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What changed in CVR ENERGY INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CVR ENERGY INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+465 added−477 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-22)

Top changes in CVR ENERGY INC's 2023 10-K

465 paragraphs added · 477 removed · 335 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

106 edited+29 added−23 removed71 unchanged
Biggest changeIn April 2022, the EPA denied 36 small refinery exemptions (“SRE”) for the 2018 compliance year, many of which had been previously granted by the EPA, including the SRE to WRC, and also issued an alternative compliance demonstration approach for certain small refineries (the “Alternate Compliance Ruling”) under which they would not be required to purchase or redeem additional RINs as a result of the EPA’s denial.
Biggest changeDecember 31, 2023 | 19 Table of Contents • In December 2021, the EPA proposed a new standard for evaluating SREs which it ultimately finalized and applied, in most cases retroactively, to deny all pending SRE petitions filed by small refineries for compliance years 2016 through 2023, as follows: ◦ In April 2022, the EPA denied 36 SRE petitions (the “April 2022 Denials”) for the 2018 compliance year, despite having previously granted 31 of those petitions in 2019, including WRC’s petition for 2018, and also issued an alternative compliance demonstration approach for certain small refineries (the “Alternate Compliance Ruling”) under which they would not be required to purchase or redeem additional RINs as a result of the EPA’s April 2022 Denials; ◦ In June 2022, the EPA denied 69 SRE petitions (the “June 2022 Denials” and together with the April 2022 Denials, the “2022 Denials”) including those submitted by WRC for 2017, 2019, 2020 and 2021 and also applied the Alternate Compliance Ruling to three such petitions; and ◦ In July 2023, the EPA denied 26 SRE petitions (the “2023 Denials”) seeking SREs for one or more of the compliance years between 2016 and 2023, including the SRE sought by WRC for 2022.
The major operations of the Coffeyville Refinery include fractionation, catalytic cracking, hydrotreating, reforming, coking, isomerization, alkylation, sulfur recovery, and propane and butane recovery operating units. The Coffeyville Refinery benefits from significant refining unit redundancies, which include two crude oil distillation, two vacuum towers, two sulfur recovery units, and five hydrotreating units.
The major operations of the Coffeyville Refinery include fractionation, catalytic cracking, hydrotreating, reforming, coking, isomerization, alkylation, sulfur recovery, and propane and butane recovery operating units. The Coffeyville Refinery benefits from significant refining unit redundancies, which include two crude oil distillation units, two vacuum towers, two sulfur recovery units, and five hydrotreating units.
Similar to the Coffeyville Refinery, the Wynnewood Refinery benefits from unit redundancies, including two crude oil distillation and two vacuum towers as well as four hydrotreating units.
Similar to the Coffeyville Refinery, the Wynnewood Refinery benefits from unit redundancies, including two crude oil distillation units and two vacuum towers as well as four hydrotreating units.
Regionally sourced crude oils delivered to the Refineries usually have a transportation cost advantage compared to other domestic or international crudes given the Refineries’ proximity to the producing areas. However, sometimes slightly heavier and more sour crudes may offer improved economics to the Refineries, notwithstanding the higher transportation costs.
Regionally sourced crude oils delivered to the Refineries usually have a transportation cost advantage compared to other domestic or international crudes given the Refineries’ proximity to the producing areas. However, sometimes slightly heavier and more sour crude oils may offer improved economics to the Refineries, notwithstanding the higher transportation costs.
In addition, water resources are becoming more scarce, and many refiners, including us, are subject to use restrictions in the event of low availability conditions. Our Refineries and the Coffeyville Fertilizer Facility have contracts in place to receive water during certain water shortage conditions, but these conditions could change over time depending on the scarcity of water.
In addition, water resources are becoming more scarce, and many refiners, including us, are subject to use restrictions in the event of low availability conditions. Our Refineries and the Coffeyville Fertilizer Facility have contracts in place to receive water during certain water shortage conditions, but these conditions and contracts could change over time depending on the scarcity of water.
As used in this Annual Report on Form 10-K, the terms “CVR Energy”, the “Company”, “we”, “us”, or “our” generally include the Company’s subsidiaries, including CVR Partners and its subsidiaries, as consolidated subsidiaries of the Company, unless otherwise noted. Refer to “Petroleum” and “Nitrogen Fertilizer” below for further details on our two reportable segments.
As used in this Annual Report on Form 10-K, the terms “CVR Energy”, the “Company”, “we”, “us”, or “our” generally include the Company’s subsidiaries, including CVR Partners and its subsidiaries, as consolidated subsidiaries of the Company, unless otherwise noted or implied. Refer to “Petroleum” and “Nitrogen Fertilizer” below for further details on our two reportable segments.
We typically sell bulk products to long-standing customers at spot market prices based on a Group 3 basis differential to prices quoted on the New York Mercantile Exchange (“NYMEX”) subject to other terms or adjustments, which are reported by industry market-related indices such as Platts and Oil Price Information Service (“OPIS”).
We typically sell bulk products to long-standing customers at spot market prices based on a Group 3 basis differential to prices quoted on the New York Mercantile Exchange (“NYMEX”) subject to other terms or adjustments, which are reported by industry market-related indices such as Platts and Oil Price Information Service.
We believe that certain carbon oxide capture and sequestration activities conducted at or in connection with the Coffeyville Fertilizer Facility qualify under the Internal Revenue Service safe harbor described in Revenue Procedure 2020-12 for certain tax credits available to joint ventures under Section 45Q of the Internal Revenue Code of 1986, as amended (“Section 45Q Credits”).
We believe that certain carbon oxide capture and sequestration activities conducted at or in connection with the Coffeyville Fertilizer Facility qualify under the Internal Revenue Service (“IRS”) safe harbor described in Revenue Procedure 2020-12 for certain tax credits available to joint ventures under Section 45Q of the Internal Revenue Code of 1986, as amended (“Section 45Q Credits”).
Subject to location and other considerations, our major competitors in the nitrogen fertilizer business generally includes CF Industries Holdings, Inc., which sells significantly more nitrogen fertilizers in the United States than other industry participants; Nutrien Ltd.; Koch Fertilizer Company, LLC; OCI N.V.; and LSB Industries, Inc.
Subject to location and other considerations, our major domestic competitors in the nitrogen fertilizer business generally includes CF Industries Holdings, Inc., which sells significantly more nitrogen fertilizers in the United States than other industry participants; Nutrien Ltd.; Koch Fertilizer Company, LLC; OCI N.V.; and LSB Industries, Inc.
This insurance provides coverage due to named perils for claims involving pollutants where the discharge is sudden and accidental and first commences at a specific day and time during the policy period.
This insurance generally provides coverage due to named perils for claims involving pollutants where the discharge is sudden and accidental and first commences at a specific day and time during the policy period.
These assets include the following: As of December 31, 2022 Pipeline Segment Length (miles) Capacity (bpd) Joint Ventures: Midway Pipeline LLC (“Midway JV”) (1) 99 131,000 Enable South Central Pipeline (“Enable JV”) (1) 26 20,000 Owned Pipelines: East Tank Farm to Refinery 16” (2) 2 156,000 Broome to East Tank Farm 16” (2) 19 168,000 Broome to East Tank Farm 12” (2) 19 28,000 Enable to Cushing 8” & 10” (Red River) 108 41,000 Maysville to Springer 8” (Red River) 45 17,000 Springer to Cushing 6” & 8” 125 23,000 Hooser to Broome 8” 43 12,000 Brothers to Hooser 8” 20 7,000 CapturePoint to Shidler 6” 3 16,000 Madill to Springer 6” 32 18,000 Maysville to Lawyer 6” & 8” 124 12,000 Velma to Maysville 6” & 8” 29 13,000 Plainville to Natoma 6” 11 7,000 Shidler to Hooser 4” 23 7,000 Phillipsburg to Plainville 6” 36 8,000 Enville to Wynnewood 4” & 6” 74 6,000 Leased Pipelines: Kelly to Caney Jct. 8” 66 13,000 Humboldt to Broome 8” 63 6,000 (1) Through our subsidiaries, we own a 50% interest in the Midway JV and a 40% interest in the Enable JV.
These assets include the following: As of December 31, 2023 Pipeline Segment Length (miles) Capacity (bpd) Joint Ventures: Midway Pipeline LLC (“Midway JV”) (1) 99 131,000 Enable South Central Pipeline (“Enable JV”) (1) 26 80,000 Owned Pipelines: East Tank Farm to Refinery 16” (2) 2 156,000 Broome to East Tank Farm 16” (2) 19 168,000 Broome to East Tank Farm 12” (2) 19 28,000 Enable to Cushing 8” & 10” (Red River) 108 41,000 Maysville to Springer 8” (Red River) 45 17,000 Springer to Cushing 6” & 8” 125 23,000 Hooser to Broome 8” 43 12,000 Brothers to Hooser 8” 20 7,000 CapturePoint to Shidler 6” 3 16,000 Madill to Springer 6” 32 18,000 Maysville to Cushing 6” & 8” 124 12,000 Velma to Maysville 6” & 8” 29 13,000 Plainville to Natoma 6” 11 7,000 Shidler to Hooser 4” 23 7,000 Phillipsburg to Plainville 6” 36 8,000 Enville to Wynnewood 4” & 6” 74 6,000 Leased Pipelines: Kelly to Caney Jct. 8” 66 13,000 Humboldt to Broome 8” 63 6,000 (1) Through our subsidiaries, we own a 50% interest in the Midway JV and a 40% interest in the Enable JV.
Environmental Matters Our petroleum and nitrogen fertilizer businesses are subject to extensive and frequently changing federal, state, and local environmental laws and regulations governing the emission and release of regulated substances into the environment, the transportation, storage, and disposal of waste, the treatment and discharge of wastewater and stormwater, the storage, handling, use, and transportation of petroleum and nitrogen fertilizer products, and the characteristics and composition of gasoline, diesel fuels, UAN, and ammonia.
Environmental Matters Our businesses are subject to extensive and frequently changing federal, state, and local environmental laws and regulations governing the emission and release of regulated substances into the environment, the transportation, storage, and disposal of waste, the treatment and discharge of wastewater and stormwater, and the storage, handling, use, and transportation of petroleum, renewable and nitrogen fertilizer products, and the characteristics and composition of gasoline, diesel and aviation fuels, renewable fuels, UAN, and ammonia.
We periodically audit our programs and seek to continually improve our management systems. Our Refineries and Facilities are subject to the Chemical Facility Anti-Terrorism Standards (“CFATS”), a regulatory program designed to ensure facilities have security measures in place to reduce the risk that certain hazardous chemicals are weaponized by terrorists.
We periodically audit our programs and seek to continually improve our management systems. Our Facilities were subject to the Chemical Facility Anti-Terrorism Standards (“CFATS”), a regulatory program designed to ensure facilities have security measures in place to reduce the risk that certain hazardous chemicals are weaponized by terrorists.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through our website under “Investor Relations,” as soon as reasonably practicable after the electronic filing or furnishing of these reports is made with the Securities and Exchange Commission (the “SEC”) at www.sec.gov.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through our website under “Investor Relations” , as soon as reasonably practicable after the electronic filing or furnishing of these reports is made with the Securities and Exchange Commission (the “SEC”) at www.sec.gov.
While we have the ability to exercise influence through its participation on the board of directors of each of the Midway JV and the Enable JV, we do not serve as the day-to-day operator. We have determined that these entities should not be consolidated and are accounted for under the equity method.
While we have the ability to exercise influence through our participation on the board of directors of each of the Midway JV and the Enable JV, we do not serve as the day-to-day operator. We have determined that these entities should not be consolidated and are accounted for under the equity method.
Based on Fertecon Limited’s (“Fertecon”) 2022 estimates, the United States is the world’s third largest consumer and importer of nitrogen fertilizer. Fertecon is an agency which provides market information and analysis on fertilizers and fertilizer raw materials for fertilizer and related industries, as well as international agencies.
Based on Fertecon Limited’s (“Fertecon”) 2023 estimates, the United States is the world’s third largest consumer and importer of nitrogen fertilizer. Fertecon is an agency which provides market information and analysis on fertilizers and fertilizer raw materials for fertilizer and related industries, as well as international agencies.
Various standards and programs specific to our operations have been implemented, such as the National Emission Standard for Hazardous Air Pollutants, the New Source Performance Standards, and the New Source Review. The Environmental Protection Agency (“EPA”) regulates greenhouse gas (“GHG”) emissions under the CAA.
Various standards and programs specific to our operations have been implemented, such as the National Emission Standard for Hazardous Air Pollutants, the New Source Performance Standards, and the New Source Review. The U.S. Environmental Protection Agency (“EPA”) regulates greenhouse gas (“GHG”) emissions under the CAA.
Refer to Part II, Item 8, Note 3 (“Equity Method Investments”) of this Report for further discussion of these investments. (2) In support of our Coffeyville Refinery, we operate a tank storage facility in close proximity to the Coffeyville Refinery (the “East Tank Farm”).
Refer to Part II, Item 8, Note 5 (“Equity Method Investments”) of this Report for further discussion of these investments. (2) In support of our Coffeyville Refinery, we operate a tank storage facility in close proximity to the Coffeyville Refinery (the “East Tank Farm”).
In addition, the laws and regulations to which we are subject are often evolving and many of them have or could become more stringent or have or could become subject to more stringent interpretation or enforcement by federal or state agencies. These laws and regulations could result in increased capital, operating, and compliance costs.
In addition, the laws, rules, and regulations to which we are subject are often evolving and many of them have or could become more stringent or have or could become subject to more stringent interpretation or enforcement by federal or state agencies or courts. These laws and regulations could result in increased capital, operating, and compliance costs.
December 31, 2022 | 10 Table of Contents In addition to the use of third-party pipelines, we have an extensive gathering system consisting of logistics assets that are owned, leased, or part of a joint venture operation.
December 31, 2023 | 10 Table of Contents In addition to the use of third-party pipelines, we have an extensive gathering system consisting of logistics assets that are owned, leased, or part of a joint venture operation.
Raw Material Supply Coffeyville Fertilizer Facility - During the past five years, approximately 44% of the Coffeyville Fertilizer Facility’s pet coke requirements on average were supplied by our adjacent Coffeyville Refinery pursuant to the Coffeyville Master Services Agreement (the “Coffeyville MSA”).
Raw Material Supply Coffeyville Fertilizer Facility - During the past five years, approximately 41% of the Coffeyville Fertilizer Facility’s pet coke requirements, on average, were supplied by our adjacent Coffeyville Refinery pursuant to the Coffeyville Master Services Agreement (the “Coffeyville MSA”).
From the Broome Station facility, crude oil is delivered to the Coffeyville Refinery via the Petroleum Segment’s 170,000 bpd proprietary pipeline system. Crude oils are delivered to the Wynnewood Refinery through third-party December 31, 2022 | 11 Table of Contents and joint venture pipelines and received into storage tanks at terminals located within or near the refinery.
From the Broome Station facility, crude oil is delivered to the Coffeyville Refinery via the Petroleum December 31, 2023 | 11 Table of Contents Segment’s 170,000 bpd pipeline system. Crude oils are delivered to the Wynnewood Refinery through third-party and joint venture pipelines and received into storage tanks at terminals located within or near the refinery.
On January 27, 2021, the White House issued another climate-related Executive Order, titled “Tackling the Climate Crisis at Home and Abroad.” On April 22, 2021, the Biden Administration announced a new target for the United States to achieve a 50 to 52 percent reduction from 2005 levels in economy-wide net GHG emissions in 2030.
On January 27, 2021, the White House issued another climate-related Executive Order, titled “Tackling the Climate Crisis at Home and Abroad”. On April 22, 2021, the Biden Administration announced a new target for the United States to achieve a 50 to 52 percent reduction from 2005 levels in economy-wide net GHG emissions in 2030.
These laws and regulations and the enforcement thereof impact our segments and their operations by imposing: • restrictions on operations or the need to install enhanced or additional control and monitoring equipment; • liability for the investigation and remediation of contaminated soil and groundwater at current and former facilities (if any) and for off-site waste disposal locations; and • specifications for the products marketed by the Petroleum and Nitrogen Fertilizer Segments, primarily gasoline, diesel fuel, UAN, and ammonia.
These laws and regulations and the enforcement thereof impact our segments and their operations by imposing: • restrictions on operations or the need to install and operate enhanced or additional control and monitoring equipment; • liability for the investigation and remediation of contaminated soil and groundwater at current and former facilities (if any) and for off-site waste disposal locations; and • specifications for the products marketed by the Petroleum and Nitrogen Fertilizer Segments, primarily gasoline, diesel and aviation fuels, UAN, and ammonia.
Our operations require numerous permits, licenses, and authorizations. Failure to comply with these permits or environmental laws and regulations could result in fines, penalties, or other sanctions or a revocation of our permits, licenses, or authorizations.
Our operations require numerous permits, licenses, and authorizations. Failure to comply with these permits, licenses, authorizations, or environmental laws, rules, and regulations could result in fines, penalties, or other sanctions or liabilities or a revocation of our permits, licenses, or authorizations.
Company Transformation During 2022, the Company advanced its renewables initiatives. In April 2022, we completed a project at our Wynnewood Refinery by converting the refinery’s hydrocracker to a renewable diesel unit (“RDU”) capable of producing approximately 100 million gallons of renewable diesel per year at a total cost of $179 million.
Company Transformation Since 2022, the Company has advanced its renewables initiatives. In April 2022, we completed a project at our Wynnewood Refinery by converting the refinery’s hydrocracker to a renewable diesel unit (“RDU”) capable of producing approximately 100 million gallons of renewable diesel per year at a total cost of $179 million.
Additionally, CRRM purchases RINs generated from the Company’s renewable diesel operations, whose operating results are not currently included in either of our reportable segments, to partially satisfy its RFS obligations. The cost of purchasing RINs and cellulosic waiver credits fluctuates and can be significant.
Additionally, CRRM purchases RINs generated from the Company’s renewable diesel operations, whose operating results are not currently included in either of our reportable segments, to partially satisfy its RVOs. The cost of purchasing RINs and cellulosic waiver credits fluctuates and can be significant.
In May 2010, the EPA finalized the “Greenhouse Gas Tailoring Rule,” which established GHG emissions thresholds that determine when stationary sources, such as the Refineries and the Facilities, must obtain permits under the Prevention of Significant Deterioration (“PSD”) and Title V programs of the CAA.
In May 2010, the EPA finalized the “Greenhouse Gas Tailoring Rule” , which established GHG emissions thresholds that determine when stationary sources, such as the Refineries and the Facilities, must obtain permits under the Prevention of Significant Deterioration (“PSD”) and Title V programs of the CAA.
December 31, 2022 | 13 Table of Contents Competition Our Petroleum Segment competes primarily on the basis of price, reliability of supply, availability of multiple grades of products, and location.
December 31, 2023 | 13 Table of Contents Competition Our Petroleum Segment competes primarily on the basis of price, reliability of supply, availability of multiple grades of products, and location.
