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Derivative Financial Instruments | 12 Months Ended
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Dec. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | (17) Derivative Financial Instruments Current period settlements on derivative contracts and Loss on derivatives, net were as follows:
| Year Ended December 31,
| 2017 |  | 2016 |  | 2015
| (in millions)
Current period settlement on derivative contracts | $ | (16.6 | ) |  | $ | 36.4 |  |  | $ | (26.0 | )
Loss on derivatives, net | (69.8 | ) |  | (19.4 | ) |  | (28.6 | )
The Refining Partnership and Nitrogen Fertilizer Partnership are subject to price fluctuations caused by supply conditions, weather, economic conditions, interest rate fluctuations and other factors. To manage price risk on crude oil and other inventories and to fix margins on certain future production, the Refining Partnership from time to time enters into various commodity derivative transactions. The Refining Partnership has adopted accounting standards which impose extensive record-keeping requirements in order to designate a derivative financial instrument as a hedge. The Refining Partnership holds derivative instruments, such as exchange-traded crude oil futures and certain over-the-counter forward swap agreements, which it believes provide an economic hedge on future transactions, but such instruments are not designated as hedges under GAAP. Gains or losses related to the change in fair value and periodic settlements of these derivative instruments are classified as gain (loss) on derivatives, net in the Consolidated Statements of Operations. There are no premiums paid or received at inception of the derivative contracts and upon settlement, there is no cost recovery associated with these contracts. The Refining Partnership maintains a margin account to facilitate other commodity derivative activities. A portion of this account may include funds available for withdrawal. These funds are included in cash and cash equivalents within the Consolidated Balance Sheets. The maintenance margin balance is included within other current assets within the Consolidated Balance Sheets. Dependent upon the position of the open commodity derivatives, the amounts are accounted for as other current assets or other current liabilities within the Consolidated Balance Sheets. From time to time, the Refining Partnership may be required to deposit additional funds into this margin account. There were no open commodity positions as of December 31, 2017 or 2016. For the years ended December 31, 2017, 2016 and 2015, the Refining Partnership recognized a net loss of $0.5 million, a net loss of $0.5 million, and a net gain of $3.2 million, respectively, which are recorded in loss on derivatives, net in the Consolidated Statements of Operations. Commodity Swaps The Refining Partnership enters into commodity swap contracts in order to fix the margin on a portion of future production. Additionally, the Refining Partnership may enter into price and basis swaps in order to fix the price on a portion of its commodity purchases and product sales. The physical volumes are not exchanged and these contracts are net settled with cash. The contract fair value of the commodity swaps is reflected on the Consolidated Balance Sheets with changes in fair value currently recognized in the Consolidated Statements of Operations. Quoted prices for similar assets or liabilities in active markets (Level 2) are considered to determine the fair values for the purpose of marking to market the hedging instruments at each period end. At December 31, 2017, the Refining Partnership had open commodity swap instruments consisting of 7.1 million barrels of 2-1-1 crack spreads, 3.6 million barrels of distillate crack spreads, and 3.6 million barrels of gasoline crack spreads. Additionally, as of December 31, 2017, CVR Refining had open forward purchase and sale commitments for 5.8 million barrels of Canadian crude oil priced at fixed differentials that are not considered probable of physical settlement and are accounted for as derivatives at December 31, 2017. At December 31, 2016, the Refining Partnership had open commodity hedging instruments consisting of 4.0 million barrels of crack spreads, primarily to fix the margin on a portion of its future gasoline and distillate production. Additionally, at December 31, 2015, the Refining Partnership had open commodity hedging instruments consisting of 1.4 million barrels primarily to fix the price on a portion of its future crude oil purchases or the basis on a portion of its future product sales. The fair value of the outstanding contracts at December 31, 2017 was a net unrealized loss of $64.3 million, of which the entire balance is included in other current liabilities. The fair value of the outstanding contracts at December 31, 2016 was a net unrealized loss of $11.1 million, of which entire balance is included in other current liabilities. For the years ended December 31, 2017, 2016 and 2015, the Refining Partnership recognized a net loss of $69.3 million, $18.9 million and $36.4 million, respectively, which are recorded in loss on derivatives, net in the Consolidated Statements of Operations. Counterparty Credit Risk The Refining Partnership's exchange-traded crude oil futures and certain over-the-counter forward swap agreements are potentially exposed to concentrations of credit risk as a result of economic conditions and periods of uncertainty and illiquidity in the credit and capital markets. The Refining Partnership manages credit risk on its exchange-traded crude oil futures by completing trades with an exchange clearinghouse, which subjects the trades to mandatory margin requirements until the contract settles. The Refining Partnership also monitors the creditworthiness of its commodity swap counterparties and assesses the risk of nonperformance on a quarterly basis. Counterparty credit risk identified as a result of this assessment is recognized as a valuation adjustment to the fair value of the commodity swaps recorded in the Consolidated Balance Sheets. As of December 31, 2017, the counterparty credit risk adjustment was not material to the consolidated financial statements. Additionally, the Refining Partnership does not require any collateral to support commodity swaps into which it enters; however, it does have master netting arrangements that allow for the setoff of amounts receivable from and payable to the same party, which mitigates the risk associated with nonperformance. Offsetting Assets and Liabilities The commodity swaps and other commodity derivatives agreements discussed above include multiple derivative positions with a number of counterparties for which the Refining Partnership has entered into agreements governing the nature of the derivative transactions. Each of the counterparty agreements provides for the right to setoff each individual derivative position to arrive at the net receivable due from the counterparty or payable owed by the Refining Partnership. As a result of the right to setoff, the Refining Partnership's recognized assets and liabilities associated with the outstanding derivative positions have been presented net in the Consolidated Balance Sheets. The tables below outline the gross amounts of the recognized assets and liabilities and the gross amounts offset in the Consolidated Balance Sheets for the various types of open derivative positions at the Refining Partnership. The offsetting assets and liabilities for the Refining Partnership's derivatives as of December 31, 2017 and 2016 are recorded as current assets and current liabilities in prepaid expenses and other current assets and accrued expenses and other current liabilities, respectively, in the Consolidated Balance Sheets as follows:
| As of December 31, 2017
Description | Gross Current Assets |  | Gross Amounts Offset |  | Net Current Assets Presented |  | Cash Collateral Not Offset |  | Net Amount
| (in millions)
Commodity Swaps | $ | 7.0 |  |  | $ | (7.0 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |
Total | $ | 7.0 |  |  | $ | (7.0 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |
| As of December 31, 2017
Description | Gross Current Liabilities |  | Gross Amounts Offset |  | Net Current Liabilities Presented |  | Cash Collateral Not Offset |  | Net Amount
| (in millions)
Commodity Swaps | $ | 71.3 |  |  | $ | (7.0 | ) |  | $ | 64.3 |  |  | $ | — |  |  | $ | 64.3 |
Total | $ | 71.3 |  |  | $ | (7.0 | ) |  | $ | 64.3 |  |  | $ | — |  |  | $ | 64.3 |
| As of December 31, 2016
Description | Gross Current Liabilities |  | Gross Amounts Offset |  | Net Current Liabilities Presented |  | Cash Collateral Not Offset |  | Net Amount
| (in millions)
Commodity Swaps | $ | 11.1 |  |  | $ | — |  |  | $ | 11.1 |  |  | $ | — |  |  | $ | 11.1 |
Total | $ | 11.1 |  |  | $ | — |  |  | $ | 11.1 |  |  | $ | — |  |  | $ | 11.1 |

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- References No definition available. + Details
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- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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