Fair Value of Financial Instruments

3 Months Ended

Jun. 30, 2024

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other current assets and liabilities (excluding derivative instruments) approximate fair value because of the short-term nature of these instruments. Therefore, these assets and liabilities are not presented in the following table.

Derivatives

The following table summarizes, by level within the fair value hierarchy, the estimated fair values of our derivative assets and liabilities reported in our unaudited condensed consolidated balance sheets at the dates indicated:


	June 30, 2024				March 31, 2024
	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
	(in thousands)
Level 1 measurements	$	6,195	$	(11,941)	$	4,798	$	(7,517)
Level 2 measurements	24,459		(23,139)		54,040		(37,345)
	30,654		(35,080)		58,838		(44,862)

Netting of counterparty contracts (1)	(6,195)		6,195		(4,798)		4,798
Net cash collateral provided	944		5,189		630		2,719
Derivatives	$	25,403	$	(23,696)	$	54,670	$	(37,345)

(1) Relates to commodity derivative assets and liabilities that are expected to be net settled on an exchange or through a master netting arrangement with the counterparty. Our physical contracts that do not qualify as normal purchase normal sale transactions are not subject to such master netting arrangements.

The following table summarizes the accounts that include our derivative assets and liabilities in our unaudited condensed consolidated balance sheets at the dates indicated:


	June 30, 2024		March 31, 2024
	(in thousands)
Prepaid expenses and other current assets	$	25,397	$	54,670
Other noncurrent assets	6		—
Accrued expenses and other payables	(22,268)		(36,679)
Other noncurrent liabilities	(1,428)		(666)
Net derivative asset	$	1,707	$	17,325

The following table summarizes our open derivative contract positions at the dates indicated. We do not account for these derivatives as hedges.


Contracts	Settlement Period	Net Long (Short) Notional Units (in barrels)	Fair Value of Net Assets (Liabilities)
		(in thousands)
At June 30, 2024:
Crude oil fixed-price (1)	July 2024–March 2025	(330)	$	(596)
Propane fixed-price (1)	July 2024–March 2026	14,704	(3,349)
Refined products fixed-price (1)	July 2024–January 2025	(341)	136
Butane fixed-price (1)	July 2024–March 2025	(1,157)	(4,052)
Variable-to-fixed interest rate swaps (2)	July 2024–April 2026		69
Other	July 2024–March 2025		3,366
			(4,426)
Net cash collateral provided			6,133
Net derivative asset			$	1,707

At March 31, 2024:
Crude oil fixed-price (1)	April 2024–March 2025	(174)	$	(3,000)
Propane fixed-price (1)	April 2024–April 2025	6,980	1,870
Refined products fixed-price (1)	April 2024–December 2024	(244)	518
Butane fixed-price (1)	April 2024–March 2025	(982)	(2,222)
Variable-to-fixed interest rate swap (2)	April 2024–April 2026		515
Other	April 2024–March 2025		16,295
			13,976
Net cash collateral provided			3,349
Net derivative asset			$	17,325

(1) We may have fixed price physical purchases, including inventory, offset by floating price physical sales or floating price physical purchases offset by fixed price physical sales. These contracts are derivatives we have entered into as an economic hedge against the risk of mismatches between fixed and floating price physical obligations.

(2) In March and April 2024, we entered into interest rate swaps totaling $400.0 million to reduce the variability of cash outflows associated with our floating-rate, SOFR-based borrowings, including borrowings on the Term Loan B. Under these arrangements, we pay fixed interest rates of 4.32% and 4.79%, respectively, in exchange for SOFR-based variable interest through April 2026. Changes in the fair value of the interest rate swaps are recorded as a net gain or loss within interest expense in our unaudited condensed consolidated statement of operations. During the three months ended June 30, 2024, there was $0.3 million of net gains on our interest rate swaps.

During the three months ended June 30, 2024 and 2023, we recorded net losses of $13.3 million and net gains of $12.9 million, respectively, from our commodity derivatives to revenues and cost of sales in our unaudited condensed consolidated statements of operations.

Credit Risk

We have credit policies that we believe minimize our overall credit risk, including an evaluation of potential counterparties’ financial condition (including credit ratings), collateral requirements under certain circumstances, and the use of industry standard master netting agreements, which allow for offsetting counterparty receivable and payable balances for certain transactions. At June 30, 2024, our primary counterparties were retailers, resellers, energy marketers, producers, refiners, and dealers. This concentration of counterparties may impact our overall exposure to credit risk, either positively or negatively, as the counterparties may be similarly affected by changes in economic, regulatory or other conditions. If a counterparty does not perform on a contract, we may not realize amounts that have been recorded in our unaudited condensed consolidated balance sheets and recognized in our net income.

Interest Rate Risk

The ABL Facility is variable-rate debt with interest rates that are generally indexed to the prime rate or SOFR. At June 30, 2024, we had $169.0 million of outstanding borrowings under the ABL Facility at a weighted average interest rate of 8.42%.

The Term Loan B is variable-rate debt with interest rates that are generally indexed to SOFR. At June 30, 2024, there was $698.3 million of outstanding borrowings under the Term Loan B with an interest rate of SOFR of 5.34% plus a margin of 4.50%.

In March and April 2024, we entered into interest rate swaps totaling $400.0 million to reduce the variability of cash outflows associated with our floating-rate, SOFR-based borrowings, including borrowings on the Term Loan B.

The current distribution rate for the Class B Preferred Units is a floating rate of the three-month LIBOR interest rate (5.30% for the quarter ended June 30, 2024) plus a spread of 7.213% (see Note 8 for a further discussion).

The current distribution rate for the Class C Preferred Units is a floating rate of the three-month LIBOR interest rate (5.30% for the quarter ended June 30, 2024) plus a spread of 7.384% (see Note 8 for a further discussion).

As of July 1, 2024, the holders of our Class D Preferred Units can elect, from time to time, for the distributions to be calculated based on a floating rate equal to the applicable three-month LIBOR interest rate (or alternative rate as determined in accordance with our Partnership Agreement) plus a spread of 7.00% (see Note 8 for a further discussion).

Fair Value of Fixed-Rate Notes

The following table provides fair value estimates of our fixed-rate notes at June 30, 2024 (in thousands):


2029 Senior Secured Notes	$	917,625
2032 Senior Secured Notes	$	1,322,750

For the 2029 Senior Secured Notes and 2032 Senior Secured Notes, the fair value estimates were developed based on publicly traded quotes and would be classified as Level 2 in the fair value hierarchy.