Fair Value Measurements

12 Months Ended

Dec. 31, 2023

Fair Value Measurements

Fair Value Measurements

13. Fair Value Measurements

The hierarchy of fair value measurements assigns a level to fair value measurements based on the inputs used in the respective valuation techniques. The levels of the hierarchy, as defined below, give the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

● Level 1 is defined as observable inputs such as quoted prices in active markets for identical assets. Level 1 assets include U.S. Treasury securities, and coal swaps and futures that are submitted for clearing on the New York Mercantile Exchange.

● Level 2 is defined as observable inputs other than Level 1 prices. These include quoted prices for similar assets or liabilities in an active market, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company’s Level 2 assets and liabilities include U.S. government agency securities, coal commodity contracts and interest rate swaps with fair values derived from quoted prices in over-the-counter markets or from prices received from direct broker quotes.

● Level 3 is defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. These include the Company’s commodity option contracts (heating oil) valued using modeling techniques, such as Black-Scholes, that require the use of inputs, particularly volatility, that are rarely observable. Changes in the unobservable inputs would not have had a significant impact on the reported Level 3 fair values at December 31, 2023 and 2022.

The table below sets forth, by level, the Company’s financial assets and liabilities that are recorded at fair value in the accompanying consolidated balance sheet:

	December 31, 2023
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Investments in marketable securities	$	32,724	$	28,773	$	3,951	$	—
Derivatives		998		—		—		998
Fund for asset retirement obligations		142,266		142,266		—		—
Total assets	$	175,988	$	171,039	$	3,951	$	998
Liabilities:
Derivatives	$	165	$	—	$	165	$	—

	Fair Value at December 31, 2022
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Investments in marketable securities	$	36,993	$	28,301	$	8,692	$	—
Derivatives		3,955		—		2,655		1,300
Fund for asset retirement obligations		135,993		135,993		—		—
Total assets	$	176,941	$	164,294	$	11,347	$	1,300
Liabilities:
Derivatives	$	—	$	—	$	—	$	—

The Company’s contracts with its counterparties allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default or termination. For classification purposes, the Company records the net fair value of all the positions with these counterparties as a net asset or liability. Each level in the table above displays the underlying contracts according to their classification in the accompanying Consolidated Balance Sheet, based on this counterparty netting.

The following table summarizes the change in the fair values of financial instruments categorized as Level 3.

	2023		2022
(In thousands)
Balance, beginning of period	$	1,300	$	1,219
Realized and unrealized gains (losses) recognized in earnings, net		(4,192)		7,019
Purchases		5,400		4,673
Settlements		(1,510)		(11,611)
Ending balance	$	998	$	1,300

Net unrealized losses of $2.6 million were recognized during the year ended December 31, 2023 related to Level 3 financial instruments held on December 31, 2023.

Cash and Cash Equivalents

At December 31, 2023 and 2022, the carrying amounts of cash and cash equivalents approximate their fair value.

Fair Value of Long-Term Debt

At December 31, 2023 and 2022, the fair value of the Company’s debt, including amounts classified as current, was $142.1 million and $223.0 million, respectively. Fair values are based upon observed prices in an active market, when available, or from valuation models using market information, which fall into Level 2 in the fair value hierarchy.