Fair Value Measurements

12 Months Ended

Dec. 31, 2015

Fair Value Measurements

9.    Fair Value Measurements

The Company’s derivative instruments are measured at fair value on a recurring basis. U.S. GAAP establishes a fair value hierarchy that has three levels based on the reliability of the inputs used to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company’s natural gas derivative instruments are included within the Level 2 fair value hierarchy. For additional information on the derivative instruments, refer to Note 8 – Natural Gas Derivative Instruments. The Company’s impaired long-lived assets primarily relating machinery and equipment at its McIntyre, Georgia ceramic proppant manufacturing facility and its Marshfield, Wisconsin sand processing plant are included within the Level 3 fair value hierarchy. The fair value measurements used in those impairment evaluations were based on discounted cash flow estimates using unobservable inputs and certain other market data. For additional information, refer to Note 4 – Impairment of Long-Lived Assets. The following table sets forth by level within the fair value hierarchy the Company’s assets and liabilities that were accounted for at fair value:

	Fair value as of December 31, 2015
	Level 1		Level 2			Level 3		Total
Assets:
Impaired long-lived assets	$	—	$	—		$	5,896	$	5,896
Liabilities:
Derivative instruments		—		(11,155	)		—		(11,155	)
Total fair value	$	—	$	(11,155	)	$	5,896	$	(5,259	)

	Fair value as of December 31, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Impaired long-lived assets	$	—	$	—	$	2,138	$	2,138
Liabilities:
Derivative instruments		—		—		—		—
Total fair value	$	—	$	—	$	2,138	$	2,138

At December 31, 2015, the fair value of the Company’s bank borrowings approximated the carrying value.