Revenues from Contracts with Customers

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenues

Substantially all revenue-generating activities relate to sales of refined product and excess crude oil inventories sold at market prices (variable consideration) under contracts with customers. Additionally, we have revenues attributable to HEP logistics services provided under petroleum product and crude oil pipeline transportation, processing, storage and terminalling agreements with third parties.

Disaggregated revenues were as follows:



		Three Months Ended March 31,
		2020		2019
	(In thousands)
Revenues by type
Refined product revenues
Transportation fuels⁽¹⁾		$	2,478,347	$	2,807,440
Specialty lubricant products ⁽²⁾		470,953		444,342
Asphalt, fuel oil and other products ⁽³⁾		201,343		218,858
Total refined product revenues		3,150,643		3,470,640
Excess crude oil revenues ⁽⁴⁾		199,779		382,630
Transportation and logistic services		26,426		31,138
Other revenues ⁽⁵⁾		23,697		12,839
Total sales and other revenues		$	3,400,545	$	3,897,247



		Three Months Ended March 31,
		2020		2019
	(In thousands)
Refined product revenues by market
United States
Mid-Continent		$	1,532,924	$	1,730,505
Southwest		734,175		850,149
Rocky Mountains		468,779		515,335
Northeast		159,824		127,891
Canada		182,653		177,355
Europe, Asia and Latin America		72,288		69,405
Total refined product revenues		$	3,150,643	$	3,470,640


(1)	Transportation fuels consist of gasoline, diesel and jet fuel.


(2)	Specialty lubricant products consist of base oil, waxes, finished lubricants and other specialty fluids.


(3)	Asphalt, fuel oil and other products revenue include revenues attributable to our Refining and Lubricants and Specialty Products segments of $148,797 and $52,546, respectively, for the three months ended March 31, 2020, and $169,866 and $48,992, respectively, for the three months ended March 31, 2019.


(4)	Excess crude oil revenues represent sales of purchased crude oil inventory that at times exceeds the supply needs of our refineries.


(5)	Other revenues are principally attributable to our Refining segment.

Our consolidated balance sheet reflects contract liabilities related to unearned revenues attributable to future service obligations under HEP’s third-party transportation agreements and production agreements from the acquisition of Sonneborn on February 1, 2019. The following table presents changes to our contract liabilities during the three months ended March 31, 2020 and 2019.



	Three Months Ended March 31,
	2020			2019
	(In thousands)
Balance at January 1	$	4,652		$	132
Sonneborn acquisition	—			6,463
Increase	10,419			3,968
Recognized as revenue	(9,712		)	(3,966		)
Balance at March 31	$	5,359		$	6,597

As of March 31, 2020, we have long-term contracts with customers that specify minimum volumes of gasoline, diesel, lubricants and specialty products to be sold ratably at market prices through 2024. Such volumes are typically nominated in the month preceding delivery and delivered ratably throughout the following month. Future prices are subject to market fluctuations and therefore, we have elected the exemption to exclude variable consideration under these contracts under Accounting Standards Codification 606-10-50-14A. Aggregate minimum volumes expected to be sold (future performance obligations) under our long-term product sales contracts with customers are as follows:



	Remainder of 2020	2021	2022	Thereafter	Total
	(In thousands)
Refined product sales volumes (barrels)	15,653	14,851	12,775	24,465	67,744

Additionally, HEP has long-term contracts with third-party customers that specify minimum volumes of product to be transported through its pipelines and terminals that result in fixed-minimum annual revenues through 2025. Annual minimum revenues attributable to HEP’s third-party contracts as of March 31, 2020 are presented below:



	Remainder of 2020		2021		2022		Thereafter		Total
	(In thousands)
HEP contractual minimum revenues	$	22,289	$	23,871	$	13,267	$	25,307	$	84,734