v3.25.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Equity Method Investments
We evaluate equity method investments for impairment when factors indicate that a decrease in the value of our investment has occurred and the carrying amount of our investment may not be recoverable. An impairment loss, based on the
difference between the carrying value and the estimated fair value of the investment, is recognized in earnings when an impairment is deemed to be other than temporary.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Derivative Instruments
We classify financial assets and liabilities according to the fair value hierarchy. Financial assets and liabilities classified as Level 1 instruments are valued using quoted prices in active markets for identical assets and liabilities. These include our exchange traded futures. Level 2 instruments are valued using quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability. Our Level 2 instruments include OTC swaps and options. These derivatives are valued using market quotations from independent price reporting agencies and commodity exchange price curves that are corroborated with market data. Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity. The valuation of the embedded derivative related to our Citi repurchase obligation is based on estimates of the prices and a weighted-average price differential assuming settlement at the end of the reporting period. Estimates of the Citi settlement prices are based on observable inputs, such as Brent indices, and unobservable inputs, such as contractual price differentials as defined in the Inventory Intermediation Agreement. Contractual price differentials are considered unobservable inputs; therefore, these embedded derivatives are classified as Level 3 instruments. We do not have other commodity derivatives classified as Level 3 at June 30, 2025, or December 31, 2024. Please read Note 11—Derivatives for further information on derivatives.
Gross Environmental Credit Obligations
The portion of the estimated gross environmental credit obligations satisfied by internally generated or purchased RINs or other environmental credits is recorded at the carrying value of such internally generated or purchased RINs or other environmental credits. The remainder of the estimated gross environmental credit obligation is recorded at the market price of the RINs or other environmental credits that are needed to satisfy the remaining obligation as of the end of the reporting period and classified as Level 2 instruments as we obtain the pricing inputs for the RINs and other environmental credits from brokers based on market quotes on similar instruments. Please read Note 14—Commitments and Contingencies for further information on the U.S. Environmental Protection Agency (“EPA”) regulations related to greenhouse gases.
Financial Statement Impact
Fair value amounts by hierarchy level as of June 30, 2025, and December 31, 2024, are presented gross in the tables below (in thousands):
June 30, 2025
Level 1Level 2Level 3Gross Fair ValueEffect of Counter-Party NettingNet Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives$10,746 $391,564 $— $402,310 $(363,360)$38,950 
Liabilities
Commodity derivatives$(12,563)$(354,158)$— $(366,721)$363,360 $(3,361)
Citi repurchase obligation derivative
— — (3,678)(3,678)— (3,678)
Interest rate derivatives— (758)— (758)— (758)
Gross environmental credit obligations (2) (3)
— (85,381)— (85,381)— (85,381)
Total liabilities$(12,563)$(440,297)$(3,678)$(456,538)$363,360 $(93,178)
December 31, 2024
Level 1Level 2Level 3Gross Fair ValueEffect of Counter-Party NettingNet Carrying Value on Balance Sheet (1)
Assets
Commodity derivatives$209,666 $13,506 $— $223,172 $(212,581)$10,591 
Liabilities
Commodity derivatives$(215,139)$(10,898)$— $(226,037)$212,581 $(13,456)
Citi repurchase obligation derivative— — (1,588)(1,588)— (1,588)
Interest rate derivatives— (24)— (24)— (24)
Gross environmental credit obligations (2) (3)
— (44,498)— (44,498)— (44,498)
Total liabilities$(215,139)$(55,420)$(1,588)$(272,147)$212,581 $(59,566)
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(1)Does not include cash collateral of $9.6 million and $38.6 million as of June 30, 2025, and December 31, 2024, respectively, included within Prepaid and other current assets on our condensed consolidated balance sheets, respectively.
(2)Does not include RINs assets and other environmental credits of $171.2 million and $195.0 million presented in Inventories on our condensed consolidated balance sheet and stated at the lower of cost and net realizable value as of June 30, 2025, and December 31, 2024, respectively, and $5.6 million included in Other long-term assets as of June 30, 2025.
(3)Does not include environmental liabilities of $215.9 million and $187.5 million satisfied by internally generated or purchased environmental credits and presented at the carrying value of these credits included in Other Accrued Liabilities on our condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, respectively.
A roll forward of Level 3 derivative instruments measured at fair value on a recurring basis is as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Balance, at beginning of period$(5,136)$(22,208)$(1,588)$(392)
Settlements— (661)— (661)
Total gains (losses) included in earnings (1)1,458 22,460 (2,090)644 
Balance, at end of period$(3,678)$(409)$(3,678)$(409)
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(1)Included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations.
The carrying value and fair value of long-term debt and other financial instruments as of June 30, 2025, and December 31, 2024, are as follows (in thousands):
June 30, 2025
Carrying ValueFair Value
ABL Credit Facility due 2028 (1)
$485,000 $485,000 
Term Loan Credit Agreement due 2030 (2)
623,695 627,322 
Product Financing Agreement (2)
25,122 25,122 
Other long-term debt (2)
3,778 3,991 
December 31, 2024
Carrying ValueFair Value
ABL Credit Facility due 2028 (1)
$483,000 $483,000 
Term Loan Credit Agreement due 2030 (2)
625,859 636,924 
Product Financing Agreement (2)
— — 
Other long-term debt (2)4,108 4,412 
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(1)The fair value measurements of the ABL Credit Facility are considered Level 3 measurements in the fair value hierarchy.
(2)The fair value measurements of the Term Loan Credit Agreement, Product Financing Agreement and Other long-term debt are considered Level 2 measurements in the fair value hierarchy as discussed below.
The fair values of the Term Loan Credit Agreement and Other long-term debt were determined using a market approach based on quoted prices and the inputs used to measure the fair value are classified as Level 2 inputs within the fair value hierarchy.
The carrying value of our ABL Credit Facility and Product Financing Agreement were determined to approximate fair value as of June 30, 2025. The fair value of all non-derivative financial instruments recorded in current assets, including cash and cash equivalents, restricted cash, and trade accounts receivable, and current liabilities, including accounts payable, approximate their carrying value due to their short-term nature.