NEW JERSEY RESOURCES CORPNJR
NEW JERSEY RESOURCES CORP Fair Value Disclosure
6. FAIR VALUE
Fair Value of Assets and Liabilities
The fair value of cash and cash equivalents, accounts receivable, current loans receivable, accounts payable, commercial paper and borrowings under revolving credit facilities are estimated to equal their carrying amounts due to the short maturity of those instruments. Noncurrent loans receivable are recorded based on what the Company expects to receive, which approximates fair value, in other noncurrent assets on the Consolidated Balance Sheets. The Company regularly evaluates the credit quality and collection profile of its customers to approximate fair value.
As of September 30, the estimated fair value of long-term debt, including current maturities, excluding natural gas meter sale leasebacks, debt issuance costs and solar asset sale leasebacks, is as follows (1):
| (Thousands) | 2025 | 2024 | ||||||
| NJNG | ||||||||
Carrying value (1) | $ | 1,797,845 | $ | 1,647,845 | ||||
| Fair market value | $ | 1,536,391 | $ | 1,439,849 | ||||
| NJR | ||||||||
Carrying value (1) | $ | 1,120,000 | $ | 1,120,000 | ||||
| Fair market value | $ | 1,095,121 | $ | 1,085,955 | ||||
The Company enters into sale leaseback transactions for certain commercial solar assets and natural gas meters. These transactions are recorded within long-term debt on the Consolidated Balance Sheets. The carrying value of solar sale leasebacks was approximately $471.5M and $283.0M and the estimated fair value was approximately $481.4M and $290.4M as of September 30, 2025 and 2024, respectively. The carrying value of the natural gas meter sale leasebacks was approximately $33.5M and $31.6M and the estimated fair value of certain natural gas meter sale leasebacks amounted to approximately $32.5M and $26.7M as of September 30, 2025 and 2024, respectively.
The Company utilizes a discounted cash flow method to determine the fair value of its debt. Inputs include observable municipal and corporate yields, as appropriate, for the maturity of the specific debt instrument and the Company’s credit rating. As of September 30, 2025 and 2024, the Company discloses its debt within Level 2 of the fair value hierarchy.
Fair Value Hierarchy
The Company applies fair value measurement guidance to its financial assets and liabilities, as appropriate, which include financial derivatives and physical commodity contracts qualifying as derivatives, investments in equity securities and other financial assets and liabilities. In addition, authoritative accounting literature prescribes the use of a fair value hierarchy that prioritizes the inputs-to-valuation techniques used to measure fair value based on the source of the data used to develop the price inputs. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to inputs that are based on unobservable market data and includes the following:
| Fair Value Hierarchy | Description of Fair Value Level | Fair Value Technique | ||||||
| Level 1 | Unadjusted quoted prices for identical assets or liabilities in active markets | The Company’s Level 1 assets and liabilities include exchange-traded natural gas futures and options contracts, listed equities and money market funds. Exchange-traded futures and options contracts include all energy contracts traded on the NYMEX, CME and ICE that the Company refers to internally as basis swaps, fixed swaps, futures and financial options that are cleared through an FCM. | ||||||
| Level 2 | Other significant observable inputs, such as interest rates or price data, including both commodity and basis pricing that is observed either directly or indirectly from publications or pricing services | The Company’s Level 2 assets and liabilities include over-the-counter physical forward commodity contracts and swap contracts, SREC contracts or derivatives that are initially valued using observable quotes and are subsequently adjusted to include time value, credit risk or estimated transport pricing components for which no basis price is available. Level 2 financial derivatives consist of transactions with non-FCM counterparties (basis swaps, fixed swaps and/or options). Inputs are verifiable and do not require significant management judgment. For some physical commodity contracts, the Company utilizes transportation tariff rates that are publicly available and that it considers to be observable inputs that are equivalent to market data received from an independent source. There are no significant judgments or adjustments applied to the transportation tariff inputs and no market perspective is required. Even if the transportation tariff input were considered to be a “model,” it would still be considered to be a Level 2 input as the data is: •widely accepted and public; •non-proprietary and sourced from an independent third party; and •observable and published. These additional adjustments are generally not considered to be significant to the ultimate recognized values. | ||||||
| Level 3 | Inputs derived from a significant amount of unobservable market data | These include the Company’s best estimate of fair value and are derived primarily through the use of internal valuation methodologies. | ||||||
Financial derivative portfolios of NJNG and ES consist mainly of futures, options and swaps. The Company primarily uses the market approach, and its policy is to use actively quoted market prices when available. The principal market for its derivative transactions is the natural gas wholesale market; therefore, the primary sources for its price inputs are CME, NYMEX and ICE. However, ES also engages in transactions that result in transporting natural gas to delivery points for which there is no actively quoted market price. In most instances, the transportation cost to the final delivery location is not significant to the overall valuation. If required, ES’s policy is to use the best information available to determine fair value based on internal pricing models, which would include estimates extrapolated from broker quotes or other pricing services.
The Company also has other financial assets that include listed equities, mutual funds and money market funds for which there are active exchange quotes available. When the Company determines fair values, measurements are adjusted, as needed, for credit risk associated with its counterparties, as well as its own credit risk. The Company determines these adjustments by using historical default probabilities that correspond to the applicable S&P issuer ratings, while also taking into consideration collateral and netting arrangements that serve to mitigate risk.
Assets and liabilities measured at fair value on a recurring basis are summarized as follows:
| Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||||||||||||
| (Thousands) | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||||||||||||||||||
| As of September 30, 2025 | ||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Physical commodity contracts | $ | — | $ | 5,051 | $ | — | $ | 5,051 | ||||||||||||||||||||||||
| Financial commodity contracts | 9,782 | — | — | 9,782 | ||||||||||||||||||||||||||||
| Money market funds | 5 | — | — | 5 | ||||||||||||||||||||||||||||
| Other | 2,589 | — | — | 2,589 | ||||||||||||||||||||||||||||
| $ | 12,376 | $ | 5,051 | $ | — | $ | 17,427 | |||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Physical commodity contracts | $ | — | $ | 9,811 | $ | — | $ | 9,811 | ||||||||||||||||||||||||
| Financial commodity contracts | 2,092 | — | — | 2,092 | ||||||||||||||||||||||||||||
| $ | 2,092 | $ | 9,811 | $ | — | $ | 11,903 | |||||||||||||||||||||||||
| As of September 30, 2024 | ||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Physical commodity contracts | $ | — | $ | 2,408 | $ | — | $ | 2,408 | ||||||||||||||||||||||||
| Financial commodity contracts | 5,211 | — | — | 5,211 | ||||||||||||||||||||||||||||
| Money market funds | 62 | — | — | 62 | ||||||||||||||||||||||||||||
| Other | 2,671 | — | — | 2,671 | ||||||||||||||||||||||||||||
| Total assets at fair value | $ | 7,944 | $ | 2,408 | $ | — | $ | 10,352 | ||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Physical commodity contracts | $ | — | $ | 15,683 | $ | — | $ | 15,683 | ||||||||||||||||||||||||
| Financial commodity contracts | 2,078 | — | — | 2,078 | ||||||||||||||||||||||||||||
| Total liabilities at fair value | $ | 2,078 | $ | 15,683 | $ | — | $ | 17,761 | ||||||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 20, 2025 | Showing above |
| 2021 | Nov 18, 2021 | |
| 2020 | Nov 30, 2020 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.