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Derivative Instruments and Hedging Activities | 6 Months Ended
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Jun. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Partnership’s results of operations could be materially impacted by changes in commodity prices and interest rates. In an effort to manage its exposure to these risks, the Partnership periodically enters into various derivative instruments, including commodity and interest rate hedges. At the time derivative contracts are entered into, the Partnership assesses whether the nature of the instrument qualifies for hedge accounting treatment according to the requirements of ASC 815 – Derivatives and Hedging. For those transactions designated as hedging instruments for accounting purposes, the Partnership documents all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking the various hedge transactions. The Partnership also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flows or fair value of hedged items. All derivatives and hedging instruments are included on the balance sheet as an asset or a liability measured at fair value. Changes in fair value for hedging instruments are recognized on the balance sheet through Accumulated Other Comprehensive Income ("AOCI"). Settlements related to effective hedging relationships will be reclassified from AOCI to earnings during the term at which the hedged transactions are reflected on the income statement. From time to time, derivatives designated for hedge accounting may be closed prior to contract expiration. The accounting treatment of closed positions depends on whether the closure occurred due to the hedged transaction occurring early or if the hedged transaction is still expected to occur as originally forecasted. For hedged transactions that occur early, the closure results in the realized gain or loss from closure being recognized in the same period the accelerated hedged transaction affects earnings. For hedged transactions that are still expected to occur as originally forecasted, the closure results in the realized gain or loss being deferred until the hedged transaction affects earnings. If it is determined that hedged transactions associated with cash flow hedges are no longer probable of occurring, the gain or loss associated with the instrument is recognized immediately into earnings. From time to time, we may have derivative financial instruments for which we do not elect hedge accounting. Changes in fair value for derivatives not designated as hedges are recognized as gains and losses in the earnings of the periods in which they occur. (a) Commodity Derivative Instruments The Partnership from time to time has used 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. The Partnership has established a hedging policy and monitors and manages the commodity market risk associated with potential commodity risk exposure. In addition, the Partnership has focused on utilizing counterparties for these transactions whose financial condition is appropriate for the credit risk involved in each specific transaction. The Partnership enters into hedging transactions to protect a portion of its commodity price risk exposure. These hedging arrangements are in the form of swaps for NGLs and settle against the applicable pricing source for each grade and location. At June 30, 2022 and December 31, 2021, the Partnership had instruments totaling a gross notional quantity of 0 barrels. For information regarding gains and losses on commodity derivative instruments, see "Tabular Presentation of Gains and Losses on Derivative Instruments" below. (b) Tabular Presentation of Gains and Losses on Derivative Instruments The following table summarizes the fair value and classification of the Partnership’s derivative instruments in its Consolidated and Condensed Balance Sheets:
| Derivative Assets | Derivative Liabilities
|  | Fair Values |  | Fair Values
| Balance Sheet Location | June 30, 2022 |  | December 31, 2021 | Balance Sheet Location | June 30, 2022 |  | December 31, 2021
Derivatives designated as hedging instruments: | Current: |  |  |  |  |  |  |
Commodity contracts | Fair value of derivatives | $ | — |  |  | $ | — |  | Fair value of derivatives | $ | — |  |  | $ | — |
The following table summarizes the gain (loss) recognized in AOCI at June 30, 2022 and December 31, 2021, respectively, and the gain (loss) reclassified from accumulated other comprehensive loss into earnings during the three months ended June 30, 2022 and 2021, respectively, for derivative financial instruments designated as cash flow hedges:
| Amount of Gain (Loss) Recognized in AOCI | Location of Gain (Loss) Reclassified from AOCI into Income | Amount of Gain (Loss) Reclassified from AOCI into Income
| 2022 |  | 2021 |  | 2022 |  | 2021
Commodity contracts | $ | 167 |  |  | $ | 816 |  | Cost of products sold | $ | (440) |  |  | $ | — |
Total | $ | 167 |  |  | $ | 816 |  |  | $ | (440) |  |  | $ | — |
The following table summarizes the gain (loss) recognized in AOCI at June 30, 2022 and December 31, 2021, respectively, and the gain (loss) reclassified from accumulated other comprehensive loss into earnings during the six months ended June 30, 2022 and 2021, respectively, for derivative financial instruments designated as cash flow hedges:
| Amount of Gain (Loss) Recognized in AOCI | Location of Gain (Loss) Reclassified from AOCI into Income | Amount of Gain (Loss) Reclassified from AOCI into Income
| 2022 |  | 2021 |  | 2022 |  | 2021
Commodity contracts | $ | 167 |  |  | $ | 816 |  | Cost of products sold | $ | 816 |  |  | $ | — |
Total | $ | 167 |  |  | $ | 816 |  |  | $ | 816 |  |  | $ | — |
The following tables summarize the gain (loss) recognized in earnings for derivative instruments not designated as hedging instruments during the three months ended June 30, 2022 and 2021, respectively:
| Location of Gain (Loss) Recognized in Income on Derivatives | Amount of Gain (Loss) Recognized in Income on Derivatives
|  | 2022 |  | 2021
Derivatives not designated as hedging instruments: |  |
Commodity contracts | Cost of products sold | $ | — |  |  | $ | 552 |
Total effect of derivatives not designated as hedging instruments | $ | — |  |  | $ | 552 |
The following tables summarize the gain (loss) recognized in earnings for derivative instruments not designated as hedging instruments during the six months ended June 30, 2022 and 2021, respectively:
| Location of Gain (Loss) Recognized in Income on Derivatives | Amount of Gain (Loss) Recognized in Income on Derivatives
|  | 2022 |  | 2021
Derivatives not designated as hedging instruments: |  |
Commodity contracts | Cost of products sold | $ | — |  |  | $ | (884) |
Total effect of derivatives not designated as hedging instruments | $ | — |  |  | $ | (884) |

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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 https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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