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FINANCIAL INSTRUMENTS
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
FINANCIAL INSTRUMENTS
10. FINANCIAL INSTRUMENTS
Fair Value. A summary of the estimated fair value of our debt financial instruments follows.
June 30, 2025December 31, 2024
Carrying
Value (1)
Estimated
fair value
(Level 2)
Carrying
Value (1)
Estimated
fair value
(Level 2)
(In thousands)
2029 Secured Notes
$825,000 $843,563 $575,000 $595,125 
(1) Excludes applicable unamortized debt issuance costs, debt discounts and debt premiums.

The carrying values on the balance sheets of the Amended and Restated ABL Facility and the Permian Transmission Term Loan represent their fair value due to their floating interest rates. The fair value of the 2029 Secured Notes is based on an average of nonbinding broker quotes as of June 30, 2025 and December 31, 2024. The use of different market assumptions or valuation methodologies may have a material effect on their estimated fair value.
Deferred earn-out. The estimated fair value of the Company’s deferred earn-outs are remeasured each reporting period and estimated using discounted cash flow techniques with appropriate discount rates. Given the unobservable nature of the inputs, the fair value measurement of the deferred earn-out is deemed to use Level 3 inputs.
Tall Oak earn-out: In connection with the Tall Oak Acquisition, the Company incurred a deferred earn-out liability. As of June 30, 2025, the estimated fair value of the deferred earn-out liability recorded on the Company’s consolidated balance sheet was $12.8 million and is reflected within other current liabilities. As of December 31, 2024, the estimated fair value of the deferred earn-out was $21.3 million, of which $14.5 million is reflected within other current liabilities and $6.8 million is reflected within other noncurrent liabilities. The earn-out becomes payable to Tall Oak Parent subject to Tall Oak and its customers meeting certain development requirements. During the six months ended June 30, 2025, the Company recorded a $8.5 million gain on the fair value remeasurement of the Tall Oak earn-out. As of June 30, 2025, none of the earn-out requirements had been met.
Sterling DJ earn-out: In connection with the acquisition of Sterling DJ, SMLP assumed a deferred earn-out liability, which was remeasured each reporting period. This deferred earn-out liability was settled in full during the quarterly period ended June 30, 2024.
Interest Rate Swaps. In connection with the Permian Transmission Term Loan, the Company entered into amortizing interest rate swap agreements. As of June 30, 2025 and December 31, 2024, the outstanding notional amounts of interest rate swaps were $109.1 million and $116.4 million, respectively. These interest rate swaps manage exposure to variability in expected cash flows attributable to interest rate risk. Interest rate swaps convert a portion of the Company’s variable rate debt to fixed rate debt. The Company chooses counterparties for its derivative instruments that it believes are creditworthy at the time the transactions are entered into, and the Company actively monitors the creditworthiness where applicable. However, there can be no assurance that a counterparty will be able to meet its obligations to the Company. The Company presents its derivative positions on a gross basis and does not net the asset and liability positions.
As of June 30, 2025 and December 31, 2024, the Company’s interest rate swap agreements had a fair value of $7.8 million and $11.0 million, respectively, and are recorded within other noncurrent assets within the unaudited condensed consolidated balance sheets. The derivative instruments’ fair value are determined using level 2 inputs from the fair value hierarchy.
For the three and six month periods ended June 30, 2025 the Company recorded a loss on interest rate swaps of $0.5 million and $1.5 million. respectively.
For the three and six month periods ended June 30, 2024, the Company recorded a gain on interest rate swaps of $0.9 million and $3.5 million, respectively.