Marketing and Distribution Our Nitrogen Fertilizer Segment primarily markets UAN products to agricultural customers and ammonia products to agricultural and industrial customers. UAN and ammonia, including freight, accounted for approximately 70% and 24%, respectively, of our Nitrogen Fertilizer Segment’s total net sales for the year ended December 31, 2022. UAN and ammonia are primarily distributed by truck or railcar.
Marketing and Distribution Our Nitrogen Fertilizer Segment primarily markets UAN products to agricultural customers and ammonia products to agricultural and industrial customers. UAN and ammonia, including freight, accounted for approximately 69% and 24%, respectively, of our Nitrogen Fertilizer Segment’s total net sales for the year ended December 31, 2023. UAN and ammonia are primarily distributed by truck or railcar.
Information on our website is not a part of, and is not incorporated into, this Report or any other report we may file with or furnish to the SEC, whether before or after the date of this Report and irrespective of any general incorporation language therein. December 31, 2022 | 23 Table of Contents
Information on our website is not a part of, and is not incorporated into, this Report or any other report we may file with or furnish to the SEC, whether before or after the date of this Report and irrespective of any general incorporation language therein. December 31, 2023 | 24 Table of Contents
As of December 31, 2022, we owned the general partner and approximately 37% of the outstanding common units representing limited partner interests in CVR Partners, with the public owning the remaining outstanding common units of CVR Partners. Our History The following graphic depicts the Company’s history and key events that have occurred since the Company’s formation.
As of December 31, 2023, CVR Energy owned the general partner and approximately 37% of the outstanding common units representing limited partner interests in CVR Partners, with the public owning the remaining outstanding common units of CVR Partners. Our History The following graphic depicts the Company’s history and key events that have occurred since the Company’s formation.
If delivered by truck, products are most commonly sold on a free-on-board (“FOB”) shipping point basis, and freight is normally arranged by the customer. We also utilize a fleet of railcars for use in product delivery. If delivered by railcar, products are most commonly sold on a FOB destination point basis, and we typically arrange the freight.
If delivered by truck, products are most commonly sold on a shipping point basis, and freight is normally arranged by the customer. We also utilize a fleet of railcars for use in product delivery. If delivered by railcar, products are most commonly sold on a destination point basis, and we typically arrange the freight.
Contracts with customers generally contain fixed pricing and have terms of less than one year. The Nitrogen Fertilizer Segment’s top two customers represented 30% and 26% of its net sales for the years ended December 31, 2022 and 2020, respectively, and its top customer represented 13% of its net sales for the year ended December 31, 2021.
Contracts with customers generally contain fixed pricing and have terms of less than one year. The Nitrogen Fertilizer Segment’s top two customers represented 25% and 30% of its net sales for the years ended December 31, 2023 and 2022, respectively, and its top customer represented 13% of its net sales for the year ended December 31, 2021.
The CAA affects the Petroleum and Nitrogen Fertilizer Segments by extensively regulating the air emissions of sulfur dioxide (“SO 2 ”), volatile organic compounds, nitrogen oxides, and other substances, including those emitted by mobile sources, which are direct or indirect users of our products.
The CAA affects our businesses by extensively regulating the air emissions of sulfur dioxide (“SO 2 ”), volatile organic compounds, nitrogen oxides, and other substances, including those emitted by mobile sources, which are direct or indirect users of our products.
Item 1. Business Overview CVR Energy, Inc. is a diversified holding company, formed in September 2006, primarily engaged in the petroleum refining and marketing industry (the “Petroleum Segment”) and the nitrogen fertilizer manufacturing industry through its interest in CVR Partners, LP, a publicly traded limited partnership (the “Nitrogen Fertilizer Segment” or “CVR Partners”), and also produces and markets renewable diesel.
Item 1. Business Overview CVR Energy, Inc. is a diversified holding company, formed in September 2006, primarily engaged in the petroleum refining and marketing industry (the “Petroleum Segment”) and the nitrogen fertilizer manufacturing industry through its interest in CVR Partners, LP, a publicly traded limited partnership (the “Nitrogen Fertilizer Segment” or “CVR Partners”).
As an example, China’s wheat and coarse grains production is estimated to have increased 40% between 2011 and 2022, but still failed to keep pace with increases in demand, prompting China to grow its wheat and coarse grain imports by more than 1,307% over the same period, according to the United States Department of Agriculture (“USDA”).
As an example, China’s wheat and coarse grains production is estimated to have increased 42% between 2011 and 2023, but still failed to keep pace with increases in demand, prompting China to grow its wheat and coarse grain imports by more than 1,167% over the same period, according to the United States Department of Agriculture (“USDA”).
Additionally, the East Dubuque Fertilizer Facility has direct access to a barge dock on the Mississippi River, as well as a nearby rail spur serviced by the Canadian National Railway Company, both of which are used from time to time to sell and distribute our Nitrogen Fertilizer Segment’s products.
Additionally, the East Dubuque Fertilizer Facility has direct access to a barge dock on the Mississippi River, as well as a nearby rail spur serviced by the Canadian National Railway Company, both of which are utilized occasionally to sell and distribute our Nitrogen Fertilizer Segment’s products.
The United States is the world’s largest exporter and producer of coarse grains, accounting for 24% of world exports and 25% of world production for the fiscal year ended December 31, 2022, according to the USDA. A substantial amount of nitrogen is consumed in production of these crops to increase yield.
The United States is the world’s largest exporter of coarse grains, accounting for 25% of world exports and 27% of world production for the fiscal year ended December 31, 2023, according to the USDA. A substantial amount of nitrogen is consumed in production of these crops to increase yield.
For the years ended December 31, 2022, 2021, and 2020, the East Dubuque Fertilizer Facility incurred approximately $46 million, $32 million, and $20 million for feedstock natural gas used in production, respectively, which equaled an average cost of $6.66, $3.95, and $2.31 per MMBtu, respectively.
For the years ended December 31, 2023, 2022, and 2021, the East Dubuque Fertilizer Facility incurred approximately $29 million, $46 million and $32 million for feedstock natural gas used in production, respectively, which equaled an average cost of $3.42, $6.66 and $3.95 per MMBtu, respectively.
Diversity & Inclusion We are an equal opportunity employer and strive to maintain a diverse and inclusive work environment free from harassment and discrimination regardless of race, religion, color, age, gender, disability, minority, sexual orientation or any other protected class.
December 31, 2023 | 23 Table of Contents Diversity & Inclusion We are an equal opportunity employer and strive to maintain a diverse and inclusive work environment free from harassment and discrimination regardless of race, religion, color, age, gender, disability, minority, sexual orientation or any other protected class.
The Petroleum Segment’s top two customers represented 25% and 26% of its net sales for the years ended December 31, 2022 and 2020, respectively, and its top customer represented 16% of its net sales for the year ended December 31, 2021.
The Petroleum Segment’s top two customers represented 27% and 25% of its net sales for the years ended December 31, 2023 and 2022, respectively, and its top customer represented 16% of its net sales for the year ended December 31, 2021.
We also offer a remote work policy for eligible employees to provide our employees with the flexibility that is key to a work-life balance.
We offer a remote work policy to provide eligible employees with the flexibility that is key to a work-life balance.
Fertecon estimates indicate that the United States represented 11% of total global nitrogen fertilizer consumption for 2022, with China and India as the top consumers representing 22% and 17% of total global nitrogen fertilizer consumption, respectively. North American nitrogen fertilizer producers predominantly use natural gas as their primary feedstock.
Fertecon estimates indicate that the United States represented 11% of total global nitrogen fertilizer consumption for 2023, with China and India as the top consumers representing 23% and 18% of total global nitrogen fertilizer consumption, respectively. North American nitrogen fertilizer producers predominantly use natural gas as their primary feedstock.
Commodities The nitrogen products we produce are globally traded commodities and are subject to price competition. The customers for CVR Partners’ products make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, on December 31, 2022 | 14 Table of Contents customer service and product quality.
Commodities The nitrogen products we produce are globally traded commodities and are subject to price competition. The customers for CVR Partners’ products make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, on customer service and product quality.
In January 2023, we entered into a series of agreements with CapturePoint and certain unaffiliated third-party investors intended to qualify under the Internal Revenue Service safe harbor described in Revenue Procedure 2020-12 for certain joint ventures that are eligible to claim Section 45Q Credits and to allow us to monetize Section 45Q Credits we expect to generate from January 6, 2023 until March 31, 2030.
In January 2023, the Nitrogen Fertilizer Segment entered into a series of agreements with CapturePoint LLC, an unaffiliated third-party (“CapturePoint”), and certain unaffiliated third-party investors intended to qualify under the IRS safe harbor described in Revenue Procedure 2020-12 for certain joint ventures that are eligible to claim Section 45Q Credits and allow us to monetize Section 45Q Credits we expect to generate from January 6, 2023 until March 31, 2030.
For the acquisition of crude oil within close proximity of the Refineries, we operate a fleet of 112 trucks and have contracts with third-party trucking fleets to acquire and deliver crude oil to our pipeline systems or directly to the Refineries for consumption or resale.
For the acquisition of crude oil within close proximity of the Refineries, we operate a fleet of 124 trucks as of December 31, 2023 and have contracts with third-party trucking fleets to acquire and deliver crude oil to our pipeline systems or directly to the Refineries for consumption or resale.
The locations of the Refineries provides us with a reliable supply of crude oil and a transportation cost advantage over our competitors. We primarily compete against CHS Inc.’s McPherson Refinery; HF Sinclair Corporation’s (formerly known as HollyFrontier Corporation) El Dorado and Tulsa Refineries; Phillips 66 Company’s Ponca Refinery; and Valero Energy Corporation’s Ardmore Refinery in the mid-continent region.
The locations of the Refineries generally provide us with a reliable supply of crude oil and a transportation cost advantage over our competitors. We primarily compete against CHS Inc.’s McPherson Refinery; HF Sinclair Corporation’s El Dorado and Tulsa Refineries; Phillips 66 Company’s Ponca Refinery; and Valero Energy Corporation’s Ardmore Refinery in the mid-continent region.
The selling prices of its products fluctuate in response to global market conditions, feedstock costs, and changes in supply and demand. Agriculture Nutrients are depleted in soil over time and, therefore, must be replenished through fertilizer application.
The selling prices of its products fluctuate in response to global market conditions, feedstock costs, and changes in supply and demand. December 31, 2023 | 14 Table of Contents Agriculture Nutrients are depleted in soil over time and, therefore, must be replenished through fertilizer application.
Our health and safety management system provides a comprehensive approach to injury, illness and incident prevention, risk assessment and mitigation, and emergency management. Despite our efforts to achieve excellence in our health and safety performance, there can be no assurances that there will not be accidents resulting in injuries or even fatalities.
Our health and safety management system provides a comprehensive approach to injury, illness and incident prevention, risk assessment and mitigation, and emergency management. Despite our efforts to achieve excellence in our health and safety performance, there can be no assurances that there will not be accidents resulting in losses, injuries, or fatalities that could materially adversely impact our business.
Financial Assurance - We are required under the 2004 Consent Decree, as modified by a 2010 agreement between CRRM, Coffeyville Resources Terminal, LLC (“CRT”), the EPA, and the KDHE, to establish financial assurance to secure the current projected clean-up cost for the now-closed Phillipsburg terminal. This financial assurance is currently provided by a bond in the amount of $2 million.
Financial Assurance - We are required under the 2004 Consent Decree, as modified by a 2010 agreement between CVR Energy subsidiaries, the EPA, and the KDHE, to establish financial assurance to secure the current projected clean-up cost for the now-closed Phillipsburg terminal. This financial assurance is currently provided by a bond in the amount of $2 million.
Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and the Emergency Planning and Community Right-to-Know Act (“EPCRA”) The release of hazardous substances or extremely hazardous substances into the environment is subject to release reporting requirements under federal and state environmental laws.
December 31, 2023 | 20 Table of Contents Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and the Emergency Planning and Community Right-to-Know Act (“EPCRA”) The release of hazardous substances or extremely hazardous substances into the environment is subject to release reporting requirements under federal and state environmental laws.
Farming activities intensify in the United States during the spring and fall fertilizer application periods, and geographic proximity to these activities is also a significant competitive advantage for December 31, 2022 | 16 Table of Contents domestic producers. We manage our manufacturing and distribution operations to best serve our customers during these critical periods.
Farming activities intensify in the United States during the spring and fall fertilizer application periods, and geographic proximity to these activities is also a significant competitive advantage for domestic producers. We manage our manufacturing and distribution operations to best serve our customers during these critical periods.
Environmental Insurance We are covered by a site pollution legal liability insurance policies, which include business interruption coverage. The policies insure any location owned, leased, rented, or operated by the Company, including the Refineries and the Facilities.
Environmental Insurance We are covered by site pollution legal liability insurance policies, which include business interruption coverage, subject to applicable retentions and exclusions. The policies insure any location owned, leased, rented, or operated by the Company, including the Refineries and the Facilities.
Historically, the Coffeyville Fertilizer Facility has obtained the remainder of its pet coke December 31, 2022 | 15 Table of Contents requirements through third-party contracts typically priced at a discount to the spot market. In 2022, 2021, and 2020, our supply of pet coke from the Coffeyville Refinery was approximately 47%, 43%, and 33%, respectively.
Historically, the Coffeyville Fertilizer Facility has obtained the remainder of its pet coke requirements through third-party contracts typically priced at a discount to the spot market. In 2023, 2022, and 2021, our supply of pet coke from the Coffeyville Refinery was approximately 43%, 47%, and 43%, respectively.
Under the rule, facilities already subject to the PSD and Title V programs that increase their emissions of GHGs by a significant amount are required to undergo PSD review and to evaluate and implement air pollution control technology, known as “best available control technology,” to reduce GHG emissions.
Under the rule, facilities already subject to the PSD and Title V programs that increase their December 31, 2023 | 17 Table of Contents emissions of GHGs by a significant amount are required to undergo PSD review and to evaluate and implement air pollution control technology, known as “best available control technology” , to reduce GHG emissions.
December 31, 2022 | 17 Table of Contents The regulation of air emissions under the CAA requires that we obtain various construction and operating permits and incur capital expenditures for the installation of certain air pollution control devices at our operations.
The regulation of air emissions under the CAA requires that we obtain various construction and operating permits and incur capital expenditures for the installation of certain air pollution control devices at our operations.
For the year ended December 31, 2022, the gathering system, which includes the pipelines outlined above and our trucking operations, supplied approximately 53% and 93% of the Coffeyville and Wynnewood Refineries’ crude oil demand, respectively.
For the year ended December 31, 2023, the gathering system, which includes the pipelines outlined above and our trucking operations, supplied approximately 63% and 97% of the Coffeyville and Wynnewood Refineries’ crude oil demand, respectively.
Besides governing current waste disposal December 31, 2022 | 20 Table of Contents practices, RCRA also addresses the environmental effects of certain past waste disposal practices, the recycling of wastes, and the regulation of underground storage tanks containing regulated substances.
Besides governing current waste disposal practices, RCRA also addresses the environmental effects of certain past waste disposal practices, the recycling of wastes, and the regulation of underground storage tanks containing regulated substances.
For the years ended December 31, 2022, 2021, and 2020, the Coffeyville Fertilizer Facility purchased approximately $22 million, $23 million, and $18 million, respectively, of pet coke, which equaled an average cost per ton of $52.88, $44.69, and $35.25, respectively.
For the years ended December 31, 2023, 2022, and 2021, the Coffeyville Fertilizer Facility purchased approximately $41 million, $22 million, and $23 million, respectively, of pet coke, which equaled an average cost per ton of $78.14, $52.88, and $44.69, respectively.
Competition Our Nitrogen Fertilizer Segment produces globally traded commodities and has competitors in every region of the world. The industry is dominated by price considerations, which are driven by raw material and transportation costs, currency fluctuations, trade barriers, and regulators.
Competition Our Nitrogen Fertilizer Segment produces globally traded commodities and has competitors in every region of the world, with barge and rail distribution fostering healthy competition throughout the United States. The industry is dominated by price considerations, which are driven by raw material and transportation costs, currency fluctuations, trade barriers, and regulators.
Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “CVI,” and CVR Partners’ common units are listed on the NYSE under the symbol “UAN.” As of December 31, 2022, Icahn Enterprises L.P. and its affiliates (“IEP”) owned approximately 71% of our outstanding common stock.
Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “CVI”, and CVR Partners’ common units are listed on the NYSE under the symbol “UAN”. As of December 31, 2023, Icahn Enterprises L.P. and its affiliates (“IEP”) owned approximately 66% of our outstanding common stock.
The Federal Clean Water Act (“CWA”) The CWA and its implementing regulations, as well as state laws and regulations that govern the discharge of pollutants into the water, affect the Petroleum and Nitrogen Fertilizer Segments.
The Federal Clean Water Act (“CWA”) The CWA and its implementing regulations, as well as state laws and regulations that govern the discharge of pollutants into the water, affect our businesses.
We may engage independent contractors from time to time based on our business needs. We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees. We are committed to providing wages and benefits that are competitive with a market-based, pay-for-performance compensation philosophy.
Compensation & Benefits We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees. We are committed to providing wages and benefits that are competitive with a market-based, pay-for-performance compensation philosophy.
As of December 31, 2022, we had commitments to purchase approximately 1 million MMBtus of natural gas supply for planned use in our East Dubuque Fertilizer Facility in both January and February of 2023 at a weighted average rate per MMBtu of approximately $9.50 and $9.72, respectively, exclusive of transportation costs.
As of December 31, 2023, we had commitments to purchase approximately 1 million MMBtus of natural gas supply for planned use in our East Dubuque Fertilizer Facility in January of 2024 at a weighted average rate per MMBtu of approximately $3.03, exclusive of transportation costs.
Seasonality Because the Nitrogen Fertilizer Segment primarily sells agricultural commodity products, its business is exposed to seasonal fluctuations in demand for nitrogen fertilizer products in the agricultural industry.
Seasonality December 31, 2023 | 16 Table of Contents Because the Nitrogen Fertilizer Segment primarily sells agricultural commodity products, its business is exposed to seasonal fluctuations in demand for nitrogen fertilizer products in the agricultural industry.
The December 31, 2022 | 21 Table of Contents policies insure certain pollution conditions at or migrating from a covered location, certain waste transportation and disposal activities, and business interruption. In addition to the site pollution legal liability insurance policy, we maintain umbrella and excess casualty insurance policies which include sudden and accidental pollution coverage.
The policies insure certain pollution conditions at or migrating from a covered location, certain waste transportation and disposal activities, and business interruption. In addition to the site pollution legal liability insurance policies, we maintain umbrella and excess casualty insurance policies which include sudden and accidental pollution coverage, subject to applicable retentions and exclusions.
The N 2 O abatement systems at the East Dubuque Fertilizer Facility’s two nitric acid plants have abated, on average, the annual release of approximately 265,000 metric tons of CO 2 e during the past five years.
From 2018 to 2022, the N 2 O abatement systems at the East Dubuque Fertilizer Facility’s two nitric acid plants have abated, on average, the annual release of approximately 256,000 metric tons of CO 2 e.
