XML 69 R43.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2016
Fair Value Disclosures [Abstract]  
Fair Value Measurements, Nonrecurring
The fair values of the assets acquired and liabilities assumed as a result of the Mid Pac acquisition were estimated as of April 1, 2015, the date of the acquisition, using valuation techniques described in notes (1) through (7) described below.
 
 
 
Valuation
 
Fair Value
 
Technique
 
(in thousands)
 
 
Net working capital
$
15,989

 
(1)
Property, plant and equipment
40,997

 
(2)
Land
34,800

 
(3)
Goodwill
26,942

 
(4)
Intangible assets
33,647

 
(5)
Other non-current assets
1,228

 
(7)
Deferred tax liability
(16,759
)
 
(6)
Other non-current liabilities
(7,235
)
 
(7)
Total
$
129,609

 
 

(1)
Current assets acquired and liabilities assumed were recorded at their net realizable value.
(2)
The fair value of the property, plant and equipment was estimated using the cost approach. Under the cost approach, the total replacement cost of the property is determined based on industry sources with adjustments for regional factors. The total cost is then adjusted for depreciation based on the physical age of the assets and obsolescence. We consider this to be a Level 3 fair value measurement.
(3)
The fair value of the land was estimated using the sales comparison approach. Under this approach, the sales prices of similar properties are adjusted to account for differences in land characteristics. We consider this to be a Level 3 fair value measurement.
(4)
The excess of the purchase price paid over the fair value of the identifiable assets acquired and liabilities assumed is allocated to goodwill.
(5)
The fair value of customer relationships was estimated using the Excess Earnings Method. Significant inputs used in this model include estimated revenue attributable to the customer relationship and estimated attrition rates. The fair value of the trade names and trademarks was estimated using the Relief from Royalty Method. Significant inputs used in this model include estimated revenue attributable to the trade names and trademarks and a royalty rate. We consider this to be a Level 3 fair value measurement.
(6)
The deferred tax liability was determined based on the differences between the tax bases of the assets acquired and liabilities assumed and the values of those assets and liabilities recognized on our consolidated balance sheets as of the date of acquisition.
(7)
Other non-current assets and liabilities were recorded at their estimated net present value. We consider this to be a Level 3 fair value measurement.
The preliminary fair values of the assets acquired and liabilities assumed as a result of the Wyoming Refining acquisition were estimated as of July 14, 2016, the date of the acquisition, using valuation techniques described in notes (1) through (5) described below.
 
 
 
Valuation
 
Fair Value
 
Technique
 
(in thousands)
 
 
Net working capital
$
(11,590
)
 
(1)
Property, plant and equipment
254,367

 
(2)
Goodwill
64,994

 
(3)
Long-term debt
(68,136
)
 
(4)
Other non-current liabilities
(30,269
)
 
(5)
Total
$
209,366

 
 
(1)
Current assets acquired and liabilities assumed were recorded at their net realizable value.
(2)
The fair value of property, plant and equipment was estimated using the cost approach. Under the cost approach, the total replacement cost of the property is determined based on industry sources with adjustments for regional factors. The total cost is then adjusted for depreciation based on the physical age of the assets and obsolescence. The fair value of the land was estimated using the sales comparison approach. Under this approach, the sales prices of similar properties are adjusted to account for differences in land characteristics. We consider this to be a Level 3 fair value measurement.
(3)
The excess of the purchase price paid over the fair value of the identifiable assets acquired and liabilities assumed is allocated to goodwill.
(4)
Long-term debt was recorded at carrying value. The carrying value of long-term debt approximates fair value due to its floating interest rate.
(5)
Other non-current liabilities include environmental liabilities and the underfunded status of the Wyoming Refining defined benefit plan. The underfunded status of the defined benefit plan represents the difference between the fair value of the plan's assets and the projected benefit obligations. Environmental liabilities are based on management’s best estimates of probable future costs using current available information. We consider this to be a Level 3 fair value measurement.
Schedule of Share-based Payment Award, Common Stock Warrants
Significant inputs used in the simulation model as of December 31, 2015 included: 
 
December 31,
 
2015
Stock price
$
23.54

Weighted-average exercise price
$
0.10

Term (years)
6.67

Risk-free interest rate
2.04
%
Expected volatility
43.0
%
Fair Value, Assets Measured on Recurring Basis
The following table provides information on the fair value amounts (in thousands) of these derivatives as of December 31, 2016 and 2015 and their placement within our consolidated balance sheets. 
 
 
 
December 31,
 
Balance Sheet Location
 
2016
 
2015
 
 
 
Asset (Liability)
Commodity derivatives (1)
Prepaid and other current assets
 
$
—

 
$
4,577

Commodity derivatives (1)
Other long-term assets
 
2,748

 
—

Commodity derivatives
Other accrued liabilities
 
(595
)
 
(9,534
)
Commodity derivatives
Other liabilities
 
—

 
(4,925
)
J. Aron repurchase obligation derivative
Obligations under inventory financing agreements
 
(20,000
)
 
9,810

Interest rate derivatives
Prepaid and other current assets
 
161

 
—

Interest rate derivatives
Other long-term assets
 
3,377

 
—

Interest rate derivatives
Other accrued liabilities
 
(94
)
 
