Assets and Liabilities Measured at Fair Value

12 Months Ended

Dec. 31, 2016

Assets and Liabilities Measured at Fair Value [Abstract]

Assets and Liabilities Measured at Fair Value

Note Q – Assets and Liabilities Measured at Fair Value

Fair Values – Recurring

The Company carries certain assets and liabilities at fair value in its Consolidated Balance Sheet.  The fair value hierarchy is based on the quality of inputs used to measure fair value, with Level 1 being the highest quality and Level 3 being the lowest quality.  Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable inputs other than quoted prices included within Level 1.  Level 3 inputs are unobservable inputs which reflect assumptions about pricing by market participants.

The fair value measurements for these assets and liabilities at December 31, 2016 and 2015 are presented in the following table.

	December 31, 2016					December 31, 2015
(Thousands of dollars)	Level 1		Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Assets:
Commodity derivative         contracts		–	–	–	–	–	89,358	–	89,358
	$	–	–	–	–	–	89,358	–	89,358
Liabilities:
Nonqualified employee         savings plans	$	13,904	–	–	13,904	12,971	–	–	12,971
Commodity derivative contracts		–	48,864	–	48,864	–	–	–	–
Foreign currency exchange         derivative contracts		–	73	–	73	–	29	–	29
	$	13,904	48,937	–	62,841	12,971	29	–	13,000

The fair value of West Texas Intermediate (WTI) crude oil contracts in 2016 and 2015 was based on active market quotes for WTI crude oil.  The fair value of foreign exchange derivative contracts in each year was based on market quotes for similar contracts at the balance sheet date.  The income effect of changes in fair value of crude oil derivative contracts is recorded in Sales and other operating revenues in the Consolidated Statements of Operations, while the effects of changes in fair value of foreign exchange derivative contracts is recordedin Interest and other income.  The nonqualified employee savings plan is an unfunded savings plan through which participants seek a return via phantom investments in equity securities and/or mutual funds.  The fair value of this liability was based on quoted prices for these equity securities and mutual funds.  The income effect of changes in the fair value of the nonqualified employee savings plan is recorded in Selling and General Expenses.

The Company offsets certain assets and liabilities related to derivative contracts when the legal right of offset exists.  There were no offsetting positions recorded at December 31, 2016 and 2015.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at December 31, 2016 and 2015.  The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.  The table excludes cash and cash equivalents, trade accounts receivable, trade accounts payable and accrued expenses, all of which had fair values approximating carrying amounts.  The carrying value of Canadian government securities is determined based on cost plus earned interest.  The fair value of current and long-term debt was estimated based on rates offered to the Company at that time for debt of the same maturities.  The Company has off-balance sheet exposures relating to

certain letters of credit.  The fair value of these, which represents fees associated with obtaining the instruments, was nominal.

	At December 31,
	2016			2015
(Thousands of dollars)	Carrying Amount		Fair Value	Carrying Amount	Fair Value
Financial assets (liabilities):
Canadian government securities with maturities             greater than 90 days at the date of acquisition	$	111,542	111,331	173,288	173,234
Current and long-term debt		(2,992,567)	(2,951,992)	(3,059,475)	(2,189,858)

Fair Values – Nonrecurring

As a result of significantly lower commodity prices during 2016 and 2015, the Company recognized approximately $95,088,000 and $2,493,156,000, respectively, in pretax noncash impairment charges related primarily to producing properties.  The fair value information associated with these impaired properties is presented in the following table.

	Year Ended December 31, 2016
						Total
					Net Book	Pretax
					Value	(Noncash)
	Fair Value				Prior to	Impairment
(Thousands of dollars)		Level 1	Level 2	Level 3	Impairment	Expense
Assets:
Impaired proved properties
Canada		–	–	71,967	167,055	95,088
	$	–	–	71,967	167,055	95,088

	Year Ended December 31, 2015
						Total
					Net Book	Pretax
					Value	(Noncash)
	Fair Value				Prior to	Impairment
(Thousands of dollars)		Level 1	Level 2	Level 3	Impairment	Expense
Assets:
Impaired proved properties
Gulf of Mexico	$	–	–	316,106	645,088	328,982
Western Canada		–	–	23,526	707,100	683,574
Malaysia		–	–	1,200,900	2,681,500	1,480,600
	$	–	–	1,540,532	4,033,688	2,493,156

The fair values were determined by internal discounted cash flow models using estimates of future production, prices from futures exchanges, costs and a discount rate believed to be consistent with those used by principal market participants in the applicable region.