Renewable Fuel Standard Pursuant to the Energy Policy Act of 2005 and Energy Independence and Security Act of 2007 (“EISA”), the EPA has promulgated the RFS, which requires obligated parties, defined by the EPA as refiners or importers of transportation fuels, to either blend “renewable fuels,” such as ethanol and biofuels, into their transportation fuels or purchase renewable fuel credits, known as renewable identification numbers (“RINs”), in lieu of blending.
Renewable Fuel Standard Pursuant to the Energy Policy Act of 2005 and Energy Independence and Security Act of 2007, which was intended “to move the United States toward greater energy independence…[and] increase the production of clean renewable fuels,” Congress established the RFS, which requires obligated parties, defined by the EPA as refiners and importers of transportation fuels, to either blend “renewable fuels”, such as ethanol and biofuels, into their transportation fuels or purchase renewable fuel credits, known as renewable identification numbers (“RINs”), in lieu of blending.
See “Management’s Discussion and Analysis” in Part II, Item 7 of this Report for further discussion on our core Values. Workforce & Benefits As of December 31, 2022, CVR Energy had 1,470 employees, all of which are located in the United States. Of these, 589 employees are covered by collective bargaining agreements with various labor unions.
See “Management’s Discussion and Analysis” in Part II, Item 7 of this Report for further discussion on our Mission and core Values. Workforce Profile As of December 31, 2023, CVR Energy and its subsidiaries had 1,566 employees, all of which are located in the United States. Of these, 620 employees are covered by collective bargaining agreements.
Global fertilizer use, consisting of nitrogen, phosphate and potash, is projected to increase by 3% through 2023 to meet global food demand according to a study funded by the Food and Agricultural Organization of the United Nations.
According to the IFA, from 1976 to 2021, global fertilizer demand grew 2% annually. Global fertilizer use, consisting of nitrogen, phosphate, and potash, is projected to increase by 2% through 2024 to meet global food demand according to a study funded by the Food and Agricultural Organization of the United Nations.
We provide paid time off and paid holidays, a 401(k) Company match program, a remote work December 31, 2022 | 22 Table of Contents program for eligible employees, dependent care flexible spending accounts, and an employee assistance program. In furtherance of our core Value of continuous improvement, we also offer programs for tuition reimbursement and dependent scholarships.
We provide paid time off and paid holidays, a 401(k) Company match program, life insurance, health savings and dependent care flexible spending accounts, and an employee assistance program. In furtherance of our core Value of Continuous Improvement, we also offer programs for tuition reimbursement and dependent scholarships.
While that ruling prevents EPA from granting year-round E15 sales by extending a nationally-applicable seasonal waiver to E15, a group of Midwestern governors petitioned EPA in April 2022 to allow summertime sales of E15 in their states, including Kansas, under different Clean Air Act authority.
While that ruling prevents the EPA from authorizing year-round E15 sales by extending a nationally-applicable seasonal waiver to E15, a group of Midwestern governors petitioned EPA in April 2022 to allow summertime sales of E15 in their states, including Kansas, under different CAA authority. On July 21, 2022, the Governor of Kansas rescinded Kansas’ summertime E15 request.
In connection with the sourcing of our renewable feedstocks, we face not only competition from consumers in the energy sector, such as renewable fuel producers, but also from non-energy related consumers, such as food producers. This increased competition from non-traditional food producers creates a unique dynamic of competing priorities for food versus fuel.
In connection with the sourcing of our renewable feedstocks, we face not only competition from consumers in the energy sector, such as renewable fuel producers, but also from non-energy related consumers, such as food producers.
The tables below present the total crude throughput by refinery for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 (in bpd) Coffeyville Wynnewood Total Regional Crude 53,237 42 % 46,159 73 % 99,396 52 % WTI 38,265 30 % — — % 38,265 20 % WTL 407 — % 2,323 4 % 2,730 2 % WTS 462 — % 143 — % 605 — % Midland WTI 642 1 % 1,073 2 % 1,715 1 % Condensate 12,159 10 % 13,283 21 % 25,442 13 % Heavy Canadian 6,847 5 % — — % 6,847 4 % DJ Basin 15,607 12 % — — % 15,607 8 % Total crude throughput 127,626 100 % 62,981 100 % 190,607 100 % Year Ended December 31, 2021 (in bpd) Coffeyville Wynnewood Total Regional Crude 28,270 23 % 60,287 82 % 88,557 46 % WTI 62,695 52 % — — % 62,695 32 % WTL 511 — % 3,430 5 % 3,941 2 % WTS — — % 202 — % 202 — % Midland WTI 452 — % 2,107 3 % 2,559 1 % Condensate 7,911 7 % 7,360 10 % 15,271 8 % Heavy Canadian 3,695 3 % — — % 3,695 2 % DJ Basin 17,980 15 % — — % 17,980 9 % Total crude throughput 121,514 100 % 73,386 100 % 194,900 100 % December 31, 2022 | 12 Table of Contents Marketing and Distribution Our Coffeyville product marketing efforts are focused in the central mid-continent area through rack marketing, which is the supply of product through tanker trucks and railcars directly to customers located in close geographic proximity to the refinery and to customers at terminals on third-party refined products distribution systems; and bulk sales into the mid-continent markets and other destinations utilizing third-party product pipeline networks.
The tables below present the total crude throughput by refinery for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 (in bpd) Coffeyville Wynnewood Total Regional Crude 62,859 50 % 50,900 75 % 113,759 59 % WTI 27,283 22 % — — % 27,283 14 % WTL 731 1 % 1,975 3 % 2,706 1 % Midland WTI — — % 137 — % 137 — % Condensate 7,566 6 % 15,228 22 % 22,794 12 % Heavy Canadian 3,265 3 % — — % 3,265 2 % DJ Basin 20,342 17 % — — % 20,342 11 % Bakken 978 1 % — — % 978 1 % Total crude throughput 123,024 100 % 68,240 100 % 191,264 100 % Year Ended December 31, 2022 (in bpd) Coffeyville Wynnewood Total Regional Crude 53,237 42 % 46,159 73 % 99,396 52 % WTI 38,265 30 % — — % 38,265 20 % WTL 407 — % 2,323 4 % 2,730 2 % WTS 462 — % 143 — % 605 — % Midland WTI 642 1 % 1,073 2 % 1,715 1 % Condensate 12,159 10 % 13,283 21 % 25,442 13 % Heavy Canadian 6,847 5 % — — % 6,847 4 % DJ Basin 15,607 12 % — — % 15,607 8 % Total crude throughput 127,626 100 % 62,981 100 % 190,607 100 % December 31, 2023 | 12 Table of Contents Marketing and Distribution Our Coffeyville product marketing efforts are focused in the central mid-continent area through rack marketing, which is the supply of product through tanker trucks and railcars directly to customers located in close geographic proximity to the refinery and to customers at terminals on third-party refined products distribution systems; and bulk sales into the mid-continent markets and other destinations utilizing third-party product pipeline networks.
When the economics are favorable, we expect to continue upgrading substantially all of our ammonia production into UAN. East Dubuque Fertilizer Facility - We own and operate a nitrogen fertilizer production facility in East Dubuque, Illinois that includes a 1,075 ton per day capacity ammonia unit and a 950 ton per day capacity UAN unit (the “East Dubuque Fertilizer Facility”).
East Dubuque Fertilizer Facility - We own and operate a nitrogen fertilizer production facility in East Dubuque, Illinois that includes a 1,075 ton per day capacity ammonia unit and a 950 ton per day capacity UAN unit (the “East Dubuque Fertilizer Facility”).
In addition, the East Dubuque Fertilizer Facility is regulated under the Maritime Transportation Security Act (the “MTSA”). We implement and maintain comprehensive security programs designed to comply with regulatory requirements and protect our assets and employees. We periodically assess risk and conduct audits of our programs and seek to continually improve our health, safety, and security management systems.
We implement and maintain comprehensive security programs designed to comply with regulatory requirements and protect our assets and employees. We periodically assess risk and conduct audits of our programs and seek to continually improve our health, safety, and security management systems.
The Biden Administration has signaled that it will take steps intended to address climate change. On January 20, 2021, the White House issued its Executive Order titled “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis,” as well as a formal notification re-accepting entry of the United States into the Paris Agreement.
On January 20, 2021, the White House issued an Executive Order titled “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis” , as well as a formal notification re-accepting entry of the United States into the Paris Agreement.
The Wynnewood Refinery operates under a RCRA permit. A RCRA facility investigation has been completed in accordance with the terms of the permit. Based on the facility investigation and other available information, WRC entered into a consent order with the Oklahoma Department of Environmental Quality (the “ODEQ”) requiring further investigations of groundwater conditions and enhancements of existing remediation systems.
Based on the facility investigation and other available information, WRC entered into a consent order with the Oklahoma Department of Environmental Quality (the “ODEQ”) requiring further investigations of groundwater conditions and enhancements of existing remediation systems. We have completed the groundwater investigation at the Wynnewood Refinery and the ODEQ has approved our ongoing corrective actions.
The Petroleum Segment refines and markets high value transportation fuels. CVR Partners produces and markets nitrogen fertilizers primarily in the form of UAN and ammonia.
The Petroleum Segment refines and markets high value transportation fuels primarily in the form of gasoline and diesel fuels. CVR Partners produces and markets nitrogen fertilizers primarily in the form of urea ammonium nitrate (“UAN”) and ammonia. CVR Energy also produces and markets renewable diesel.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf such weather conditions prevail near our facilities or logistics assets, they could interrupt or undermine our ability to produce and transport products or to manage our business. Regional occurrences, such as energy shortages or increases in commodity prices, and natural disasters, could also have a material adverse effect on our business, financial condition and results of operations.
Biggest changeRegional occurrences, such as energy shortages or increases in commodity prices, geological hazards, and natural disasters, could also have a material adverse effect on our business, financial condition and results of operations. The physical effects of adverse weather conditions have the potential to directly affect our operations and result in increased costs related to our operations.
If we were required to obtain our crude oil supply without the benefit of crude oil located near the Refineries or through a supply intermediation agreement, our Petroleum Segment’s exposure to crude oil pricing risk may increase, despite any hedging activity in which we engage (such as futures and swaps), crude oil transportation costs could increase and our liquidity could be negatively impacted due to increased inventory, potential need to post letters of credit, and negative impacts of market volatility.
If we were required to obtain our crude oil supply without the benefit of crude oil located near the Refineries or a supply intermediation agreement, our Petroleum Segment’s exposure to crude oil pricing risk may increase, despite any hedging activity in which we engage (such as futures and swaps), crude oil transportation costs could increase and our liquidity could be negatively impacted due to increased inventory, potential need to post letters of credit, and negative impacts of market volatility.
If we are unable to complete capital projects at their expected costs and/or in a timely manner, or if the market conditions assumed in project economics deteriorate, our financial condition, results of operations or cash flows could be adversely affected. Equipment, even when properly maintained, may require significant capital expenditures and expenses to keep operating at optimum efficiency.
If we are unable to complete capital projects at their expected costs, in a timely manner or at all, or if the market conditions assumed in project economics deteriorate, our financial condition, results of operations or cash flows could be adversely affected. Equipment, even when properly maintained, may require significant capital expenditures and expenses to keep operating at optimum efficiency.
Price level changes during the period between purchasing feedstocks and selling the refined petroleum products from these feedstocks could have a significant effect on our financial results. A decline in market prices in these feedstocks may negatively impact the carrying value of our inventories.
Price level changes during the period between purchasing feedstocks and selling the refined products from these feedstocks could have a significant effect on our financial results. A decline in market prices of these feedstocks and refined products may negatively impact the carrying value of our inventories.
The extent to which the pandemic and its effects may adversely impact our future business, financial, and operating results, and for what duration and magnitude, depends on factors that are continuing to evolve, are difficult to predict and, in many instances, are beyond our control.
The extent to which the pandemic and its ongoing effects may adversely impact our future business, financial, and operating results, and for what duration and magnitude, depends on factors that are continuing to evolve, are difficult to predict and, in many instances, are beyond our control.
Compliance with and changes in the tax laws could adversely affect our performance. We are subject to extensive tax liabilities, including U.S. and state income taxes and transactional taxes such as excise, sales/use, payroll, franchise, and withholding taxes.
Compliance with and changes in the tax laws could adversely affect our performance. We are subject to extensive tax liabilities, including U.S. federal and state income taxes and transactional taxes such as excise, sales/use, payroll, franchise, and withholding taxes.
Any disruption in the supply of natural gas to our East Dubuque Facility could restrict our ability to continue to make products at the facility and have a material adverse effect on our results of operations and financial condition.
Any disruption in the supply of natural gas to our East Dubuque Fertilizer Facility could restrict our ability to continue to make products at the facility and have a material adverse effect on our results of operations and financial condition.
From time to time, we may own less than a 50% interest in other public companies, which exposes us to the risk of inadvertently becoming an investment company required to register under the Investment Company Act (“ICA”).
From time to time, we may own less than a 50% interest in other public companies, which exposes us to the risk of inadvertently becoming an investment company required to register under the Investment Company Act of 1940 (“ICA”).
Icahn indirectly controls approximately 71% of the voting power of our common stock and, by virtue of such stock ownership, is able to control or exert substantial influence over the Company, including the election and appointment of directors; business strategy and policies; mergers or other business combinations; acquisition or disposition of assets; future issuances of common stock, common units, or other securities; occurrence of debt or obtaining other sources of financing; and the payment of dividends on the Company’s common stock and distributions on the common units of CVR Partners.
Icahn indirectly controls approximately 66% of the voting power of our common stock and, by virtue of such stock ownership, is able to control or exert substantial influence over the Company, including the election and appointment of directors; business strategy and policies; mergers or other business combinations; acquisition or disposition of assets; future issuances of common stock, common units, or other securities; occurrence of debt or obtaining other sources of financing; and the payment of dividends on the Company’s common stock and distributions on the common units of CVR Partners.
A failure to operate at full capacity could adversely affect our profitability and cash flows. The Petroleum Segment’s commodity derivative contracts may limit potential gains, exacerbate potential losses, and involve other risks. We may enter into both short- and long-term commodity derivatives contracts to mitigate crack spread risk with respect to a portion of expected refined products production.
A failure to operate at full capacity could adversely affect our profitability and cash flows. The Petroleum Segment’s commodity derivative strategy and/or contracts may limit potential gains, exacerbate potential losses, and involve other risks. We may enter into both short- and long-term commodity derivatives contracts to mitigate crack spread risk with respect to a portion of expected refined products production.
General Risks Related to CVR Energy The acquisition, expansion and investment strategy of our businesses involves significant risks. From time to time, we may consider pursuing acquisitions and expansion projects to continue to grow and increase profitability. We also may make investments in other entities.
General Risks Related to CVR Energy The acquisition, expansion and investment strategy of our businesses involves significant risks. From time to time, we may consider pursuing acquisitions of businesses or assets and expansion projects to continue to grow and increase profitability. We also may make investments in other entities.
Inflation in the United States increased beginning in the second half of 2021 and has continued into 2023, due to a substantial increase in money supply, a stimulative fiscal policy, a significant rebound in consumer demand as COVID-19 restrictions were relaxed, the Russia-Ukraine conflict, and worldwide supply chain disruptions resulting from the economic contraction caused by COVID-19 and lockdowns followed by a rapid recovery.
Inflation in the United States increased beginning in the second half of 2021 and continued into the beginning of 2023, due to a substantial increase in money supply, a stimulative fiscal policy, a significant rebound in consumer demand as COVID-19 restrictions were relaxed, the Russia-Ukraine war and worldwide supply chain disruptions resulting from the economic contraction caused by COVID-19 and lockdowns followed by a rapid recovery.
Our debt facilities and instruments contain, and any instruments governing future indebtedness would likely contain, a number of covenants that impose significant operating and financial restrictions on us and our subsidiaries and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on the ability, among other things, to: incur, assume, or guarantee additional indebtedness or issue redeemable or preferred stock; pay dividends or distributions in respect of equity securities or make other restricted payments; prepay, redeem, or repurchase certain debt; enter into agreements that restrict distributions from restricted subsidiaries; make certain payments on debt that is subordinated or secured on a junior basis; make certain investments; sell or otherwise dispose of assets, including capital stock of subsidiaries; create liens on certain assets; consolidate, merge, sell, or otherwise dispose of all or substantially all assets; enter into certain transactions with affiliates; and designate subsidiaries as unrestricted subsidiaries.
Our debt facilities and instruments contain, and any instruments governing future indebtedness would likely contain, a number of covenants that impose significant operating and financial restrictions on us and our subsidiaries and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on the ability, among other things, to: incur, assume, or guarantee additional indebtedness or issue redeemable or preferred stock; pay dividends or distributions in respect of equity securities or make other restricted payments; prepay, redeem, or repurchase certain debt; enter into agreements December 31, 2023 | 37 Table of Contents that restrict distributions from restricted subsidiaries; make certain payments on debt that is subordinated or secured on a junior basis; make certain investments; sell or otherwise dispose of assets, including capital stock of subsidiaries; create liens on certain assets; consolidate, merge, sell, or otherwise dispose of all or substantially all assets; enter into certain transactions with affiliates; and designate subsidiaries as unrestricted subsidiaries.
In addition, any future acquisitions, expansions or December 31, 2022 | 39 Table of Contents investments may entail significant transaction costs and risks associated with entry into new markets and lines of business, including but not limited to new regulatory obligations and risks, and integration challenges such as disruption of operations; failure to achieve financial or operating objectives contributing to the accretive nature of an acquisition; strain on controls, procedures and management; the need to modify systems or to add management resources; the diversion of management time from the operation of our business; customer and personnel retention; assumption of unknown material liabilities or regulatory non-compliance issues; amortization of acquired assets, which would reduce future reported earnings; and possible adverse short-term effects on our cash flows or operating results.
In addition, any future acquisitions, expansions or investments may entail significant transaction costs and risks associated with entry into new markets and lines of business, including but not limited to new regulatory obligations and risks, and integration challenges such as disruption of operations; failure to achieve financial or operating objectives contributing to the accretive nature of an acquisition; strain on controls, procedures and management; the need to modify systems or to add management resources; the diversion of management time from the operation of our business; customer and personnel retention; assumption of unknown material liabilities or regulatory non-compliance issues; amortization of acquired assets, which would reduce future reported earnings; and possible adverse short-term effects on our cash flows or operating results.
Examples of unforeseen events and circumstances, which may not be within our control, include: (i) major unplanned maintenance requirements; (ii) catastrophic events caused by mechanical breakdown, electrical injury, pressure vessel rupture, explosion, contamination, fire, or natural disasters, including floods, windstorms, and other similar events; (iii) labor supply shortages or labor difficulties that result in a work stoppage or slowdown; (iv) cessation or suspension of a plant or specific operations dictated by environmental authorities; (v) acts of terrorism or other deliberate malicious acts; and (vi) an event or incident involving a large clean-up, decontamination, or the imposition of laws and ordinances regulating the cost and schedule of demolition or reconstruction, which can cause significant delays in restoring property to its pre-loss condition.
