Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Offsetting Assets and Liabilities [Table Text Block]

Balance sheet offsetting

PESCO has entered into master netting agreements with counterparties that enable it to net the counterparties' outstanding accounts receivable and payable, which are presented on a net basis in the consolidated balance sheets. The following table summarizes the accounts receivable and payables on a gross and net basis at March 31, 2018 and December 31, 2017:



	At March 31, 2018
(in thousands)	Gross amounts		Amounts offset		Net amounts
Accounts receivable	$	6,555	$	2,092	$	4,463
Accounts payable	$	13,912	$	2,092	$	11,820



	At December 31, 2017
(in thousands)	Gross amounts		Amounts offset		Net amounts
Accounts receivable	$	8,283	$	2,391	$	5,892
Accounts payable	$	16,643	$	2,391	$	14,252

The following tables present information about the fair value and related gains and losses of our derivative contracts. We did not have any derivative contracts with a credit risk-related contingency.

Fair Values of Derivative Contracts Recorded in Condensed Consolidated Balance Sheet

The fair values of the derivative contracts recorded in the condensed consolidated balance sheets as of March 31, 2018 and December 31, 2017, are as follows:



	Asset Derivatives
		Fair Value As Of
(in thousands)	Balance Sheet Location	March 31, 2018		December 31, 2017
Derivatives not designated as hedging instruments
Propane swap agreements	Derivative assets, at fair value	$	4	$	13
Derivatives designated as cash flow hedges
Natural gas futures contracts	Derivative assets, at fair value	—		92
Propane swap agreements	Derivative assets, at fair value	204		1,181
Total asset derivatives		$	208	$	1,286



	Liability Derivatives
		Fair Value As Of
(in thousands)	Balance Sheet Location	March 31, 2018		December 31, 2017
Derivatives not designated as hedging instruments
Natural gas futures contracts	Derivative liabilities, at fair value	$	300	$5,776
Derivatives designated as cash flow hedges
Natural gas futures contracts	Derivative liabilities, at fair value	1,639		469
Natural gas swap contracts	Derivative liabilities, at fair value	404		2
Propane swap agreements	Derivative liabilities, at fair value	16		—
Total liability derivatives		$	2,359	$	6,247

Effects of Gains and Losses from Derivative Instruments on Condensed Consolidated Financial Statements

The effects of gains and losses from derivative instruments on the condensed consolidated financial statements are as follows:



		Amount of Gain (Loss) on Derivatives:
	Location of Gain	For the Three Months Ended March 31,
(in thousands)	(Loss) on Derivatives	2018			2017
Derivatives not designated as hedging instruments
Realized gain on forward contracts and options ⁽¹⁾	Revenue	$	—		$	112
Natural gas futures contracts	Cost of sales	(2,835		)	124
Propane swap agreements	Cost of sales	(9		)	(4		)
Derivatives designated as fair value hedges
Put /Call option ⁽²⁾	Cost of sales	—			(9		)
Derivatives designated as cash flow hedges
Propane swap agreements	Cost of sales	(464		)	388
Propane swap agreements	Other comprehensive loss	(992		)	(557		)
Natural gas futures contracts	Cost of sales	298			1,150
Natural gas swap contracts	Cost of sales	(450		)	1,087
Natural gas futures agreements	Other comprehensive income	65			—
Natural gas swap agreements	Other comprehensive loss	(1,732		)	—
Total		$	(6,119	)	$	2,291


⁽¹⁾	All of the realized and unrealized gain (loss) on forward contracts represents the effect of trading activities on our condensed consolidated statements of income.

⁽²⁾

As a fair value hedge with no ineffective portion, the unrealized gains and losses associated with this call option are recorded in cost of sales, offset by the corresponding change in the value of propane inventory (hedged item), which is also recorded in cost of sales. The amounts in cost of sales offset to zero, and the unrealized gains and losses of this put option effectively changed the value of propane inventory on the condensed consolidated balance sheets.