Fair Value Measurements

9 Months Ended

Sep. 30, 2016

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:



	September 30, 2016
	Level 1			Level 2			Total
Derivative instruments
Risk management assets—Commodity forward contracts	$	1,551		$	4,344		$	5,895
Risk management liabilities—Commodity forward contracts	(8,091		)	(1,916		)	(10,007		)

	December 31, 2015
	Level 1			Level 2			Total
Derivative instruments
Risk management assets—Commodity forward contracts	$	5,553		$	—		$	5,553
Risk management liabilities—Commodity forward contracts	(11,648		)	(10,114		)	(21,762		)
Marketable securities
Available-for-sale securities	48,081			520,144			568,225

The Level 2 measurements for the Company's commodity contracts are derived using forward curves supplied by industry-recognized and unrelated third-party services. The Level 2 measurements for the Company's available-for-sale securities are derived using market-based pricing provided by unrelated third-party services.

There were no transfers in or out of Levels 1 and 2 of the fair value hierarchy for the nine months ended September 30, 2016 and 2015.

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 and notes payable and current and long-term debt, all of which are recorded at carrying value. The amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, net, accounts and notes payable and current term loan 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 fair value of the Company's long-term debt instruments is determined using a market approach, based upon quotes from financial reporting services. 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.



	September 30, 2016				December 31, 2015
	Carrying Value		Fair Value		Carrying Value		Fair Value
Revolving credit facility	$	325,000	$	325,000	$	—	$	—
4.625% Westlake 2021 Senior Notes	653,256		653,715		—		—
4.625% Subsidiary 2021 Senior Notes	66,243		66,058		—		—
3.60% senior notes due 2022	248,024		251,480		247,768		244,828
4.875% Westlake 2023 Senior Notes	447,751		454,151		—		—
4.875% Subsidiary 2023 Senior Notes	16,769		16,954		—		—
3.60% 2026 Senior Notes	739,082		752,055		—		—
Loan related to tax-exempt waste disposal revenue bonds due 2027	10,889		10,889		10,889		10,889
6 ½% senior notes due 2029	99,066		117,726		99,011		117,153
6 ¾% senior notes due 2032	248,087		265,383		247,998		268,490
6 ½% 2035 GO Zone Senior Notes	88,149		105,298		88,116		106,491
6 ½% 2035 IKE Zone Senior Notes	64,390		76,837		64,366		76,741
5.0% 2046 Senior Notes	673,879		705,985		—		—

The carrying values of the Company's long-term debt as of December 31, 2015 have been adjusted to reflect the retrospective application of the accounting standards update on simplifying the presentation of debt issuance costs discussed in Note 10.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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