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Fair Value Measurements (Tables)
 9 Months Ended
Sep. 30, 2023
Fair Value Disclosures [Abstract]  
Schedule of Fair Value Assets Acquired and Liabilities Assumed
The preliminary fair values of the assets acquired and liabilities assumed as a result of the Billings Acquisition were estimated as of June 1, 2023, the date of the acquisition, using valuation techniques described in notes (1) through (5) below.
Valuation
Fair ValueTechnique
(in thousands)
Net working capital excluding operating leases$294,507 (1)
Property, plant, and equipment259,088 (2)
Operating lease right-of-use assets3,562 (3)
Refining and logistics equity investments86,600 (4)
Other long-term assets4,094 (1)
Current operating lease liabilities(2,081)(3)
Long-term operating lease liabilities(1,481)(3)
Environmental liabilities(18,869)(5)
Total$625,420 
(1)Current assets acquired and liabilities assumed were recorded at their net realizable value. Other long-term assets includes preliminary costs for future turnarounds that were recently incurred and were recorded at their net realizable value.
(2)The fair value of personal property was estimated using the cost approach. Key assumptions in the cost approach include determining the replacement cost by evaluating recent purchases of comparable assets or published data, and adjusting replacement cost for economic and functional obsolescence, location, normal useful lives, and capacity (if applicable). The fair value of real property was estimated using the market approach. Key assumptions in the market approach include determining the asset value by evaluating recent purchases of comparable assets under similar circumstances. We consider this to be a Level 3 fair value measurement.
(3)Operating lease right-of-use assets and liabilities were recognized based on the present value of lease payments over the lease term using the incremental borrowing rate at acquisition of 9.6%.
(4)The fair value of our investments in YELP and YPLC were determined using a combination of the income approach and the market approach. Under the income approach, we estimated the present value of expected future cash flows using a market participant discount rate. Under the market approach, we estimated fair value using observable multiples for comparable companies in the investments’ industries. These valuation methods require us
to make significant estimates and assumptions regarding future cash flows, capital projects, commodity prices, long-term growth rates, and discount rates. We consider this to be a Level 3 fair value measurement.
(5)Environmental liabilities are based on management’s best estimates of probable future costs using currently available information. We consider this to be a Level 3 fair value measurement.
Schedule of Fair Value Amounts by Hierarchy Level
Fair value amounts by hierarchy level as of September 30, 2023 and December 31, 2022, are presented gross in the tables below (in thousands):
September 30, 2023
Level 1Level 2Level 3Gross Fair ValueEffect of Counter-Party NettingNet Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives$411,270 $14,521 $— $425,791 $(410,584)$15,207 
Interest rate derivatives— 664 — 664 — 664 
Total$411,270 $15,185 $— $426,455 $(410,584)$15,871 
Liabilities
Commodity derivatives$(412,939)$(33,057)$— $(445,996)$410,584 $(35,412)
J. Aron repurchase obligation derivative— — (57,972)(57,972)— (57,972)
MLC terminal obligation derivative— — (6,429)(6,429)— (6,429)
Gross environmental credit obligations (2)— (326,598)— (326,598)— (326,598)
Total liabilities$(412,939)$(359,655)$(64,401)$(836,995)$410,584 $(426,411)
December 31, 2022
Level 1Level 2Level 3Gross Fair ValueEffect of Counter-Party NettingNet Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives$161,541 $8,369 $— $169,910 $(169,415)$495 
Liabilities
Commodity derivatives$(172,529)$(7,875)$— $(180,404)$169,415 $(10,989)
J. Aron repurchase obligation derivative— — (12,156)(12,156)— (12,156)
MLC terminal obligation derivative— — 14,435 14,435 — 14,435 
Gross environmental credit obligations (2)— (549,791)— (549,791)— (549,791)
Total liabilities$(172,529)$(557,666)$2,279 $(727,916)$169,415 $(558,501)
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(1)Does not include cash collateral of $32.4 million and $50.3 million as of September 30, 2023 and December 31, 2022, respectively, included within Prepaid and other current assets and Other long-term assets on our condensed consolidated balance sheets.
(2)Does not include RINs assets and other environmental credits of $223.4 million and $258.2 million presented as Inventories on our condensed consolidated balance sheet and stated at the lower of cost and net realizable value as of September 30, 2023 and December 31, 2022, respectively.
Schedule of Roll Forward of Level 3 Financial Instruments Measured at Fair Value on a Recurring Basis
A roll forward of Level 3 derivative instruments measured at fair value on a recurring basis is as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Balance, at beginning of period$(5,584)$(8,492)$2,279 $(37,321)
Settlements30,143 (55,448)13,285 93,613 
Total gains (losses) included in earnings (1)(88,960)77,274 (79,965)(42,958)
Balance, at end of period$(64,401)$13,334 $(64,401)$13,334 
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(1)Included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.
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 September 30, 2023 and December 31, 2022 are as follows (in thousands):
September 30, 2023
Carrying ValueFair Value
ABL Credit Facility due 2028 (2)
$— $— 
LC Facility due 2024 (2)
— — 
Term Loan Credit Agreement due 2030 (1)
532,039 545,882 
Other long-term debt (1)4,901 4,680 
December 31, 2022
Carrying ValueFair Value
Prior ABL Credit Facility due 2025 (2)$— $— 
7.75% Senior Secured Notes due 2025 (1) (3)
277,137 276,785 
Term Loan B Facility due 2026 (1) (3)
198,268 201,094 
12.875% Senior Secured Notes due 2026 (1) (3)
30,127 34,029 
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(1)The fair value measurements of the Term Loan Credit Agreement, Other long-term debt, 7.75% Senior Secured Notes, Term Loan B Facility, and 12.875% Senior Secured Notes are considered Level 2 measurements in the fair value hierarchy as discussed below.
(2)The fair value measurement of the ABL Credit Facility, LC Facility, and the Prior ABL Credit Facility is considered a Level 3 measurement in the fair value hierarchy.
(3)The 7.75% Senior Secured Notes, Term Loan B Facility, and 12.875% Senior Secured Notes were fully repaid in 2023, please read Note 11—Debt for more information.