2 unchanged sentences
When we make the decision to manage our market exposure, our objective is generally to avoid losses from adverse price changes, realizing we will not obtain the gains of beneficial price changes.
−Removed: Impact of Changing Prices
−Removed: Our revenues and cash flows, as well as estimates of future cash flows, are sensitive to changes in energy prices.
−Removed: Major shifts in the cost of crude oil, the prices of refined products and the cost of ethanol can generate large changes in the operating margin in each of our segments.
−Removed: We maintain, at both company-owned and third-party facilities, inventories of crude oil, feedstocks and refined petroleum products, the values of which are subject to wide fluctuations in market prices driven by world economic conditions, regional and global inventory levels and seasonal conditions.
−Removed: At December 31, 2023 and December 31, 2022, we held approximately 10.0 million and 15.0 million, respectively, barrels of crude and product inventories associated with the Tyler, El Dorado, Big Spring and Krotz Springs refineries valued under FIFO, with an average cost of $76.37 and $81.88, respectively, per barrel.
−Removed: For the years ended December 31, 2023, 2022 and 2021, we recognized net inventory valuation (losses) gains of $(0.4) million, $(1.9) million and $(8.5) million, respectively, which were recorded as a component of cost of materials and other in the consolidated statements of income.
−Removed: From time to time, we also may enter into forward purchase or sale derivative contracts for trading purposes (primarily in our Canadian business) and, as a result, may have trading investment commodities on hand related to the purchased inventory.
−Removed: Such derivative contracts and related investment commodities are recorded at fair value and subject to pricing risk each period with changes in fair value reflected in other operating income, net in the profit and loss section of our consolidated financial statements.
−Removed: For the years ended December 31, 2023, 2022 and 2021, all of our forward purchase and sales contracts that were accounted for as derivative instruments consisted of contracts related to our Canadian trading activities.
Price Risk Management Activities
5 unchanged sentences
Gains or losses on commodity derivative contracts accounted for as cash flow hedges are recognized in other comprehensive income on the consolidated balance sheets and, ultimately, when the forecasted transactions are completed in net revenues or cost of materials and other in the consolidated statements of income.
−Removed: Management's Discussion and Analysis
−Removed: The following table sets forth information relating to our open commodity derivative contracts, excluding our trading derivative contracts (which are presented separately below), as of December 31, 2023 ($ in millions):
+Added: The following table sets forth information relating to our open commodity derivative contracts, excluding our trading derivative contracts (which are discussed separately below), as of December 31, 2024 ($ in millions):
Total Outstanding Notional Contract Volume by Year of Maturity
9 unchanged sentences
(8.9) 5,058,350 5,058,350
−Removed: RINs commitment contracts - long (2)
+Added: Natural gas swaps - long (3)
— 747,500 747,500
−Removed: RINs commitment contracts - short (2)
+Added: Natural gas swaps - short (3)
— 747,500 747,500
+Added: RINs commitment contracts - long (2)
+Added: (5.3) 36,000,000 36,000,000
Total $ (7.8)
1 unchanged sentence
(2) Volume in RINs.
+Added: (3) Volume in MMBtu.
+Added: Management's Discussion and Analysis
Interest Rate Risk
We have market exposure to changes in interest rates relating to our outstanding floating rate borrowings, which totaled approximately $1,366.4 million as of December 31, 2024.
−Removed: The annualized impact of a hypothetical one percent change in interest rates on our floating rate debt outstanding as of December 31, 2023 would be to change interest expense by approximately $20.1 million.
−Removed: We also have interest rate exposure in connection with our Inventory Intermediation Agreement under which we pay a time value of money charge based on Secured Overnight Financing Rate ("SOFR").
−Removed: Inflationary factors, such as increases in the costs of our inputs, operating expenses, and interest rates may adversely affect our operating results.
−Removed: In addition, current or future governmental policies may increase or decrease the risk of inflation, which could further increase costs and may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses as a percentage of sales if the prices at which we are able to sell our products and services do not increase in line with increases in costs.
+Added: We help manage this risk through interest rate swap agreements that we may periodically enter into in order to modify the interest rate characteristics of our outstanding long-term debt.
+Added: In accordance with ASC 815, all interest rate hedging instruments are recorded at fair value and any changes in the fair value between periods are recognized in earnings.
+Added: We expect that any interest rate derivatives held would reduce our exposure to short-term interest rate movements.
+Added: As of December 31, 2024, we had one floating-to-fixed interest rate derivative agreement in place for a notional amount of $500.0 million, which matures in November 2027.
+Added: The estimated fair value of our interest rate derivative asset was $3.2 million as of December 31, 2024.
+Added: The annualized impact of a hypothetical one percent change in interest rates on our floating rate debt, after considering the interest rate swap, outstanding as of December 31, 2024 would be to change interest expense by approximately $8.7 million.
+Added: We also have interest rate exposure in connection with our Inventory Intermediation Agreement under which we pay a time value of money charge based on Secured Overnight Financing Rate.
Commodity Derivatives Trading Activities
−Removed: We enter into active trading positions in a variety of commodity derivatives, which include forward physical contracts, swap contracts, and futures contracts.
+Added: From time to time, we enter into active trading positions in a variety of commodity derivatives, which include forward physical contracts, swap contracts, and futures contracts.
These trading activities are undertaken by using a range of contract types in combination to create incremental gains by capitalizing on crude oil supply and pricing seasonality.
These contracts are classified as held for trading and are recognized at fair value with changes in fair value recognized in the income statement.
−Removed: The following table sets forth information relating to trading commodity derivative contracts as of December 31, 2023 ($ in millions):
−Removed: Total Outstanding Notional Contract Volume by Year of Maturity
−Removed: Contract Description Fair Value Notional Contract Volume 2023
−Removed: Crude forward contracts - long (1)
−Removed: $ 7.2 118,935 118,935
−Removed: Crude forward contracts - short (1)
−Removed: (7.2) 118,935 118,935
−Removed: (1) Volume in barrels.
+Added: We had no outstanding trading commodity derivative contracts as of December 31, 2024.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
3 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.