Examples of unforeseen events and circumstances, which may not be within our control, include: (i) major unplanned maintenance requirements; (ii) catastrophic events caused by mechanical breakdown, electrical injury, pressure vessel rupture, explosion, contamination, fire, or natural disasters, including floods, windstorms, and other similar events; (iii) labor supply shortages or labor difficulties that result in a work stoppage or slowdown; (iv) cessation or suspension of a plant or specific operations December 31, 2023 | 28 Table of Contents dictated by environmental authorities; (v) acts of terrorism, cyberattacks or other deliberate malicious acts; and (vi) an event or incident involving a large clean-up, decontamination, or the imposition of laws and ordinances regulating the cost and schedule of demolition or reconstruction, which can cause significant delays in restoring property to its pre-loss condition.
Our ability to satisfy existing debt obligations will depend upon, among other things: future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory, and other factors, many of which are beyond our control; future ability to borrow under CVR Refining’s Amended and Restated ABL Credit Facility and CVR Partners’ ABL Credit Facility, the availability of which depends on, among other things, complying with the covenants in the applicable facility; and future ability to obtain other financing.
Our ability to satisfy existing debt obligations will depend upon, among other things: future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory, and other factors, many of which are beyond our control; future ability to borrow under the CVR Energy ABL Credit Facility and CVR Partners’ ABL Credit Facility, the availability of which depends on, among other things, complying with the covenants in the applicable facility; and future ability to obtain other financing.
Any interruption in the supply of natural gas to our East Dubuque Fertilizer Facility could have a material adverse effect on our results of operations and financial condition. Operations at our East Dubuque Fertilizer Facility depends on the availability of natural gas. We have two agreements for pipeline transportation of natural gas with expiration dates in 2023 and 2025.
Any interruption in the supply of natural gas to our East Dubuque Fertilizer Facility could have a material adverse effect on our results of operations and financial condition. Operations at our East Dubuque Fertilizer Facility depend on the availability of natural gas. We have two agreements for pipeline transportation of natural gas with expiration dates in 2025.
The level of indebtedness could have important consequences, including the following: (i) limiting our ability to obtain additional financing to fund working capital needs, capital expenditures, debt service requirements, acquisitions, general corporate, or other purposes; (ii) requiring us to utilize a significant portion of cash flows to service indebtedness, thereby reducing our funds available for operations, future business opportunities, and distributions to us and public common unitholders of CVR Partners; (iii) limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt; (iv) limiting our ability to compete with other companies who are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions; (v) limiting our ability to make certain payments on debt that is subordinated or secured on a junior basis; (vi) restricting the way in which we conduct business because of financial and operating covenants, including regarding borrowing additional funds, disposing of assets, and in the case of certain indebtedness of subsidiaries, restricting the ability of subsidiaries to pay dividends or make distributions; (vii) limiting our ability to enter into certain transactions with our affiliates; (viii) limiting our ability to designate our subsidiaries as unrestricted subsidiaries; (ix) exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in their or their December 31, 2022 | 34 Table of Contents respective subsidiaries’ debt instruments; (x) increasing our vulnerability to general adverse economic and industry conditions or adverse pricing of products; (xi) increasing the likelihood for a reduction in the borrowing base under CVR Refining L.P.’s (“CVR Refining”) Amended and Restated ABL Credit Facility following a periodic redetermination could require us to repay a portion of our then-outstanding bank borrowings; and (xii) limiting our ability to react to changing market conditions in our industries and in respective customers’ industries.
The level of indebtedness could have important consequences, including the following: (i) limiting our ability to obtain additional financing to fund working capital needs, capital expenditures, debt service requirements, acquisitions, general corporate, or other purposes; (ii) requiring us to utilize a significant portion of cash flows to service indebtedness, thereby reducing our funds available for operations, future business opportunities, and distributions to us and public common unitholders of CVR Partners; (iii) limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service debt; (iv) limiting our ability to compete with other companies who are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions; (v) limiting our ability to make certain payments on debt that is subordinated or secured on a junior basis; (vi) restricting the way in which we conduct business because of financial and operating covenants, including regarding borrowing additional funds, disposing of assets, and in the case of certain indebtedness of subsidiaries, restricting the ability of subsidiaries to pay dividends or make distributions; (vii) limiting our ability to enter into certain transactions with our affiliates; (viii) limiting our ability to designate our subsidiaries as unrestricted subsidiaries; (ix) exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in their or their respective subsidiaries’ debt instruments; (x) increasing our vulnerability to general adverse economic and industry conditions or adverse pricing of products; (xi) increasing the likelihood for a reduction in the borrowing base under the Amended and Restated ABL Credit Facility (the "CVR Energy ABL Credit Facility"), which certain subsidiaries of the Company are parties to, following a periodic redetermination could require us to repay a portion of our then-outstanding bank borrowings; and (xii) limiting our ability to react to changing market conditions in our industries and in respective customers’ industries.
In addition, our hedging activities may expose us to the risk of financial loss in certain circumstances, including instances in which the volumes of our actual use of crude oil or production of the applicable refined products is less than the volumes subject to the hedging arrangement; accidents, interruptions in transportation, inclement weather, or other events cause unscheduled shutdowns or otherwise adversely affect a refinery, suppliers, or customers; the counterparties to our futures contracts fail to perform under the contracts; or a sudden, unexpected event materially impacts the commodity or crack spread subject to the hedging arrangement.
In addition, our hedging activities may expose us to the risk of financial loss in certain circumstances, including instances in which the volumes of our actual use of crude oil or production of December 31, 2023 | 33 Table of Contents the applicable refined products is less than the volumes subject to the hedging arrangement; accidents, interruptions in transportation, inclement weather, or other events cause unscheduled shutdowns or otherwise adversely affect a refinery, suppliers, or customers; the counterparties to our futures contracts fail to perform under the contracts; or a sudden, unexpected event materially impacts the commodity or crack spread subject to the hedging arrangement.
As a result, our Petroleum Segment is more susceptible to regional economic conditions than the operations of more geographically diversified competitors, and any unforeseen circumstances that affect our December 31, 2022 | 25 Table of Contents operating area could also materially adversely affect our revenues and cash flows.
As a result, our Petroleum Segment is more susceptible to regional economic conditions than the operations of more geographically diversified competitors, and any unforeseen circumstances that affect our December 31, 2023 | 26 Table of Contents operating area could also materially adversely affect our revenues and cash flows.
If our access to transportation on which we rely for the supply of our feedstocks and the distribution of our products is interrupted, our inventory and costs may increase and we may be unable to efficiently distribute our products.
If our access to transportation on which we rely for the supply of our feedstocks and the distribution of our products is interrupted, our inventory and costs may increase and we may be unable to distribute our products efficiently or at all.
December 31, 2022 | 37 Table of Contents Risks Related to Our Ownership in CVR Partners If CVR Partners were to be treated as a corporation for U.S. federal income tax purposes or if it becomes subject to entity-level taxation for state tax purposes, its cash available for distribution to its common unitholders, including to us, would be substantially reduced, likely causing a substantial reduction in the value of its common units, including the common units held by us.
Risks Related to Our Ownership in CVR Partners If CVR Partners were to be treated as a corporation for U.S. federal income tax purposes or if it becomes subject to entity-level taxation for state tax purposes, its cash available for distribution to its common unitholders, including to us, would be substantially reduced, likely causing a substantial reduction in the value of its common units, including the common units held by us.
The U.S. agricultural industry can be affected by a number of factors, including weather patterns and field conditions, current and projected grain inventories and December 31, 2022 | 32 Table of Contents prices, domestic and international population changes, demand for U.S. agricultural products, U.S., state and foreign policies regarding trade in agricultural products, and changes in governmental regulations and incentives for ethanol production that could affect future corn-based ethanol demand and production, including the RFS program.
The U.S. agricultural industry can be affected by a number of factors, including weather patterns and field conditions, current and projected grain inventories and prices, domestic and international population changes, demand for U.S. agricultural products, U.S., state and foreign policies regarding trade in agricultural products, and changes in governmental regulations and incentives for ethanol production that could affect future corn-based ethanol demand and production, including the RFS program.
The agreement, which currently extends through December 31, 2023, minimizes the amount of in-transit inventory and mitigates crude oil pricing risk by ensuring pricing takes place close to the time the crude oil is refined and the yielded products are sold.
The agreement, which currently extends through January 31, 2026, minimizes the amount of in-transit inventory and mitigates crude oil pricing risk by ensuring pricing takes place close to the time the crude oil is refined and the yielded products are sold.
For example, in August 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”), which imposes a charge on methane emissions from certain petroleum system facilities and could have an indirect impact on demand for the goods and services of our Petroleum Segment.
For example, in August 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”), which directs the EPA to impose a charge on methane emissions from certain petroleum system facilities and could have an indirect impact on demand for the goods and services of our Petroleum Segment.
If such an event were to occur, it is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of notes or repay amounts outstanding under CVR Refining’s Amended and Restated ABL Credit Facility or CVR Partners’ ABL Credit Facility, if any.
If such an event were to occur, it is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of notes or repay amounts outstanding under the CVR Energy ABL Credit Facility or CVR Partners’ ABL Credit Facility, if any.
The Petroleum and Nitrogen Fertilizer Segments both have a significant concentration of customers. The two largest customers of our Petroleum Segment represented 25% of its net sales for the year ended December 31, 2022. The two largest customers of the Nitrogen Fertilizer Segment represented approximately 30% of its net sales for the same period.
The Petroleum and Nitrogen Fertilizer Segments both have a significant concentration of customers. The two largest customers of our Petroleum Segment represented 27% of its net sales for the year ended December 31, 2023. The two largest customers of the Nitrogen Fertilizer Segment represented approximately 25% of its net sales for the same period.
Although we own the general partner of CVR Partners, the general partner owes a duty of good faith to public unitholders, which could cause them to manage their respective businesses differently than if there were no public unitholders. Public investors own approximately 63% of CVR Partners’ common units.
Although we own the general partner of CVR Partners, the general partner owes a duty of good faith to public unitholders, which could cause them to manage their respective businesses differently than if there were no public unitholders. As of December 31, 2023, public investors own approximately 63% of CVR Partners’ outstanding common units.
Our operations are subject to extensive federal, state, and local environmental laws and regulations relating to the protection of the environment, including those governing the emission or discharge of pollutants into the environment, climate change and the ongoing energy transition, product use and specifications, and the generation, treatment, storage, transportation, December 31, 2022 | 26 Table of Contents disposal, and remediation of solid and hazardous wastes.
Our operations are subject to extensive federal, state, and local environmental laws and regulations relating to the protection of the environment, including those governing the emission or discharge of pollutants into the environment, climate change and the ongoing energy transition, product use and specifications, and the generation, treatment, storage, transportation, disposal, and remediation of solid and hazardous wastes.
In addition, the long-term success of our Petroleum Segment depends on our ability to effectively address energy transition matters, which will require that we continue to adapt our existing facilities to potentially December 31, 2022 | 31 Table of Contents changing government requirements, among other things.
In addition, the long-term success of our Petroleum Segment depends on our ability to effectively address energy transition matters, which will require that we continue to adapt our existing facilities to potentially changing government requirements, among other things.
However, because the nature and timing of changes in extreme December 31, 2022 | 28 Table of Contents weather events (such as increased frequency, duration, and severity) are uncertain, it is not possible for us to estimate reliably the future financial risk to our operations caused by these potential physical risks.
However, because the nature and timing of changes in extreme weather events (such as increased frequency, duration, and severity) are uncertain, it is not possible for us to estimate reliably the future financial risk to our operations caused by these potential physical risks.
Icahn’s interests in us to an unrelated party or group, a change of control could be deemed to have occurred under the terms of the indenture governing CVR Energy’s 5.250% and 5.750% Senior Notes and under the indenture governing CVR Partners’ 6.125% Senior Secured Notes, which, in each case, could require the issuers to offer to repurchase all outstanding notes at 101% of their principal amount plus accrued interest to the date of repurchase, and an event of default could be deemed to have occurred under CVR Refining’s Amended and Restated ABL Credit Facility and under CVR Partners’ ABL Credit Facility, which, in each case, could allow lenders to accelerate indebtedness owed to them.
Icahn’s interests in us to an unrelated party or group, a change of control could be deemed to have occurred under the terms of the indenture governing CVR Energy’s 5.750% Senior Notes due 2028, under the indenture governing CVR Partners’ 6.125% Senior Secured Notes due 2028 and under the indenture governing CVR Energy’s 8.500% Senior Notes due 2029, which, in each case, could require the issuers to offer to repurchase all outstanding notes at 101% of their principal amount plus accrued interest to the date of repurchase, and an event of default could be deemed to have occurred under the CVR Energy ABL Credit Facility and under CVR Partners’ ABL Credit Facility, which, in each case, could allow lenders to accelerate indebtedness owed to them.
To protect our facilities and systems against and mitigate cyber risk, we have implemented several programs including externally performed cyber risk monitoring, audits and penetration testing and an information security training program, and we are actively engaged in evaluating the implementation of applicable Cybersecurity and Infrastructure Security Agency security standard guidelines.
To protect our facilities and systems against and mitigate cyber risk, we have implemented several programs including externally performed cyber risk monitoring, audits and penetration testing and an information security training program, and we completed the implementation of applicable Cybersecurity and Infrastructure Security Agency security standard guidelines in 2023.
Should these, or any of our other third-party suppliers fail to perform in accordance with existing contractual arrangements, or should we otherwise lose the service of any third-party suppliers, our operations (or a portion thereof) could be forced to halt. Alternative December 31, 2022 | 33 Table of Contents sources of supply could be difficult to obtain.
Should these, or any of our other third-party suppliers fail to perform in accordance with existing contractual arrangements, or should we otherwise lose the service of any third-party suppliers, our operations (or a portion thereof) could be forced to halt. Alternative sources of supply could be difficult to obtain.
These fluctuations historically have had, and could in the future have, significant effects on prices across all nitrogen fertilizer products and, in turn, our results of operations, financial condition and cash flows. Nitrogen fertilizer products are commodities, December 31, 2022 | 24 Table of Contents the price of which can be highly volatile.
These fluctuations historically have had, and could in the future have, significant effects on prices across all nitrogen fertilizer products and, in turn, our results of operations, financial condition and cash flows. Nitrogen fertilizer products are commodities, the price of which can be highly volatile.
December 31, 2022 | 27 Table of Contents There is finite capacity in the commercial insurance industry engaged in underwriting energy industry risk, and factors impacting cost and availability include: (i) losses in our industries, (ii) natural disasters (which could be exacerbated by climate change), (iii) specific losses incurred by us, and (iv) inadequate investment returns earned by the insurance industry.
There is finite capacity in the commercial insurance industry engaged in underwriting energy industry risk, and factors impacting cost and availability include: (i) losses in our industries, (ii) natural disasters (which could be exacerbated by climate change), (iii) specific losses incurred by us, and (iv) inadequate investment returns earned by the insurance industry.
The limited number of companies available for ammonia transport may also impact the availability of transportation for our Nitrogen Fertilizer Segment’s products. We may be unable to obtain or renew permits or approvals necessary for our operations, which could inhibit our ability to do business.
The limited number of companies available for ammonia transport may also impact the availability of transportation for our Nitrogen Fertilizer Segment’s products. December 31, 2023 | 30 Table of Contents We may be unable to obtain or renew permits or approvals necessary for our operations, which could inhibit our ability to do business.
In addition, an increase in interest rates could adversely affect our future ability to obtain financing or materially increase the cost of any additional financing. Risks Related to Our Corporate Structure The Company’s reorganization of its entities and assets could trigger increased costs, complexity and risks.
In addition, an increase in interest rates could adversely affect our future ability to obtain financing or materially increase the cost of any additional financing. December 31, 2023 | 38 Table of Contents Risks Related to Our Corporate Structure The Company’s reorganization of its entities and assets could trigger increased costs, complexity and risks.
Failure to manage these acquisition, expansion and investment risks could have a material adverse effect on our results of operations, financial condition and cash flows. Our joint ventures involve similar risks. We are subject to the risk of becoming an investment company.
Failure to manage these acquisition, expansion and investment risks could have a material adverse effect on our results of operations, financial condition and cash flows. Our joint ventures involve similar risks. December 31, 2023 | 41 Table of Contents We are subject to the risk of becoming an investment company.
If seasonal demand exceeds the projections on which we base our production levels, customers may acquire nitrogen fertilizer products from competitors, and our profitability may be negatively impacted. If seasonal demand is less than expected, we may be left with excess inventory that will have to be stored or liquidated.
If seasonal demand December 31, 2023 | 25 Table of Contents exceeds the projections on which we base our production levels, customers may acquire nitrogen fertilizer products from competitors, and our profitability may be negatively impacted. If seasonal demand is less than expected, we may be left with excess inventory that will have to be stored or liquidated.
Failure by our Coffeyville Refinery to continue to supply our Coffeyville Fertilizer Facility with pet coke could negatively impact the Nitrogen Fertilizer Segment’s results of operations.
Failure by our Coffeyville Refinery or other third parties to continue to supply our Coffeyville Fertilizer Facility with pet coke could negatively impact the Nitrogen Fertilizer Segment’s results of operations.
One of the ways we may grow our business is through the conversion or expansion of our existing facilities, such as the conversion of the Wynnewood Refinery’s hydrocracker to an RDU and the conversion of a hydrotreater to renewable diesel service at the Coffeyville Refinery.
One of the ways we may grow our business is through the conversion or expansion of our existing facilities, such as the conversion of the Wynnewood Refinery’s hydrocracker to an RDU and the conversion of a hydrotreater to renewable diesel service at the Coffeyville Refinery, which were completed in 2022 and 2023, respectively.
As a result, the effectiveness of our risk mitigation strategy could have a material adverse impact on our financial results and cash flows.
As a result, our risk mitigation strategy and activities could have a material adverse impact on our financial results and cash flows.
December 31, 2022 | 35 Table of Contents We are authorized to issue up to a total of 350 million shares of our common stock and 50 million shares of preferred stock, potentially diluting equity ownership of current holders and the share price of our common stock.
We are authorized to issue up to a total of 350 million shares of our common stock and 50 million shares of preferred stock, potentially diluting equity ownership of current holders and the share price of our common stock.
There is no assurance that our crude oil gathering operations will remain at current levels or that we will be able to renew or extend the Vitol agreement beyond December 31, 2023.
There is no assurance that our crude oil gathering operations will remain at current levels or that we will be able to renew or extend the Gunvor agreement beyond January 31, 2026.
Inflation has also caused and may in the future cause increases in employee-related costs, both due to higher wages and other compensation. We are subject to cybersecurity risks and may experience cyber incidents resulting in disruption to our businesses.
Inflation has also caused and may in the future cause increases in employee-related costs, both due to higher wages and other compensation. December 31, 2023 | 31 Table of Contents We are subject to cybersecurity risks and may experience cyber incidents resulting in disruption or harm to our businesses.
Currently, we purchase 100% of the pet coke our Coffeyville Refinery produces. However, we are still required to procure additional pet coke at fixed prices from third parties to maintain our production rates. We have contracts for 233,500 tons of third-party supply of pet coke through December 2023.
Currently, we purchase December 31, 2023 | 35 Table of Contents 100% of the pet coke our Coffeyville Refinery produces. However, we are still required to procure additional pet coke at fixed prices from third parties to maintain our production rates. We have contracts for 330,000 tons of third-party supply of pet coke through December 2024.
