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Derivative Financial Instruments | 6 Months Ended
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Jun. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | (11) Derivative Financial Instruments CVR Refining and CVR Partners 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, CVR Refining from time to time enters into various commodity derivative transactions. CVR Refining does not apply hedge accounting with respect to derivative instruments held. 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 Condensed Consolidated Statements of Operations. CVR Refining has adopted accounting standards which impose extensive record-keeping requirements in order to designate a derivative financial instrument as a hedge. CVR Refining 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. There are no premiums paid or received at inception of the derivative contracts and upon settlement. CVR Refining enters into commodity swap contracts in order to fix the margin on a portion of future production. Additionally, CVR Refining 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 Condensed Consolidated Balance Sheets with changes in fair value currently recognized in the Condensed 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. A change of $1.00 per barrel in the fair value of the benchmark crude or product basis would result in an increase or decrease in the related fair value of the commodity instruments and forward purchase and sale commitments of $2 million.
Gain (Loss) on Derivatives
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
| (in millions)
Realized gain on commodity derivatives | $ | 19 |  |  | $ | — |  |  | $ | 33 |  |  | $ | 1 |
Realized loss on margin account | (2 | ) |  | — |  |  | (2 | ) |  | — |
Total realized gain on derivatives, net | $ | 17 |  |  | $ | — |  |  | $ | 31 |  |  | $ | 1 |
Open Commodity Derivative Instruments
| June 30, 2018 |  | December 31, 2017
| (in millions of barrels)
Commodity Swap Instruments: |  |  |
2-1-1 Crack spreads | — |  |  | 7 |
Distillate Crack spreads | — |  |  | 4 |
Gasoline Crack spreads | — |  |  | 4 |
Purchase and Sale Commitments: |  |  |
Canadian crude oil | 4 |  |  | 6 |
Fair Value of Commodity Derivatives
| June 30, 2018 |  | December 31, 2017
| (in millions)
Net unrealized gain (loss) on outstanding commodity derivative contracts | $ | (26 | ) |  | $ | (64 | )
Offsetting Assets and Liabilities The commodity swap agreements discussed above include multiple derivative positions with a number of counterparties for which CVR Refining 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 CVR Refining. As a result of the right to setoff, CVR Refining's recognized assets and liabilities associated with the outstanding commodity swap derivative positions have been presented net in the Condensed Consolidated Balance Sheets. The tables below outline the gross amounts of the recognized assets and liabilities and the gross amounts offset in the Condensed Consolidated Balance Sheets for the various types of open derivative positions at CVR Refining. The offsetting assets and liabilities for CVR Refining's derivatives as of June 30, 2018 and December 31, 2017 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 Condensed Consolidated Balance Sheets as follows:
| As of June 30, 2018
Description | Gross Current Assets |  | Gross Amounts Offset |  | Net Current Assets Presented |  | Cash Collateral Not Offset |  | Net Amount
| (in millions)
Commodity Derivatives | $ | 6 |  |  | $ | (5 | ) |  | $ | 1 |  |  | $ | — |  |  | $ | 1 |
Total | $ | 6 |  |  | $ | (5 | ) |  | $ | 1 |  |  | $ | — |  |  | $ | 1 |
| As of June 30, 2018
Description | Gross Current Liabilities |  | Gross Amounts Offset |  | Net Current Liabilities Presented |  | Cash Collateral Not Offset |  | Net Amount
| (in millions)
Commodity Derivatives | $ | 32 |  |  | $ | (5 | ) |  | $ | 27 |  |  | $ | — |  |  | $ | 27 |
Total | $ | 32 |  |  | $ | (5 | ) |  | $ | 27 |  |  | $ | — |  |  | $ | 27 |
| 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 Derivatives | $ | 7 |  |  | $ | (7 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |
Total | $ | 7 |  |  | $ | (7 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |
| 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 Derivatives | $ | 71 |  |  | $ | (7 | ) |  | $ | 64 |  |  | $ | — |  |  | $ | 64 |
Total | $ | 71 |  |  | $ | (7 | ) |  | $ | 64 |  |  | $ | — |  |  | $ | 64 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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