Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Fair Value Measurements

9. Fair Value Measurements

The Company reports certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Under the accounting guidance for fair value measurements, inputs used to measure fair value are classified in one of three levels:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The following tables summarize, by level within the fair value hierarchy, the Company’s assets and liabilities that were accounted for at fair value on a recurring basis:

	June 30, 2012
	Level 1			Level 2			Total
Derivative instruments
Risk management assets—Commodity forward contracts	$	1,379		$	8,670		$	10,049
Risk management liabilities—Commodity forward contracts		—			(2,884	)		(2,884	)
Risk management liabilities—Treasury lock agreements		(813	)		—			(813	)
Firm commitments
Hedged portion of firm commitment		—			544			544
Hedged portion of firm commitment		—			(8,670	)		(8,670	)
Marketable securities
Available-for-sale equity securities		1,288			—			1,288
	December 31, 2011
	Level 1			Level 2			Total
Derivative instruments
Risk management assets	$	1,090		$	1,347		$	2,437
Risk management liabilities		—			(4,235	)		(4,235	)
Firm commitments
Hedged portion of firm commitment		—			3,262			3,262
Marketable securities
Available-for-sale equity securities		30,113			—			30,113

The Level 2 measurements are derived using forward curves supplied by industry recognized and unrelated third-party services. There were no transfers in and out of Levels 1 and 2 of the fair value hierarchy for the six months ended June 30, 2012 and 2011.

In addition to the financial assets and liabilities above, the Company has other financial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, net, accounts payable and long-term debt, all of which are recorded at carrying value. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, net and accounts payable approximate their fair value due to the short maturities of these instruments. The carrying and fair values of the Company’s long-term debt are summarized in the table below. The Company’s long-term debt instruments are publicly-traded. A market approach, based upon quotes from financial reporting services, is used to measure the fair value of the Company’s long-term debt. Because the Company’s long-term debt instruments may not be actively traded, the inputs used to measure the fair value of the Company’s long-term debt are classified as Level 2 inputs within the fair value hierarchy.

	June 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
65/8% senior notes due 2016	$	249,715	$	252,160	$	249,674	$	254,890
6   1/2% senior notes due 2029		100,000		115,575		100,000		108,834
6   3/4% senior notes due 2032		250,000		280,583		250,000		263,988
2035 GO Zone 6  1/2% Notes		89,000		89,619		89,000		93,090
2035 IKE Zone 6  1/2% Notes		65,000		65,452		65,000		67,987
Loan related to tax-exempt waste disposal revenue bonds due 2027		10,889		10,889		10,889		10,889