Derivative Instruments And Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2015

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 and forward sales 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, 2015
Change in fair value	$	8,501		Sales and other revenues	$	49,752
Gain reclassified to earnings due to settlements	(14,802		)	Cost of products sold	(30,964		)	Sales and other revenues	$	(140	)
Amortization of discontinued hedges reclassified to earnings	270			Operating expenses	(4,256		)	Cost of products sold	2,494
Total	$	(6,031	)		$	14,532			$	2,354
Three Months Ended June 30, 2014
Change in fair value	$	47,988		Sales and other revenues	$	(48,942	)
Gain reclassified to earnings due to settlements	(13,197		)	Cost of products sold	61,124
Amortization of discontinued hedges reclassified to earnings	270			Operating expenses	745			Operating expenses	$	1,354
Total	$	35,061			$	12,927			$	1,354
Six Months Ended June 30, 2015
Change in fair value	$	(5,647	)	Sales and other revenues	$	98,932		Sales and other revenues	$	(274	)
Gain reclassified to earnings due to settlements	(19,494		)	Cost of products sold	(71,733		)	Cost of products sold	3,738
Amortization of discontinued hedge reclassified to earnings	540			Operating expenses	(8,245		)	Operating expenses	547
Total	$	(24,601	)		$	18,954			$	4,011
Six Months Ended June 30, 2014
Change in fair value	$	140,466		Sales and other revenues	$	(74,273	)
Gain reclassified to earnings due to settlements	(18,957		)	Cost of products sold	90,441
Amortization of discontinued hedge reclassified to earnings	540			Operating expenses	2,249			Operating expenses	$	(806	)
Total	$	122,049			$	18,417			$	(806	)

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

As of June 30, 2015, 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	2015	2016	2017	Unit of Measure
Natural gas - long	24,000,000	4,800,000	9,600,000	9,600,000	MMBTU
WTI crude oil - long	2,208,000	2,208,000	—	—	Barrels
Ultra-low sulfur diesel - short	2,208,000	2,208,000	—	—	Barrels
Forward diesel sales	1,500,000	1,500,000	—	—	Barrels
Forward diesel purchases	1,125,000	1,125,000	—	—	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	2015			2014			2015			2014
	(In thousands)
Cost of products sold	$	5,292		$	(24,432	)	$	27,574		$	(24,406	)
Operating expenses	(248		)	(140		)	(544		)	(188		)
Total	$	5,044		$	(24,572	)	$	27,030		$	(24,594	)

Schedule of Notional Amounts of Outstanding Derivatives Serving as Economic Hedges

As of June 30, 2015, 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	2015	2016	2017	Unit of Measure
Commodity price swap (crude basis spread) - long	4,412,000	3,680,000	732,000	—	Barrels
Commodity price swap (natural gas basis spread) - long	17,820,000	4,020,000	6,900,000	6,900,000	MMBTU
Commodity price swap (natural gas) - long	24,000,000	4,800,000	9,600,000	9,600,000	MMBTU
Commodity price swap (natural gas) - short	24,000,000	4,800,000	9,600,000	9,600,000	MMBTU
NYMEX futures (WTI) - short	1,095,000	1,095,000	—	—	Barrels

Schedule of Interest Rate Hedges

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 June 30, 2015
Interest rate swaps
Change in fair value	$	(306	)
Loss reclassified to earnings due to settlements	528			Interest expense	$	(528	)
Total	$	222			$	(528	)
Three Months Ended June 30, 2014
Interest rate swaps
Change in fair value	$	(1,299	)
Loss reclassified to earnings due to settlements	553			Interest expense	$	(553	)
Total	$	(746	)		$	(553	)
Six Months Ended June 30, 2015
Interest rate swaps
Change in fair value	$	(1,586	)
Loss reclassified to earnings due to settlements	1,059			Interest expense	$	(1,059	)
Total	$	(527	)		$	(1,059	)
Six Months Ended June 30, 2014
Interest rate swaps
Change in fair value	$	(1,742	)
Loss reclassified to earnings due to settlements	1,091			Interest expense	$	(1,091	)
Total	$	(651	)		$	(1,091	)

Schedule of Fair Value and Balance Sheet Location of Outstanding Derivatives

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, 2015
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts	$	62,370	$	(49,711	)	$	12,659	$	42,647	$	(21,026	)	$	21,621
Forward contracts	223		(166		)	57		2,563		(439		)	2,124
Interest rate swap contracts	134		—			134		707		—			707
	$	62,727	$	(49,877	)	$	12,850	$	45,917	$	(21,465	)	$	24,452
Derivatives not designated as cash flow hedging instruments:
Commodity price swap contracts	$	24,580	$	(7,461	)	$	17,119	$	27,282	$	(23,475	)	$	3,807
NYMEX futures contracts	—		—			—		236		—			236
	$	24,580	$	(7,461	)	$	17,119	$	27,518	$	(23,475	)	$	4,043
Total net balance						$	29,969						$	28,495
Balance sheet classification:	Prepayment and other					$	29,295	Accrued liabilities					$	4,727
	Intangibles and other					674		Other long-term liabilities					23,768
						$	29,969						$	28,495

	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, 2014
Derivatives designated as cash flow hedging instruments:
Commodity price swap contracts	$	173,658	$	(142,115	)	$	31,543	$	21,441	$	—		$	21,441
Interest rate swap contracts	1,019		—			1,019		1,065		—			1,065
	$	174,677	$	(142,115	)	$	32,562	$	22,506	$	—		$	22,506
Derivatives not designated as cash flow hedging instruments:
Commodity price swap contracts	$	17,630	$	(12,942	)	$	4,688	$	20,398	$	(17,007	)	$	3,391
NYMEX futures contracts	17,619		—			17,619		—		—			—
	$	35,249	$	(12,942	)	$	22,307	$	20,398	$	(17,007	)	$	3,391
Total net balance						$	54,869						$	25,897
Balance sheet classification:	Prepayment and other					$	53,850
	Intangibles and other					1,019		Other long-term liabilities					$	25,897
						$	54,869						$	25,897