Derivative Instruments And Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2014

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 September 30, 2014
Commodity price swaps
Change in fair value	$	4,580		Sales and other revenues	$	(6,202	)	Sales and other revenues	$	1,498
Gain reclassified to earnings due to settlements	(14,400		)	Cost of products sold	20,776			Cost of products sold	(6,189		)
Amortization of discontinued hedges reclassified to earnings	270			Operating expenses	(444		)	Operating expenses	(99		)
Total	$	(9,550	)		$	14,130			$	(4,790	)
Three Months Ended September 30, 2013
Commodity price swaps
Change in fair value	$	27,049		Sales and other revenues	$	(10,138	)	Sales and other revenues	$	1,949
Gain reclassified to earnings due to settlements	(22,007		)	Cost of products sold	32,874			Cost of products sold	(962		)
Amortization of discontinued hedges reclassified to earnings	270			Operating expenses	(999		)	Operating expenses	259
Total	$	5,312			$	21,737			$	1,246
Nine Months Ended September 30, 2014
Commodity price swaps
Change in fair value	$	145,046		Sales and other revenues	$	(80,475	)	Sales and other revenues	$	1,498
Gain reclassified to earnings due to settlements	(33,357		)	Cost of products sold	111,217			Cost of products sold	(6,189		)
Amortization of discontinued hedge reclassified to earnings	810			Operating expenses	1,805			Operating expenses	(905		)
Total	$	112,499			$	32,547			$	(5,596	)
Nine Months Ended September 30, 2013
Commodity price swaps
Change in fair value	$	41,410		Sales and other revenues	$	(25,454	)	Sales and other revenues	$	2,143
Gain reclassified to earnings due to settlements	(1,396		)	Cost of products sold	28,271			Cost of products sold	730
Amortization of discontinued hedge reclassified to earnings	630			Operating expenses	(2,051		)	Operating expenses	—
Total	$	40,644			$	766			$	2,873

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

As of September 30, 2014, 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	2014	2015	2016	2017	Unit of Measure
Natural gas - long	31,200,000	2,400,000	9,600,000	9,600,000	9,600,000	MMBTU
WTI crude oil - long	11,418,000	7,038,000	4,380,000	—	—	Barrels
Ultra-low sulfur diesel - short	8,106,000	3,726,000	4,380,000	—	—	Barrels
Sub octane gasoline - short	3,312,000	3,312,000	—	—	—	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 September 30,					Nine Months Ended September 30,
Location of Gain (Loss) Recognized in Income	2014		2013			2014			2013
	(In thousands)
Cost of products sold	$	27,773	$	(29,515	)	$	3,367		$	5,916
Operating expenses	3		(157		)	(185		)	(5,458		)
Total	$	27,776	$	(29,672	)	$	3,182		$	458

Schedule of Notional Amounts of Outstanding Derivative Positions

As of September 30, 2014, 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	2014	2015	2016	2017	Unit of Measure
Commodity price swap (WCS spread) - long	1,610,000	1,610,000	—	—	—	Barrels
Commodity price swap (WTS spread) - long	1,825,000	—	1,825,000	—	—	Barrels
Commodity price swap (WTI) - long	365,000	—	365,000	—	—	Barrels
Commodity price swap (natural gas) - long	31,200,000	2,400,000	9,600,000	9,600,000	9,600,000	MMBTU
Commodity price swap (natural gas) - short	31,200,000	2,400,000	9,600,000	9,600,000	9,600,000	MMBTU
NYMEX futures (WTI) - short	1,043,000	939,000	104,000	—	—	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 hedge accounting:

	Unrealized Gain (Loss) Recognized in OCI			Loss Recognized in Earnings Due to Settlements
				Location	Amount
	(In thousands)
Three Months Ended September 30, 2014
Interest rate swaps
Change in fair value	$	553
Loss reclassified to earnings due to settlements	556			Interest expense	$	(556	)
Total	$	1,109			$	(556	)
Three Months Ended September 30, 2013
Interest rate swaps
Change in fair value	$	(1,626	)
Loss reclassified to earnings due to settlements	529			Interest expense	$	(529	)
Total	$	(1,097	)		$	(529	)
Nine Months Ended September 30, 2014
Interest rate swaps
Change in fair value	$	(1,189	)
Loss reclassified to earnings due to settlements	1,647			Interest expense	$	(1,647	)
Total	$	458			$	(1,647	)
Nine Months Ended September 30, 2013
Interest rate swaps
Change in fair value	$	1,329
Loss reclassified to earnings due to settlements	1,549
Amortization of discontinued hedge reclassified to earnings	849			Interest expense	$	(2,398	)
Total	$	3,727			$	(2,398	)

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)
September 30, 2014
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts	$	104,969	$	(31,480	)	$	73,489	$	12,735	$	(5,456	)	$	7,279
Interest rate swap contracts	1,545		—			1,545		1,231		—			1,231
	$	106,514	$	(31,480	)	$	75,034	$	13,966	$	(5,456	)	$	8,510
Derivatives not designated as cash flow hedging instruments:
Commodity price swap contracts	$	14,325	$	(3,961	)	$	10,364	$	11,624	$	(7,860	)	$	3,764
NYMEX futures contracts	1,848		—			1,848		—		—			—
	$	16,173	$	(3,961	)	$	12,212	$	11,624	$	(7,860	)	$	3,764
Total net balance						$	87,246						$	12,274
Balance sheet classification:	Prepayment and other					$	84,559
	Intangibles and other					2,687		Other long-term liabilities					$	12,274
						$	87,246						$	12,274

	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, 2013
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts	$	—	$	—	$	—	$	63,561	$	(23,679	)	$	39,882
Interest rate swap contracts	1,670		—		1,670		1,814		—			1,814
	$	1,670	$	—	$	1,670	$	65,375	$	(23,679	)	$	41,696
Derivatives not designated as cash flow hedging instruments:
Commodity price swap contracts	$	6,972	$	—	$	6,972	$	19,766	$	(12,611	)	$	7,155
NYMEX futures contracts	—		—		—		3,569		—			3,569
	$	6,972	$	—	$	6,972	$	23,335	$	(12,611	)	$	10,724
Total net balance					$	8,642						$	52,420
Balance sheet classification:	Prepayment and other				$	6,972	Accrued liabilities					$	26,843
	Intangibles and other				1,670		Other long-term liabilities					25,577
					$	8,642						$	52,420