Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2015

Derivative Financial Instruments

Schedule of notional amounts of derivative contracts

Derivative contracts not designated as hedging instruments	Financial Position	Notional Quantity (net)
Crude Oil (Bbl)	Short	201,800
Natural Gas (MMBtu)	Long	375,385
NGLs (Gal)	Short	80,351,908

Reconciliation of liability recorded for embedded derivative

See the following table for a reconciliation of the liability recorded for the embedded derivative as of September 30, 2015 (in thousands):

Fair value of commodity contract	$	(27,352	)
Inception value for period from October 1, 2015 to December 31, 2022	(48,407		)
Derivative asset as of September 30, 2015	$	21,055

Schedule of the impact of derivative instruments on the balance sheet and statement of operations

The impact of the Partnership’s derivative instruments on its Condensed Consolidated Balance Sheets is summarized below (in thousands):

	Assets				Liabilities
Derivative instruments not designated as hedging instruments and their balance sheet location	Fair Value at September 30, 2015		Fair Value at December 31, 2014		Fair Value at September 30, 2015			Fair Value at December 31, 2014
Commodity contracts(1)
Fair value of derivative contracts — current	$	18,077	$	20,921	$	(854	)	$	—
Fair value of derivative contracts — long-term	16,863		16,507		(20		)	—
Total	$	34,940	$	37,428	$	(874	)	$	—

(1) Includes Embedded Derivatives in Commodity Contracts as discussed above.

The impact of the Partnership’s derivative instruments on its Condensed Consolidated Statements of Operations is summarized below (in thousands):

Derivative contracts not designated as hedging instruments and the location of gain	Three months ended September 30,						Nine months ended September 30,
or (loss) recognized in income	2015			2014			2015			2014
Revenue: Derivative gain (loss)
Realized gain (loss)	$	11,745		$	(254	)	$	27,865		$	(9,635	)
Unrealized gain (loss)	3,674			12,083			(4,940		)	10,744
Total revenue: derivative gain	15,419			11,829			22,925			1,109
Derivative gain (loss) related to purchased product costs
Realized gain (loss)	43			(667		)	63			(925		)
Unrealized gain	9,000			14,231			2,185			10,323
Total derivative gain related to purchased product costs	9,043			13,564			2,248			9,398
Derivative loss related to facility expenses
Unrealized (loss)	(515		)	(1,128		)	(606		)	(2,905		)
Total gain	$	23,947		$	24,265		$	24,567		$	7,602

Schedule of impact on the balance sheet if Partnership had elected to net derivative positions subject to master netting arrangements

The table below summarizes the impact if the Partnership had elected to net its derivative positions that are subject to master netting arrangements (in thousands):

	Assets							Liabilities
As of September 30, 2015	Gross Amounts of Assets in the Condensed Consolidated Balance Sheet		Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet			Net Amount		Gross Amounts of Liabilities in the Condensed Consolidated Balance Sheet			Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet		Net Amount
Current
Commodity contracts	$	13,356	$	(248	)	$	13,108	$	(248	)	$	248	$	—
Embedded derivatives in commodity contracts	4,721		—			4,721		(606		)	—		(606		)
Total current derivative instruments	18,077		(248		)	17,829		(854		)	248		(606		)
Non-current
Commodity contracts	529		—			529		(20		)	—		(20		)
Embedded derivatives in commodity contracts	16,334		—			16,334		—			—		—
Total non-current derivative instruments	16,863		—			16,863		(20		)	—		(20		)
Total derivative instruments	$	34,940	$	(248	)	$	34,692	$	(874	)	$	248	$	(626	)

	Assets						Liabilities
As of December 31, 2014	Gross Amounts of Assets in the Condensed Consolidated Balance Sheet		Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet		Net Amount		Gross Amounts of Liabilities in the Condensed Consolidated Balance Sheet		Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet		Net Amount
Current
Commodity contracts	$	18,652	$	—	$	18,652	$	—	$	—	$	—
Embedded derivatives in commodity contracts	2,269		—		2,269		—		—		—
Total current derivative instruments	20,921		—		20,921		—		—		—
Non-current
Embedded derivatives in commodity contracts	16,507		—		16,507		—		—		—
Total non-current derivative instruments	16,507		—		16,507		—		—		—
Total derivative instruments	$	37,428	$	—	$	37,428	$	—	$	—	$	—