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Derivatives
 12 Months Ended
Dec. 31, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives
Derivatives
 
Diesel fuel price risk management
 
The Company is exposed to price risk with respect to diesel fuel purchased for use in its operations. The Company anticipates purchasing approximately 50 to 58 million gallons of diesel fuel for use in its operations during 2016. To protect the Company’s cash flows from increases in the price of diesel fuel for its operations, the Company may use forward physical diesel purchase contracts and purchase out-of-the-money heating oil call options to protect against substantial increases in pricing. At December 31, 2015, the Company had heating oil call options for approximately 56 million gallons at an average strike price of $1.98.

Coal risk management positions
 
The Company may sell or purchase forward contracts, swaps and options in the over-the-counter coal market in order to manage its exposure to coal prices. The Company has exposure to the risk of fluctuating coal prices related to forecasted sales or purchases of coal or to the risk of changes in the fair value of a fixed price physical sales contract. Certain derivative contracts may be designated as hedges of these risks.
 
At December 31, 2015, the Company held derivatives for risk management purposes that are expected to settle in the following years:
 
(Tons in thousands)
 
2016
 
2017
 
Total
Coal sales
 
480

 
—

 
480

Coal purchases
 
255

 
—

 
255



Coal trading positions
 
The Company may sell or purchase forward contracts, swaps and options in the over-the-counter coal market for trading purposes. The Company is exposed to the risk of changes in coal prices on the value of its coal trading portfolio. The unrecognized gains of $5.8 million in the trading portfolio are expected to be realized in 2016.

Tabular derivatives disclosures
 
The Company has master netting agreements with all of its counterparties which allow for the settlement of contracts in an asset position with contracts in a liability position in the event of default or termination. Such netting arrangements reduce the Company’s credit exposure related to these counterparties. For classification purposes, the Company records the net fair value of all the positions with a given counterparty as a net asset or liability in the consolidated balance sheets. The amounts shown in the table below represent the fair value position of individual contracts, and not the net position presented in the accompanying consolidated balance sheets.

 The fair value and location of derivatives reflected in the accompanying consolidated balance sheets are as follows:
 
 
December 31, 2015
 
 
 
December 31, 2014
 
 
Fair Value of Derivatives
 
Asset
 
Liability
 
 
 
Asset
 
Liability
 
 
(In thousands)
 
Derivative
 
Derivative
 
 
 
Derivative
 
Derivative
 
 
Derivatives Designated as Hedging Instruments
 
 

 
 

 
 

 
 

 
 

 
 

Coal
 
$
4

 
$
(20
)
 
 

 
$
6,535

 
$
(2,492
)
 
 

 
 


 


 
 
 


 


 
 

Derivatives Not Designated as Hedging Instruments
 
 

 
 

 
 

 
 

 
 

 
 

Heating oil -- diesel purchases
 
1,017

 
—

 
 

 
300

 
—

 
 

Coal held for trading purposes, exchange traded swaps and futures
 
110,653

 
(104,814
)
 
 

 
96,898

 
(93,272
)
 
 

Coal -- risk management
 
3,912

 
(1,947
)
 
 

 
8,510

 
(3,688
)
 
 

Natural gas
 
494

 
(247
)
 
 
 
—

 
—

 
 
Total
 
116,076

 
(107,008
)
 
 

 
105,708

 
(96,960
)
 
 

Total derivatives
 
116,080

 
(107,028
)
 
 

 
112,243

 
(99,452
)
 
 

Effect of counterparty netting
 
(107,028
)
 
107,028

 
 

 
(98,686
)
 
98,686

 
 

Net derivatives as classified in the balance sheets
 
$
9,052

 
$
—

 
$
9,052

 
$
13,557

 
$
(766
)
 
$
12,791

 
 
 
 
 
December 31,
 
 
 
 
2015
 
2014
Net derivatives as reflected on the balance sheets
 
 
 
 

 
 

Heating oil
 
Other current assets
 
$
1,017

 
$
300

Coal
 
Coal derivative assets
 
8,035

 
13,257

 
 
Accrued expenses and other current liabilities
 
—

 
(766
)
 
 
 
 
$
9,052

 
$
12,791


 
The Company had a current asset for the right to reclaim cash collateral of $1.7 million and a current liability for the obligation to return cash collateral of $2.4 million at December 31, 2015 and 2014, respectively. These amounts are not included with the derivatives presented in the table above and are included in "other current assets" and “other current liabilities”, respectively, in the accompanying consolidated balance sheets.

The effects of derivatives on measures of financial performance are as follows: 

Derivatives used in Cash Flow Hedging Relationships (in thousands)
For the year ended December 31,  
 
 
Gain (Loss) Recognized in Other Comprehensive Income (Effective Portion)
 
 
 
Gains (Losses) Reclassified from Other Comprehensive Income into Income
(Effective Portion)
 
 
 
2015
 
2014
 
2013
 
 
 
2015
 
2014
 
2013
 
Coal sales
(1) 
$
12,816

 
$
10,842

 
(338
)
 
 
 
$
18,635

 
$
5,336

 
$
3,664

 
Coal purchases
(2) 
(6,718
)
 
(5,097
)
 
526

 
 
 
(9,060
)
 
(2,693
)
 
(683
)
 
 
 
$
6,098

 
$
5,745

 
$
188

 
 
 
$
9,575

 
$
2,643

 
$
2,981

 
 
No ineffectiveness or amounts excluded from effectiveness testing relating to the Company’s cash flow hedging relationships were recognized in the results of operations in the years ended December 31, 2015, 2014 and 2013.  
 


Derivatives Not Designated as Hedging Instruments (in thousands)
For the year ended December 31,
 
 
Gain (Loss) Recognized
 
 
2015
 
2014
 
2013
Coal — unrealized
(3) 
$
(3,883
)
 
$
430

 
$
(12,700
)
Coal — realized
(4) 
$
3,236

 
$
5,956

 
$
32,534

Heating oil — diesel purchases
(4) 
$
(8,294
)
 
$
(7,848
)
 
$
(9,791
)
Heating oil — fuel surcharges
(4) 
$
—

 
$
(405
)
 
$
(947
)
Natural gas
 
$
878

 
$
—

 
$
—

Foreign currency
 
$
(887
)
 
$
—

 
$
—



Location in statement of operations:
(1) — Revenues
(2) — Cost of sales
(3) — Change in fair value of coal derivatives and coal trading activities, net
(4) — Other operating income, net

    
The Company recognized net unrealized and realized gains of $5.7 million, $3.2 million, and $4.9 million during the years ended December 31, 2015, 2014 and 2013, respectively, related to its trading portfolio, which are included in the caption “Change in fair value of coal derivatives and coal trading activities, net” in the accompanying consolidated statements of operations, and are not included in the previous tables reflecting the effects of derivatives on measures of financial performance.
 
Based on fair values at December 31, 2015, losses on derivative contracts designated as hedge instruments in cash flow hedges expected to be reclassified from other comprehensive income into earnings during the next twelve months are immaterial.