In addition, we may incur significant losses or increased costs relating to the operation of railcars used for the purpose of carrying various products, including ammonia.
December 31, 2023 | 36 Table of Contents In addition, we may incur significant losses or increased costs relating to the operation of railcars used for the purpose of carrying various products, including ammonia.
We are a “controlled company” within the meaning of the NYSE rules and, as a result, qualify for, and are relying on, exemptions from certain corporate governance requirements.
December 31, 2023 | 39 Table of Contents We are a “controlled company” within the meaning of the NYSE rules and, as a result, qualify for, and are relying on, exemptions from certain corporate governance requirements.
As a result, we may face negative publicity, increasing pressure regarding our ESG practices and disclosures, and demands for ESG-focused engagement commenced by investors, stakeholders, and other interested parties.
As a result, we may face negative publicity, increasing pressure regarding our December 31, 2023 | 34 Table of Contents ESG practices and disclosures, and demands for ESG-focused engagement commenced by investors, stakeholders, and other interested parties.
If licensed technology were no longer available, our business may be adversely affected. We have licensed, and may in the future license, a combination of patent, trade secret, and other intellectual property rights of third parties for use in our plant operations.
If licensed technology were no longer available or able to be licensed economically or at all, our business may be adversely affected. We have licensed a combination of patent, trade secret, and other intellectual property rights of third parties for use in our plant operations.
Risks Related to the Petroleum Segment If our Petroleum Segment is required to obtain its crude oil supply without the benefit of a crude oil supply agreement and significant crude oil gathering in the regions in which we operate, our exposure to the risks associated with volatile crude oil prices may increase, crude oil transportation costs could increase and our liquidity may be reduced.
Risks Related to the Petroleum Segment If our Petroleum Segment loses the benefit of a crude oil supply agreement or is unable to gather crude oil in the regions in which we operate, our exposure to the risks associated with volatile crude oil prices may increase, crude oil transportation costs could increase and our liquidity may be reduced.
Therefore, treatment of CVR Partners as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to its common unitholders (including us), likely causing a substantial reduction in the value of such common units. We may have liability to repay distributions that are wrongfully distributed to us.
Therefore, treatment of CVR Partners as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to its common unitholders (including us), likely causing a substantial reduction in the value of such common units.
The ultimate outcome of these and other factors may result in many adverse consequences including, but not limited to, reduced availability of critical staff, disruption or delays to supply chains for critical equipment or feedstock, inflation, increased interest rates, reduced economic activity that negatively impacts demand for our products, and increased administrative, compliance, and operational costs.
The ultimate outcome of these and other factors may result in many adverse consequences including, but not limited to, disruption or delays to supply chains for critical equipment or feedstock, inflation, increased interest rates, and increased administrative, compliance, and operational costs.
The economic effects from the COVID-19 pandemic on our business were and may again be significant.
The economic effects from public health crises such as the COVID-19 pandemic on our business were and may again be significant.
We may be unable to pass along such higher costs to our customers. In addition, inflation may adversely affect our customers’ financing costs, cash flows, and profitability, which could adversely impact their operations and our ability to offer credit and collect receivables.
In addition, inflation may adversely affect our customers’ financing costs, cash flows and profitability, which could adversely impact their operations and our ability to offer credit and collect receivables.
Challenges that may lead to failed consummation of an expansion/acquisition include intense competition for suitable acquisition targets, the potential unavailability of financial resources necessary, difficulties in securing sufficiently favorable terms, and the failure to obtain requisite regulatory or other governmental approvals or the approval of equity holders of the entities in which we have invested.
Challenges that may lead to failed consummation of an expansion/acquisition include intense competition for suitable acquisition targets, the potential unavailability of financial resources necessary, difficulties in securing sufficiently favorable terms, and the failure to obtain requisite regulatory or other governmental approvals or the approval of equity holders of the entities in which we have invested, and efforts concerning an expansion/acquisition will require significant time and attention from our management, which could distract them from the operation of our business.
Our Coffeyville Fertilizer Facility obtained 47% of its pet coke from our Coffeyville Refinery in 2022.
Our Coffeyville Fertilizer Facility obtained 43% of its pet coke from our Coffeyville Refinery in 2023.
This law imposes, among other things, a 15% corporate alternative minimum tax on adjusted financial statement income, and a 1% excise tax on certain corporate stock repurchases occurring after December 31, 2022. While we do not expect any material impacts from these provisions, it is unclear how they will be implemented by the U.S.
This law imposes, among other things, a 15% corporate alternative minimum tax on adjusted financial statement income, and a 1% excise tax on certain corporate stock repurchases occurring after December 31, 2022. We do not expect any material impacts from these provisions.
Moreover, we may construct facilities to capture anticipated future growth in demand for refined products or renewable diesel in a region in which such growth does not materialize, and our revenue may not increase immediately upon the expend of funds on a particular project.
Moreover, we may construct facilities to capture anticipated future growth in demand for refined products or renewable diesel in a region in which such growth does not materialize, or we may return previously converted equipment to hydrocarbon service based on our expectations concerning market conditions, including but not limited to renewable diesel margins and contractual obligations, and our revenue may not increase immediately upon the expend of funds on a particular project.
Our Petroleum Segment obtains substantially all of its crude oil supply through crude oil gathering operations in Kansas and Oklahoma or through the crude oil intermediation agreement with Vitol Inc.
December 31, 2023 | 32 Table of Contents Our Petroleum Segment obtains substantially all of its crude oil supply through crude oil gathering operations in Kansas and Oklahoma or through the crude oil intermediation agreement with Gunvor USA LLC.
December 31, 2022 | 30 Table of Contents Also, we believe WRC, as a small refinery, should be entitled to exemptions from the RFS, and we may carry a RIN deficit while we pursue such exemptions in court.
Also, we believe WRC, as a small refinery, should be entitled to exemptions from the RFS, and we may carry a RIN deficit while we pursue such exemptions in court. The accounting treatment of such deficit may change over time and in response to court rulings.
The physical effects of adverse weather conditions have the potential to directly affect our operations and result in increased costs related to our operations. Since climate change may change weather patterns and the severity of weather events, any such changes could consequently materially adversely affect our revenues and cash flows and the demand for our products by our customers.
Since climate change may change weather patterns and the severity of weather events, any such changes could consequently materially adversely affect our revenues and cash flows and the demand for our products by our customers.
December 31, 2022 | 36 Table of Contents In addition, in the event of a sale or transfer of some or all of Mr.
In addition, in the event of a sale or transfer of some or all of Mr.
In addition, imports of fertilizer from other countries may be unfairly subsidized, as was found to be the case on November 30, 2021 by the U.S. Department of Commerce (the “USDOC”) with respect to UAN imports from Russia and Trinidad.
In addition, imports of fertilizer from other countries may be unfairly subsidized, as determined by the U.S. Department of Commerce on June 24, 2022 with respect to UAN imports from Russia and Trinidad and Tobago. On July 18, 2022, the U.S.
As of December 31, 2022, we have established an accrual of approximately $22 million for probable and reasonably estimable obligations associated with these sites. Regulations concerning the transportation, storage, and handling of hazardous chemicals and materials, risks of terrorism, and the security of refineries and chemical manufacturing facilities could result in higher operating costs.
As of December 31, 2023, we have established an accrual of approximately $19 million for probable and reasonably estimable obligations associated with environmental matters, approximately $5 million of which is for remedial activities. Regulations concerning the transportation, storage, and handling of hazardous chemicals and materials could result in higher operating costs.
If the supply of commercial insurance is curtailed or if commercial insurance companies decline to underwrite companies in the energy industry, we may not be able to continue our present limits of insurance coverage or obtain sufficient insurance capacity to adequately insure our risks. We could incur significant costs in cleaning up contamination at our facilities.
If the supply of commercial insurance is curtailed or if commercial insurance companies decline to underwrite companies in the energy industry, we may not be able to continue our present limits of insurance coverage or obtain sufficient insurance capacity to adequately insure our risks or we may determine that premium costs, in our judgement, do not justify such expenditures and instead increase our self-insurance.
Our businesses handle petroleum and hazardous substances, and as a result, spills, discharges, or other releases of petroleum or hazardous substances into the environment may occur.
We could incur significant costs in cleaning up contamination at or associated with our facilities. Our businesses handle petroleum and hazardous substances, and as a result, spills, discharges, or other releases of petroleum or hazardous substances into the environment may occur.
Despite these measures (or those we may implement in the future), our facilities and these systems could be vulnerable to December 31, 2022 | 29 Table of Contents security breaches, computer viruses, lost or misplaced data, programming errors, human errors, acts of vandalism, or other events.
On an as needed basis, but no less than quarterly, we brief the Audit Committee of the Board on information security matters. Despite these measures (or those we may implement in the future), our facilities and these systems could be vulnerable to security breaches, computer viruses, lost or misplaced data, programming errors, human errors, acts of vandalism, or other events.
Under certain circumstances, we may, as a holder of common units in CVR Partners, have to repay amounts wrongfully returned or distributed to us. Under the Delaware Revised Uniform Limited Partnership Act, a partnership may not make distributions to its unitholders if the distribution would cause its liabilities to exceed the fair value of its assets.
Under the Delaware Revised Uniform Limited Partnership Act, a partnership may not make distributions to its unitholders if the distribution would cause its liabilities to exceed the fair value of its assets.
Failure to comply with these requirements may result in significant fines or compliance costs, which could have a material adverse effect on our results of operations, financial condition and cash flows. A portion of our workforce is unionized, and we are subject to the risk of labor disputes, slowdowns or strikes, which may disrupt our business and increase our costs.
Failure to comply with these requirements may result in significant fines or compliance costs, which could have a material adverse effect on our results of operations, financial condition and cash flows. Our business may suffer due to the departure of any of our key senior executives or other key employees.
The costs of compliance therewith may have a material adverse effect on our results of operations, financial condition and cash flows. Adverse weather conditions or other unforeseen developments could damage our facilities or logistics assets and impair our ability to produce and deliver our refined petroleum or nitrogen fertilizer products.
Adverse weather conditions or other unforeseen developments could damage our facilities or logistics assets and impair our ability to produce and deliver our refined petroleum or nitrogen fertilizer products.
Compliance with and changes in environmental laws and regulations, including those related to climate change and the ongoing “energy transition,” could result in increased operating costs and capital expenditures and changes in demand for the products we produce.
Any of the foregoing could have a material adverse effect on our competitive position, results of operations, financial condition and cash flows. Compliance with and changes in environmental laws and regulations, including those related to climate change and the ongoing “energy transition”, could result in increased operating costs and capital expenditures and changes in demand for the products we produce.
A breach could also originate from or compromise third-party networks outside of our control that could impact our business and operations. Although we implement controls on third-party connectivity to our systems, we have limited control in ensuring their systems consistently enforce strong cybersecurity controls.
Although we implement controls on third-party connectivity to our systems, we have limited control in ensuring their systems consistently enforce strong cybersecurity controls.
Our businesses are geographically concentrated, creating exposure to regional economic downturns and seasonal variations, which may affect our production levels, transportation costs, and inventory and working capital levels. Our Refineries are both located in the southern portion of Group 3 of the PADD II region, and we primarily market refined products in a relatively limited geographic area.
Our Refineries are both located in the southern portion of Group 3 of the PADD II region, and we primarily market refined products in a relatively limited geographic area.
Furthermore, the Federal Reserve has signaled that additional rate increases are likely to occur for the foreseeable future. An increase in the interest rates associated with our floating rate debt would increase our debt service costs and affect our results of operations and cash flow available for payments of our debt obligations.
Since March 2022, the Federal Reserve has raised its target range for the federal funds rate by 525 basis points through January 31, 2024. An increase in the interest rates associated with our floating rate debt would increase our debt service costs and affect our results of operations and cash flow available for payments of our debt obligations.
Our business could also be impacted by governmental initiatives to incentivize the conservation of energy or the use of alternative energy sources.
On January 26, 2024, the EPA issued a proposed rule to implement the methane emissions reduction program. Public comments on the proposal are due March 11, 2024. Our business could also be impacted by governmental initiatives to incentivize the conservation of energy or the use of alternative energy sources.
As of December 31, 2022, approximately 43% and 29% of our Petroleum and Nitrogen Fertilizer Segment employees, respectively, were represented by labor unions under collective bargaining agreements. We may not be able to renegotiate our collective bargaining agreements when they expire on satisfactory terms or at all. A failure to do so may increase our costs.
We may not be able to renegotiate our collective bargaining agreements when they expire on satisfactory terms or at all. A failure to do so may increase our costs. For example, a labor union representing approximately 90 employees at our East Dubuque Fertilizer Facility went on strike in October 2023, after its collective bargaining agreement expired.
Inflation rose from 5.4% in June 2021 to 7.0% in December 2021 to 8.2% in September 2022. As of December 31, 2022, inflation was at 6.5%. An increase in inflation rates could negatively affect our profitability and cash flows, due to higher wages, higher operating costs, higher financing costs, and/or higher supplier prices.
An increase in inflation rates could negatively affect our profitability and cash flows, due to higher wages, higher operating costs, higher financing costs and/or higher supplier prices. We may be unable to pass along such higher costs to our customers.
Critical infrastructure such as petroleum refining and chemical manufacturing facilities may be at greater risk of terrorist attacks than other businesses in the United States. As a result, the petroleum and chemical industries are subject to security regulations relating to physical and cyber security.
For example, the conflict between Israel and Hamas, which began in October 2023, and the ongoing Russia-Ukraine war, pose significant geopolitical risks to global crude oil, fertilizer, and agriculture markets. Critical infrastructure such as petroleum refining and chemical manufacturing facilities may be at greater risk of terrorist attacks than other businesses in the United States.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough we cannot provide assurance, we believe that an adverse resolution of the matters described therein would not have a material impact on our liquidity, consolidated financial position, or consolidated results of operations.
Biggest changeRefer to Part II, Item 8, Note 14 (“Commitments and Contingencies”), Contingencies of this Report for further discussion on current litigation matters. Although we cannot provide assurance, we believe that an adverse resolution of the matters described therein would not have a material impact on our liquidity, consolidated financial position, or consolidated results of operations.
Removed
Refer to Part II, Item 8, Note 11 December 31, 2022 | 40 Table of Contents (“Commitments and Contingencies”), Contingencies of this Report for further discussion on current litigation matters.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe timing, price and amount of repurchases (if any) will be made at the discretion of management and are subject to market conditions as well as corporate, regulatory and other considerations.
Biggest changeThe timing, price and amount of repurchases (if any) were to be made at the discretion of management and were subject to market conditions as well as corporate, regulatory and other considerations. The Stock Repurchase Program expired, in accordance with its terms, on October 22, 2023. We did not repurchase any of our common stock under the Stock Repurchase Program.
The graph assumes that the value of the investment in common stock and each index was $100 on December 31, 2017 and that all dividends were reinvested. Investment is weighted on the basis of market capitalization. The share price performance shown on the graph is not necessarily indicative of future price performance.
The graph assumes that the value of the investment in common stock and each index was $100 on December 31, 2018 and that all dividends were reinvested. Investment is weighted on the basis of market capitalization. The share price performance shown on the graph is not necessarily indicative of future price performance.
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Performance Graph The performance graph below compares the cumulative total return of our common stock to (a) the cumulative total return of the S&P 500 Composite Index and (b) a composite peer group (“Peer Group”) consisting of Delek US Holdings, Inc., HF Sinclair Corporation (formerly known as HollyFrontier Corporation), Marathon Petroleum Corp., Par Pacific Holdings, Inc, PBF Energy Inc. and Valero Energy Corporation.
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Performance Graph The performance graph below compares the cumulative total return of our common stock to (a) the cumulative total return of the S&P 500 Composite Index and (b) a composite peer group (“Peer Group”) consisting of Delek US Holdings, Inc., HF Sinclair Corporation, Marathon Petroleum Corp., Par Pacific Holdings, Inc., PBF Energy Inc. and Valero Energy Corporation.
The Company has 113 holders of record of the outstanding shares as of December 31, 2022. Purchases of Equity Securities by the Issuer On October 23, 2019, the Board of Directors of the Company (the “Board”) authorized a stock repurchase program (the “Stock Repurchase Program”).
The Company has 109 holders of record of the outstanding shares as of December 31, 2023. Purchases of Equity Securities by the Issuer On October 23, 2019, the board of directors of the Company (the “Board”) authorized a stock repurchase program (the “Stock Repurchase Program”), which authorized the Company to repurchase up to $300 million of the Company’s common stock.
The Stock Repurchase Program would enable the Company to repurchase up to $300 million of the Company’s common stock. Repurchases under the Stock Repurchase Program may be made from time-to-time through open market transactions, block trades, privately negotiated transactions or otherwise in accordance with applicable securities laws.
Repurchases under the Stock Repurchase Program could have been made from time-to-time through open market transactions, block trades, privately negotiated transactions or otherwise in accordance with applicable securities laws.
Removed
While the Stock Repurchase Program currently has a duration of four years, it does not obligate the Company to acquire any stock and may be terminated by the Board at any time. We have not repurchased any of our common stock since inception of the Stock Repurchase Program. December 31, 2022 | 42 Table of Contents Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeReconciliation of Petroleum Segment Total Throughput Barrels Year Ended December 31, 2022 2021 2020 Total throughput barrels per day 205,288 209,084 183,295 Days in the period 365 365 366 Total throughput barrels 74,930,140 76,315,701 67,085,913 December 31, 2022 | 66 Table of Contents Reconciliation of Petroleum Segment Refining Margin per Total Throughput Barrel Year Ended December 31, (in millions, except per total throughput barrel) 2022 2021 2020 Refining margin $ 1,431 $ 621 $ 298 Divided by: total throughput barrels 75 76 67 Refining margin per total throughput barrel $ 19.09 $ 8.14 $ 4.44 Reconciliation of Petroleum Segment Refining Margin Adjusted for Inventory Valuation Impact per Total Throughput Barrel Year Ended December 31, (in millions, except per total throughput barrel) 2022 2021 2020 Refining margin, adjusted for inventory valuation impact $ 1,409 $ 494 $ 356 Divided by: total throughput barrels 75 76 67 Refining margin adjusted for inventory valuation impact per total throughput barrel $ 18.80 $ 6.48 $ 5.31 Reconciliation of Petroleum Segment Direct Operating Expenses per Total Throughput Barrel Year Ended December 31, (in millions, except per total throughput barrel) 2022 2021 2020 Direct operating expenses (exclusive of depreciation and amortization) $ 426 $ 369 $ 319 Divided by: total throughput barrels 75 76 67 Direct operating expenses per total throughput barrel $ 5.68 $ 4.83 $ 4.76 Reconciliation of Nitrogen Fertilizer Segment Net Income (Loss) to EBITDA and Adjusted EBITDA Year Ended December 31, (in millions) 2022 2021 2020 Nitrogen Fertilizer net income (loss) $ 287 $ 78 $ (98) Interest expense, net 34 61 63 Depreciation and amortization 82 74 76 Nitrogen Fertilizer EBITDA 403 213 41 Adjustments: Goodwill impairment — — 41 Nitrogen Fertilizer Adjusted EBITDA $ 403 $ 213 $ 82 December 31, 2022 | 67 Table of Contents Reconciliation of Total Debt and Net Debt and Finance Lease Obligations to EBITDA Exclusive of Nitrogen Fertilizer (in millions) Year Ended December 31, 2022 Total debt and finance lease obligations (1) $ 1,591 Less: Nitrogen Fertilizer debt and finance lease obligations (1) $ (547) Total debt and finance lease obligations exclusive of Nitrogen Fertilizer 1,044 EBITDA exclusive of Nitrogen Fertilizer $ 771 Total debt and finance lease obligations to EBITDA exclusive of Nitrogen Fertilizer 1.35 Consolidated cash and cash equivalents $ 510 Less: Nitrogen Fertilizer cash and cash equivalents (86) Cash and cash equivalents exclusive of Nitrogen Fertilizer 424 Net debt and finance lease obligations exclusive of Nitrogen Fertilizer (2) $ 620 Net debt and finance lease obligations to EBITDA exclusive of Nitrogen Fertilizer (2) $ 0.80 (1) Amounts are shown inclusive of the current portion of long-term debt and finance lease obligations.
