Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2013

Derivative Instruments

Derivatives designated and not designated as hedging instruments

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
	(Thousands)
Commodity derivatives designated as cash flow hedges
Amount of gain (loss) recognized in OCI (effective portion), net of tax	$	73,429	$	(8,930)	$	20,828	$	98,558
Amount of gain reclassified from accumulated OCI into operating revenues (effective portion), net of tax	$	10,490	$	55,286	$	36,323	$	103,272
Amount of loss recognized in operating revenues (ineffective portion) (a)	$	(7,473)	$	(212)	$	(7,954)	$	(243)

Interest rate derivatives designated as cash flow hedges
Amount of loss recognized in OCI (effective portion), net of tax	$	–		$	(6,670	)	$	–		$	(4,297	)
Amount of loss reclassified from accumulated OCI, net of tax, into interest expense (effective portion)	$	(36	)	$	(64	)	$	(72	)	$	(129	)
Commodity derivatives designated as fair value hedges (b)
Amount of gain (loss) recognized in operating revenues for fair value commodity contracts	$	2,700		$	(2,378	)	$	(839	)	$	4,694
Fair value (loss) gain recognized in operating revenues for inventory designated as hedged item	$	(4,075	)	$	8,388		$	462		$	(1,543	)
Derivatives not designated as hedging instruments
Amount of gain (loss) recognized in operating revenues	$	1,512		$	(790	)	$	1,250		$	1,673

(a) No amounts have been excluded from effectiveness testing of cash flow hedges.

(b) For the three months ended June 30, 2013, the net impact on operating revenues associated with commodity derivatives designated as fair value hedges was a $0.8 million gain which resulted from the Company’s election to exclude the spot/forward differential from the assessment of effectiveness of the fair value hedges and a $2.2 million loss due to changes in basis. For the three months ended June 30, 2012, the net impact on operating revenues associated with commodity derivatives designated as fair value hedges was a $6.0 million gain which resulted from the Company’s election to the exclude the spot/forward differential from the assessment of effectiveness of the fair value hedges. For the six months ended June 30, 2013, the net impact on operating revenues associated with commodity derivatives designated as fair value hedges was a $2.1 million gain which resulted from the Company’s election to exclude the spot/forward differential from the assessment of effectiveness of the fair value hedges and a $2.5 million loss due to changes in basis. For the six months ended June 30, 2012, the net impact on operating revenues associated with commodity derivatives designated as fair value hedges was a $2.8 million gain which resulted from the Company’s election to exclude the spot/forward differential from the assessment of effectiveness of the fair value hedges and a $0.4 million loss due to changes in basis.

Asset and liability derivatives

	As of June 30,		As of December 31,
	2013		2012
	(Thousands)
Asset derivatives
Commodity derivatives designated as hedging instruments	$	206,776	$	259,459
Commodity derivatives not designated as hedging instruments	23,363		44,778
Total asset derivatives	$	230,139	$	304,237
Liability derivatives
Commodity derivatives designated as hedging instruments	$	12,301	$	27,946
Commodity derivatives not designated as hedging instruments	24,170		47,616
Total liability derivatives	$	36,471	$	75,562

Schedule of impact of netting agreements and margin deposits on gross derivative assets and liabilities

As of June 30, 2013	Derivative instruments, recorded in the Condensed Consolidated Balance Sheet, gross		Derivative instruments subject to master netting agreements		Margin deposits remitted to counterparties		Derivative instruments, net
	(Thousands)
Asset derivatives:
Derivative instruments, at fair value	$	230,139	$	(35,437)	$	–	$	194,702
Liability derivatives:
Derivative instruments, at fair value	$	36,471	$	(35,437)	$	(656)	$	378
As of December 31, 2012	Derivative instruments, recorded in the Condensed Consolidated Balance Sheet, gross		Derivative instruments subject to master netting agreements		Margin deposits remitted to counterparties		Derivative instruments, net
	(Thousands)
Asset derivatives:
Derivative instruments, at fair value	$	304,237	$	(73,753)	$	–	$	230,484
Liability derivatives:
Derivative instruments, at fair value	$	75,562	$	(73,753)	$	(736)	$	1,073