Derivative Instruments And Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2014

Derivative Instruments, Gain (Loss) [Line Items]

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The following table presents the pre-tax effect on other comprehensive income (“OCI”) and earnings due to fair value adjustments and maturities of commodity price swaps under hedge accounting:

	Unrealized Gain (Loss) Recognized in OCI			Gain (Loss) Recognized in Earnings Due to Settlements				Gain (Loss) Attributable to Hedge Ineffectiveness Recognized in Earnings
				Location	Amount			Location	Amount
	(In thousands)
Three Months Ended June 30, 2014
Commodity price swaps
Change in fair value	$	47,988		Sales and other revenues	$	(48,942	)
Gain reclassified to earnings due to settlements	(13,197		)	Cost of products sold	61,124
Amortization of discontinued hedges reclassified to earnings	270			Operating expenses	745			Operating expenses	$	1,354
Total	$	35,061			$	12,927			$	1,354
Three Months Ended June 30, 2013
Commodity price swaps
Change in fair value	$	24,764		Sales and other revenues	$	3,868		Sales and other revenues	$	550
Gain reclassified to earnings due to settlements	(6,589		)	Cost of products sold	1,930			Cost of products sold	(1,439		)
Amortization of discontinued hedges reclassified to earnings	270			Operating expenses	521			Operating expenses	106
Total	$	18,445			$	6,319			$	(783	)
Six Months Ended June 30, 2014
Commodity price swaps
Change in fair value	$	140,466		Sales and other revenues	$	(74,273	)
Gain reclassified to earnings due to settlements	(18,957		)	Cost of products sold	90,441
Amortization of discontinued hedge reclassified to earnings	540			Operating expenses	2,249			Operating expenses	$	(806	)
Total	$	122,049			$	18,417			$	(806	)
Six Months Ended June 30, 2013
Commodity price swaps
Change in fair value	$	14,360		Sales and other revenues	$	(15,316	)	Sales and other revenues	$	194
Loss reclassified to earnings due to settlements	20,611			Cost of products sold	(4,603		)	Cost of products sold	1,692
Amortization of discontinued hedge reclassified to earnings	360			Operating expenses	(1,052		)	Operating expenses	(259		)
Total	$	35,331			$	(20,971	)		$	1,627

Schedule of Notional Amounts of Outstanding Derivatives Serving as Cash Flow Hedges

As of June 30, 2014, we have the following notional contract volumes related to outstanding derivative instruments serving as cash flow hedges against price risk on forecasted purchases of natural gas and crude oil and sales of refined products:

		Notional Contract Volumes by Year of Maturity
Derivative Instrument	Total Outstanding Notional	2014	2015	2016	2017	Unit of Measure
Natural gas - long	33,600,000	4,800,000	9,600,000	9,600,000	9,600,000	MMBTU
WTI crude oil - long	18,456,000	14,076,000	4,380,000	—	—	Barrels
Ultra-low sulfur diesel - short	11,832,000	7,452,000	4,380,000	—	—	Barrels
Sub octane gasoline - short	6,624,000	6,624,000	—	—	—	Barrels
Forward sales - diesel and gasoline	100,000	100,000	—	—	—	Barrels

Schedule of Realized Gain (Loss)

The following table presents the pre-tax effect on income due to maturities and fair value adjustments of our economic hedges:

	Three Months Ended June 30,						Six Months Ended June 30,
Location of Gain (Loss) Recognized in Income	2014			2013			2014			2013
	(In thousands)
Cost of products sold	$	(24,432	)	$	1,839		$	(24,406	)	$	35,431
Operating expenses	(140		)	(308		)	(188		)	(5,301		)
Total	$	(24,572	)	$	1,531		$	(24,594	)	$	30,130

Schedule of Notional Amounts of Outstanding Derivative Positions

As of June 30, 2014, we have the following notional contract volumes related to our outstanding derivative contracts serving as economic hedges:

		Notional Contract Volumes by Year of Maturity
Derivative Instrument	Total Outstanding Notional	2014	2015	2016	2017	Unit of Measure
Commodity price swap (WCS spread) - long	3,220,000	3,220,000	—	—	—	Barrels
Commodity price swap (natural gas) - long	33,600,000	4,800,000	9,600,000	9,600,000	9,600,000	MMBTU
Commodity price swap (natural gas) - short	33,600,000	4,800,000	9,600,000	9,600,000	9,600,000	MMBTU
NYMEX futures (WTI) - short	2,935,000	2,935,000	—	—	—	Barrels

