Fair Value Measurements

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

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 available-for-sale equity securities, 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 and coal commodity contracts 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 (coal and 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, 2016 and 2015.

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: 

	Successor
	Fair Value at					December 31, 2016
	Total		Level 1				Level 2		Level 3
	(In thousands)
Assets:
Investments in marketable securities	$	90,209	$	2,137			$	88,072	$	—
Derivatives	4,908		262				—		4,646
Total assets	$	95,117	$	2,399			$	88,072	$	4,646
Liabilities:
Derivatives	$	101	$	(8	)		$	—	$	109

	Predecessor
	Fair Value at				December 31, 2015
	Total		Level 1			Level 2		Level 3
	(In thousands)
Assets:
Investments in marketable securities	$	201,910	$	11,713		$	190,197	$	—
Derivatives	9,052		5,597			1,023		2,432
Total assets	$	210,962	$	17,310		$	191,220	$	2,432
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.

	Successor			Predecessor
	October 2 through December 31, 2016			January 1 through October 1, 2016			Year Ended December 31, 2015
	(In thousands)			(In thousands)
Balance, beginning of period	$	3,842		$	2,432		$	3,040
Realized and unrealized losses recognized in earnings, net	926			(1,686		)	(8,602		)
Included in other comprehensive income	—			—			(1,341		)
Purchases	1,225			5,021			13,541
Issuances	(34		)	(488		)	(4,046		)
Settlements	(1,422		)	(1,437		)	(160		)
Ending balance	$	4,537		$	3,842		$	2,432

Net unrealized gains of $0.4 million were recognized during the period October 2 through December 31, 2016 related to level 3 financial instruments held on December 31, 2016. 

Cash and Cash Equivalents

At December 31, 2016 and 2015, the carrying amounts of cash and cash equivalents approximate their fair value.

Fair Value of Long-Term Debt

At December 31, 2016 and 2015, the fair value of the Company’s debt, including amounts classified as current, was $362.9 million and $937.1 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.