2011, the fair value of our senior notes was as follows (in millions):

	March 31, 2012				December 31, 2011
	Fair Value		Carrying Value		Fair Value		Carrying Value
7-1/8% senior notes due 2017	$	257.5	$	250.0	$	254.8	$	250.0
8-7/8% senior notes due 2020	$	243.6	$	221.9	$	239.6	$	221.9
7-7/8% senior notes due 2022	$	255.0	$	247.9	$	252.8	$	247.9

Our senior notes due 2017, 2020 and 2022 are stated at cost on our financial statements and are traded in an active market with observable inputs. If we recorded these notes at fair value they would be level 2 in our fair value hierarchy since their value is based on similar assets and they are in a market with limited trading.

The following table presents our assets that are measured at fair value as of March 31, 2012 and December 31, 2011 and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine the fair value (in millions):

	Fair Value Measurements at
	Total		Quoted Prices in Active markets for Identical Assets (Level  1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2012
Oil Floors	$	0.8	$	—	$	0.8	$	—
December 31, 2011
Oil Floors	$	0.1	$	—	$	0.1	$	—

Our derivatives, measured at fair value in the table above, are recorded in “Other current assets” on the accompanying condensed consolidated balance sheet.

Level 1 – Uses quoted prices in active markets for identical, unrestricted assets or liabilities. Instruments in this category include money market funds as they have comparable fair values for identical assets.

Level 2 – Uses quoted prices for similar assets or liabilities in active markets or observable inputs for assets or liabilities in non-active markets. Instruments in this category include our commodity derivatives that we value using commonly accepted industry-standard models (such as Black-Scholes) which contain inputs such as contract prices, risk-free rates, volatility measurements and other observable market data that are obtained from independent third-party sources.

Level 3 – Uses unobservable inputs for assets or liabilities that are in non-active markets. We do not have any assets or liabilities in this category that are not supported by market activity and have significant unobservable inputs.