KOSMOS ENERGY LTD. Notes to Consolidated Financial Statements (Continued) 10. Fair Value Measurements (Continued) Provisional Oil Sales The value attributable to the provisional oil sales derivative is based on (i) the sales volumes and (ii) the difference in the independent active futures price quotes for Dated Brent over the term of the pricing period designated in the sales contract and the spot price on the lifting date. Interest Rate Derivatives We enter into interest rate swaps, whereby the Company pays a fixed rate of interest and the counterparty pays a variable LIBOR-based rate. We also enter into capped interest rate swaps, whereby the Company pays a fixed rate of interest if LIBOR is below the cap, and pays the market rate less the spread between the cap and the fixed rate of interest if LIBOR is above the cap. The values attributable to the Company’s interest rate derivative contracts are based on (i) the contracted notional amounts, (ii) LIBOR yield curves provided by independent third parties and corroborated with forward active market-quoted LIBOR yield curves and (iii) a credit-adjusted yield curve as applicable to each counterparty by reference to the CDS market. Debt The following table presents the carrying values and fair values at December 31, 2017 and 2016: December 31, 2017 December 31, 2016 Carrying Carrying Value Fair Value Value Fair Value (In thousands) Senior Notes . . . . . . . . . . . . . . . $ 507,600 $ 542,472 $ 503,716 $ 528,938 Facility . . . . . . . . . . . . . . . . . . . 800,000 800,000 850,000 850,000 Total . . . . . . . . . . . . . . . . . . . $1,307,600 $1,342,472 $1,353,716 $1,378,938 The carrying value of our Senior Notes represents the principal amounts outstanding less unamortized discounts. The fair value of our Senior Notes is based on quoted market prices, which results in a Level 1 fair value measurement. The carrying value of the Facility approximates fair value since it is subject to short-term floating interest rates that approximate the rates available to us for those periods. 11. Asset Retirement Obligations The following table summarizes the changes in the Company’s asset retirement obligations: December 31, 2017 2016 (In thousands) Asset retirement obligations: Beginning asset retirement obligations . . . . . . . . . . . . . . . . . . $63,574 $43,938 Liabilities incurred during period . . . . . . . . . . . . . . . . . . . . . . — 14,235 Revisions in estimated retirement obligations . . . . . . . . . . . . . (3,945) — Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,966 5,401 Ending asset retirement obligations . . . . . . . . . . . . . . . . . . . . $66,595 $63,574 137