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Derivative Instruments
 12 Months Ended
Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments Derivative Instruments
  
Interest rate swaps

The Company uses interest rate swaps to manage its exposure to interest rate risk on its debt. Generally, the Company enters into interest rate swaps with the objective of effectively converting debt from a floating-rate to a fixed-rate obligation.

For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is reported as a component of other comprehensive income/(loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same line item in the Consolidated Statements of Operations as the earnings effect of the hedged item.

In October 2021, the Company entered into certain interest rate swaps with a total notional amount of $300.0 million with fixed interest rates between 0.83% and 1.06% to hedge the LIBOR-based floating interest rate on the Term Facility. These interest rate swaps are settled in a manner that is consistent with the principal payments required on the Term Facility and ultimately expire on December 15, 2025, which coincides with the maturity date of the Term Facility. These interest rate swaps were designated as cash flow hedging instruments.

In 2020, the Company entered into certain interest rate swaps with a total notional amount of $174.2 million to hedge the LIBOR-based floating interest rate on debt under the New Ultraco Debt Facility. In August 2021, the Company cancelled certain interest rate swaps with a total notional amount of $150.8 million and entered into an interest rate swap with a notional amount of $143.0 million, which was subsequently cancelled on October 1, 2021 upon repayment of the New Ultraco Debt Facility.

As of December 31, 2022, the Company had the following outstanding interest rate swaps that were designated and qualified as cash flow hedges.
Range of Fixed RatesWeighted Average Fixed RateNotional Amount Outstanding
0.83% to 1.06%
0.87%$237,750 

The effect of these derivative instruments on the Consolidated Balance Sheets as of December 31, 2022 and 2021 is as follows:

Fair Value of Derivative Assets/(Liabilities)
Balance Sheet LocationDecember 31, 2022December 31, 2021
Derivatives designated as hedging instruments
Interest rate contracts - interest rate swaps
Fair value of derivative assets - current$8,479 $— 
Fair value of derivative assets - noncurrent8,184 3,112 
$16,663 $3,112 
Fair value of derivative liabilities - current$— $(885)
Fair value of derivative liabilities - noncurrent— — 
$— $(885)

The effect of these instruments on the Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020 is as follows:

Gain/(Loss) Recognized in Other Comprehensive Income/(Loss) for the Years EndedGain/(Loss) Reclassified from Accumulated Other Comprehensive Income/(Loss) into Earnings for the Years Ended
Derivatives in Cash Flow Hedging RelationshipsDecember 31, 2022December 31, 2021December 31, 2020Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income into EarningsDecember 31, 2022December 31, 2021December 31, 2020
Interest rate contracts
Interest rate swaps$16,609 $2,106 $(1,021)Interest expense$1,947 $(913)$111 

Of the amount recorded in Accumulated other comprehensive income as of December 31, 2022, $8.8 million is expected to be reclassified into earnings within the next twelve months.
Forward freight agreements and bunker swaps

The Company uses forward freight agreements (“FFAs”) and bunker swaps to manage its exposure to changes in freight rates and market bunker prices, respectively. Generally, the Company enters into FFAs with the objective of effectively fixing freight rates for forecasted charter hire transactions and the Company enters into bunker swaps with the objective of effectively fixing forecasted bunker transactions. The Company utilizes these derivative instruments to economically hedge these risks and does not designate them as hedging instruments. As of December 31, 2022, $0.3 million of collateral was pledged related to outstanding forward freight agreements. See Note 2, Significant Accounting Policies, for a discussion of the Company’s policy on collateral on derivatives.

For derivative instruments that are not designated as hedging instruments, changes in the fair value of the instruments and the gain or loss ultimately realized upon settlement of the derivative are reported in Realized and unrealized (gain)/loss on derivative instruments, net in the Consolidated Statements of Operations.

For our bunker swaps, the Company may enter into master netting, collateral and offset agreements with counterparties. As of December 31, 2022, the Company has International Swaps and Derivatives Association agreements with five financial institutions which contain netting provisions. In addition to a master agreement with the Company supported by a primary parent guarantee on either side, the Company also has associated credit support agreements in place with the two counterparties which, among other things, provide the circumstances under which either party is required to post eligible collateral, when the market value of transactions covered by these agreements exceeds specified thresholds. The Company does not expect non-performance by any of the counterparties to the Company’s bunker swap transactions. As of December 31, 2022, $0.5 million of collateral was pledged related to outstanding bunker swaps. See Note 2, Significant Accounting Policies, for a discussion of the Company’s policy on collateral on derivatives.

As of December 31, 2022, the Company had outstanding bunker swap agreements to purchase 5,500 metric tons of low sulphur fuel oil for prices ranging between $492 and $587 per metric ton that will expire during the first quarter of 2023.

A summary of outstanding FFAs as of December 31, 2022 is as follows:

FFA Period
Average FFA Contract Price(1)
Number of Days Hedged
Quarter ending March 31, 2023 - Buy Positions$14,390 (225)
Quarter ending March 31, 2023 - Sell Positions$14,525 180
Quarter ending June 30, 2023 - Buy Positions$14,390 (225)
Quarter ending June 30, 2023 - Sell Positions$14,525 180
Quarter ending September 30, 2023 - Buy Positions$14,390 (225)
Quarter ending September 30, 2023 - Sell Positions$14,525 180
Quarter ending December 31, 2023 - Buy Positions$14,000 (180)
Quarter ending December 31, 2023 - Sell Positions$14,525 180
(1)Presented in whole dollars.
The effect of these derivative instruments on the Consolidated Balance Sheets as of December 31, 2022 and 2021 is as follows:

Fair Value of Derivative Assets/(Liabilities)
Balance Sheet LocationDecember 31, 2022December 31, 2021
Derivatives not designated as hedging instruments
Commodity contracts - FFAs
Fair value of derivative assets - current$— $4,326 
Fair value of derivative assets - noncurrent— — 
$— $4,326 
Fair value of derivative liabilities - current$(70)$(3,368)
Fair value of derivative liabilities - noncurrent— — 
$(70)$(3,368)
Commodity contracts - bunker swaps
Fair value of derivative assets - current$— $343 
Fair value of derivative assets - noncurrent— — 
$— $343 
Fair value of derivative liabilities - current$(93)$— 
Fair value of derivative liabilities - noncurrent— — 
$(93)$— 
 
The effect of these instruments on the Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020 is as follows:

  (Gain)/Loss Recognized in Earnings for the Years Ended
Derivatives not designated as hedging instrumentsLocation in Consolidated Statements of OperationsDecember 31, 2022December 31, 2021December 31, 2020
Commodity contracts
FFAsRealized and unrealized (gain)/loss on derivative instruments, net$(9,969)$41,197 $4,534 
Bunker SwapsRealized and unrealized (gain)/loss on derivative instruments, net(3,890)(2,953)(9,361)
$(13,859)$38,244 $(4,827)