Biggest changeReconciliation of Petroleum Segment Total Throughput Barrels and Metrics per Total Throughput Barrel Year Ended December 31, 2023 2022 2021 Total throughput barrels per day 208,219 205,288 209,084 Days in the period 365 365 365 Total throughput barrels 75,999,905 74,930,140 76,315,701 (in millions, except per total throughput barrel) Refining margin $ 1,658 $ 1,431 $ 621 Refining margin per total throughput barrel $ 21.82 $ 19.09 $ 8.14 Refining margin, adjusted for inventory valuation impact $ 1,690 $ 1,409 $ 494 Refining margin adjusted for inventory valuation impact per total throughput barrel $ 22.24 $ 18.80 $ 6.48 Direct operating expenses (exclusive of depreciation and amortization) $ 406 $ 426 $ 369 Direct operating expenses per total throughput barrel $ 5.34 $ 5.68 $ 4.83 December 31, 2023 | 65 Table of Contents Reconciliation of Nitrogen Fertilizer Segment Net Income to EBITDA and Adjusted EBITDA Year Ended December 31, (in millions) 2023 2022 2021 Nitrogen Fertilizer net income $ 172 $ 287 $ 78 Interest expense, net 29 34 61 Depreciation and amortization 80 82 74 Nitrogen Fertilizer EBITDA and Adjusted EBITDA 281 403 213 Liquidity and Capital Resources Our principal source of liquidity has historically been cash from operations.
Utilization is calculated as actual tons of ammonia produced divided by capacity. Utilization is presented solely on ammonia production, rather than each nitrogen product, as it provides a comparative baseline against industry peers and eliminates the disparity of facility configurations for upgrade of ammonia into other nitrogen products.
Utilization is calculated as actual tons of ammonia produced divided by capacity. Utilization is presented solely on ammonia production, rather than on each nitrogen product, as it provides a comparative baseline against industry peers and eliminates the disparity of facility configurations for upgrade of ammonia into other nitrogen products.
Market Indicators NYMEX WTI crude oil is an industry wide benchmark that is utilized in the market pricing of a barrel of crude oil. The pricing differences between other crudes and WTI, known as differentials, show how the market for other crude oils such as WCS, White Cliffs (“Condensate”), Brent Crude (“Brent”), and Midland WTI (“Midland”) are trending.
Market Indicators NYMEX WTI crude oil is an industry wide benchmark that is utilized in the market pricing of a barrel of crude oil. The pricing differences between other crude oils and WTI, known as differentials, show how the market for other crude oils such as WCS, White Cliffs (“Condensate”), Brent Crude (“Brent”), and Midland WTI (“Midland”) are trending.
With production primarily focused on ammonia upgrade capabilities, we believe this measure provides a meaningful view of how we operate. Gross tons produced for ammonia represent the total ammonia produced, including ammonia produced that was upgraded into other fertilizer products. Net tons available for sale represent the ammonia available for sale that was not upgraded into other fertilizer products.
With production primarily focused on ammonia upgrade capabilities, we believe this measure provides a meaningful view of how we operate. Gross tons of ammonia represent the total ammonia produced, including ammonia produced that was upgraded into other fertilizer products. Net tons available for sale represents the ammonia available for sale that was not upgraded into other fertilizer products.
These decisions support the Company’s continued focus on financial discipline through a balanced approach of evaluation of strategic investment opportunities and stockholder dividends while maintaining adequate capital requirements for ongoing operations throughout the environment of uncertainty.
These decisions support the Company’s continued focus on financial discipline through a balanced approach of evaluation of strategic investment opportunities and stockholder dividends while maintaining adequate capital requirements for ongoing operations throughout this environment of uncertainty.
Specific factors impacting the Company’s operations are outlined below: Current Market Outlook • After substantial declines in demand for gasoline and diesel due to the COVID-19 pandemic in 2020, the combination of improving demand, declining inventories, loss of domestic and foreign operating refining capacities, and conversions to renewable diesel facilities led to an increase in refined products prices and crack spreads during 2021 and 2022.
Specific factors impacting the Company’s operations are outlined below: Current Market Outlook • After substantial declines in demand for gasoline and diesel due to the COVID-19 pandemic in 2020, the combination of improving demand, declining inventories, loss of domestic and foreign operating refining capacities, and conversions to renewable diesel facilities led to an increase in refined products prices and crack spreads during 2022 and 2023.
(2) Total Gasoline, Distillate, and Other liquid products divided by total throughput. (3) Total Distillate divided by total Regional crude, WTI, WTL, Midland WTI, WTS, Condensate, Heavy Canadian and DJ Basin throughput.
(2) Total Gasoline, Distillate, and Other liquid products divided by total throughput. (3) Total Distillate divided by total Regional crude, WTI, WTL, Midland WTI, WTS, Condensate, Heavy Canadian, DJ Basin, and Bakken throughput.
Refer to Part II, Item 8, Note 6 (“Long-Term Debt and Finance Lease Obligations”) of this Report for further discussion.
Refer to Part II, Item 8, Note 8 (“Long-Term Debt and Finance Lease Obligations”) of this Report for further discussion.
CVR Partners As of December 31, 2022, the Nitrogen Fertilizer Segment has the 6.125% Senior Secured Notes, due June 2028 (the “2028 UAN Notes”) and the Nitrogen Fertilizer ABL, the proceeds of which may be used to fund working capital, capital expenditures, and for other general corporate purposes.
Nitrogen Fertilizer Segment As of December 31, 2023, the Nitrogen Fertilizer Segment has the 6.125% Senior Secured Notes, due June 2028 (the “2028 UAN Notes”) and the CVR Partners ABL, the proceeds of which may be used to fund working capital and capital expenditures and for other general corporate purposes.
References to “CVR Energy”, “CVR”, the “Company”, “we”, “us”, and “our” may refer to consolidated subsidiaries of CVR Energy, including CVR Partners, as the context may require. This discussion and analysis covers the years ended December 31, 2022 and 2021 and discusses year-to-year comparisons between such periods.
References to “CVR Energy”, “CVR”, the “Company”, “we”, “us”, and “our” may refer to consolidated subsidiaries of CVR Energy, including CVR Partners, as the context may require. This discussion and analysis covers the years ended December 31, 2023 and 2022 and discusses year-to-year comparisons between such periods.
The cost to acquire crude oil and other feedstocks and the price for which refined products are ultimately sold depends on factors beyond the Petroleum Segment’s control, including the supply of and demand for crude oil, as well as gasoline and other refined products which, in turn, depend on, among other factors, changes in domestic and foreign economies, driving habits, weather conditions, domestic and foreign political affairs, production levels, the availability or permissibly of imports and exports, the marketing of competitive fuels and the extent of government regulation.
The cost to acquire crude oil and other feedstocks and the price for which refined products are ultimately sold depends on factors beyond the Petroleum Segment’s control, including the supply of and demand for crude oil, as well as gasoline, distillate, and other refined products which, in turn, depend on, among other factors, changes in domestic and foreign economies, driving habits, weather conditions, domestic and foreign political affairs, production levels, the availability or permissibly of imports and exports, the marketing of competitive fuels, and the extent of government regulations.
For our Nitrogen Fertilizer Segment, depending on inventory levels, the per-ton realizable value of our fertilizer products is estimated using pricing on in-transit orders, pricing for open, fixed-price orders that have not shipped, and, if volumes remain unaccounted for, current management pricing estimates for fertilizer products.
For our nitrogen fertilizer business, depending on inventory levels, the per-ton realizable value of our fertilizer products is estimated using pricing on in-transit orders, pricing for open, fixed-price orders that have not shipped, and, if volumes remain unaccounted for, current management pricing estimates for fertilizer products.
Our 2021 ESG Report does not constitute a part of, and is not incorporated by reference into, this Annual Report on Form 10-K or any other report we file with (or furnish to) the SEC, whether made before or after the date of this Annual Report on Form 10-K.
Our 2022 ESG Report does not constitute a part of, and is not incorporated by reference into, this Annual Report on Form 10-K or any other report we file with (or furnish to) the SEC, whether made before or after the date of this Annual Report on Form 10-K.
The Company’s open RFS position, which does not consider open commitments expected to settle in future periods, is marked-to-market each period and thus significant market volatility, as experienced in late 2021 and 2022, could impact our RFS expense from period to period.
The Company’s open RFS position, which does not consider open commitments expected to settle in future periods, is marked-to-market each period and thus significant market volatility, as experienced in late 2022 and 2023, could impact our RFS expense from period to period.
The discussions of the year ended December 31, 2020 and year-to-year comparisons between the years ended December 31, 2021 and 2020 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed on February 23, 2022, and such discussions are incorporated by reference into this Report.
The discussions of the year ended December 31, 2021 and year-to-year comparisons between the years ended December 31, 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on February 22, 2023, and such discussions are incorporated by reference into this Report.
December 31, 2022 | 49 Table of Contents The tables below are presented, on a per barrel basis, by month through December 31, 2022: Crude Oil Differentials against WTI (1)(2) NYMEX Crack Spreads (2) December 31, 2022 | 50 Table of Contents PADD II Group 3 Product Crack Spread and RIN Pricing (2)(3) ( $/bbl ) Group 3 Differential against NYMEX WTI (1)(2) ( $/bbl ) (1) The change over time in NYMEX - WTI, as reflected in the charts above, is illustrated below.
The tables below are presented, on a per barrel basis, by month through December 31, 2023: Crude Oil Differentials against WTI (1)(2) NYMEX Crack Spreads (2) December 31, 2023 | 50 Table of Contents PADD II Group 3 Product Crack Spread and RIN Pricing (2)(3) ( $/bbl ) Group 3 Product Differential against NYMEX Products (1)(2) ( $/bbl ) (1) The change over time in NYMEX - WTI, as reflected in the charts above, is illustrated below.
Unlike corn, soybeans are able to obtain most of their own nitrogen through a process known as “N fixation.” As such, upon harvesting of soybeans, the soil retains a certain amount of nitrogen which results in lower demand for nitrogen fertilizer for the following corn planting cycle.
Unlike corn, soybeans are able to obtain most of their own nitrogen through a process known as “N fixation”. As such, upon harvesting of soybeans, the soil retains a certain amount of nitrogen which results in lower demand for nitrogen fertilizer for the following corn planting cycle.
Adjusted EBITDA, Adjusted Petroleum EBITDA and Adjusted Nitrogen Fertilizer EBITDA - EBITDA, Petroleum EBITDA and Nitrogen Fertilizer EBITDA adjusted for certain significant non-cash items and items that management believes are not attributable to or indicative of our on-going operations or that may obscure our underlying results and trends.
Adjusted EBITDA, Petroleum Adjusted EBITDA and Nitrogen Fertilizer Adjusted EBITDA - EBITDA, Petroleum EBITDA and Nitrogen Fertilizer EBITDA adjusted for certain significant noncash items and items that management believes are not attributable to or indicative of our on-going operations or that may obscure our underlying results and trends.
However, our future capital expenditures and other cash requirements could be higher than we currently expect as a result of various factors including, but not limited to, rising material and labor costs, the costs associated with complying with the Renewable Fuel Standard’s outcome of litigation and other factors.
However, our future capital expenditures and other cash requirements could be higher than we currently expect as a result of various factors including, but not limited to, rising material and labor costs, the costs associated with complying with the RFS’s outcome of litigation and other factors.
Nitrogen Fertilizer Segment Utilization and Production Volumes - The following tables summarize the ammonia utilization at the Nitrogen Fertilizer Segment’s facility in Coffeyville, Kansas (the “Coffeyville Fertilizer Facility”) and East Dubuque, Illinois (the “East Dubuque Fertilizer Facility”). Utilization is an important measure used by management to assess operational output at each of the Nitrogen Fertilizer Segment’s facilities.
Nitrogen Fertilizer Segment Utilization and Production Volumes - The following tables summarize the consolidated ammonia utilization from the Nitrogen Fertilizer Segment’s facilities in Coffeyville, Kansas (the “Coffeyville Fertilizer Facility”) and the East Dubuque Fertilizer Facility. Utilization is an important measure used by management to assess operational output at each of the Nitrogen Fertilizer Segment’s facilities.
The charts below show relevant market indicators for the Nitrogen Fertilizer Segment by month through December 31, 2022: Ammonia and UAN Market Pricing (1) Natural Gas and Pet Coke Market Pricing (1) (1) Information used within these charts was obtained from various third-party sources including Green Markets (a Bloomberg Company), Pace Petroleum Coke Quarterly, and the EIA, amongst others.
December 31, 2023 | 53 Table of Contents The charts below show relevant market indicators for the Nitrogen Fertilizer Segment by month through December 31, 2023: Ammonia and UAN Market Pricing (1) Natural Gas Market Pricing (1) Pet Coke Market Pricing (1) (1) Information used within these charts was obtained from various third-party sources including Green Markets (a Bloomberg Company), Pace Petroleum Coke Quarterly, and the EIA, amongst others.
Depending on the needs of our business, contractual limitations and market conditions, we may from time to time seek to issue equity securities, incur additional debt, issue debt securities, or redeem, repurchase, refinance, or retire our outstanding debt through privately negotiated transactions, open market repurchases, redemptions, exchanges, tender offers or otherwise, but we are under no obligation to do so.
Depending on the needs of our business, contractual limitations and market conditions, we may from time to time seek to issue equity securities, incur additional debt, issue debt securities, or redeem, repurchase, refinance, or retire our outstanding debt through privately negotiated transactions, open market repurchases, redemptions, exchanges, tender offers or otherwise, December 31, 2023 | 66 Table of Contents but we are under no obligation to do so.
Due to the COVID-19 pandemic, the Russia-Ukraine conflict, and, in each case, actions taken by governments and others in response thereto, refined product prices have experienced extreme volatility. As a result of the current environment, refining margins have been and will continue to be volatile.
Due to the COVID-19 pandemic, the Russia-Ukraine war, the Israel-Hamas conflict, and, in each case, actions taken by governments and others in response thereto, refined product prices have experienced extreme volatility. As a result of the current environment, refining margins have been and should continue to be volatile.
Due to the amount and variability in volume of inventories maintained, changes in production costs, and the volatility of market pricing for our products, losses recognized to reflect inventories at the lower of cost or net realizable value could have a material impact on the Company’s results of operations.
No amounts were recognized in 2022 and 2021. Due to the amount and variability in volume of inventories maintained, changes in production costs, and the volatility of market pricing for our products, losses recognized to reflect inventories at the lower of cost or net realizable value could have a material impact on the Company’s results of operations.
In our Petroleum Segment, to determine the net realizable value of our inventories, we assume that crude oil and other feedstocks are converted into refined products, which requires us to make estimates regarding the refined products expected to be produced from those feedstocks and the conversion costs required to convert those feedstocks into refined products.
In our refining and renewables businesses, to determine the net realizable value of our inventories, we assume that crude oil and other feedstocks are converted into refined products, which requires us to make estimates regarding the refined products expected to be produced from those feedstocks and the conversion costs required to convert those feedstocks into refined products.
Of this amount, CVR Energy will receive approximately $41 million, with the remaining amount payable to public unitholders. Capital Structure On October 23, 2019, the Board authorized a stock repurchase program (the “Stock Repurchase Program”). The Stock Repurchase Program would enable the Company to repurchase up to $300 million of the Company’s common stock.
Of this amount, CVR Energy will receive approximately $7 million, with the remaining amount payable to public unitholders. Capital Structure On October 23, 2019, the Board authorized a stock repurchase program (the “Stock Repurchase Program”), which authorized the Company to repurchase up to $300 million of the Company’s common stock.
December 31, 2022 | 53 Table of Contents Consolidated Financial Highlights Operating Income (Loss) Net Income (Loss) Attributable to CVR Energy Stockholders Earnings (Loss) per Share EBITDA (1) (1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measure shown above.
December 31, 2023 | 54 Table of Contents Consolidated Financial Highlights Operating Income Net Income Attributable to CVR Energy Stockholders Earnings per Share EBITDA (1) (1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measure shown above.
Due to these factors, nitrogen fertilizer consumers generally operate a balanced corn-soybean rotational planting cycle as evident by the chart presented below for 2022, 2021, and 2020.
Due to these factors, nitrogen fertilizer consumers generally operate a balanced corn-soybean rotational planting cycle as shown by the chart presented below for 2023, 2022, and 2021.
The pretreatment unit should enable us to process a wider variety of renewable diesel feedstocks at the Wynnewood Refinery, most of which have a lower carbon intensity than soybean oil and generate additional LCFS credits.
Once operational, the pretreatment unit should lower our feedstock costs and enable us to process a wider variety of renewable diesel feedstocks at the Wynnewood Refinery, most of which have a lower carbon intensity than soybean oil and generate additional LCFS credits.
Because the Petroleum Segment applies first-in first-out accounting to value its inventory, crude oil price movements may impact net income because of changes in the value of its unhedged inventory.
Because the Petroleum Segment applies first-in, first-out (“FIFO”) accounting to value its inventory, crude oil price movements may impact net income as a result of changes in the value of its unhedged inventory.
Refer to Part II, Item 8, Note 6 (“Long-Term Debt and Finance Lease Obligations”) of this Report for further discussion. December 31, 2022 | 70 Table of Contents Capital Spending We divide capital spending needs into two categories: maintenance and growth. Maintenance capital spending includes non-discretionary maintenance projects and projects required to comply with environmental, health, and safety regulations.
Refer to Part II, Item 8, Note 8 (“Long-Term Debt and Finance Lease Obligations”) of this Report for further discussion. Capital Spending We divide capital spending needs into two categories: maintenance and growth. Maintenance capital spending includes non-discretionary maintenance projects and projects required to comply with environmental, health, and safety regulations.
The Petroleum Segment does not have crude oil exploration or production operations (an “independent petroleum refiner”) and is a marketer of high value transportation fuels primarily in the form of gasoline and diesel fuels. CVR Partners produces and markets nitrogen fertilizers primarily in the form of urea ammonium nitrate (“UAN”) and ammonia. We also produce and market renewable diesel.
