Derivatives

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Commodity Derivatives

We utilize commodity derivative contracts to manage our price exposure in our inventory positions, future purchases of crude oil, future purchases and sales of refined products, and crude oil consumption in our refining process. The derivative contracts that we execute to manage our price risk include exchange traded futures, options, and OTC swaps. Our futures, options, and OTC swaps are marked-to-market and changes in the fair value of these contracts are recognized within Cost of revenues (excluding depreciation) on our consolidated statements of operations.

We are obligated to repurchase the crude oil from Citi at the termination of the Inventory Intermediation Agreement. On May 31, 2024, we repurchased the crude oil and refined products from J. Aron at the expiration of the Supply and Offtake Agreement. Our Washington Refinery Intermediation Agreement contained forward purchase obligations for certain volumes of crude oil and refined products that were required to be settled at market prices on a monthly basis. Thus, we have determined that the obligations under the current Inventory Intermediation Agreement contains, and those under the previously terminated Supply and Offtake Agreement and Washington Refinery Intermediation Agreement contained, embedded derivatives. As such, we have accounted for the embedded derivatives contained in the aforementioned agreements at fair value with changes in the fair value recorded in Cost of revenues (excluding depreciation) on our consolidated statements of operations for the years ended December 31, 2024 and 2023.

We have entered into forward purchase contracts for crude oil, forward purchases and sales contracts of refined products, and forward purchase contracts for environmental credits. We elect the normal purchases normal sales (“NPNS”) exception for all forward contracts that meet the definition of a derivative and are not expected to net settle. Any gains and losses with respect to these forward contracts designated as NPNS are not reflected in earnings until the delivery occurs.

We elect to offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting agreement. Our consolidated balance sheets present derivative assets and liabilities on a net basis. Please read Note 16—Fair Value Measurements for the gross fair value and net carrying value of our derivative instruments. Our cash margin that is required as collateral deposits cannot be offset against the fair value of open contracts except in the event of default.

Our open futures and OTC swaps expire in December 2025. At December 31, 2024, our open commodity derivative contracts represented (in thousands of barrels):


Contract type	Purchases	Sales	Net
Futures	88,901	(94,018)	(5,117)
Swaps	5,249	(5,899)	(650)
Total	94,150	(99,917)	(5,767)

At December 31, 2024, we also had option collars that economically hedge a portion of our internally consumed fuel at our refineries. The following table provides information on these option collars at our refineries as of December 31, 2024:




Total open option collars	2,430
Weighted-average strike price - floor (in dollars)	$	58.15
Weighted-average strike price - ceiling (in dollars)	$	83.68
Earliest commencement date	January 2025
Furthest expiry date	December 2025

Interest Rate Derivatives

We are exposed to interest rate volatility in our ABL Credit Facility, Term Loan Credit Agreement, and the Inventory Intermediation Agreement. We may utilize interest rate swaps to manage our interest rate risk. On April 12, 2023, we entered into an interest rate collar transaction to manage our interest rate risk related to the Term Loan Credit Agreement. The interest rate collar agreement reduces variable interest rate risk from May 31, 2023, through May 31, 2026, with a notional amount of $300.0 million as of December 31, 2024. The terms of the agreement provide for an interest rate cap of 5.50% and floor of 2.30%, based on the three-month SOFR as of the fixing date. The interest rate collar transaction expires on May 31, 2026.

The following table provides information on the fair value amounts (in thousands) of these derivatives as of December 31, 2024 and 2023, and their placement within our consolidated balance sheets.


		December 31,
	Balance Sheet Location	2024		2023
		Asset (Liability)
Commodity derivatives (1)	Prepaid and other current assets	$	10,591	$	43,356

Commodity derivatives (2)	Other accrued liabilities	(13,456)		(530)


J. Aron repurchase obligation derivative	Obligations under inventory financing agreements	—		(392)
Citi repurchase obligation derivative	Obligations under inventory financing agreements	(1,588)		—



Interest rate derivatives	Other liabilities	(24)		(821)

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(1)Does not include cash collateral of $38.6 million and $21.8 million recorded in Prepaid and other current assets as of December 31, 2024, and 2023, respectively, and $9.5 million in Other long-term assets as of December 31, 2023. As of December 31, 2024, we had no cash collateral recorded in Other long-term assets. Does not include $2.3 million recorded in Prepaid and other current assets as of December 31, 2024, related to realized derivatives receivable.

(2)Does not include $6.1 million and $27.2 million recorded in Other accrued liabilities as of December 31, 2024, and 2023, respectively, related to realized derivatives payable.

The following table summarizes the pre-tax gains (losses) recognized in Net income (loss) on our consolidated statements of operations resulting from changes in fair value of derivative instruments not designated as hedges charged directly to earnings (in thousands):


		Year Ended December 31,
	Statement of Operations Classification	2024		2023		2022
Commodity derivatives	Cost of revenues (excluding depreciation)	$	9,615	$	(16,701)	$	(65,814)
J. Aron repurchase obligation derivative	Cost of revenues (excluding depreciation)	1,053		11,764		2,995
Citi repurchase obligation derivative	Cost of revenues (excluding depreciation)	(1,588)		—		—
MLC terminal obligation derivative	Cost of revenues (excluding depreciation)	—		(34,149)		(49,636)
Interest rate derivatives	Interest expense and financing costs, net	796		(821)		—