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Derivative Instruments
 6 Months Ended
Jun. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments
5. Derivative Instruments
We are exposed to a variety of risks including but not limited to, changes in the prices of commodities that we buy or sell, changes in foreign currency exchange rates, changes in interest rates, and the creditworthiness of each of our counterparties. While we attempt to mitigate these fluctuations through hedging, such hedges may not be fully effective.
Our risk management program includes the following types of derivative instruments:
Fair Value Hedges. Derivative contracts we hold to hedge the risk of changes in the price of our inventory.
Cash Flow Hedges. Derivative contracts we execute to mitigate the risk of price and interest rate volatility in forecasted transactions.
Non-designated Derivatives. Derivatives we primarily transact to mitigate the risk of market price fluctuations in swaps or futures contracts, as well as certain forward fixed price purchase and sale contracts to hedge the risk of currency rate fluctuations and for portfolio optimization.
With the exception of the interest rate swap agreement, which matures in March 2025, the majority of our derivative contracts are expected to settle within the next year. The following table summarizes the gross notional values of our derivative contracts used for risk management purposes (in millions):
Unit
June 30, 2022
Commodity contracts
LongBBL66.8 
ShortBBL(56.1)
Foreign currency exchange contracts
Sell U.S. dollar, buy other currenciesUSD(511.6)
Buy U.S. dollar, sell other currenciesUSD762.1 
Interest rate contracts
Interest rate swapUSD300.0 
Assets and Liabilities
The following table presents the gross fair value of our derivative instruments and their locations on the Condensed Consolidated Balance Sheets (in millions):
Gross Derivative AssetsGross Derivative Liabilities
Condensed Consolidated Balance Sheets LocationJune 30,December 31,June 30,December 31,
Derivative Instruments2022202120222021
Derivatives designated as hedging instruments
Commodity contractsShort-term derivative assets, net$15.5 $1.8 $1.4 $9.7 
Short-term derivative liabilities, net1.9 0.1 2.1 0.4 
Interest rate contractsShort-term derivative assets, net7.5 — — — 
Other non-current assets11.8 5.4 — — 
Short-term derivative liabilities, net— — — 0.3 
Total derivatives designated as hedging instruments36.7 7.3 3.5 10.4 
Derivatives not designated as hedging instruments
Commodity contractsShort-term derivative assets, net1,370.8 516.3 899.3 337.5 
Other non-current assets520.2 112.2 259.8 27.6 
Short-term derivative liabilities, net406.1 117.6 853.2 286.6 
Other long-term liabilities145.2 15.5 388.3 82.1 
Foreign currency contractsShort-term derivative assets, net24.8 3.8 7.7 1.7 
Other non-current assets0.6 0.1 0.3 — 
Short-term derivative liabilities, net9.0 0.8 15.2 2.6 
Total derivatives not designated as hedging instruments2,476.7 766.3 2,423.8 738.1 
Total derivatives$2,513.4 $773.6 $2,427.3 $748.5 
For information regarding our derivative instruments measured at fair value after netting and collateral, see Note 8. Fair Value Measurements.
The following amounts were recorded on our Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges (in millions):
Line item in the Consolidated Balance Sheets in which the hedged item is includedCarrying Amount of Hedged Assets/(Liabilities)Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Asset/(Liabilities)
June 30, 2022December 31, 2021June 30, 2022December 31, 2021
Inventory$61.0 $59.3 $(0.5)$0.6 
Earnings and Other Comprehensive Income (Loss)
Derivatives Designated as Hedging Instruments
The following table presents, on a pre-tax basis, the location and amount of gains (losses) on fair value and cash flow hedges recognized in income in our Condensed Consolidated Statements of Income and Comprehensive Income (in millions):
For the Three Months Ended
June 30, 2022June 30, 2021
RevenueCost of revenueInterest expense and other financing costs, netRevenueCost of revenueInterest expense and other financing costs, net
Total amounts of income and expense line items in which the effects of fair value or cash flow hedged are recorded$17,122.1 $16,868.7 $26.5 $7,085.5 $6,901.6 $11.4 
Gains (losses) on fair value hedge relationships:
   Commodity contracts:
Hedged item— 13.5 — — 14.6 — 
Derivatives designated as hedging instruments— (10.9)— — (11.3)— 
Gains (losses) on cash flow hedge relationships:
   Commodity contracts:
Amount of gain (loss) reclassified from Accumulated other comprehensive income (loss) into net income(112.2)— — (2.9)67.4 — 
   Interest rate contracts:
Amount of gain (loss) reclassified from Accumulated other comprehensive income (loss) into net income— — (0.2)— — (0.3)
Total amount of income and expense line items excluding the impact of hedges$17,234.3 $16,871.3 $26.3 $7,088.4 $6,972.2 $11.1 
For the Six Months Ended
June 30, 2022June 30, 2021
