Derivative Instruments And Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2013

Derivative Instruments, Gain (Loss) [Line Items]

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

The following table presents the pre-tax effect on other comprehensive income (“OCI”) and earnings due to fair value adjustments and maturities of commodity price swaps under hedge accounting:

	Unrealized Gain (Loss) Recognized in OCI			Gain (Loss) Recognized in Earnings Due to Settlements				Gain (Loss) Attributable to Hedge Ineffectiveness Recognized in Earnings
				Location	Amount			Location	Amount
	(In thousands)
Three Months Ended June 30, 2013
Commodity price swaps
Change in fair value	$	24,764		Sales and other revenues	$	3,868		Sales and other revenues	$	550
Gain reclassified to earnings due to settlements	(6,589		)	Cost of products sold	1,930			Cost of products sold	(1,439		)
Amortization of discontinued hedge reclassified to earnings	270			Operating expenses	521			Operating expenses	106
Total	$	18,445			$	6,319			$	(783	)
Three Months Ended June 30, 2012
Commodity price swaps
Change in fair value	$	27,044		Sales and other revenues	$	(20,167	)	Sales and other revenues	$	2,984
Loss reclassified to earnings due to settlements	3,992			Cost of products sold	16,175			Cost of products sold	(6,317		)
Total	$	31,036			$	(3,992	)		$	(3,333	)
Six Months Ended June 30, 2013
Commodity price swaps
Change in fair value	$	14,360		Sales and other revenues	$	(15,316	)	Sales and other revenues	$	194
Loss reclassified to earnings due to settlements	20,611			Cost of products sold	(4,603		)	Cost of products sold	1,692
Amortization of discontinued hedge reclassified to earnings	360			Operating expenses	(1,052		)	Operating expenses	(259		)
Total	$	35,331			$	(20,971	)		$	1,627
Six Months Ended June 30, 2012
Commodity price swaps
Change in fair value	$	(113,076	)	Sales and other revenues	$	(54,292	)	Sales and other revenues	$	1,655
Gain reclassified to earnings due to settlements	(12,423		)	Cost of products sold	66,715			Cost of products sold	(6,317		)
Total	$	(125,499	)		$	12,423			$	(4,662	)

Schedule of Notional Amounts of Outstanding Derivatives Serving as Cash Flow Hedges

As of June 30, 2013, we have the following notional contract volumes related to outstanding derivative instruments serving as cash flow hedges against price risk on forecasted purchases of natural gas and crude oil and sales of refined products:

		Notional Contract Volumes by Year of Maturity
Derivative Instrument	Total Outstanding Notional	2013	2014	2015	2016	2017	Unit of Measure
Commodity Price Swaps:
Natural gas - long	43,200,000	4,800,000	9,600,000	9,600,000	9,600,000	9,600,000	MMBTU
WTI crude oil - long	5,701,000	5,336,000	365,000	—	—	—	Barrels
Ultra-low sulfur diesel - short	5,701,000	5,336,000	365,000	—	—	—	Barrels

Schedule of Realized Gain (Loss)

The following table presents the pre-tax effect on income due to maturities and fair value adjustments of our economic hedges:

	Three Months Ended June 30,					Six Months Ended June 30,
Location of Gain (Loss) Recognized in Income	2013			2012		2013			2012
	(In thousands)
Cost of products sold	$	1,839		$	50,863	$	35,431		$	35,869
Operating expenses	(308		)	1,543		(5,301		)	(158		)
Total	$	1,531		$	52,406	$	30,130		$	35,711

Schedule of Notional Amounts of Outstanding Derivative Positions

As of June 30, 2013, we have the following notional contract volumes related to our outstanding derivative contracts serving as economic hedges:

		Notional Contract Volumes by Year of Maturity
Derivative Instrument	Total Outstanding Notional	2013	2014	2015	2016	2017	Unit of Measure
Commodity price swap (WCS spread) - long	3,588,000	3,588,000	—	—	—	—	Barrels
Commodity price swap (WTS spread) - long	1,472,000	1,472,000	—	—	—	—	Barrels
Commodity price swap (natural gas) - long	43,200,000	4,800,000	9,600,000	9,600,000	9,600,000	9,600,000	MMBTU
Commodity price swap (natural gas) - short	43,200,000	4,800,000	9,600,000	9,600,000	9,600,000	9,600,000	MMBTU
NYMEX futures (WTI) - short	1,896,000	1,681,000	215,000	—	—	—	Barrels

