Fair Value Measurements

6 Months Ended

Jun. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

FAIR VALUE MEASUREMENTS

Financial Instruments

Investments

We retained an interest in CSI Compressco, which was acquired by Kodiak on April 1, 2024; we received shares of Kodiak in exchange for our common units in CSI Compressco in connection with such acquisition. In December 2021, we invested in a $5.0 million convertible note issued by CarbonFree. In addition, we receive stock of Standard Lithium under the terms of our arrangements as noted in Note 4 - “Investments.”

Our investments in Kodiak, Standard Lithium, and, formerly, CSI Compressco are recorded in investments on our consolidated balance sheets based on the quoted market stock price (Level 1 fair value measurements). The stock component of consideration received from Standard Lithium was initially recorded as unearned income based on the quoted market price at the time the stock is received, then recognized in income over the contract term. Changes in the value of stock are recorded in other (income) expense, net in our consolidated statements of operations.

Our investment in convertible notes and common units issued by CarbonFree is recorded in our consolidated financial statements based on an internal valuation with assistance from a third-party valuation specialist (Level 3 fair value measurement). The valuation is impacted by key assumptions, including the assumed probability and timing of potential debt or equity offerings. The convertible note includes an option to convert the note into equity interests issued by CarbonFree. The change in the fair value of the embedded option is included in other (income) expense, net in our consolidated statements of operations. The change in the fair value of the convertible note, excluding the embedded option, and common units are included in other comprehensive income (loss) in our consolidated statements of comprehensive income.

The change in our investments for the three-month and six-month periods ended June 30, 2024 and 2023 are as follows:


	Three Months Ended June 30, 2024
	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Unobservable Inputs
	(Level 1)		(Level 3)		Total
	(in thousands)
Investment balance at beginning of period	$	13,148	$	7,238	$	20,386
Unrealized gain on equity securities	131		—		131
Unrealized loss on embedded option	—		(85)		(85)
Unrealized loss on convertible note, excluding embedded option	—		(5)		(5)
Investment balance at end of period	$	13,279	$	7,148	$	20,427

	Three Months Ended June 30, 2023
	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Unobservable Inputs
	(Level 1)		(Level 3)		Total
	(in thousands)
Investment balance at beginning of period	$	7,963	$	5,939	$	13,902
Purchase of investments	—		250		250
Unrealized gain on equity securities	2,236		—		2,236
Unrealized gain on embedded option	—		123		123
Unrealized gain on convertible note, excluding embedded option	—		207		207
Investment balance at end of period	$	10,199	$	6,519	$	16,718


	Six Months Ended June 30, 2024
	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Unobservable Inputs
	(Level 1)		(Level 3)		Total
	(in thousands)
Investment balance at beginning of period	$	10,154	$	7,200	$	17,354
Unrealized gain on equity securities	3,125		—		3,125
Unrealized loss on embedded option	—		(284)		(284)
Unrealized gain on convertible note, excluding embedded option	—		232		232
Investment balance at end of period	$	13,279	$	7,148	$	20,427

	Six Months Ended June 30, 2023
	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Unobservable Inputs
	(Level 1)		(Level 3)		Total
	(in thousands)
Investment balance at beginning of period	$	8,147	$	6,139	$	14,286
Purchase of investments	—		250		250
Unrealized gain on equity securities	2,052		—		2,052
Unrealized loss on embedded option	—		(198)		(198)
Unrealized gain on convertible note, excluding embedded option	—		328		328
Investment balance at end of period	$	10,199	$	6,519	$	16,718

Recurring fair value measurements by valuation hierarchy as of June 30, 2024 and December 31, 2023 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	June 30, 2024		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Investment in Kodiak	$	12,279	$	12,279	$	—	$	—
Investment in CarbonFree	6,798		—		—		6,798
Investment in Standard Lithium	1,000		1,000		—		—
Other investments	350		—		—		350

Total investments	$	20,427


			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, 2023		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Investment in CSI Compressco	$	8,538	$	8,538	$	—	$	—
Investment in CarbonFree	6,850		—		—		6,850
Investment in Standard Lithium	1,616		1,616		—		—
Other investments	350		—		—		350

Investments	$	17,354

Other

The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and long-term debt approximate their carrying amounts. See Note 5 - “Long-Term Debt and Other Borrowings” for further discussion.