Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Fair Value Measurements

Fair Value Measurements

Note 5— Fair Value Measurements

The accounting guidance on fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: (i) Level 1, defined as quoted prices in active markets for identical instruments; (ii) Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and (iii) Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Our Level 2 fair value measurements consist of both quoted price inputs and inputs that are derived principally from or corroborated by observable market data. Our Level 3 fair value measurements consist of both quoted price inputs and unobservable inputs.

The guidance also requires that the fair value measurements of assets and liabilities reflect the nonperformance risk of counterparties and the reporting entity, as applicable. Therefore, using credit default spreads, we factored the impact of our own credit standing and the credit standing of our counterparties, as well as any potential credit enhancements (e.g. collateral) into the consideration of nonperformance risk for both derivative assets and liabilities. The results of this analysis were not material to the financial statements.

The following fair value hierarchy table presents information about our assets measured at fair value using the market value approach on a recurring basis as of September 30, 2011 and December 31, 2010.

($ in 000’s)

				Fair Value Measurements at Reporting Date Using
Description	Liabilities at Fair Value			Quoted Prices in  Active Markets for  Identical Liabilities (Level 1)			Significant Other  Observable Inputs (Level 2)		Significant  Unobservable  Inputs (Level 3)
				September 30, 2011
Net derivative liabilities*	$	(6,387	)	$	(6,387	)	$	—	$	—
				December 31, 2010
Net derivative liabilities*	$	(4,091	)	$	(4,091	)	$	—	$	—

*The only recurring measurements are derivative commodity contracts. Therefore, assets and liabilities are netted together in the table above.

The following table presents the change in net fair value of our Level 3 assets/liabilities during the twelve months ended September 30, 2011 and 2010. There were no Level 3 assets/liabilities for the three and six months ended September 30, 2011 and 2010.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3) — 12 Months Ended

	2011		2010
	Derivatives Commodity		Derivatives Commodity
($ in 000’s)	Contracts(1)		Contracts(1)
Beginning Balance, October 1,	$	—	$	3,237
Total gains or (losses) (realized/unrealized)
Included in earnings (or changes in net assets)	—		—
Included in comprehensive income			—
Purchases, issuances, and settlements	—		—
Transfers out of Level 3(2) (3)			(3,237		)
Ending Balance, September 30,	$	—	$	—
Changes in unrealized gains relating to assets still held at reporting date	$	—	$	—

(1) Net derivatives at September 30, 2011 and 2010 included no derivative assets or derivative liabilities.

(2) Transferred from Level 3 to Level 1 due to an increase in availability of observable market data and increased market liquidity for these derivatives.

(3) The company’s policy is to recognize transfers in and out of a level as of the end of the period.

Long-Term Debt

The carrying amount of our total debt exclusive of capital leases at September 30, 2011, was $688 million compared to a fair market value of approximately $746 million. These estimates were based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities. The estimated fair market value may not represent the actual value that could have been realized as of September 30, 2011, or that will be realizable in the future.