v3.26.1
Note 9 - Fair Value Measurements
 9 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

9.

Fair Value Measurements

 

ASC 820, Fair Value Measurements and Disclosures, established a fair value hierarchy that prioritizes each input to the valuation method used to measure fair value of financial and nonfinancial assets and liabilities that are measured and reported on a fair value basis into one of the following three levels:

 

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

Level 2 – Inputs other than quoted prices in Level 1 that are either for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

Level 3 – Unobservable inputs for the asset or liability where there is little, if any, market activity for the asset or liability at the measurement date, which require the Company to develop its own assumptions.

 

The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). All fair value disclosures are categorized within one of the three categories in the hierarchy based on the lowest level that is significant to the valuation.

 

 

The following table summarizes the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as required by existing guidance and the fair value measurements by level within the fair value hierarchy:

 

  

Fair Value Measurements - June 30, 2026

 
      

Quoted

  

Significant

     
      

Prices

  

Other

  

Significant

 
      

in Active

  

Observable

  

Unobservable

 
  

Fair

  

Markets

  

Inputs

  

Inputs

 
  

Value

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

Assets:

                

Interest rate swaps - current

 $550,336  $—  $550,336  $— 

Interest rate swaps - noncurrent

  823,192   —   823,192   — 

Total

 $1,373,528  $—  $1,373,528  $— 
                 

Liabilities:

                

Natural gas purchases

 $893,886  $—  $893,886  $— 

Interest rate swaps - current

  35,735      35,735   — 

Interest rate swaps - noncurrent

  77,427      77,427   — 

Total

 $1,007,048  $—  $1,007,048  $— 

 

  

Fair Value Measurements - September 30, 2025

 
      

Quoted

  

Significant

     
      

Prices

  

Other

  

Significant

 
      

in Active

  

Observable

  

Unobservable

 
  

Fair

  

Markets

  

Inputs

  

Inputs

 
  

Value

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

Assets:

                

Interest rate swaps - current

 $828,573  $—  $828,573  $— 

Interest rate swaps - noncurrent

  421,511   —   421,511   — 

Total

 $1,250,084  $—  $1,250,084  $— 
                 

Liabilities:

                

Natural gas purchases

 $135,863  $—  $135,863  $— 

Interest rate swaps - current

  57,144   —   57,144   — 

Interest rate swaps - noncurrent

  298,016   —   298,016   — 

Total

 $491,023  $—  $491,023  $— 

 

 

The fair value of the interest rate swaps are determined by using the counterparty's proprietary models that can include observable quoted market interest rates and interest rate futures as well as certain assumptions regarding past, present and future market conditions.

 

Under the asset management contract, a timing difference can exist between the payment for natural gas purchases and the actual receipt of such purchases.  Payments are made based on a predetermined monthly volume and a weighted average basket price.  At June 30, 2026 and September 30, 2025, the Company had recorded in accounts payable the estimated fair value of the liability expected to be settled.

 

The Company’s nonfinancial assets and liabilities measured at fair value on a nonrecurring basis consist of its AROs.  The AROs are measured at fair value at initial recognition based on expected future cash flows required to settle the obligation. 

 

The carrying value of cash and cash equivalents, accounts receivable, borrowings under line-of-credit, accounts payable, customer credit balances and customer deposits is a reasonable estimate of fair value due to the short-term nature of these financial instruments.  In addition, the carrying amount of the variable rate line-of-credit is a reasonable approximation of its fair value.

 

The following table summarizes the fair value of the Company’s financial assets and liabilities that are not adjusted to fair value in the financial statements:

 

  

Fair Value Measurements - June 30, 2026

 
      

Quoted

  

Significant

     
      

Prices

  

Other

  

Significant

 
      

in Active

  

Observable

  

Unobservable

 
  

Carrying

  

Markets

  

Inputs

  

Inputs

 
  

Value

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

Liabilities:

                

Current maturities of long-term debt

 $2,846,018  $—  $—  $2,846,018 

Notes payable

  133,139,644   —   —   129,908,205 

Total

 $135,985,662  $—  $—  $132,754,223 

 

  

Fair Value Measurements - September 30, 2025

 
      

Quoted

  

Significant

     
      

Prices

  

Other

  

Significant

 
      

in Active

  

Observable

  

Unobservable

 
  

Carrying

  

Markets

  

Inputs

  

Inputs

 
  

Value

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

Liabilities:

                

Current maturities of long-term debt

 $2,846,018  $—  $—  $2,846,018 

Notes payable

  134,258,197   —   —   131,605,756 

Total

 $137,104,215  $—  $—  $134,451,774 

 

The fair value of long-term debt is estimated by discounting the future cash flows of the fixed rate debt based on the underlying treasury rate or other treasury instruments with a corresponding maturity period and estimated credit spread extrapolated based on market conditions since the issuance of the debt.

 

ASC 825, Financial Instruments, requires disclosures regarding concentrations of credit risk from financial instruments.  Cash equivalents are investments in high-grade, short-term securities (original maturity less than three months), placed with financially sound institutions.  Accounts receivable are from a diverse group of customers including individuals and small and large companies in various industries.  No individual customer amounted to more than 5% of total accounts receivable at  June 30, 2026 and  September 30, 2025.  The Company maintains certain credit standards with its customers and requires a customer deposit, if warranted.