Fair Value Measurements

3 Months Ended

Mar. 31, 2016

Fair Value Measurements

Fair Value Measurements

11.Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs.

The fair value 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 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, basis swaps, options, and collars.

Level 3 – Pricing inputs include 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.

The Company measures fair value of its debt based on recent trade activity for fixed rate obligations, 2017 Notes, 2019 Notes and 2020 Notes, on a Level 2 methodology using quoted market prices which include consideration of the Company’s credit risk. The value of the New Revolving Credit Facility and Term Loan Facility were stated at the carrying value, as a basis for fair value is indeterminable. The following table outlines the fair value of the 2017 Notes, 2019 Notes and 2020 Notes as of March 31, 2016 and December 31, 2015:

	March 31,		December 31,
	2016		2015
	(in thousands)
New Revolving Credit Facility
Carrying Value	$	902,148	$	902,148
Fair Value		(1)	$	(1)
Term Loan Facility
Carrying Value	$	700,000	$	700,000
Fair Value		(1)	$	(1)
2017 Senior Notes
Carrying Value (2)	$	350,000	$	350,000
Fair Value	$	3,281	$	17,281
2019 Senior Notes
Carrying Value (2)	$	577,914	$	577,914
Fair Value	$	6,863	$	27,090
2020 Senior Notes
Carrying Value (2)	$	222,087	$	222,087
Fair Value	$	2,498	$	10,827

(1) The value of the New Revolving Credit Facility and Term Loan Facility were stated at the carrying value, as a basis for fair value is indeterminable.

(2) The carrying value equals the face value and are presented as a long term liability in “Liabilities Subject to Compromise”.

Assets and liabilities acquired in business combinations were recorded at their fair value as of the date of acquisition. The inputs used to determine such fair value were primarily based upon internally developed cash flow models and would generally be classified as Level 3. Additionally, the Company uses fair value to determine the inception value of the Company’s asset retirement obligations. The inputs used to determine such fair value are primarily based upon costs incurred historically for similar work, as well as estimates for costs that would be incurred to restore leased property to the contractually stipulated condition, and would generally be classified as Level 3.