—

_________________________________________________________
(1)
Does not include cash collateral of $2.7 million and $20.9 million recorded in Prepaid and other current assets and $7.0 million and $7.0 million in Other long-term assets as of December 31, 2016 and 2015, respectively.
Fair value amounts by hierarchy level as of December 31, 2016 and 2015 are presented gross in the tables below (in thousands):
 
December 31, 2016
 
Level 1
 
Level 2
 
Level 3
 
Gross Fair Value
 
Effect of Counter-party Netting
 
Net Carrying Value on Balance Sheet (1)
Assets
 
 
 
 
 
 
 
 
 
 
 
Commodity derivatives
$
190

 
$
26,095

 
$
—

 
$
26,285

 
$
(23,537
)
 
$
2,748

Interest rate derivatives
—

 
3,602

 
—

 
3,602

 
(64
)
 
3,538

Total
$
190

 
$
29,697

 
$
—

 
$
29,887

 
$
(23,601
)
 
$
6,286

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Common stock warrants
$
—

 
$
—

 
$
(5,134
)
 
$
(5,134
)
 
$
—

 
$
(5,134
)
Contingent consideration
—

 
—

 
—

 
—

 
—

 
—

Commodity derivatives
(54
)
 
(24,078
)
 
—

 
(24,132
)
 
23,537

 
(595
)
J. Aron repurchase obligation derivative
—

 
—

 
(20,000
)
 
(20,000
)
 
—

 
(20,000
)
Interest rate derivatives
—

 
(158
)
 
—

 
(158
)
 
64

 
(94
)
Total
$
(54
)
 
$
(24,236
)
 
$
(25,134
)
 
$
(49,424
)
 
$
23,601

 
$
(25,823
)


 
December 31, 2015
 
Level 1
 
Level 2
 
Level 3
 
Gross Fair Value
 
Effect of Counter-party Netting
 
Net Carrying Value on Balance Sheet (1)
Assets
 
 
 
 
 
 
 
 
 
 
 
Commodity derivatives
$
429

 
$
33,797

 
$
—

 
$
34,226

 
$
(29,649
)
 
$
4,577

J.Aron repurchase obligation derivative
—

 
—

 
9,810

 
9,810

 
(9,810
)
 
—

Total
$
429

 
$
33,797

 
$
9,810

 
$
44,036

 
$
(39,459
)
 
$
4,577

 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Common stock warrants
$
—

 
$
—

 
$
(8,096
)
 
$
(8,096
)
 
$
—

 
$
(8,096
)
Contingent consideration
—

 
—

 
(27,581
)
 
(27,581
)
 
—

 
(27,581
)
Commodity derivatives
(396
)
 
(43,712
)
 
—

 
(44,108
)
 
29,649

 
(14,459
)
J.Aron repurchase obligation derivative
—

 
—

 
—

 
—

 
9,810

 
9,810

Total
$
(396
)
 
$
(43,712
)
 
$
(35,677
)
 
$
(79,785
)
 
$
39,459

 
$
(40,326
)
_________________________________________________________
(1)
Does not include cash collateral of $9.7 million and $28.0 million as of December 31, 2016 and 2015, respectively included on our consolidated balance sheets.
Reconcilliation of Level 3 Derivative Instruments, Fair Value
A roll forward of Level 3 derivative instruments measured at fair value on a recurring basis is as follows (in thousands): 
 
 
Year Ended December 31,
 
 
2016
 
2015
 
2014
Beginning balance
 
$
(25,867
)
 
$
(21,254
)
 
$
(29,316
)
Settlements
 
16,810

 
7,691

 
780

Acquired
 
—

 
(2,844
)
 
—

Total unrealized income (loss) included in earnings
 
(16,077
)
 
(9,460
)
 
7,282

Ending balance
 
$
(25,134
)
 
$
(25,867
)
 
$
(21,254
)
Schedule of Carrying Value and Fair Value of Long Term Debt and Other Financial Instruments
The carrying value and fair value of long-term debt and other financial instruments as of December 31, 2016 and 2015 is as follows (in thousands):
 
Carrying Value
 
Fair Value (1)
December 31, 2016
 
 
 
Hawaii Retail Credit Agreement (2)
$
93,853

 
$
93,853

5% Convertible Senior Notes due 2021 (3)
91,029

 
122,229

Term Loan
57,426

 
62,367

Par Wyoming Holdings Term Loan (2)
65,908

 
65,908

Wyoming Refining Senior Secured Term Loan (2)
55,480

 
55,480

Wyoming Refining Senior Secured Revolver (2)
6,700

 
6,700

Common stock warrants
5,134

 
5,134

December 31, 2015
 
 
 
Hawaii Retail Credit Agreement (2)
$
110,000

 
$
110,000

Term Loan
60,119

 
62,037

Common stock warrants
8,096

 
8,096

Contingent consideration
27,581

 
27,581

_________________________________________________________ 
(1)
The fair values of these instruments are considered Level 3 measurements in the fair value hierarchy with the exception of the fair value measurement of the 5.00% Convertible Senior Notes which is considered a Level 2 measurement as discussed below.
(2)
Fair value approximates carrying value due to the debt's floating rate interest which approximates current market value.
(3)
The carrying value of the 5.00% Convertible Senior Notes excludes the fair value of the equity component, which was classified as equity upon issuance.