The Petroleum Segment is an “independent petroleum refiner”, in that it does not have crude oil exploration or production operations and is a marketer of high value transportation fuels primarily in the form of gasoline and diesel fuels. CVR Partners produces and markets nitrogen fertilizers primarily in the form of urea ammonium nitrate (“UAN”) and ammonia.
Direct Operating Expenses (1) (1) Exclusive of depreciation and amortization expense. Direct Operating Expenses (Exclusive of Depreciation and Amortization) - For the year ended December 31, 2022, direct operating expenses (exclusive of depreciation and amortization) were $426 million compared to $369 million for the year ended December 31, 2021.
Direct Operating Expenses (1) (1) Exclusive of depreciation and amortization expense. Direct Operating Expenses (Exclusive of Depreciation and Amortization) - For the year ended December 31, 2023, direct operating expenses (exclusive of depreciation and amortization) were $406 million compared to $426 million for the year ended December 31, 2022.
GAAP results, including but not limited to our operating performance as compared to other publicly-traded companies in the refining and fertilizer industries, without regard to historical December 31, 2022 | 63 Table of Contents cost basis or financing methods and our ability to incur and service debt and fund capital expenditures.
GAAP results, including but not limited to our operating performance as compared to other publicly-traded companies in the refining and fertilizer industries, without regard to historical cost basis or financing methods and our ability to incur and service debt and fund capital expenditures.
The following tables present distributions paid by CVR Partners to CVR Partners’ unitholders, including amounts received by the Company, as of December 31, 2022 and 2021 (amounts presented in tables below may not add to totals presented due to rounding): Quarterly Distributions Paid (in millions) Related Period Date Paid Quarterly Distributions Per Common Unit Public Unitholders CVR Energy Total 2021 - 4th Quarter March 14, 2022 $ 5.24 $ 35 $ 20 $ 56 2022 - 1st Quarter May 23, 2022 2.26 15 9 24 2022 - 2nd Quarter August 22, 2022 10.05 67 39 106 2022 - 3rd Quarter November 21, 2022 1.77 12 7 19 Total 2022 quarterly distributions $ 19.32 $ 129 $ 75 $ 205 December 31, 2022 | 72 Table of Contents Quarterly Distributions Paid (in millions) Related Period Date Paid Quarterly Distributions Per Common Unit Public Unitholders CVR Energy Total 2021 - 2nd Quarter August 23, 2021 $ 1.72 $ 11 $ 7 $ 18 2021 - 3rd Quarter November 22, 2021 2.93 20 11 31 Total 2021 quarterly distributions $ 4.65 $ 31 $ 18 $ 50 There were no quarterly distributions declared or paid by CVR Partners related to the first quarter of 2021 and the fourth quarter of 2020.
The following tables present quarterly distributions paid by CVR Partners to CVR Partners’ unitholders, including amounts received by the Company, as of December 31, 2023 and 2022 (amounts presented in tables below may not add to totals presented due to rounding): Quarterly Distributions Paid (in millions) Related Period Date Paid Quarterly Distributions Per Common Unit Public Unitholders CVR Energy Total 2022 - 4th Quarter March 13, 2023 $ 10.50 $ 70 $ 41 $ 111 2023 - 1st Quarter May 22, 2023 10.43 70 41 110 2023 - 2nd Quarter August 21, 2023 4.14 28 16 44 2023 - 3rd Quarter November 20, 2023 1.55 10 6 16 Total 2023 quarterly distributions $ 26.62 $ 178 $ 104 $ 281 December 31, 2023 | 70 Table of Contents Quarterly Distributions Paid (in millions) Related Period Date Paid Quarterly Distributions Per Common Unit Public Unitholders CVR Energy Total 2021 - 4th Quarter March 14, 2022 $ 5.24 $ 36 $ 20 $ 56 2022 - 1st Quarter May 23, 2022 2.26 15 9 24 2022 - 2nd Quarter August 22, 2022 10.05 67 39 106 2022 - 3rd Quarter November 21, 2022 1.77 12 7 19 Total 2022 quarterly distributions $ 19.32 $ 129 $ 75 $ 205 Quarterly Distributions Paid (in millions) Related Period Date Paid Quarterly Distributions Per Common Unit Public Unitholders CVR Energy Total 2021 - 2nd Quarter August 23, 2021 $ 1.72 $ 12 $ 7 $ 18 2021 - 3rd Quarter November 22, 2021 2.93 20 11 31 Total 2021 quarterly distributions $ 4.65 $ 32 $ 18 $ 50 There were no quarterly distributions declared or paid by CVR Partners related to the first quarter of 2021 and the fourth quarter of 2020.
Repurchases under the Stock Repurchase Program may be made from time-to-time through open market transactions, block trades, privately negotiated transactions or otherwise in accordance with applicable securities laws.
Repurchases under the Stock Repurchase Program could have been made from time-to-time through open market transactions, block trades, privately negotiated transactions or otherwise in accordance with applicable securities laws.
On a blended barrel basis (calculated using applicable RVO percentages), RINs approximated $7.54 per barrel during 2022 compared to $6.71 per barrel during 2021.
On a blended barrel basis (calculated using applicable RVO percentages), RINs approximated $6.95 per barrel during 2023 compared to $7.54 per barrel during 2022.
Direct Operating Expenses (exclusive of depreciation and amortization) - For the year ended December 31, 2022, direct operating expenses (exclusive of depreciation and amortization) were $270 million compared to $199 million for the year ended December 31, 2021.
Direct Operating Expenses (exclusive of depreciation and amortization) - For the year ended December 31, 2023, direct operating expenses (exclusive of depreciation and amortization) were $235 million compared to $270 million for the year ended December 31, 2022.
For the years ended December 31, 2022 and 2021, net sales included $35 million and $31 million in freight revenue, respectively, and $11 million and $11 million in other revenue, respectively.
For the years ended December 31, 2023 and 2022, net sales included $42 million and $35 million in freight revenue and $18 million and $11 million in other revenue, respectively.
As of December 31, 2022, CVR Partners had a nominal authorized amount remaining under the Unit Repurchase Program. This Unit Repurchase Program does not obligate CVR Partners to acquire any common units and may be cancelled or terminated by the UAN GP Board at any time.
As of December 31, 2023, considering all repurchases made since inception of the Unit Repurchase Program, CVR Partners had a nominal authorized amount remaining under the Unit Repurchase Program. This Unit Repurchase Program does not obligate CVR Partners to acquire any common units and may be cancelled or terminated by the UAN GP Board at any time.
These factors can impact, among other things, the level of inventories in the market, resulting in price volatility and a reduction in product margins. Moreover, the industry typically experiences seasonal fluctuations in demand for nitrogen fertilizer products.
These factors can impact, among other things, the level of inventories in the markets, resulting in price and product margin volatility. Moreover, the industry typically experiences seasonal fluctuations in demand for nitrogen fertilizer products.
The price at which nitrogen fertilizer products are ultimately sold depends on numerous factors, including the global supply and demand for nitrogen fertilizer products which, in turn, depends on, among other factors, world grain demand and production levels, inflation, global supply disruptions, changes in world population, the cost and availability of fertilizer transportation infrastructure, local market conditions, operating levels of competing facilities, weather conditions, the availability of imports, the availability and price of feedstocks to produce nitrogen fertilizer, impacts of foreign imports and foreign subsidies thereof, and the extent of government intervention in agriculture markets.
The price at which nitrogen fertilizer products are ultimately sold depends on numerous factors, including the global supply and demand for nitrogen fertilizer products, which, in turn, depends on world grain demand and production levels, changes in world population, the cost and availability of fertilizer transportation infrastructure, weather conditions, the availability of imports, the availability and price of feedstocks to produce nitrogen fertilizer, and the extent of government intervention in agriculture markets, among other factors.
Nitrogen Fertilizer Segment Within the Nitrogen Fertilizer Segment, earnings and cash flows from operations are primarily affected by the relationship between nitrogen fertilizer product prices, utilization, and operating costs and expenses, including pet coke and natural gas feedstock costs.
December 31, 2023 | 51 Table of Contents Nitrogen Fertilizer Segment Within the Nitrogen Fertilizer Segment, earnings and cash flows from operations are primarily affected by the relationship between nitrogen fertilizer product prices, utilization, and operating costs and expenses, including pet coke and natural gas feedstock costs.
(in $/bbl) Average 2020 Average December 2020 Average 2021 Average December 2021 Average 2022 Average December 2022 WTI $ 39.34 $ 47.07 $ 68.11 $ 71.69 $ 94.41 $ 76.52 (2) Information used within these charts was obtained from reputable market sources, including the New York Mercantile Exchange (“NYMEX”), Intercontinental Exchange, and Argus Media, among others.
(in $/bbl) Average 2021 Average December 2021 Average 2022 Average December 2022 Average 2023 Average December 2023 WTI $ 68.11 $ 71.69 $ 94.41 $ 76.52 $ 77.57 $ 72.12 (2) Information used within these charts was obtained from reputable market sources, including the New York Mercantile Exchange (“NYMEX”), Intercontinental Exchange, and Argus Media, among others.
December 31, 2022 | 60 Table of Contents Feedstock - Our Coffeyville Fertilizer Facility utilizes a pet coke gasification process to produce nitrogen fertilizer. Our East Dubuque Fertilizer Facility uses natural gas in its production of ammonia.
Feedstock - Our Coffeyville Fertilizer Facility utilizes a pet coke gasification process to produce nitrogen fertilizer. Our East Dubuque Fertilizer Facility uses natural gas in its production of ammonia.
The Group 3 2-1-1 crack spread is calculated using two barrels of WTI crude oil producing one barrel of Group 3 sub-octane gasoline and one barrel of Group 3 ultra-low sulfur diesel. Both NYMEX 2-1-1 and Group 3 2-1-1 crack spreads increased during 2022 compared to 2021.
The Group 3 2-1-1 crack spread is calculated using two barrels of WTI crude oil producing one barrel of Group 3 sub-octane gasoline and one barrel of Group 3 ultra-low sulfur diesel. December 31, 2023 | 49 Table of Contents Both NYMEX 2-1-1 and Group 3 2-1-1 crack spreads decreased during 2023 compared to 2022.
The table below presents all of these Nitrogen Fertilizer Segment metrics for the years ended December 31, 2022, 2021, and 2020: Year Ended December 31, 2022 2021 2020 Consolidated Ammonia Utilization 81 % 92 % 98 % Production Volumes (in thousands of tons) Ammonia (gross produced) 703 807 852 Ammonia (net available for sale) 213 275 303 UAN 1,140 1,208 1,303 On a consolidated basis, the Nitrogen Fertilizer Segment’s utilization decreased 11% to 81% for the year ended December 31, 2022 compared to the year ended December 31, 2021.
The table below presents all of these Nitrogen Fertilizer Segment metrics for the years ended December 31, 2023, 2022, and 2021: Year Ended December 31, 2023 2022 2021 Consolidated Ammonia Utilization 100 % 81 % 92 % Production Volumes (in thousands of tons) Ammonia (gross produced) 864 703 807 Ammonia (net available for sale) 270 213 275 UAN 1,369 1,140 1,208 On a consolidated basis, the Nitrogen Fertilizer Segment’s utilization increased 19% to 100% for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Plant Production of Fuel Ethanol (1) Corn and Soybean Planted Acres (2) (1) Information used within this chart was obtained from the EIA through December 31, 2022. (2) Information used within this chart was obtained from the USDA, National Agricultural Statistics Services, as of December 31, 2022.
Plant Production of Fuel Ethanol (1) Corn and Soybean Planted Acres (2) (1) Information used within this chart was obtained from the U.S. Energy Information Administration (“EIA”) through December 31, 2023. (2) Information used within this chart was obtained from the USDA, National Agricultural Statistics Services, as of December 31, 2023.
The table below presents these feedstocks for both facilities within the Nitrogen Fertilizer Segment for the years ended December 31, 2022, 2021, and 2020: Year Ended December 31, 2022 2021 2020 Petroleum coke used in production (thousand tons) 425 514 523 Petroleum coke (dollars per ton) $ 52.88 $ 44.69 $ 35.25 Natural gas used in production (thousands of MMBtu) (1) 6,905 8,049 8,611 Natural gas used in production (dollars per MMBtu) (1) $ 6.66 $ 3.95 $ 2.31 Natural gas in cost of materials and other (thousands of MMBtu) (1) 6,701 7,848 9,349 Natural gas in cost of materials and other (dollars per MMBtu) (1) $ 6.37 $ 3.83 $ 2.35 (1) The feedstock natural gas shown above does not include natural gas used for fuel.
The table below presents these feedstocks for both fertilizer facilities within the Nitrogen Fertilizer Segment for the years ended December 31, 2023, 2022, and 2021: Year Ended December 31, 2023 2022 2021 Petroleum coke used in production (thousands of tons) 518 425 514 Petroleum coke used in production (dollars per ton) $ 78.14 $ 52.88 $ 44.69 Natural gas used in production (thousands of MMBtus) (1) 8,462 6,905 8,049 Natural gas used in production (dollars per MMBtu) (1) $ 3.42 $ 6.66 $ 3.95 Natural gas in cost of materials and other (thousands of MMBtus) (1) 8,671 6,701 7,848 Natural gas in cost of materials and other (dollars per MMBtu) (1) $ 3.84 $ 6.37 $ 3.83 (1) The feedstock natural gas shown above does not include natural gas used for fuel.
In December 2022, we published our first public report based on the Sustainability Accounting Standards Board standards. Our 2021 Environmental, Social & Governance Report (“2021 ESG Report”) is available at CVR Energy’s website at www.CVREnergy.com.
In December 2023, we published our 2022 Environmental, Social & Governance Report (“2022 ESG Report”) which is based on the Sustainability Accounting Standards Board standards and is available at CVR Energy’s website at www.CVREnergy.com.
For example, we may experience unexpected changes in labor or equipment costs necessary to comply with government regulations or to complete projects that sustain or improve the profitability of the Refineries or Facilities. We may also accelerate or defer some capital expenditures from time to time.
For example, we may experience changes in labor or equipment costs necessary to comply with government regulations or to complete projects that sustain or improve the profitability of the refineries or facilities. We may also accelerate or defer some capital expenditures from time to time. Capital spending for CVR Partners is determined by the UAN GP Board.
When completed, the collective renewable diesel efforts could effectively mitigate a substantial majority, if not all, of our future RFS exposure, assuming we receive SREs for our Wynnewood Refinery which we believe we are legally entitled to and are pursuing in the courts.
With our existing renewable diesel production, this could effectively mitigate a substantial majority, if not all, of our future RFS exposure, assuming we receive SREs for our Wynnewood Refinery for its transportation fuels, which we believe we are legally entitled to and are pursuing in the courts.
We are good neighbors and know that it’s a privilege we can’t take for granted. We seek to make a positive economic and social impact through our financial donations and the contributions of time, knowledge and talent of our employees to the places where we live and work. • Continuous Improvement - We believe in both individual and team success.
We seek to make a positive economic and social impact through our financial donations and the contributions of time, knowledge and talent of our employees to the places where we live and work. • Continuous Improvement - We believe in both individual and team success.
CVR Energy As of December 31, 2022, CVR Energy has the 5.25% Senior Notes, due 2025 (the “2025 Notes”) and the 5.75% Senior Notes, due 2028 (the “2028 Notes” and together with the 2025 Notes, the “Notes”), the net proceeds of which may be used for general corporate purposes, which may include funding acquisitions, capital projects, and/or share repurchases or other distributions to our stockholders.
CVR Energy As of December 31, 2023, CVR Energy has the 2025 Notes, the 5.75% Senior Notes, due 2028 (the “2028 Notes”), the 2029 Notes, and the CVR Energy ABL, the net proceeds of which may be used for general corporate purposes, which may include funding acquisitions, working capital and capital expenditures, share repurchases or distributions to our stockholders.
(2) Renewables reflects spending on the Wynnewood Refinery’s RDU and renewable feedstock pretreater projects. As of December 31, 2022, Renewables does not meet the definition of a reportable segment as defined under Accounting Standards Codification Topic 280. Our estimated capital expenditures are subject to change due to unanticipated changes in the cost, scope, and completion time for capital projects.
As of December 31, 2023, Renewables does not meet the definition of a reportable segment as defined under Accounting Standards Codification Topic 280. Our estimated capital expenditures are subject to change due to changes in the cost, scope, and completion time for capital projects.
December 31, 2022 | 51 Table of Contents Market Indicators While there is risk of shorter-term volatility given the inherent nature of the commodity cycle, the Company believes the long-term fundamentals for the U.S. nitrogen fertilizer industry remain intact.
Market Indicators While there is risk of shorter-term volatility given the inherent nature of the commodity cycle and governmental and geopolitical risks, the Company believes the long-term fundamentals for the U.S. nitrogen fertilizer industry remain intact.
December 31, 2022 | 52 Table of Contents Weather continues to be a critical variable for crop production. Even with high planted acres and trendline yields per acre in the United States, inventory levels for corn and soybeans remain below historical levels and prices have remained elevated.
Weather continues to be a critical variable for crop production. Even with high planted acres and trendline yields per acre in the U.S., global inventory levels for corn and soybeans remain below historical levels and prices have remained elevated.
Our cost to comply with the RFS is dependent upon a variety of factors, which include the availability of ethanol and biodiesel for blending at our refineries and downstream terminals or RINs for purchase, the price at which RINs can be purchased, transportation fuel and renewable diesel production levels, and the mix of our products, all of which can vary significantly from period to period, as well as certain waivers or exemptions to which we may be entitled.
Our cost to comply with the RFS is dependent upon a variety of factors, which include but are not limited to the availability of ethanol and biodiesel for blending at our refineries and downstream terminals or RINs for purchase, the actions of RIN market participants including non-obligated parties, the price at which RINs can be purchased, transportation fuel and renewable diesel production levels and pricing including potential discounts thereto related to the RFS, the mix of our products, our refining margins and other factors, all of which can vary significantly from period to period, as well as certain waivers or exemptions to which we may be entitled.
December 31, 2022 | 46 Table of Contents Petroleum Segment The earnings and cash flows of the Petroleum Segment are primarily affected by the relationship between refined product prices and the prices for crude oil and other feedstocks that are processed and blended into refined products together with the cost of refinery compliance.
Petroleum Segment The earnings and cash flows of the Petroleum Segment are primarily affected by the relationship between refined product prices and the prices for crude oil and other feedstocks that are processed and blended into refined products together with the cost of refinery compliance, including the cost of compliance with Renewable Fuel Standard (“RFS”) regulations.
Additionally, an estimated 11.6 billion pounds of soybean oil is expected to be used in producing cleaner renewables in marketing year 2022/2023. Multiple refiners have announced renewable diesel expansion projects for 2023 and beyond, which will only increase the demand for soybeans and potentially for corn and canola.
Additionally, an estimated 12.8 billion pounds of soybean oil is expected to be used in producing cleaner December 31, 2023 | 52 Table of Contents renewable fuels in marketing year 2023/2024. Multiple refiners have announced renewable diesel expansion projects for 2024 and beyond, which should only increase the demand for soybeans and potentially for corn and canola.
