Fair Value Measurements

The FASB authoritative guidance regarding fair value measurements establishes a fair-value hierarchy and prioritizes the inputs used in valuation techniques that measure fair value. Those inputs are prioritized into three levels. Level 1 inputs are unadjusted quoted prices in active markets for assets or liabilities that the Company can access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly at the measurement date. Level 3 inputs are unobservable inputs for the asset or liability at the measurement date. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The following table sets forth, by level within the fair value hierarchy, the Company’s financial assets and liabilities (as applicable) that were accounted for at fair value on a recurring basis as of September 30, 2017 and 2016. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The fair value presentation for over-the-counter swaps combines gas and oil swaps because a significant number of the counterparties enter into both gas and oil swap agreements with the Company.



	At Fair Value as of September 30, 2017
Recurring Fair Value Measures	Level 1		Level 2		Level 3		Netting Adjustments(1)			Total(1)
	(Dollars in thousands)
Assets:
Cash Equivalents — Money Market Mutual Funds	$	527,978	$	—	$	—	$	—		$	527,978
Derivative Financial Instruments:
Commodity Futures Contracts — Gas	1,483		—		—		(963		)	520
Over the Counter Swaps — Gas and Oil	—		38,977		—		(4,206		)	34,771
Foreign Currency Contracts	—		1,227		—		(407		)	820
Other Investments:
Balanced Equity Mutual Fund	37,033		—		—		—			37,033
Fixed Income Mutual Fund	45,727		—		—		—			45,727
Common Stock — Financial Services Industry	3,150		—		—		—			3,150
Hedging Collateral Deposits	1,741		—		—		—			1,741
Total	$	617,112	$	40,204	$	—	$	(5,576	)	$	651,740
Liabilities:
Derivative Financial Instruments:
Commodity Futures Contracts — Gas	$	963	$	—	$	—	$	(963	)	$	—
Over the Counter Swaps — Gas and Oil	—		5,309		—		(4,206		)	1,103
Foreign Currency Contracts	—		407		—		(407		)	—
Total	$	963	$	5,716	$	—	$	(5,576	)	$	1,103
Total Net Assets/(Liabilities)	$	616,149	$	34,488	$	—	$	—		$	650,637



	At Fair Value as of September 30, 2016
Recurring Fair Value Measures	Level 1		Level 2		Level 3		Netting Adjustments(1)			Total(1)
	(Dollars in thousands)
Assets:
Cash Equivalents — Money Market Mutual Funds	$	113,407	$	—	$	—	$	—		$	113,407
Derivative Financial Instruments:
Commodity Futures Contracts — Gas	2,623		—		—		(2,276		)	347
Over the Counter Swaps — Gas and Oil	—		119,654		—		(3,860		)	115,794
Foreign Currency Contracts	—		—		—		(2,337		)	(2,337		)
Other Investments:
Balanced Equity Mutual Fund	36,658		—		—		—			36,658
Fixed Income Mutual Fund	31,395		—		—		—			31,395
Common Stock — Financial Services Industry	2,902		—		—		—			2,902
Hedging Collateral Deposits	1,484		—		—		—			1,484
Total	$	188,469	$	119,654	$	—	$	(8,473	)	$	299,650
Liabilities:
Derivative Financial Instruments:
Commodity Futures Contracts — Gas	$	2,276	$	—	$	—	$	(2,276	)	$	—
Over the Counter Swaps — Gas and Oil	—		5,322		—		(3,860		)	1,462
Foreign Currency Contracts	—		2,337		—		(2,337		)	—
Total	$	2,276	$	7,659	$	—	$	(8,473	)	$	1,462
Total Net Assets/(Liabilities)	$	186,193	$	111,995	$	—	$	—		$	298,188


(1)	Netting Adjustments represent the impact of legally-enforceable master netting arrangements that allow the Company to net gain and loss positions held with the same counterparties. The net asset or net liability for each counterparty is recorded as an asset or liability on the Company’s balance sheet.

Derivative Financial Instruments

At September 30, 2017 and 2016, the derivative financial instruments reported in Level 1 consist of natural gas NYMEX and ICE futures contracts used in the Company’s Energy Marketing segment. Hedging collateral deposits of $1.7 million (at September 30, 2017) and $1.5 million (at September 30, 2016), which are associated with these futures contracts, have been reported in Level 1 as well. The derivative financial instruments reported in Level 2 at September 30, 2017 and 2016 consist of natural gas price swap agreements used in the Company’s Exploration and Production and Energy Marketing segments, the majority of the crude oil price swap agreements used in the Company’s Exploration and Production segment and foreign currency contracts used in the Company's Exploration and Production segment. The fair value of the Level 2 price swap agreements is based on an internal, discounted cash flow model that uses observable inputs (i.e. LIBOR based discount rates and basis differential information, if applicable, at active natural gas and crude oil trading markets). The fair value of the Level 2 foreign currency contracts is determined using the market approach based on observable market transactions of forward Canadian currency rates.

The accounting rules for fair value measurements and disclosures require consideration of the impact of nonperformance risk (including credit risk) from a market participant perspective in the measurement of the fair value of assets and liabilities. At September 30, 2017, the Company determined that nonperformance risk would have no material impact on its financial position or results of operation. To assess nonperformance risk, the Company considered information such as any applicable collateral posted, master netting arrangements, and applied a market-based method by using the counterparty's (assuming the derivative is in a gain position) or the Company’s (assuming the derivative is in a loss position) credit default swaps rates.

For the years ended September 30, 2017 and 2016, there were no assets or liabilities measured at fair value and classified as Level 3. The Company's Exploration and Production segment had a small portion of their crude oil price swap agreements reported as Level 3 at October 1, 2015 that settled during the first quarter of fiscal 2016. For the years ended September 30, 2017 and September 30, 2016, no transfers in or out of Level 1 or Level 2 occurred.