XML 45 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivative Instruments (Tables)
 6 Months Ended
Jun. 30, 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 payable on a gross and net basis at June 30, 2018 and December 31, 2017:
 
 
At June 30, 2018
(in thousands)
 
Gross amounts
 
Amounts offset
 
Net amounts
Accounts receivable
 
$
5,723

 
$
1,288

 
$
4,435

Accounts payable
 
$
10,326

 
$
1,288

 
$
9,038

 
 
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 June 30, 2018 and December 31, 2017, are as follows: 
 
 
Asset Derivatives
 
 
 
 
Fair Value As Of
(in thousands)
 
Balance Sheet Location
 
June 30, 2018
 
December 31, 2017
Derivatives not designated as hedging instruments
 
 
 
 
 
 
Propane swap agreements
 
Derivative assets, at fair value
 
$
—

 
$
13

Natural gas futures contracts
 
Derivative assets, at fair value
 
90

 
—

Derivatives designated as cash flow hedges
 
 
 
 
 
 
Natural gas futures contracts
 
Derivative assets, at fair value
 
120

 
92

Propane swap agreements
 
Derivative assets, at fair value
 
324

 
1,181

Total asset derivatives
 
 
 
$
534

 
$
1,286



 
 
 
Liability Derivatives
 
 
 
 
Fair Value As Of
(in thousands)
 
Balance Sheet Location
 
June 30, 2018
 
December 31, 2017
Derivatives not designated as hedging instruments
 
 
 
 
 
 
Natural gas futures contracts
 
Derivative liabilities, at fair value
 
$
77

 
$
5,776

Derivatives designated as cash flow hedges
 
 
 
 
 
 
Natural gas futures contracts
 
Derivative liabilities, at fair value
 
779

 
469

Natural gas swap contracts
 
Derivative liabilities, at fair value
 
—

 
2

Propane swap agreements
 
Derivative liabilities, at fair value
 
30

 
—

Total liability derivatives
 
 
 
$
886

 
$
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 June 30,
 
For the Six Months Ended June 30,
(in thousands)
 
(Loss) on Derivatives
 
2018
 
2017
 
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
 
(128
)
 
497

 
(2,963
)
 
621

Propane swap agreements
 
Cost of sales
 
(4
)
 
—

 
(13
)
 
(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
 
(181
)
 
77

 
(645
)
 
465

Propane swap agreements
 
Other comprehensive loss
 
106

 
(218
)
 
(886
)
 
(775
)
       Natural gas futures contracts
 
Cost of sales
 
(161
)
 
631

 
137

 
1,781

       Natural gas swap contracts
 
Cost of sales
 
(31
)
 
—

 
(481
)
 
—

       Natural gas swap contracts
 
Other comprehensive income
 
523

 
—

 
588

 
—

       Natural gas futures contracts
 
Other comprehensive loss
 
861

 
(1,211
)
 
(871
)
 
(124
)
Total
 
 
 
$
985

 
$
(224
)
 
$
(5,134
)
 
$
2,067



(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.