COMMODITY DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company utilizes derivative instruments to manage its exposure to fluctuations in the underlying commodity prices of its inventory. The Company’s management sets and implements hedging policies, including volumes, types of instruments and counterparties, to support oil prices at targeted levels and manage its exposure to fluctuating prices.

The Company’s derivative instruments consist of option and futures arrangements for oil. For option and futures arrangements, the Company receives the difference positive or negative between an agreed-upon strike price and the market price.

The mark-to-market effects of these contracts as of June 30, 2023 and December 31, 2022, are summarized in the following table. The notional amount is equal to the total net volumetric derivative position during the period indicated. The fair value of the crude oil futures agreements is based on the difference between the strike price and the New York Mercantile Exchange and Brent Complex futures price for the applicable trading months.


As of June 30, 2023
Contract Type	Contract Period	Weighted Average Strike Price (Barrels)		Remaining Volume (Barrels)	Fair Value
				(in thousands)	(in thousands)
Futures	Jun 2023 - Aug 2023	$	29.53	56	$	(18)
Futures	Jun. 2023 - Sept. 2023	$	31.39	20	$	(14)
Futures	May 2023 - Aug. 2023	$	20.55	9	$	(69)
Futures	May 2023 - Dec. 2023	$	20.22	438	$	(2,844)
Swap	Jun 2023 - Aug 2023	$	2.56	5	$	(13)
Swap	Jun 2023 - Aug 2023	$	2.87	5	$	(14)
Swap	Jun. 2023 - Sept. 2023	$	2.02	8	$	(16)
Swap	Jun. 2023 - Jul. 2023	$	4.55	48	$	(218)
Swap	Jun. 2023 - Aug. 2023	$	3.14	48	$	(151)


As of December 31, 2022
Contract Type	Contract Period	Weighted Average Strike Price (Barrels)		Remaining Volume (Barrels)	Fair Value
				(in thousands)	(in thousands)
Swap	Nov. 2022 - Feb. 2023	$	4.19	5	$	(42)
Swap	Nov. 2022 - Feb. 2023	$	5.51	3	$	(27)
Futures	Sept. 2022 - Dec. 2022	$	32.14	25	$	76
Futures	Sept. 2022 - Dec. 2022	$	23.57	35	$	(92)
Futures	Nov. 2022 - Feb. 2023	$	33.71	10	$	(23)
Futures	Sept. 2022 - Dec. 2022	$	23.75	10	$	30
Futures	Dec. 2022 - Mar. 2023	$	36.08	35	$	(74)
Futures	Dec. 2022 - Apr. 2023	$	35.97	1,000	$	(1,100)
Futures	Dec. 2022 - May. 2023	$	35.81	1,000	$	(1,070)
Futures	Dec. 2022 - Jun. 2023	$	35.60	1,000	$	2,080

The carrying values of the Company’s derivatives positions and their locations on the consolidated balance sheets as of June 30, 2023 and December 31, 2022 are presented in the table below (in thousands):


Balance Sheet Classification	Contract Type	June 30, 2023		December 31, 2022

	Crude oil futures	$	—	$	2,186

	Soybean oil futures	(2,913)		(69)
	Crude oil futures	(32)		(2,359)
	Gas swap	(383)		—
	ULSD swap	(29)		—

Derivative commodity asset(liability)		$	(3,357)	$	(242)

For the three months ended June 30, 2023 and 2022, we recognized $3.6 million and $94.8 million of loss, respectively, on commodity derivative contracts on the consolidated statements of operations as part of our cost of revenues.

For the six months ended June 30, 2023 and 2022, we recognized $2.1 million and $98.3 million of loss, respectively, on commodity derivative contracts on the consolidated statements of operations as part of our cost of revenues.