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Market Risks and Derivative Hedge Contracts
 3 Months Ended
Mar. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Hedge Contracts FAIR VALUE MEASUREMENTS
 
Financial Instruments

Warrants

The Warrants are valued using a Black Scholes option valuation model that includes implied volatility of the trading price (a Level 3 fair value measurement).

Derivative Contracts

We and CCLP each enter into short term foreign currency forward derivative contracts with third parties as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. As of March 31, 2020, we and CCLP had the following foreign currency derivative contracts outstanding relating to portions of our foreign operations:
Derivative Contracts
 
US Dollar Notional Amount
 
Traded Exchange Rate
 
Settlement Date

 
(In Thousands)
 

 

Forward purchase Euro
 
$
8,167

 
1.08
 
4/21/2020
Forward purchase Euro
 
10,497

 
1.10
 
4/21/2020
Forward purchase pounds sterling
 
9,400

 
1.17
 
4/21/2020
Forward sale pounds sterling
 
500

 
1.18
 
4/21/2020
Forward sale pounds sterling
 
1,875

 
1.17
 
4/21/2020
Forward sale Norwegian krone
 
1,000

 
11.76
 
4/21/2020
Forward purchase Norwegian krone
 
4,300

 
11.36
 
4/21/2020
Forward sale Mexican peso
 
4,974

 
24.40
 
4/21/2020
Derivative Contracts
 
British Pound Notional Amount
 
Traded Exchange Rate
 
Settlement Date
 
 
(In Thousands)
 
 
 
 
Forward purchase Euro
 
£
3,445

 
0.92
 
4/21/2020
Derivative Contracts
 
Swedish Krona Notional Amount
 
Traded Exchange Rate
 
Settlement Date
 
 
(In Thousands)
 
 
 
 
Forward purchase Euro
 

210
kr
 
10.90
 
4/6/2020
Forward purchase Euro
 

66,690
kr
 
10.91
 
4/6/2020
Forward purchase Euro
 

2,400
kr
 
11.24
 
4/21/2020


Under this program, we and CCLP may enter into similar derivative contracts from time to time. Although contracts pursuant to this program will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative contracts during a period will be included in the determination of earnings for that period.

The fair values of foreign currency derivative contracts are based on quoted market values (a Level 2 fair value measurement). The fair values of our and CCLP's foreign currency derivative contracts as of March 31, 2020
and December 31, 2019, are as follows:
Foreign currency derivative contracts
Balance Sheet Location
 
 Fair Value at March 31, 2020
 
 Fair Value at December 31, 2019

 

 
(In Thousands)
Forward purchase contracts
 
Current assets
 
$
1,160

 
$
86

Forward sale contracts
 
Current liabilities
 
(433
)
 
(53
)
Forward purchase contracts
 
Current liabilities
 
(181
)
 
(3
)
Net asset (liability)
 
 
 
$
546

 
$
30



None of our foreign currency derivative contracts contain credit risk related contingent features that would require us to post assets or collateral for contracts that are classified as liabilities. During the three months ended March 31, 2020 and March 31, 2019, we recognized $(1.0) million and $0.6 million of net (gains) losses, respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program.

During the first quarter of 2020, we recorded impairments of approximately $5.4 million, reflecting the decreased fair value for certain assets. The fair values used in these impairment calculations were estimated based on a market approach, which is based on significant unobservable inputs (Level 3) in accordance with the fair value hierarchy.

Recurring and nonrecurring fair value measurements by valuation hierarchy as of March 31, 2020 and December 31, 2019, are as follows:
 
 
 
Fair Value Measurements Using
 
Total as of
 
Quoted Prices in Active Markets for Identical Assets or Liabilities
 
Significant Other Observable Inputs
 
Significant Unobservable Inputs
Description
March 31, 2020
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
(In Thousands)
Midland manufacturing facility and related assets
$
19,646

 
$
—

 
$
—

 
$
19,646

Warrants liability
(112
)
 
—

 
—

 
(112
)
Asset for foreign currency derivative contracts
1,160

 
—

 
1,160

 
—

Liability for foreign currency derivative contracts
(614
)
 
—

 
(614
)
 
—

Net asset
$
20,080

 
 
 
 
 
 
 
 
 
Fair Value Measurements Using
 
Total as of
 
Quoted Prices in Active Markets for Identical Assets or Liabilities
 
Significant Other Observable Inputs
 
Significant Unobservable Inputs
Description
December 31, 2019
 
(Level 1)
 
(Level 2)
 
(Level 3)
 
(In Thousands)
Warrants liability
$
(449
)
 
$
—

 
$
—

 
$
(449
)
Asset for foreign currency derivative contracts
86

 
—

 
86

 
—

Liability for foreign currency derivative contracts
(56
)
 
—

 
(56
)
 
—

Net liability
$
(419
)
 
 
 
 
 
 

The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and long-term debt pursuant to TETRA's ABL Credit Agreement and Term Credit Agreement, and the CCLP Credit Agreement approximate their carrying amounts. The fair values of the publicly traded CCLP 7.25% Senior Notes at March 31, 2020 and December 31, 2019, were approximately $148.0 million and $266.0 million, respectively. Those fair values compare to the face amount of $295.9 million both at March 31, 2020 and December 31, 2019. The fair values of the CCLP 7.50% Senior Secured Notes at March 31, 2020 and December 31, 2019 were approximately $239.8 million and $344.8 million, respectively. These fair values compare
to aggregate principal amount of such notes at both March 31, 2020 and December 31, 2019, of $350.0 million. We based the fair values of the CCLP 7.25% Senior Notes and the CCLP 7.50% Senior Secured Notes as of March 31, 2020 on recent trades for these notes.