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Financial instruments

12 Months Ended

Dec. 31, 2023

Commodity risk management

The Company has utilized commodity swap transactions to manage exposure to changes in market pricing of natural gas or LNG. Realized and unrealized gains and losses on these transactions have been recognized in Cost of sales in the Consolidated Statements of Operations and Comprehensive Income.

•During the fourth quarter of 2022, the Company entered into a commodity swap transaction to swap market pricing exposure for approximately 6.8 TBtus for a fixed price of $40.55 per MMBtu. The swap settled during the first quarter of 2023 resulting in a gain of $41,315 recognized as a reduction to Cost of sales in the Consolidated Statements of

Operations and Comprehensive Income. The gain was comprised of a realized gain of $146,112 and the reversal of the unrealized gain of $104,797 recognized in the fourth quarter of 2022.

•In January 2023, the Company entered into a series of commodity swap transactions. Realized loss of $8,495 for the year ended December 31, 2023 on this instrument have been recognized in Cost of sales in the Consolidated Statements of Operations and Comprehensive Income. All swaps have been settled prior to December 31, 2023.

Interest rate and currency risk management

In connection with the Mergers during 2022, the Company acquired an interest rate swap to reduce the risk associated with fluctuations in interest rates by converting floating rate interest obligations to fixed rates, which from an economic perspective hedges the interest rate exposure. The interest rate swap was terminated in the first quarter of 2023.

During the fourth quarter of 2023, the Company entered into a non-deliverable forward to secure the currency position of the Barcarena Debentures (defined below) to be issued nominated in USD. The forward was settled in November 2023, and the Company recorded a realized gain of $5,864.

The Company does not hold or issue instruments for speculative purposes, and the counterparties to such contracts are major banking and financial institutions. Credit risk exists to the extent that the counterparties are unable to perform under the contracts; however, the Company does not anticipate non-performance by any counterparties.

The mark-to-market gain or loss on the interest rate swap, non-deliverable forward and other derivative instruments that are not intended to mitigate commodity risk are reported in Other expense (income), net in the Consolidated Statements of Operations and Comprehensive Income.

Fair value

Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows:

•Level 1 – observable inputs such as quoted prices in active markets for identical assets or liabilities.

•Level 2 – inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs.

•Level 3 – unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants price the asset or liability.

The valuation techniques that may be used to measure fair value are as follows:

•Market approach – uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

•Income approach – uses valuation techniques, such as the discounted cash flow technique, to convert future amounts to a single present amount based on current market expectations about those future amounts.

•Cost approach – based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

The Company uses the market approach when valuing investment in equity securities which is recorded in Other non-current assets on the Consolidated Balance Sheets as of December 31, 2023 and 2022.

The Company uses the income approach when valuing the following financial instruments:

•Interest rate swap and commodity swaps - The Company did not have any interest rate swaps or commodity swaps outstanding as of December 31, 2023. As of December 31, 2022, the interest rate swap and commodity swaps were recorded within Other non-current assets and Prepaid expenses and other current assets on the Consolidated Balance Sheets, respectively.

•Contingent consideration derivative liability represents consideration due to the sellers in asset acquisitions when certain contingent events occur. The liabilities associated with these derivatives are recorded within Other current liabilities and Other long-term liabilities based on the timing of expected settlement.

The fair value of certain derivative instruments, including commodity swaps, is estimated considering current interest rates, foreign exchange rates, closing quoted market prices and the creditworthiness of counterparties. The Company estimates fair value of the contingent consideration derivative liabilities using a discounted cash flows method with discount rates based on the average yield curve for bonds with similar credit ratings and matching terms to the discount periods as well as a probability of the contingent events occurring.

The following table presents the Company’s financial assets and financial liabilities, including those that are measured at fair value, as of December 31, 2023 and 2022:


	Level 1		Level 2		Level 3		Total
December 31, 2023
Assets
Investment in equity securities	$	—	$	—	$	7,678	$	7,678

Liabilities
Contingent consideration derivative liabilities	—		—		37,832		37,832

December 31, 2022
Assets
Investment in equity securities	$	10,128	$	—	$	7,678	$	17,806
Interest rate swap	—		11,650		—		11,650
Commodity swap	—		104,797		—		104,797

Liabilities
Contingent consideration derivative liabilities	$	—	$	—	$	46,619	$	46,619

The Company believes the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximated their fair value as of December 31, 2023 and 2022 and are classified as Level 1 within the fair value hierarchy.

The table below summarizes the fair value adjustment to instruments measured at Level 3 in the fair value hierarchy, including the contingent consideration derivative liabilities. These adjustments have been recorded within Other expense (income), net in the Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2023, 2022 and 2021:


	Year Ended December 31,
	2023		2022		2021
Contingent consideration derivative liabilities - Fair value adjustment - loss (gain)	$	(4,801)	$	703	$	(341)

During the years ended December 31, 2023 and 2022, the Company had no transfers in or out of Level 3 in the fair value hierarchy.

- 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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