Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Commodity Risk. The Partnership from time to time uses derivatives to manage the risk of commodity price fluctuation. Commodity risk is the adverse effect on the value of a liability or future purchase that results from a change in commodity price. We have established a hedging policy and monitor and manage the commodity market risk associated with potential commodity risk exposure. In addition, we focus on utilizing counterparties for these transactions whose financial condition is appropriate for the credit risk involved in each specific transaction.
We have entered into hedging transactions as of December 31, 2020 to mitigate a portion of our commodity price risk exposure. These hedging arrangements are in the form of swaps for NGLs. We have instruments totaling a gross notional quantity of 137,000 barrels settling during the period from January 31, 2021 through February 28, 2021. These instruments settle against the applicable pricing source for each grade and location. These instruments are recorded on our Consolidated Balance Sheets at December 31, 2020 in "Fair value of derivatives" as a current liability of $0.2 million. Based on the current net notional volume hedged as of December 31, 2020, a $0.10 change in the expected settlement price of these contracts would result in an impact of $0.6 million to the Partnership's net income.
Interest Rate Risk. Borrowings under our revolving credit facility are at variable rates and include a LIBOR floor of 1.00%. Our revolving credit facility had a weighted-average interest rate of 4.75% as of December 31, 2020. Based on the amount of unhedged floating rate debt owed by us on December 31, 2020, the impact of a 100 basis point increase in interest rates on this amount of debt would result in an increase in interest expense and a corresponding decrease in net income of approximately $0.2 million annually.
We are not exposed to changes in interest rates with respect to our 2021 Notes, 2024 Notes and 2025 Notes as these obligations are fixed rate. Based on the quoted prices for identical liabilities in markets that are not active at December 31, 2020, the estimated fair value of the 2021 Notes, 2024 Notes and 2025 Notes was $28.6 million, $55.2 million and $288.7 million, respectively. Market risk is estimated as the potential decrease in fair value of our long-term debt resulting from a hypothetical increase of a 100 basis point increase in interest rates. Such an increase in interest rates at December 31, 2020 would result in a $0.5 million decrease in the fair value of our 2021 Notes, a $0.9 million decrease in the fair value of our 2024 Notes, and a $5.0 million decrease in the fair value of our 2025 Notes. On February 15, 2021, our 2021 Notes matured and we retired the outstanding balance of $28.8 million using our revolving credit facility.
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