Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2015

Schedule of the volume of activity related to the derivative financial instruments

The following table summarizes the notional values related to the Partnership’s derivative instruments outstanding at March 31, 2015:

		Units (1)		Unit of Measure

Exchange-Traded Derivatives
Long		46,736		Thousands of barrels
Short		(50,292	)	Thousands of barrels

OTC Derivatives (Petroleum/Ethanol)
Long		13,318		Thousands of barrels
Short		(10,167	)	Thousands of barrels

OTC Derivatives (Natural Gas)
Long		10,607		Thousands of decatherms
Short		(10,661	)	Thousands of decatherms

Interest Rate Swaps	$	200.0		Millions of U.S. dollars
Interest Rate Cap	$	100.0		Millions of U.S. dollars

Foreign Currency Derivatives
Open Forward Exchange Contracts (2)	$	6.0		Millions of Canadian dollars
	$	4.7		Millions of U.S. dollars

(1)Number of open positions and gross notional values do not measure the Partnership’s risk of loss, quantify risk or represent assets or liabilities of the Partnership, but rather indicate the relative size of the derivative instruments and are used in the calculation of the amounts to be exchanged between counterparties upon settlements.

(2)All-in forward rate Canadian dollars (“CAD”) $1.2662 to USD $1.00.

Derivative Financial Instruments

Schedule of the amount of gains and losses from derivatives not involved in a fair value hedging relationship or in a hedging relationship recognized in the consolidated statements of income

The following table presents the gains and losses from the Partnership’s derivative instruments not involved in hedging relationships recognized in the consolidated statements of income for the three months ended March 31, 2015 and 2014 (in thousands):

	Statement of Gain (Loss)	Three Months Ended
	Recognized in Income on	March 31,
	Derivatives	2015		2014
Derivatives NOT designated as hedging instruments
Commodity contracts	Cost of sales	$	3,651	$	15,543
Forward foreign currency contracts	Cost of sales	18		(57		)
Total		$	3,669	$	15,486

Derivatives in Fair Value Hedging Relationships

Derivative Financial Instruments

Schedule of net gains and losses from derivatives recognized in consolidated statements of operations

The following table presents the gains and losses from the Partnership’s derivative instruments involved in fair value hedging relationships recognized in the consolidated statements of income for the three months ended March 31, 2015 and 2014 (in thousands):

	Statement of Gain (Loss)	Three Months Ended
	Recognized in Income on	March 31,
	Derivatives	2015			2014
Derivatives in fair value hedging relationship
Exchange-traded futures contracts for petroleum commodity products	Cost of sales	$	26,176		$	16,373

Hedged items in fair value hedge relationship
Physical inventory	Cost of sales	$	(23,621	)	$	(16,209	)

Cash Flow Hedges

Derivative Financial Instruments

Schedule of fair values of derivative instruments and location in consolidated balance sheets

The following table presents the amount of gains and losses from the Partnership’s derivative instruments designated in cash flow hedging relationships recognized in the consolidated statements of income and partners’ equity for the three months ended March 31, 2015 and 2014 (in thousands):

	Amount of Gain (Loss)					Location of Gain (Loss)
	Recognized in Other					Reclassified from	Amount of Gain (Loss)
	Comprehensive Income on					Accumulated Other	Reclassified from Other
	Derivatives					Comprehensive Income into	Comprehensive Income into
	(Effective Portion)					Income (Effective Portion)	Income (Effective Portion)
Derivatives Designated	Three Months Ended						Three Months Ended
in Cash Flow Hedging	March 31,						March 31,
Relationship	2015		2014				2015		2014
Interest rate swaps	$	47	$	677		Interest expense	$	—	$	—
Interest rate cap (1)	—		(18		)	Interest expense	—		—
Total	$	47	$	659			$	—	$	—

(1)

The interest rate cap was de-designated as a cash flow hedge in June 2014. Prepaid interest rate caplet amounts recognized in accumulated other comprehensive income up until the date of de-designation have been frozen in partner’s equity as of the de-designation date and are being amortized to income through the tenor of the interest rate cap instrument. The change in the fair value of the interest rate cap following de-designation is reflected in earnings and was immaterial for the three months ended March 31, 2015. As of March 31, 2015, the remaining unamortized prepaid interest rate caplets were $0.9 million and will be amortized over the remaining life for the interest rate cap which expires in April 2016.

Schedule of net gains and losses from derivatives recognized in consolidated statements of operations

The following table presents the fair value of each classification of the Partnership’s derivative instruments and its location in the consolidated balance sheets at March 31, 2015 and December 31, 2014 (in thousands):

		March 31, 2015
		Derivatives		Derivatives Not
		Designated as		Designated as
		Hedging		Hedging
	Balance Sheet Location	Instruments		Instruments		Total
Asset Derivatives
Exchange-traded derivative contracts	Broker margin deposits	$	17,895	$	60,354	$	78,249
Forward derivative contracts (1)	Derivative assets	—		57,470		57,470
Forward foreign currency contracts	Other Assets	—		27		27
Interest rate cap contract	Other assets	—		17		17
Total asset derivatives		$	17,895	$	117,868	$	135,763

Liability Derivatives
Forward derivative contracts (1)	Derivative liabilities	$	—	$	48,272	$	48,272
Interest rate swap contracts	Other long-term liabilities	—		6,649		6,649
Total liability derivatives		$	—	$	54,921	$	54,921

		December 31, 2014
		Derivatives		Derivatives Not
		Designated as		Designated as
		Hedging		Hedging
	Balance Sheet Location	Instruments		Instruments		Total
Asset Derivatives
Exchange-traded derivative contracts	Broker margin deposits	$	30,600	$	90,890	$	121,490
Forward derivative contracts (1)	Derivative assets	—		83,826		83,826
Forward foreign currency contracts	Other Assets	—		9		9
Interest rate cap contract	Other assets	—		17		17
Total asset derivatives		$	30,600	$	174,742	$	205,342

Liability Derivatives
Forward derivative contracts (1)	Derivative liabilities	$	—	$	58,507	$	58,507
Interest rate swap contracts	Other long-term liabilities	—		6,696		6,696
Total liability derivatives		$	—	$	65,203	$	65,203

(1)

Forward derivative contracts include the Partnership’s petroleum and ethanol physical and financial forwards and OTC swaps.