v3.19.3

Derivative Financial Instruments (Tables) | 9 Months Ended
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Sep. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Schedule Of NYMEX Contracts And Butane Price Swap Purchase Agreements | Our open futures contracts at September 30, 2019 were as follows:
Type of Contract/Accounting Methodology |  | Product Represented by the Contract and Associated Barrels |  | Maturity Dates
Futures - Economic Hedges |  | 4.5 million barrels of refined products and crude oil |  | Between October 2019 and April 2020
Futures - Economic Hedges |  | 1.5 million barrels of butane and natural gasoline |  | Between October 2019 and April 2020
Derivatives and Offset Amounts | A schedule of the derivative amounts we have offset and the deposit amounts we could offset under a master netting arrangement are provided below as of December 31, 2018 and September 30, 2019 (in thousands):
Description |  | Gross Amounts of Recognized Assets (Liabilities) |  | Gross Amounts of Assets (Liabilities) Offset in the Consolidated Balance Sheets |  | Net Amounts of Assets (Liabilities) Presented in the Consolidated Balance Sheets |  | Margin Deposit Amounts Not Offset in the Consolidated Balance Sheets |  | Net Asset Amount(1)
As of 12/31/2018 |  | $ | 62,166 |  |  | $ | (7,155 | ) |  | $ | 55,011 |  |  | $ | (37,328 | ) |  | $ | 17,683 |
As of 9/30/2019 |  | $ | 16,978 |  |  | $ | (12,139 | ) |  | $ | 4,839 |  |  | $ | 21,811 |  |  | $ | 26,650 |
(1) | Amount represents the maximum loss we would incur if all of our counterparties failed to perform on their derivative contracts.
Basis Derivative Agreement During 2019, we entered into a basis derivative agreement with a joint venture co-owner’s affiliate, and, contemporaneously, that affiliate entered into an intrastate transportation services agreement with the joint venture. Settlements under the basis derivative agreement are determined based on the basis differential of crude oil prices at different market locations and a notional volume of 30,000 barrels per day. As a result, we account for this agreement as a derivative. The agreement will expire in early 2022. We recognize the changes in fair value of this agreement based on forward price curves for crude oil in West Texas and the Houston Gulf Coast in other operating income (expense) in our consolidated statements of income. The liability for this agreement at September 30, 2019 was $17.8 million.
Derivative Gains Included in Accumulated Other Comprehensive Loss (AOCL) | The changes in derivative activity included in AOCL for the three and nine months ended September 30, 2018 and 2019 were as follows (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
Derivative Losses Included in AOCL | 2018 |  | 2019 |  | 2018 |  | 2019
Beginning balance | $ | (25,165 | ) |  | $ | (36,287 | ) |  | $ | (33,755 | ) |  | $ | (26,480 | )
Net gain (loss) on cash flow hedges | 6,852 |  |  | (14,181 | ) |  | 13,963 |  |  | (25,216 | )
Reclassification of net loss on cash flow hedges to income | 740 |  |  | 699 |  |  | 2,219 |  |  | 1,927 |
Ending balance | $ | (17,573 | ) |  | $ | (49,769 | ) |  | $ | (17,573 | ) |  | $ | (49,769 | )
Derivatives and Hedging-Cash Flow Hedges | The following is a summary of the effect on our consolidated statements of income for the three and nine months ended September 30, 2018 and 2019 of derivatives that were designated as cash flow hedges (in thousands):
|  | Interest Rate Contracts
|  | Amount of Gain (Loss) Recognized in AOCL on Derivatives |  | Location of Loss Reclassified from AOCL into Income |  | Amount of Loss Reclassified from AOCL into Income
Three Months Ended September 30, 2018 |  | $ | 6,852 |  |  | Interest expense |  | $ | (740 | )
Three Months Ended September 30, 2019 |  | $ | (14,181 | ) |  | Interest expense |  | $ | (699 | )
Nine Months Ended September 30, 2018 |  | $ | 13,963 |  |  | Interest expense |  | $ | (2,219 | )
Nine Months Ended September 30, 2019 |  | $ | (25,216 | ) |  | Interest expense |  | $ | (1,927 | )
Derivatives and Hedging-Overall-Subsequent Measurement | The following table provides a summary of the effect on our consolidated statements of income for the three and nine months ended September 30, 2018 and 2019 of derivatives that were not designated as hedging instruments (in thousands):
|  |  |  | Amount of Gain (Loss) Recognized on Derivatives
|  |  |  | Three Months Ended |  | Nine Months Ended
|  | Location of Gain (Loss) Recognized on Derivatives |  | September 30, |  | September 30,
Derivative Instrument |  |  | 2018 |  | 2019 |  | 2018 |  | 2019
Futures contracts |  | Product sales revenue |  | $ | (24,354 | ) |  | $ | 17,626 |  |  | $ | (70,140 | ) |  | $ | (41,504 | )
Futures contracts |  | Cost of product sales |  | 11,665 |  |  | (5,581 | ) |  | 16,058 |  |  | (9,456 | )
Basis derivative agreement |  | Other operating income (expense) |  | — |  |  | (3,910 | ) |  | — |  |  | (8,869 | )
|  | Total |  | $ | (12,689 | ) |  | $ | 8,135 |  |  | $ | (54,082 | ) |  | $ | (59,829 | )
Derivatives and Hedging-Designated | The following table provides a summary of the fair value of derivatives, which are presented on a net basis in our consolidated balance sheets, that were designated as hedging instruments as of December 31, 2018 (in thousands). There were no balances outstanding at September 30, 2019.
|  | December 31, 2018
|  | Asset Derivatives |  | Liability Derivatives
Derivative Instrument |  | Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Futures contracts |  | Energy commodity derivatives contracts, net |  | $ | 462 |  |  | Energy commodity derivatives contracts, net |  | $ | — |
Interest rate contracts |  | Other current assets |  | 312 |  |  | Other current liabilities |  | 8,438 |
|  | Total |  | $ | 774 |  |  | Total |  | $ | 8,438 |
The following tables provide a summary of the fair value of derivatives, which are presented on a net basis in our consolidated balance sheets, that were not designated as hedging instruments as of December 31, 2018 and September 30, 2019 (in thousands):
|  | December 31, 2018
|  | Asset Derivatives |  | Liability Derivatives
Derivative Instrument |  | Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Futures contracts |  | Energy commodity derivatives contracts, net |  | $ | 61,704 |  |  | Energy commodity derivatives contracts, net |  | $ | 7,155 |
|  | September 30, 2019
|  | Asset Derivatives |  | Liability Derivatives
Derivative Instrument |  | Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Futures contracts |  | Energy commodity derivatives contracts, net |  | $ | 16,978 |  |  | Energy commodity derivatives contracts, net |  | $ | 12,139 |
Basis derivative agreement |  | Other current assets |  | — |  |  | Other current liabilities |  | 8,957 |
Basis derivative agreement |  | Other noncurrent assets |  | — |  |  | Other noncurrent liabilities |  | 8,798 |
|  | Total |  | $ | 16,978 |  |  | Total |  | $ | 29,894 |

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