Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2024

Schedule of Net Assets (Liabilities) Measured on a Recurring Basis

Derivative assets and liabilities measured at fair value on a recurring basis are summarized below (in millions):


	Level 2
	March 31, 2024		December 31, 2023
Interest rate swap (1)	$	4.8	$	0.9
Commodity derivatives (2)	$	(12.5)	$	13.6

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(1)The fair values of the interest rate swaps are estimated based on the difference between expected cash flows calculated at the contracted interest rates and the expected cash flows using observable benchmarks for the variable interest rates.

(2)The fair values of commodity derivatives represent the amount at which the instruments could be exchanged in a current arms-length transaction adjusted for our credit risk and/or the counterparty credit risk as required under ASC 820.

Schedule of the Estimated Fair Value of Financial Instruments

Considerable judgment is required to develop the estimates of fair value; thus, the estimates provided below are not necessarily indicative of the amount we could realize upon the sale or refinancing of such financial instruments.

Long-term debt, including current maturities of long-term debt. The carrying value and estimated fair value of our outstanding debt balances are disclosed below (in millions):


	March 31, 2024				December 31, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current maturities of long-term debt (1)	$	4,567.4	$	4,424.8	$	4,568.9	$	4,427.0

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(1)The carrying value of long-term debt, including current maturities of long-term debt, is reduced by debt issuance cost, net of accumulated amortization, of $30.8 million and $32.1 million as of March 31, 2024 and December 31, 2023, respectively. The respective fair values do not factor in debt issuance costs.

The fair values of all senior unsecured notes as of March 31, 2024 and December 31, 2023 were based on Level 2 inputs from third-party market quotations.

Contingent Consideration. The carrying value and estimated fair value of the Amarillo Rattler Acquisition and Central Oklahoma Acquisition contingent consideration liabilities are disclosed below (in millions):


	Three Months Ended March 31,
	2024		2023
Amarillo Rattler Acquisition contingent consideration (1)
Contingent consideration liability, beginning of period	$	4.8	$	4.2
Change in fair value	1.4		0.5
Earnout payments	(2.3)		—
Contingent consideration liability, end of period	$	3.9	$	4.7

Central Oklahoma Acquisition contingent consideration (2)
Contingent consideration liability, beginning of period	$	1.9	$	1.3
Change in fair value	0.3		0.2
Earnout payments	(0.2)		—
Contingent consideration liability, end of period	$	2.0	$	1.5

Total contingent consideration (1)(2)
Contingent consideration liability, beginning of period	$	6.7	$	5.5
Change in fair value	1.7		0.7
Earnout payments	(2.5)		—
Contingent consideration liability, end of period	$	5.9	$	6.2

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(1)Consideration for the Amarillo Rattler Acquisition included a contingent component capped at $15.0 million and payable between 2024 and 2026 based on Diamondback E&P LLC’s drilling activity exceeding historical levels. Estimated fair values were calculated using a discounted cash flow analysis that utilized Level 3 inputs. The carrying value of the contingent consideration is equal to its fair value.

(2)Consideration for the Central Oklahoma Acquisition included a contingent component, which is payable between 2024 and 2027 based on fee revenue earned on certain contractually specified volumes for the annual periods beginning January 1, 2023 through December 31, 2026. Estimated fair values were calculated using a discounted cash flow analysis that utilized Level 3 inputs. The carrying value of the contingent consideration is equal to its fair value.