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Fair Value Measurement
9 Months Ended
Sep. 30, 2011
Notes to Financial Statements [Abstract] 
Fair Value Measurement
11. Fair Value Measurement

The following table sets forth the Company's assets and liabilities that are measured at fair value on a recurring basis at the date indicated.

 

   Fair Value  Fair Value Measurements at September 30, 2011
   as of Using Fair Value Hierarchy
   September 30, 2011 Level 1 Level 2 Level 3
              
   (In thousands)
Assets:            
 Commodity derivatives $ 216 $ - $ 216 $ -
 Long-term investments   958   958   -   -
 Total $ 1,174 $ 958 $ 216 $ -
              
Liabilities:            
 Commodity derivatives $ 30,127 $ - $ 30,127 $ -
 Interest-rate swap derivatives  79,195   -   79,195   -
 Total $ 109,322 $ - $ 109,322 $ -

The Company's Level 1 instruments primarily consist of trading securities related to a non-qualified deferred compensation plan that are valued based on active market quotes. The Company's Level 2 instruments primarily include natural gas and NGL price swaps and NGL processing spread swap derivatives and interest-rate swap derivatives that are valued using pricing models based on an income approach that discounts future cash flows to a present value amount. The significant pricing model inputs for natural gas and NGL price swaps and NGL processing spread swap derivatives include published NYMEX forward index prices for delivery of natural gas at Henry Hub, Permian Basin and Waha, and NGL at Mont Belvieu. The significant pricing model inputs for interest-rate swaps include published rates for U.S. Dollar LIBOR interest rate swaps. The pricing models also adjust for nonperformance risk associated with the counterparty or Company, as applicable, through the use of credit risk adjusted discount rates based on published default rates. The Company did not have any Level 3 instruments measured at fair value at September 30, 2011 or December 31, 2010.

 

The approximate fair value of the Company's cash and cash equivalents, accounts receivable and accounts payable is equal to book value, due to their short-term nature.