RevenueCost of revenueInterest expense and other financing costs, netRevenueCost of revenueInterest expense and other financing costs, net
Total amounts of income and expense line items in which the effects of fair value or cash flow hedged are recorded$29,504.1 $29,019.8 $40.9 $13,043.4 $12,667.9 $22.5 
Gains (losses) on fair value hedge relationships:
   Commodity contracts:
Hedged item— 42.1 — — 26.5 — 
Derivatives designated as hedging instruments— (52.1)— — (19.7)— 
Gains (losses) on cash flow hedge relationships:
   Commodity contracts:
Amount of gain (loss) reclassified from Accumulated other comprehensive income (loss) into net income(145.6)— — (14.6)88.4 — 
   Interest rate contracts:
Amount of gain (loss) reclassified from Accumulated other comprehensive income (loss) into net income— — (0.5)— — (0.5)
Total amount of income and expense line items excluding the impact of hedges$29,649.8 $29,009.8 $40.4 $13,058.0 $12,763.2 $22.0 
The following table presents, on a pre-tax basis, the amounts not recorded in Accumulated other comprehensive income (loss) due to intra-period settlement but recognized in Revenue and Cost of revenue in our Condensed Consolidated Statements of Income and Comprehensive Income (in millions):
Gain (Loss) Not Recorded in Accumulated other comprehensive income (loss) Due to Intra-Period Settlement
For the Three Months Ended June 30,For the Six Months Ended June 30,
Location2022202120222021
Commodity contractsRevenue$(56.6)$(113.8)$(131.4)$(190.6)
Commodity contractsCost of revenue$10.3 $8.0 $11.7 $15.2 
For the six months ended June 30, 2022 and 2021, there were no gains or losses recognized in earnings related to our fair value or cash flow hedges that were excluded from the assessment of hedge effectiveness.
As of June 30, 2022, on a pre-tax basis, $12.1 million is scheduled to be reclassified from Accumulated other comprehensive income (loss) as a decrease to Revenue related to designated commodity cash flow hedges that will mature within the next twelve months.
The following tables present the effect and financial statement location of our derivative instruments in cash flow hedging relationships on Accumulated other comprehensive income (loss) and in our Condensed Consolidated Statements of Income and Comprehensive Income (in millions):
Amount of Gain (Loss) Recognized in Accumulated other comprehensive income (loss), Net of Income Tax (Expense) BenefitFor the Three Months Ended June 30,For the Six Months Ended June 30,
2022202120222021
Commodity contracts (Revenue)$(56.3)$(13.3)$(109.0)$(76.1)
Commodity contracts (Cost of revenue)(0.6)69.6 (0.6)154.3 
Interest rate contracts (Interest expense and other financing costs, net)1.4 (0.7)10.0 3.0 
Total gain (loss)$(55.6)$55.7 $(99.6)$81.2 
Amount of Gain (Loss) Reclassified from Accumulated other comprehensive income (loss) into Net income (loss), Net of Income Tax (Expense) BenefitFor the Three Months Ended June 30,For the Six Months Ended June 30,
Location2022202120222021
Commodity contractsRevenue$(82.5)$(2.9)$(107.0)$(14.6)
Commodity contractsCost of revenue— 67.4 — 88.4 
Interest rate contractsInterest expense and other financing costs, net(0.1)(0.3)(0.4)(0.5)
Total gain (loss)$(82.6)$64.2 $(107.4)$73.4 
Derivatives Not Designated as Hedging Instruments
The following table presents the amount and financial statement location in our Condensed Consolidated Statements of Income and Comprehensive Income of realized and unrealized gains (losses) recognized on derivative instruments not designated as hedging instruments (in millions):
For the Three Months Ended June 30,For the Six Months Ended June 30,
Derivative Instruments - Non-designatedLocation2022202120222021
Commodity contractsRevenue$72.0 $12.9 $148.9 $(290.9)
Cost of revenue(10.6)(6.2)(17.0)306.8 
61.4 6.7 131.9 15.9 
Foreign currency contractsRevenue0.7 (0.2)0.1 0.1 
Other (expense), net6.2 (1.5)3.9 1.8 
6.8 (1.7)3.9 2.0 
Total gain (loss)$68.2 $5.0 $135.8 $17.9 
Credit-Risk-Related Contingent Features
We enter into derivative contracts which may require us to post collateral periodically. Certain of these derivative contracts contain credit-risk-related contingent clauses which are triggered by credit events. These credit events may include the requirement to post additional collateral or the immediate settlement of the derivative instruments upon the occurrence of a credit downgrade or if certain defined financial ratios fall below an established threshold. The following table presents the potential collateral requirements for derivative liabilities with credit-risk-contingent features (in millions):
June 30, 2022December 31, 2021
Net derivative liability positions with credit contingent features$15.4 $3.3 
Collateral posted and held by our counterparties— — 
Maximum additional potential collateral requirements$15.4 $3.3 
As of June 30, 2022 and December 31, 2021, there was no collateral held by our counterparties on these derivative contracts with credit-risk-contingent features.