Market Risks and Derivative Hedge Contracts

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Hedge Contracts

FAIR VALUE MEASUREMENTS

Financial Instruments

Warrants

The Warrants are valued using a Black Scholes option valuation model that includes implied volatility of the trading price (a Level 3 fair value measurement).

Contingent Consideration

The fair value of the remaining contingent consideration associated with the February 2018 acquisition of SwiftWater Energy Services, LLC ("SwiftWater") is based on a probability simulation utilizing forecasted revenues and EBITDA of the water management business of SwiftWater and all of our pre-existing operations in the Permian Basin (a Level 3 fair value measurement). At September 30, 2019, based on a forecast of SwiftWater 2019 revenues and EBITDA, the estimated fair value for the liability associated with the remaining contingent purchase price consideration was $0.2 million, resulting in $0.8 million being credited to other (income) expense, net, during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the sellers received a payment of $10.0 million based on SwiftWater's performance during 2018. In addition, as part of the purchase of JRGO Energy Services LLC ("JRGO") during December 2018, the sellers were paid contingent consideration of $1.4 million during the nine month period ended September 30, 2019, based on JRGO's performance during the fourth quarter of 2018.

Derivative Contracts

We and CCLP each enter into short term foreign currency forward derivative contracts with third parties as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. As of September 30, 2019, we and CCLP had the following foreign currency derivative contracts outstanding relating to portions of our foreign operations:

Derivative Contracts	US Dollar Notional Amount		Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward purchase Euro	$	9,472	1.12	12/19/2019
Forward purchase Euro	8,687		1.11	10/18/2019
Forward sale pounds sterling	1,867		1.24	10/18/2019
Forward purchase Mexican peso	774		19.38	10/18/2019
Forward purchase Norwegian krone	5,063		8.89	10/18/2019
Forward sale Mexican peso	8,844		19.56	10/18/2019

Derivative Contracts	British Pound Notional Amount	Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward purchase Euro	2,316	0.89	10/18/2019

Derivative Contracts	Swedish Krona Notional Amount	Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward purchase Euro	15,980	10.65	10/18/2019

Under this program, we and CCLP may enter into similar derivative contracts from time to time. Although contracts pursuant to this program will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative contracts during a period will be included in the determination of earnings for that period.

The fair values of foreign currency derivative contracts are based on quoted market values (a Level 2 fair value measurement). The fair values of our and CCLP's foreign currency derivative contracts as of September 30, 2019 and December 31, 2018, are as follows:

Foreign currency derivative contracts	Balance Sheet Location	Fair Value at September 30, 2019			Fair Value at December 31, 2018
		(In Thousands)
Forward purchase contracts	Current assets	$	12		$	41
Forward sale contracts	Current assets	122			76
Forward sale contracts	Current liabilities	—			(126		)
Forward purchase contracts	Current liabilities	(504		)	(168		)
Net asset (liability)		$	(370	)	$	(177	)

None of our foreign currency derivative contracts contain credit risk related contingent features that would require us to post assets or collateral for contracts that are classified as liabilities. During the three and nine month periods ended September 30, 2019, we recognized $1.0 million and $1.8 million of net (gains) losses, respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program. During the three and nine months ended September 30, 2018, we recognized $0.6 million and $(0.1) million of net (gains) losses, respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program.

Recurring fair value measurements by valuation hierarchy as of September 30, 2019 and December 31, 2018, are as follows:

				Fair Value Measurements Using
	Total as of			Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs			Significant Unobservable Inputs
Description	September 30, 2019			(Level 1)		(Level 2)			(Level 3)
	(In Thousands)
Warrants liability	$	(1,038	)	$	—	$	—		$	(1,038	)
Asset for foreign currency derivative contracts	134			—		134			—
Liability for foreign currency derivative contracts	(504		)	—		(504		)	—
Acquisition contingent consideration liability	(200		)	—		—			(200		)
Net liability	$	(1,608	)

				Fair Value Measurements Using
	Total as of			Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs			Significant Unobservable Inputs
Description	December 31, 2018			(Level 1)		(Level 2)			(Level 3)
	(In Thousands)
CCLP Series A Preferred Units	$	(27,019	)	$	—	$	—		$	(27,019	)
Warrants liability	(2,073		)	—		—			(2,073		)
Asset for foreign currency derivative contracts	117			—		117			—
Liability for foreign currency derivative contracts	(294		)	—		(294		)	—
Acquisition contingent consideration liability	(12,452		)	—		—			(12,452		)
Net liability	$	(41,721	)

The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and long-term debt pursuant to TETRA's ABL Credit Agreement and Term Credit Agreement, and the CCLP Credit Agreement approximate their carrying amounts. The fair values of the publicly traded CCLP 7.25% Senior Notes at September 30, 2019 and December 31, 2018, were approximately $269.2 million and $266.3 million, respectively. Those fair values compare to the face amount of $295.9 million both at September 30, 2019 and December 31, 2018. The fair values of the CCLP 7.50% Senior Secured Notes at September 30, 2019 and December 31, 2018 were approximately $344.8 million and $332.5 million, respectively. These fair values compare to aggregate principal amount of such notes at both September 30, 2019 and December 31, 2018, of $350.0 million. We based the fair values of the CCLP 7.25% Senior Notes and the CCLP 7.50% Senior Secured Notes as of September 30, 2019 on recent trades for these notes.