Derivative instruments and hedging activities

9 Months Ended

Apr. 30, 2025

Derivative instruments and hedging activities

Derivative instruments and hedging activities

J. Derivative instruments and hedging activities

Ferrellgas is exposed to certain market risks related to its ongoing business operations. These risks include exposure to changing commodity prices as well as fluctuations in interest rates. Ferrellgas utilizes derivative instruments to manage its exposure to fluctuations in commodity prices. Of these, the propane commodity derivative instruments are designated as cash flow hedges.

Derivative instruments and hedging activity

During the nine months ended April 30, 2025 and 2024, Ferrellgas did not recognize any gain or loss in earnings related to hedge ineffectiveness and did not exclude any component of financial derivative contract gains or losses from the assessment of hedge effectiveness related to commodity cash flow hedges.

The following tables provide a summary of the fair value of derivatives within Ferrellgas’ condensed consolidated balance sheets as April 30, 2025 and July 31, 2024:


		Final	April 30, 2025
		Maturity	Asset Derivatives					Liability Derivatives
Derivative Instrument		Date	Location		Fair value			Location		Fair value
Derivatives designated as hedging instruments		December 2026
Commodity derivatives-propane			Prepaid expenses and other current assets		$	3,774		Other current liabilities		$	1,701
Commodity derivatives-propane			Other assets, net			115		Other liabilities			725
			Total		$	3,889		Total		$	2,426


		Final	July 31, 2024
		Maturity	Asset Derivatives					Liability Derivatives
Derivative Instrument		Date	Location		Fair value			Location		Fair value
Derivatives designated as hedging instruments		December 2025
Commodity derivatives-propane			Prepaid expenses and other current assets		$	5,925		Other current liabilities		$	4,379
Commodity derivatives-propane			Other assets, net			594		Other liabilities			81
			Total		$	6,519		Total		$	4,460

Ferrellgas’ exchange traded commodity derivative contracts require a cash margin deposit as collateral for contracts that are in a negative mark-to-market position. These cash margin deposits will be returned if mark-to-market conditions improve or will be applied against cash settlement when the contracts are settled. Liabilities represent cash margin deposits received by Ferrellgas for contracts that are in a positive mark-to-market position. The following tables provide a summary of cash margin balances as of April 30, 2025 and July 31, 2024:


		April 30, 2025
		Assets					Liabilities
Description		Location		Amount			Location		Amount
Margin Balances		Prepaid expense and other current assets		$	3,596		Other current liabilities		$	3,458
		Other assets, net			1,469		Other liabilities			323
		Total		$	5,065		Total		$	3,781


		July 31, 2024
		Assets					Liabilities
Description		Location		Amount			Location		Amount
Margin Balances		Prepaid expense and other current assets		$	6,911		Other current liabilities		$	3,111
		Other assets, net			824		Other liabilities			438
		Total		$	7,735		Total		$	3,549

The following tables provide a summary of the effect on Ferrellgas’ condensed consolidated statements of comprehensive income for the three and nine months ended April 30, 2025 and 2024 due to derivatives designated as cash flow hedging instruments:


		For the three months ended April 30, 2025
							Amount of Gain
		Amount of Loss			Location of Gain		Reclassified from
		Recognized in			Reclassified from		AOCI into Income
Derivative Instrument		AOCI			AOCI into Income		Effective portion			Ineffective portion
Commodity derivatives		$	(2,674)		Cost of sales - propane and other gas liquids sales		$	5,512		$	—


		For the three months ended April 30, 2024
							Amount of Gain
		Amount of Loss			Location of Gain		Reclassified from
		Recognized in			Reclassified from		AOCI into Income
Derivative Instrument		AOCI			AOCI into Income		Effective portion			Ineffective portion
Commodity derivatives		$	(1,180)		Cost of sales - propane and other gas liquids sales		$	5,179		$	—


		For the nine months ended April 30, 2025
							Amount of Gain
		Amount of Gain			Location of Loss		Reclassified from
		Recognized in			Reclassified from		AOCI into Income
Derivative Instrument		AOCI			AOCI into Income		Effective portion			Ineffective portion
Commodity derivatives		$	7,081		Cost of sales - propane and other gas liquids sales		$	7,677		$	—


		For the nine months ended April 30, 2024
							Amount of Loss
		Amount of Loss			Location of Loss		Reclassified from
		Recognized in			Reclassified from		AOCI into Income
Derivative Instrument		AOCI			AOCI into Income		Effective portion			Ineffective portion
Commodity derivatives		$	(116)		Cost of sales - propane and other gas liquids sales		$	(75)		$	—

Accumulated other comprehensive income

Ferrellgas Partners

The changes in derivatives included in AOCI for the nine months ended April 30, 2025 and 2024 were as follows:


		For the nine months ended April 30,
Gains and losses on derivatives included in AOCI		2025			2024
Beginning balance attributable to Ferrellgas Partners, L.P.		$	2,025		$	1,059
Change in value of risk management commodity derivatives			7,081			(116)
Reclassification of losses on commodity hedges to cost of sales - propane and other gas liquids sales, net			(7,677)			75
Less: amount attributable to noncontrolling interests			(6)			—
Ending balance attributable to Ferrellgas Partners, L.P.		$	1,435		$	1,018

The operating partnership

The changes in derivatives included in AOCI for the nine months ended April 30, 2025 and 2024 were as follows:


		For the nine months ended April 30,
Gains and losses on derivatives included in AOCI		2025			2024
Beginning balance		$	2,059		$	1,083
Change in value of risk management commodity derivatives			7,081			(116)
Reclassification of losses on commodity hedges to cost of sales - propane and other gas liquids sales, net			(7,677)			75
Ending balance		$	1,463		$	1,042

Ferrellgas expects to reclassify net gains of approximately $2.1 million to earnings during the next 12 months. These net gains are expected to be offset by decreased margins on propane sales commitments Ferrellgas has with its customers that qualify for the normal purchase normal sale exception.

During the nine months ended April 30, 2025 and 2024, Ferrellgas had no reclassifications to operations resulting from the discontinuance of any cash flow hedges arising from the probability of the original forecasted transactions not occurring within the originally specified period of time defined within the hedging relationship.

As of April 30, 2025, Ferrellgas had financial derivative contracts covering 2.1 million barrels of propane that were entered into as cash flow hedges of forward and forecasted purchases of propane.

Derivative financial instruments credit risk

Ferrellgas is exposed to credit loss in the event of nonperformance by counterparties to derivative financial and commodity instruments. Ferrellgas’ counterparties principally consist of major energy companies and major U.S. financial institutions. Ferrellgas maintains credit policies with regard to its counterparties that it believes reduces its overall credit risk. These policies include evaluating and monitoring its counterparties’ financial condition, including their credit ratings, and entering into agreements with counterparties that govern credit limits. Certain of these agreements call for the posting of collateral by the counterparty or by Ferrellgas in the forms of letters of credit, parent guarantees or cash. Ferrellgas has concentrations of credit risk associated with derivative financial instruments held by certain derivative financial instrument counterparties. If these counterparties that make up the concentration failed to perform according to the terms of their contracts at April 30, 2025, the maximum amount of loss due to credit risk that Ferrellgas would incur based upon the gross fair values of the derivative financial instruments is zero.

From time to time Ferrellgas enters into derivative contracts that have credit-risk-related contingent features which dictate credit limits based upon Ferrellgas’ debt rating. There were no open derivative contracts with credit-risk-related contingent features as of April 30, 2025.