XPLR Infrastructure, LPXIFR
XPLR Infrastructure, LP Fair Value Disclosure
Non-Derivative Fair Value Measurements
Financial Instruments Recorded at Other than Fair Value – The carrying amounts and estimated fair values of financial instruments recorded at other than fair value are as follows:
| December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| (millions) | |||||||||||||||||||||||
Long-term debt, including current maturities(a) | $ | 5,314 | $ | 5,216 | $ | 6,289 | $ | 6,136 | |||||||||||||||
____________________
(a) At December 31, 2024 and 2023, approximately $5,201 million and $6,120 million, respectively, of the fair value is estimated using a market approach based on quoted market prices for the same or similar issues (Level 2); the balance is estimated using an income approach utilizing a discounted cash flow valuation technique, considering the current credit profile of the debtor (Level 3). At December 31, 2024, approximately $1,028 million of the fair value relates to the 2020 convertible notes and the 2022 convertible notes and is Level 2. At December 31, 2023, approximately $1,446 million of the fair value relates to the 2020 convertible notes, the 2021 convertible notes and the 2022 convertible notes and is Level 2.
Nonrecurring Fair Value Measurements – XPLR tests goodwill for impairment annually and whenever events or changes in circumstances indicate that the fair value of the goodwill is less than the carrying value. During the preparation of XPLR's December 31, 2024 financial statements, XPLR concluded that a triggering event occurred and it was more likely than not that the fair value of its reporting unit was less than its carrying value as a result of the significant decline in trading price of XPLR's common units during the fourth quarter of 2024. Therefore, XPLR performed a quantitative analysis using a combination of (i) an income approach consisting of a discounted cash flow analysis to estimate fair value for noncontrolling interests, including Class B membership interests and differential membership interests, (ii) a market approach derived from the observable trading price of its common units at December 31, 2024 of $17.80 to estimate fair value for (a) its common units and (b) noncontrolling interests related to NEE Equity's interest in XPLR OpCo, and (iii) an estimated control premium for the reporting unit and determined that the fair value of its reporting unit was less than its carrying value. As a result, XPLR recognized a non-cash goodwill impairment charge in the fourth quarter of 2024 of approximately $575 million ($503 million after tax) which is reflected in its consolidated statement of income (loss) for the year ended December 31, 2024. In January 2025, XPLR announced a strategic repositioning (see Note 1). Subsequent to this announcement, the trading price of XPLR common units traded below the December 31, 2024 trading price. Should XPLR determine, based on future analysis which includes the current and future trading prices of XPLR's common units, that a triggering event occurred and it is more likely than not that there is additional impairment, a non-cash goodwill impairment loss would be recorded which would be reflected in its consolidated statement of income (loss).
XPLR tests its equity method investments for impairment whenever events or changes in circumstances indicate that the investment may be impaired. During the preparation of XPLR's December 31, 2024 financial statements, it was determined that XPLR's investment in Meade, which is accounted for under the equity method of accounting, was other-than-temporarily impaired. The impairment is the result of market information obtained by XPLR and XPLR's estimate of fair value as it continues to evaluate options relating to a potential sale of its ownership interests in Meade. A sale is expected to occur in 2025 which limits the length of time XPLR has to recover the carrying value of its investment. As such, XPLR concluded its equity method investment in Meade was impaired and the impairment was other than temporary. Accordingly, XPLR performed a fair value analysis using a combination of a market approach and an income approach to determine the magnitude of the OTTI. Based on this fair value analysis, the equity method investment with a carrying amount of approximately $1.2 billion was written down to its estimated fair value of approximately $1.15 billion as of December 31, 2024, resulting in an impairment charge of approximately $49 million ($43 million after tax), which is reflected in equity in earnings of equity method investees in its consolidated statement of income (loss) for the year ended December 31, 2024.
The fair value estimate was based on a market approach using a market participant view of potential different outcomes regarding sales price of the investment, including commitments from ongoing litigation, and an income approach using forecasted distributions prior to the expected disposition date. As part of the valuation, XPLR used significant unobservable inputs (Level 3), including different expected sales prices and the forecasted cash flows from the equity method investment. An increase in the forecasted cash flows from the equity method investment or an increase in the estimated sales price would result in a higher fair value. Changes in the opposite direction of those unobservable inputs would result in a lower fair value.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Feb 21, 2025 | Showing above |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 16, 2021 | |
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.