XML 29 R18.htm IDEA: XBRL DOCUMENT
v3.24.2.u1

Derivative Instruments and Hedging Activities | 6 Months Ended
--- | ---
Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities Commodity Price Risk Management Our primary market risk is commodity price risk. We are exposed to market risks related to the volatility in crude oil and refined products, as well as volatility in the price of natural gas used in our refining operations. We periodically enter into derivative contracts in the form of commodity price swaps, collar contracts, forward purchase and sales and futures contracts to mitigate price exposure with respect to our inventory positions, natural gas purchases, sales prices of refined products and crude oil costs. Foreign Currency Risk Management We are exposed to market risk related to the volatility in foreign currency exchange rates. We periodically enter into derivative contracts in the form of foreign exchange forward contracts to mitigate the exposure associated with fluctuations on intercompany notes with our foreign subsidiaries that are not denominated in the U.S. dollar. Accounting Hedges We periodically have swap contracts to lock in basis spread differentials on forecasted purchases of crude oil and forward sales contracts that lock in the prices of future sales of crude oil and refined product. These contracts have been designated as accounting hedges and are measured at fair value with offsetting adjustments (gains/losses) recorded directly to other comprehensive income (loss). These fair value adjustments are later reclassified to earnings as the hedging instruments mature. The following tables present the pre-tax effect on other comprehensive income (“OCI”) and earnings due to fair value adjustments and maturities of hedging instruments under hedge accounting:
|  | Net Unrealized Loss Recognized in OCI |  |  |  | Gain (Loss) Reclassified into Earnings
Derivatives Designated as Cash Flow Hedging Instruments |  | Three Months Ended June 30, |  | Income Statement Location |  | Three Months Ended June 30,
| 2024 |  | 2023 |  |  | 2024 |  | 2023
|  | (In thousands) |  |  |  | (In thousands)
Commodity contracts |  | $ | (456) |  |  | $ | (271) |  |  | Sales and other revenues |  | $ | (305) |  |  | $ | 271 |
Total |  | $ | (456) |  |  | $ | (271) |  |  |  |  | $ | (305) |  |  | $ | 271 |
|  | Net Unrealized Loss Recognized in OCI |  |  |  | Gain (Loss) Reclassified into Earnings
Derivatives Designated as Cash Flow Hedging Instruments |  | Six Months Ended June 30, |  | Income Statement Location |  | Six Months Ended June 30,
| 2024 |  | 2023 |  |  | 2024 |  | 2023
|  | (In thousands) |  |  |  | (In thousands)
Commodity contracts |  | $ | (456) |  |  | $ | — |  |  | Sales and other revenues |  | $ | (4,592) |  |  | $ | 270 |
Total |  | $ | (456) |  |  | $ | — |  |  |  |  | $ | (4,592) |  |  | $ | 270 |
Economic Hedges We have commodity contracts, including NYMEX futures contracts, to lock in prices on forecasted inventory purchases and sales. We have basis swap contracts to mitigate exposure to natural gas price volatility. We periodically have forward purchase and sale contracts to lock in basis spread differentials on forecasted crude oil and refined products purchases. We use collar contracts to mitigate exposure to natural gas price volatility; these contracts serve as economic hedges (derivatives used for risk management but not designated as accounting hedges). We also have forward currency contracts to fix the rate of foreign currency. In addition, our precious metals catalyst financing arrangements discussed in Note 9 could require repayment under certain conditions based on the future pricing of platinum, which is an embedded derivative. These contracts are measured at fair value with offsetting adjustments (gains/losses) recorded directly to earnings. The following table presents the pre-tax effect on income due to maturities and fair value adjustments of our economic hedges:
|  |  |  | Gain (Loss) Recognized in Earnings
Derivatives Not Designated as Hedging Instruments |  | Income Statement Location |  | Three Months Ended June 30, |  | Six Months Ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
|  |  |  | (In thousands)
Commodity contracts |  | Cost of materials and other |  | $ | 1,538 |  |  | $ | 13,154 |  |  | $ | (19,127) |  |  | $ | 19,902 |
|  | Operating expenses |  | (1,665) |  |  | 3,648 |  |  | (1,878) |  |  | (10,410) |