Schedule of Interest Rate Derivatives

The following table presents the pre-tax effect on other comprehensive income and earnings due to fair value adjustments and maturities of HEP's interest rate swaps under cash flow hedge accounting:

	Unrealized Gain (Loss) Recognized in OCI			Loss Recognized in Earnings Due to Settlements
				Location	Amount
	(In thousands)
Three Months Ended June 30, 2013
Interest rate swaps
Change in fair value	$	2,897
Loss reclassified to earnings due to settlements	516			Interest expense	$	(516	)
Total	$	3,413			$	(516	)
Three Months Ended June 30, 2012
Interest rate swaps
Change in fair value	$	(1,802	)
Loss reclassified to earnings due to settlements	294
Amortization of discontinued hedge reclassified to earnings	1,273			Interest expense	$	(1,567	)
Total	$	(235	)		$	(1,567	)
Six Months Ended June 30, 2013
Interest rate swaps
Change in fair value	$	2,955
Loss reclassified to earnings due to settlements	1,020
Amortization of discontinued hedge reclassified to earnings	849			Interest expense	$	(1,869	)
Total	$	4,824			$	(1,869	)
Six Months Ended June 30, 2012
Interest rate swaps
Change in fair value	$	(2,380	)
Loss reclassified to earnings due to settlements	518
Amortization of discontinued hedge reclassified to earnings	2,547			Interest expense	$	(3,065	)
Total	$	685			$	(3,065	)

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table presents the fair value and balance sheet locations of our outstanding derivative instruments. These amounts are presented on a gross basis with offsetting balances that reconcile to a net asset or liability position in our consolidated balance sheets. We present on a net basis to reflect the net settlement of these positions in accordance with provisions of our master netting arrangements.

	Derivatives in Net Asset Position								Derivatives in Net Liability Position
	Gross Assets		Gross Liabilities Offset in Balance Sheet			Net Assets Recognized in Balance Sheet			Gross Liabilities		Gross Assets Offset in Balance Sheet		Net Liabilities Recognized in Balance Sheet
			(In thousands)
June 30, 2013
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts	$	35,732	$	(14,358	)	$	21,374		$	—	$	—	$	—
Interest rate swap contracts	2,257		(1,712		)	545			—		—		—
	$	37,989	$	(16,070	)	$	21,919		$	—	$	—	$	—
Derivatives not designated as cash flow hedging instruments:
Commodity price swap contracts	$	15,988	$	(14,040	)	$	1,948		$	—	$	—	$	—
NYMEX futures contracts	—		—			—			1,694		—		1,694
	$	15,988	$	(14,040	)	$	1,948		$	1,694	$	—	$	1,694
Total net balance						$	23,867						$	1,694
Balance sheet classification:	Prepayment and other					$	39,217		Accrued liabilities				$	1,694
	Intangibles and other					2,257
	Other long-term liabilities					(17,607		)
						$	23,867						$	1,694

	Derivatives in Net Asset Position						Derivatives in Net Liability Position
	Gross Assets		Gross Liabilities Offset in Balance Sheet		Net Assets Recognized in Balance Sheet		Gross Liabilities		Gross Assets Offset in Balance Sheet			Net Liabilities Recognized in Balance Sheet
			(In thousands)
December 31, 2012
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts	$	—	$	—	$	—	$	37,828	$	(17,383	)	$	20,445
Interest rate swap contracts	—		—		—		3,430		—			3,430
	$	—	$	—	$	—	$	41,258	$	(17,383	)	$	23,875
Derivatives not designated as cash flow hedging instruments:
Commodity price swap contracts	$	—	$	—	$	—	$	46,154	$	—		$	46,154
NYMEX futures contracts	—		—		—		5,563		—			5,563
	$	—	$	—	$	—	$	51,717	$	—		$	51,717
Total net balance					$	—						$	75,592
Balance sheet classification:							Accrued liabilities					$	62,388
							Other long-term liabilities					13,204
												$	75,592