Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Note 6 - Derivative Instruments and Hedging Activities

In October 2018, the Company executed two commodity swap contracts with Total Gas & Power North America, an affiliate of TOTAL S.A. and THUSA (as defined in Note 12), for a total of 5.0 million diesel gallons annually from April 1, 2019 to June 30, 2024. These commodity swap contracts are used to manage diesel price fluctuation risks related to the natural gas fuel supply commitments the Company makes in its fueling agreements with fleet operators that participate in the Zero Now truck financing program. These contracts are not designated as accounting hedges and as a result, changes in the fair value of these derivative instruments are recognized in "Product revenue" in the accompanying condensed consolidated statements of operations.

The Company has entered into fueling agreements with fleet operators under the Zero Now truck financing program. The fueling agreements contain a pricing feature indexed to diesel, which the Company determined to be embedded derivatives and recorded at fair value at the time of execution, with the changes in fair value of the embedded derivatives recognized in "Product revenue" in the accompanying condensed consolidated statements of operations.

Derivatives and embedded derivatives as of December 31, 2019 consisted of the following (in thousands):

	Gross Amounts		Gross Amounts		Net Amount
	Recognized		Offset		Presented
Assets:
Commodity swaps:
Long-term portion of derivative assets, related party	$	3,270	$	—	$	3,270
Fueling agreements:
Prepaid expenses and other current assets		232		—		232
Notes receivable and other long-term assets, net		491		—		491
Total derivative assets	$	3,993	$	—	$	3,993
Liabilities:
Commodity swaps:
Current portion of derivative liabilities, related party	$	164	$	—	$	164
Fueling agreements:
Accrued liabilities		42		—		42
Other long-term liabilities		39		—		39
Total derivative liabilities	$	245	$	—	$	245

Derivatives and embedded derivatives as of June 30, 2020 consisted of the following (in thousands):

	Gross Amounts		Gross Amounts		Net Amount
	Recognized		Offset		Presented
Assets:
Commodity swaps:
Current portion of derivative assets, related party	$	2,861	$	—	$	2,861
Long-term portion of derivative assets, related party		6,882		—		6,882
Fueling agreements:
Prepaid expenses and other current assets		12		—		12
Notes receivable and other long-term assets, net		82		—		82
Total derivative assets	$	9,837	$	—	$	9,837
Liabilities:
Fueling agreements:
Accrued liabilities	$	715	$	—	$	715
Other long-term liabilities		1,209		—		1,209
Total derivative liabilities	$	1,924	$	—	$	1,924

As of December 31, 2019 and June 30, 2020, the Company had a total volume on open commodity swap contracts of 21.9 million and 19.4 million diesel gallons, respectively, at a weighted-average price of approximately $3.18 per gallon.

The following table reflects the weighted-average price of open commodity swap contracts as of December 31, 2019 and June 30, 2020, by year with associated volumes:

	December 31, 2019			June 30, 2020
	Volumes	Weighted-Average Price per		Volumes	Weighted-Average Price per
Year	(Diesel Gallons)	Diesel Gallon		(Diesel Gallons)	Diesel Gallon
2020	5,000,000	$	3.18	2,500,000	$	3.18
2021	5,000,000	$	3.18	5,000,000	$	3.18
2022	5,000,000	$	3.18	5,000,000	$	3.18
2023	5,000,000	$	3.18	5,000,000	$	3.18
2024	1,875,000	$	3.18	1,875,000	$	3.18