|  | Interest expense |  | (3,993) |  |  | 2,514 |  |  | (1,230) |  |  | 4,920 |
Foreign currency contracts |  | Gain (loss) on foreign currency transactions |  | 3,540 |  |  | (8,716) |  |  | 13,671 |  |  | (8,602) |
|  | Total |  | $ | (580) |  |  | $ | 10,600 |  |  | $ | (8,564) |  |  | $ | 5,810 |
As of June 30, 2024, we have the following notional contract volumes related to outstanding derivative instruments:
|  |  |  | Notional Contract Volumes by Year of Maturity |  |  |  |
|  | Total Outstanding Notional |  | 2024 |  | 2025 |  |  |  |  |  | Unit of Measure
Derivatives Designated as Hedging Instruments |  |  |  |  |  |  |  |  |  |  |  |
Forward diesel contracts - short |  | 125,000 |  |  | 125,000 |  |  | — |  |  |  |  |  |  | Barrels
Derivatives Not Designated as Hedging Instruments |  |  |  |  |  |  |  |  |  |  |  |
NYMEX futures (WTI) - short |  | 1,790,000 |  | 1,790,000 |  | — |  |  |  |  |  | Barrels
Forward gasoline and diesel contracts - long |  | 150,000 |  | 150,000 |  | — |  |  |  |  |  | Barrels
Foreign currency forward contracts |  | 385,904,193 |  | 177,833,367 |  | 208,070,826 |  |  |  |  |  | U.S. dollar
Forward commodity contracts (platinum) |  | 34,628 |  | 2,047 |  | 32,581 |  |  |  |  |  | Troy ounces
Natural gas price swaps (basis spread) - long |  | 2,208,000 |  | 2,208,000 |  | — |  |  |  |  |  | MMBTU
The following tables present the fair value and balance sheet locations of our outstanding derivative instruments. These amounts are presented on a gross basis with offsetting balances that reconcile to a net asset or liability position in our consolidated balance sheets. We present on a net basis to reflect the net settlement of these positions in accordance with provisions of our master netting arrangements.
|  | Derivatives in Net Asset Position |  | Derivatives in Net Liability Position
|  | Gross Assets |  | Gross Liabilities Offset in Balance Sheet |  | Net Assets Recognized in Balance Sheet |  | Gross Liabilities |  | Gross Assets Offset in Balance Sheet |  | Net Liabilities Recognized in Balance Sheet
|  |  |  | (In thousands) |  |
June 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |
Derivatives designated as cash flow hedging instruments: |  |
Commodity forward contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 210 |  |  | $ | — |  |  | $ | 210 |
|  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 210 |  |  | $ | — |  |  | $ | 210 |
Derivatives not designated as cash flow hedging instruments: |  |
NYMEX futures contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 4,674 |  |  | $ | — |  |  | $ | 4,674 |
Commodity price swap contracts |  | — |  |  | — |  |  | — |  |  | 1,495 |  |  | — |  |  | 1,495 |
Commodity forward contracts |  | 574 |  |  | — |  |  | 574 |  |  | 528 |  |  | — |  |  | 528 |
Foreign currency forward contracts |  | 4,169 |  |  | (908) |  |  | 3,261 |  |  | 51 |  |  | — |  |  | 51 |
|  | $ | 4,743 |  |  | $ | (908) |  |  | $ | 3,835 |  |  | $ | 6,748 |  |  | $ | — |  |  | $ | 6,748 |
Total net balance |  |  |  |  |  | $ | 3,835 |  |  |  |  |  |  | $ | 6,958 |
Balance sheet classification: |  | Prepayment and other |  | $ | 3,835 |  |  | Accrued liabilities |  | $ | 6,958 |
|  | Derivatives in Net Asset Position |  | Derivatives in Net Liability Position
|  | Gross Assets |  | Gross Liabilities Offset in Balance Sheet |  | Net Assets Recognized in Balance Sheet |  | Gross Liabilities |  | Gross Assets Offset in Balance Sheet |  | Net Liabilities Recognized in Balance Sheet
|  |  |  | (In thousands) |  |
December 31, 2023 |  |
Derivatives not designated as cash flow hedging instruments: |  |
NYMEX futures contracts |  | $ | 836 |  |  | $ | — |  |  | $ | 836 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Commodity price swap contracts |  | — |  |  | — |  |  | — |  |  | 7,808 |  |  | — |  |  | 7,808 |
Commodity forward contracts |  | 2,908 |  |  | — |  |  | 2,908 |  |  | 1,848 |  |  | — |  |  | 1,848 |
Foreign currency forward contracts |  | — |  |  | — |  |  | — |  |  | 7,893 |  |  | — |  |  | 7,893 |
|  | $ | 3,744 |  |  | $ | — |  |  | $ | 3,744 |  |  | $ | 17,549 |  |  | $ | — |  |  | $ | 17,549 |
Total net balance |  |  |  |  |  | $ | 3,744 |  |  |  |  |  |  | $ | 17,549 |
Balance sheet classification: |  | Prepayment and other |  | $ | 3,744 |  |  | Accrued liabilities |  | $ | 17,549 |

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration