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Fair Value
9 Months Ended
Sep. 30, 2012
Fair Value

8.    Fair Value

The Partnership’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and long-term debt. The carrying amount of the Partnership’s financial instruments included in accounts receivable and accounts payable approximates their fair value due to their short-term nature except for the accounts receivable – affiliate relating to the Sugar Camp override and Taggart preparation plant sale that includes both current and long-term portions. The Partnership’s cash and cash equivalents include money market accounts and are considered a Level 1 measurement. The fair market value and carrying value of the contractual override, Taggart note receivable and long-term senior notes are as follows:

 

     Fair Value As Of      Carrying Value As Of  
     September 30, 2012      December 31, 2011      September 30, 2012      December 31, 2011  
     (In thousands)  
     (Unaudited)             (Unaudited)         

Assets

           

Sugar Camp override, current

    and long - term

   $ 8,724       $ —         $ 7,294       $ —     

Taggart plant sale, current

    and long-term

   $ 1,808       $ —         $ 1,808       $ —     

Liabilities

           

Long-term debt, current and long-term

   $ 881,023       $ 915,959       $ 836,269       $ 867,069   

The fair value of the Sugar Camp override, Taggart plant sale and long-term debt is estimated by management using comparable term risk-free treasury issues with a market rate component determined by current financial instruments with similar characteristics which is a Level 3 measurement. Since the Partnership’s credit facility is variable rate debt, its fair value approximates its carrying amount.