Schedule of Interest Rate Derivatives

The following table presents the pre-tax effect on other comprehensive income and earnings due to fair value adjustments and maturities of HEP's interest rate swaps under hedge accounting:

	Unrealized Gain (Loss) Recognized in OCI			Loss Recognized in Earnings Due to Settlements
				Location	Amount
	(In thousands)
Three Months Ended June 30, 2014
Interest rate swaps
Change in fair value	$	(1,299	)
Loss reclassified to earnings due to settlements	553			Interest expense	$	(553	)
Total	$	(746	)		$	(553	)
Three Months Ended June 30, 2013
Interest rate swaps
Change in fair value	$	2,897
Loss reclassified to earnings due to settlements	516			Interest expense	$	(516	)
Total	$	3,413			$	(516	)
Six Months Ended June 30, 2014
Interest rate swaps
Change in fair value	$	(1,742	)
Loss reclassified to earnings due to settlements	1,091			Interest expense	$	(1,091	)
Total	$	(651	)		$	(1,091	)
Six Months Ended June 30, 2013
Interest rate swaps
Change in fair value	$	2,955
Loss reclassified to earnings due to settlements	1,020
Amortization of discontinued hedge reclassified to earnings	849			Interest expense	$	(1,869	)
Total	$	4,824			$	(1,869	)

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table presents the fair value and balance sheet locations of our outstanding derivative instruments. These amounts are presented on a gross basis with offsetting balances that reconcile to a net asset or liability position in our consolidated balance sheets. We present on a net basis to reflect the net settlement of these positions in accordance with provisions of our master netting arrangements.

	Derivatives in Net Asset Position								Derivatives in Net Liability Position
	Gross Assets		Gross Liabilities Offset in Balance Sheet			Net Assets Recognized in Balance Sheet			Gross Liabilities		Gross Assets Offset in Balance Sheet			Net Liabilities Recognized in Balance Sheet
			(In thousands)
June 30, 2014
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts	$	156,904	$	(72,770	)	$	84,134		$	19,565	$	(16,448	)	$	3,117
Forward sales contracts	—		(196		)	(196		)	—		—			—
Interest rate swap contracts	834		—			834			1,629		—			1,629
	$	157,738	$	(72,966	)	$	84,772		$	21,194	$	(16,448	)	$	4,746
Derivatives not designated as cash flow hedging instruments:
Commodity price swap contracts	$	5,961	$	(2,709	)	$	3,252		$	9,091	$	(4,937	)	$	4,154
NYMEX futures contracts	—		—			—			3,337		—			3,337
	$	5,961	$	(2,709	)	$	3,252		$	12,428	$	(4,937	)	$	7,491
Total net balance						$	88,024							$	12,237
Balance sheet classification:	Prepayment and other					$	85,660		Accrued liabilities					$	3,337
	Intangibles and other					2,364			Other long-term liabilities					8,900
						$	88,024							$	12,237

	Derivatives in Net Asset Position						Derivatives in Net Liability Position
	Gross Assets		Gross Liabilities Offset in Balance Sheet		Net Assets Recognized in Balance Sheet		Gross Liabilities		Gross Assets Offset in Balance Sheet			Net Liabilities Recognized in Balance Sheet
			(In thousands)
December 31, 2013
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts	$	—	$	—	$	—	$	63,561	$	(23,679	)	$	39,882
Interest rate swap contracts	1,670		—		1,670		1,814		—			1,814
	$	1,670	$	—	$	1,670	$	65,375	$	(23,679	)	$	41,696
Derivatives not designated as cash flow hedging instruments:
Commodity price swap contracts	$	6,972	$	—	$	6,972	$	19,766	$	(12,611	)	$	7,155
NYMEX futures contracts	—		—		—		3,569		—			3,569
	$	6,972	$	—	$	6,972	$	23,335	$	(12,611	)	$	10,724
Total net balance					$	8,642						$	52,420
Balance sheet classification:	Prepayment and other				$	6,972	Accrued liabilities					$	26,843
	Intangibles and other				1,670		Other long-term liabilities					25,577
					$	8,642						$	52,420