Refining Throughput and Production Data by Refinery Throughput Data Year Ended December 31, (in bpd) 2022 2021 2020 Coffeyville Regional crude 53,237 28,270 34,652 WTI 38,265 62,695 51,656 WTL 407 511 — WTS 462 — — Midland WTI 642 452 — Condensate 12,159 7,911 8,243 Heavy Canadian 6,847 3,695 1,020 DJ Basin 15,607 17,980 5,151 Other feedstocks and blendstocks 11,556 10,788 8,321 Wynnewood Regional crude 46,159 60,287 56,932 WTL 2,323 3,430 6,235 WTS 143 202 — Midland WTI 1,073 2,107 1,262 Condensate 13,283 7,360 6,207 Other feedstocks and blendstocks 3,125 3,396 3,616 Total throughput 205,288 209,084 183,295 December 31, 2022 | 55 Table of Contents Production Data Year Ended December 31, (in bpd) 2022 2021 2020 Coffeyville Gasoline 72,478 71,070 59,419 Distillate 58,104 53,441 43,209 Other liquid products 4,789 4,481 3,999 Solids 4,700 4,246 3,073 Wynnewood Gasoline 35,027 39,858 38,640 Distillate 23,690 31,662 30,638 Other liquid products 5,712 2,862 2,629 Solids 11 21 25 Total production 204,511 207,641 181,632 Light product yield (as % of crude throughput) (1) 99.3 % 100.6 % 100.3 % Liquid volume yield (as % of total throughput) (2) 97.3 % 97.3 % 97.4 % Distillate yield (as % of crude throughput) (3) 42.9 % 43.7 % 43.1 % (1) Total Gasoline and Distillate divided by total Regional crude, WTI, WTL, Midland WTI, WTS, Condensate, Heavy Canadian and DJ Basin throughput.
Refining Throughput and Production Data by Refinery Throughput Data Year Ended December 31, (in bpd) 2023 2022 2021 Coffeyville Regional crude 62,859 53,237 28,270 WTI 27,283 38,265 62,695 WTL 731 407 511 WTS — 462 — Midland WTI — 642 452 Condensate 7,566 12,159 7,911 Heavy Canadian 3,265 6,847 3,695 DJ Basin 20,342 15,607 17,980 Bakken 978 — — Other feedstocks and blendstocks 13,490 11,556 10,788 Wynnewood Regional crude 50,900 46,159 60,287 WTL 1,975 2,323 3,430 WTS — 143 202 Midland WTI 137 1,073 2,107 Condensate 15,228 13,283 7,360 Other feedstocks and blendstocks 3,465 3,125 3,396 Total throughput 208,219 205,288 209,084 December 31, 2023 | 56 Table of Contents Production Data Year Ended December 31, (in bpd) 2023 2022 2021 Coffeyville Gasoline 69,847 72,478 71,070 Distillate 57,888 58,104 53,441 Other liquid products 4,388 4,789 4,481 Solids 4,123 4,700 4,246 Wynnewood Gasoline 38,843 35,027 39,858 Distillate 24,978 23,690 31,662 Other liquid products 6,882 5,712 2,862 Solids 10 11 21 Total production 206,959 204,511 207,641 Light product yield (as % of crude throughput) (1) 100.2 % 99.3 % 100.6 % Liquid volume yield (as % of total throughput) (2) 97.4 % 97.3 % 97.3 % Distillate yield (as % of crude throughput) (3) 43.3 % 42.9 % 43.7 % (1) Total Gasoline and Distillate divided by total Regional crude, WTI, WTL, Midland WTI, WTS, Condensate, Heavy Canadian, DJ Basin, and Bakken throughput.
IEP, through its ownership of the Company’s common stock, is entitled to receive dividends that are declared and paid by the Company based on the number of shares held at each record date.
Dividends to CVR Energy Stockholders Dividends, if any, including the payment, amount and timing thereof, are determined at the discretion of the Board. IEP, through its ownership of the Company’s common stock, is entitled to receive dividends that are declared and paid by the Company based on the number of shares held at each record date.
Our renewable diesel operations are not part of our reportable segments discussed below. We operate under two reportable segments: petroleum and nitrogen fertilizer, which are referred to in this document as our “Petroleum Segment” and our “Nitrogen Fertilizer Segment,” respectively.
We operate under two reportable segments: petroleum and nitrogen fertilizer, which are referred to in this document as our “Petroleum Segment” and our “Nitrogen Fertilizer Segment”, respectively.
For the fourth quarter of 2022, CVR Partners, upon approval by the UAN GP Board on February 21, 2023, declared a distribution of $10.50 per common unit, or $111 million, which is payable March 13, 2023 to unitholders of record as of March 6, 2023.
For the fourth quarter of 2023, CVR Partners, upon approval by the UAN GP Board on February 20, 2024, declared a distribution of $1.68 per common unit, or $18 million, which is payable March 11, 2024 to unitholders of record as of March 4, 2024.
Strategic Objectives We have outlined the following strategic objectives to drive the accomplishment of our mission: December 31, 2022 | 44 Table of Contents Environmental, Health & Safety (“EH&S”) - We aim to achieve continuous improvement in all EH&S areas through ensuring our people’s commitment to environmental, health and safety comes first, the refinement of existing policies, continuous training, and enhanced monitoring procedures.
Strategic Objectives We have outlined the following strategic objectives to drive the accomplishment of our mission: • Environmental, Health & Safety (“EH&S”) - We aim to achieve continuous improvement in all EH&S areas through ensuring our people’s commitment to environmental, health and safety comes first, the refinement of existing policies, continuous training, and enhanced monitoring procedures. • Reliability - Our goal is to achieve industry-leading utilization rates at our facilities through safe and reliable operations.
However, distillate crack spreads have remained elevated to date in 2023. • Warmer winter weather in Europe has significantly reduced natural gas prices in the region from December 2022 to January 2023, which has flattened the global cost curve and has hurt U.S. refiners’ advantage. • Contributing to the ultra-low sulfur diesel (“ULSD”) supply constraints is the International Maritime Organization’s new limit on the sulfur content in the fuel oil used on board ships (“bunker fuel”) effective January 1, 2020, which lowered the sulfur limit of bunker fuel from 3.5% to 0.5% (the “IMO 2020 Regulations”), which necessitated blending ULSD into bunker fuel to meet the new specifications.
December 31, 2023 | 47 Table of Contents • Winter 2022/2023 weather was warmer than average in Europe and when combined with natural gas conservation measures caused demand and prices for natural gas to fall significantly in the region, which contributed to the flattening of the global cost curve and has reduced the U.S. refiners’ advantage compared to refiners in Europe. • Contributing to the ultra-low sulfur diesel (“ULSD”) supply constraints is the International Maritime Organization’s limit on the sulfur content in the fuel oil used on board ships (“bunker fuel”) effective January 1, 2020, which lowered the sulfur limit of bunker fuel from 3.5% to 0.5% (the “IMO 2020 Regulations”), which necessitated blending ULSD into bunker fuel to meet the new specifications.
Selling, General, and Administrative Expenses, and Other - For the year ended December 31, 2022, selling, general and administrative expenses and other was $99 million compared to $76 million for the year ended December 31, 2021.
December 31, 2023 | 59 Table of Contents Selling, General, and Administrative Expenses, and Other - For the year ended December 31, 2023, selling, general and administrative expenses and other was $81 million compared to $99 million for the year ended December 31, 2022.
Nitrogen Fertilizer Segment Financial Highlights Overview - The Nitrogen Fertilizer Segment’s operating income and net income for the year ended December 31, 2022 were $320 million and $287 million, respectively, representing improvements of $186 million and $209 million, respectively, compared to operating income and net income of $134 million and $78 million, respectively, for the year ended December 31, 2021.
Nitrogen Fertilizer Segment Financial Highlights Overview - The Nitrogen Fertilizer Segment’s operating income and net income for the year ended December 31, 2023 were $201 million and $172 million, respectively, representing declines of $119 million and $115 million, respectively, compared to operating income and net income of $320 million and $287 million, respectively, for the year ended December 31, 2022.
Overview - The Company’s operating income and net income were $963 million and $644 million, respectively, for the year ended December 31, 2022, increases of $876 million and $570 million, respectively, compared to operating income and net income of $87 million and $74 million, respectively, for the year ended December 31, 2021.
Overview - The Company’s operating income and net income were $1,123 million and $878 million, respectively, for the year ended December 31, 2023, increases of $160 million and $234 million, respectively, compared to operating income and net income of $963 million and $644 million, respectively, for the year ended December 31, 2022.
Income Tax Expense (Benefit) - The income tax expense for the year ended December 31, 2022 was $157 million, or 19.6% of income before income taxes, as compared to income tax benefit for the year ended December 31, 2021 of $8 million, or (12.4)% of income before income taxes.
December 31, 2023 | 55 Table of Contents Income Tax Expense - The income tax expense for the year ended December 31, 2023 was $207 million, or 19.1% of income before income taxes, as compared to income tax expense for the year ended December 31, 2022 of $157 million, or 19.6% of income before income taxes.
Net Sales - The Nitrogen Fertilizer Segment’s net sales increased by $303 million to $836 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Net Sales - The Nitrogen Fertilizer Segment’s net sales decreased by $155 million to $681 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This increase was primarily due to favorable UAN and ammonia pricing conditions which contributed $348 million in higher revenues, partially offset by decreased sales volumes, which reduced revenues by $54 million compared to the year ended December 31, 2021.
This decrease was primarily due to unfavorable UAN and ammonia pricing conditions which reduced revenue by $374 million, partially offset by increased sales volumes which contributed $210 million in higher revenue compared to the year ended December 31, 2022.
Petroleum Segment Financial Highlights Overview - Petroleum Segment operating income and net income for the year ended December 31, 2022 were $719 million and $759 million, respectively, an improvement of $746 million and $755 million, respectively, compared to an operating loss and net income of $27 million and $4 million, respectively, for the year ended December 31, 2021.
Petroleum Segment Financial Highlights Overview - The Petroleum Segment’s operating income and net income for the year ended December 31, 2023 were $982 million and $1,071 million, respectively, representing an improvement of $263 million and $312 million, respectively, compared to an operating income and net income of $719 million and $759 million, respectively, for the year ended December 31, 2022.
Net Sales Operating Income (Loss) December 31, 2022 | 56 Table of Contents Net Income (Loss) EBITDA (1) (1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measure shown above.
Net Sales Operating Income (Loss) December 31, 2023 | 57 Table of Contents Net Income EBITDA (1) (1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measure shown above. Net Sales - For the year ended December 31, 2023, net sales for the Petroleum Segment decreased by $1.6 billion when compared to the year ended December 31, 2022.
The following table presents quarterly dividends, excluding any special dividends, paid to the Company’s stockholders, including IEP, during 2022 (amounts presented in table below may not add to totals presented due to rounding): December 31, 2022 | 71 Table of Contents Quarterly Dividends Paid (in millions) Related Period Date Paid Quarterly Dividends Per Share Public Stockholders IEP Total 2022 - 1st Quarter May 23, 2022 $ 0.40 $ 12 $ 28 $ 40 2022 - 2nd Quarter August 22, 2022 0.40 12 28 40 2022 - 3rd Quarter November 21, 2022 0.40 12 28 40 Total 2022 quarterly dividends $ 1.20 $ 35 $ 85 $ 121 No quarterly dividends were paid during the first quarter of 2022 related to the fourth quarter of 2021, and there were no quarterly dividends declared or paid during 2021 related to the first, second, and third quarters of 2021 and fourth quarter of 2020.
The following tables present quarterly and special dividends paid to the Company’s stockholders, including IEP, during 2023 and 2022 (amounts presented in table below may not add to totals presented due to rounding): Quarterly Dividends Paid ( in millions ) Related Period Date Paid Quarterly Dividends Per Share Public Stockholders IEP Total 2022 - 4th Quarter March 13, 2023 $ 0.50 $ 15 $ 36 $ 50 2023 - 1st Quarter May 22, 2023 0.50 15 36 50 2023 - 2nd Quarter August 21, 2023 0.50 15 36 50 2023 - 3rd Quarter November 20, 2023 0.50 17 33 50 Total 2023 quarterly dividends $ 2.00 $ 61 $ 140 $ 201 Special Dividends Paid ( in millions ) Related Period Date Paid Special Dividends Per Share Public Stockholders IEP Total 2023 - 2nd Quarter August 21, 2023 $ 1.00 $ 29 $ 71 $ 101 2023 - 3rd Quarter November 20, 2023 1.50 51 100 151 Total 2023 special dividends $ 2.50 $ 80 $ 171 $ 251 December 31, 2023 | 69 Table of Contents Quarterly Dividends Paid ( in millions ) Related Period Date Paid Quarterly Dividends Per Share Public Stockholders IEP Total 2022 - 1st Quarter May 23, 2022 $ 0.40 $ 12 $ 28 $ 40 2022 - 2nd Quarter August 22, 2022 0.40 12 28 40 2022 - 3rd Quarter November 21, 2022 0.40 12 28 40 Total 2022 quarterly dividends $ 1.20 $ 36 $ 85 $ 121 Special Dividends Paid ( in millions ) Related Period Date Paid Special Dividends Per Share Public Stockholders IEP Total 2022 - 2nd Quarter August 22, 2022 $ 2.60 $ 76 $ 185 $ 261 2022 - 3rd Quarter November 21, 2022 1.00 29 71 101 Total 2022 special dividends $ 3.60 $ 106 $ 256 $ 362 There were no quarterly dividends declared or paid during the first quarter of 2022 related to the fourth quarter of 2021, and there were no quarterly dividends declared or paid during 2021 related to the first, second, and third quarters of 2021 and fourth quarter of 2020.
Mission and Core Values Our Mission is to be a top tier North American renewable fuels, petroleum refining, and nitrogen-based fertilizer company as measured by safe and reliable operations, superior performance and profitable growth. The foundation of how we operate is built on five core Values: • Safety - We always put safety first.
December 31, 2023 | 45 Table of Contents Mission and Core Values Our Mission is to be a top tier North American renewable fuels, petroleum refining, and nitrogen-based fertilizer company as measured by safe and reliable operations, superior performance and profitable growth.
These increases were partially offset by an inventory build contributing $3 million. Non-GAAP Measures Our management uses certain non-GAAP performance measures, and reconciliations to those measures, to evaluate current and past performance and prospects for the future to supplement our financial information presented in accordance with accounting principles generally accepted in the United States (“GAAP”).
December 31, 2023 | 62 Table of Contents Non-GAAP Measures Our management uses certain non-GAAP performance measures, and reconciliations to those measures, to evaluate current and past performance and prospects for the future to supplement our financial information presented in accordance with accounting principles generally accepted in the United States (“GAAP”).
The NYMEX 2-1-1 crack spread averaged $42.60 per barrel in 2022 compared to $19.45 per barrel in 2021. The Group 3 2-1-1 crack spread averaged $38.18 per barrel in 2022 compared to $18.14 per barrel in 2021. Average monthly prices for RINs increased 12.4% during 2022 compared to 2021.
The NYMEX 2-1-1 crack spread averaged $34.24 per barrel in 2023 compared to $42.60 per barrel in 2022. The Group 3 2-1-1 crack spread averaged $32.27 per barrel in 2023 compared to $38.18 per barrel in 2022. Average monthly prices for RINs decreased 7.8% during 2023 compared to 2022.
December 31, 2022 | 68 Table of Contents Liquidity and Capital Resources Our principal source of liquidity has historically been cash from operations. Our principal uses of cash are for working capital, capital expenditures, funding our debt service obligations, and paying dividends to our stockholders, as further discussed below.
Our principal uses of cash are for working capital, capital expenditures, funding our debt service obligations, and paying dividends to our stockholders, as further discussed below.
For the fourth quarter of 2022, the Company, upon approval by the Company’s Board on February 21, 2023, declared a cash dividend of $0.50 per share, or $50 million, which is payable March 13, 2023 to shareholders of record as of March 6, 2023.
For the fourth quarter of 2023, the Company, upon approval by the Board on February 20, 2024, declared a cash dividend of $0.50 per share, or $50 million, which is payable March 11, 2024 to shareholders of record as of March 4, 2024. Of this amount, IEP will receive $33 million due to its ownership interest in the Company’s shares.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn April 2022, we completed the renewable diesel project at our Wynnewood Refinery, to convert the Wynnewood Refinery’s hydrocracker to December 31, 2022 | 75 Table of Contents a RDU, at a total cost of $179 million, which is capable of producing approximately 100 million gallons of renewable diesel per year and generating approximately 170 to 180 million RINs annually.
Biggest changeAlleviating the Company’s exposure to the market risk of RINs price volatility, the Petroleum Segment’s obligated-party subsidiaries purchase internally generated RINs from our renewable diesel operations to partially satisfy their RFS obligations through the completion of the renewable diesel project at our Wynnewood Refinery in April 2022, which converted the Wynnewood Refinery’s hydrocracker to a RDU capable of producing approximately 100 million gallons of renewable diesel per year and generating up to approximately 170 to 180 million RINs annually depending on operations.
With regard to its hedging activities, the Petroleum Segment may enter into, or has entered into, financial instruments which serve to (1) lock in or fix a percentage of the anticipated or planned gross margin in future periods when the derivative market offers commodity spreads that generate positive cash flows, (2) hedge the value of inventories in excess of minimum required inventories, and (3) manage existing positions related to a change in anticipated operations and market conditions.
With regard to its hedging activities, our refining business may enter into, or has entered into, financial instruments which serve to (1) lock in or fix a percentage of the anticipated or planned gross margin in future periods when the derivative market offers commodity spreads that generate positive cash flows, (2) hedge the value of inventories in excess of minimum required inventories, and (3) manage existing positions related to a change in anticipated operations and market conditions.
Commodity Price Risk The Petroleum Segment, as a manufacturer of refined petroleum products, and the Nitrogen Fertilizer Segment, as a manufacturer of nitrogen fertilizer products, all of which are commodities, have exposure to market pricing for products sold in the future.
Commodity Price Risk The Company, as a manufacturer of refined petroleum and renewable products and of nitrogen fertilizer products, all of which are commodities, has exposure to market pricing for products sold in the future.
RFS Compliance Price Risk As a producer of transportation fuels from crude oil, the Petroleum Segment’s obligated-party subsidiaries are required to blend biofuels into the products it produces or purchase RINs in the open market in lieu of blending to meet the mandates established by the EPA.
RFS Compliance Price Risk As a producer of transportation fuels from crude oil, the Petroleum Segment’s obligated-party subsidiaries are required to blend biofuels into the products it produces or purchase RINs in the open market in lieu of blending to meet the mandates established by the EPA, unless the obligations are waived, such as through a small refinery waiver.
Refer to Part I, Item 1A, “Risk Factors,” Part II, Item 7, “Management’s Discussion and Analysis” and Part II, Item 8, Note 11 (“Commitments and Contingencies”), of this Report for further discussion about compliance with the RFS and the potential impacts on our business. December 31, 2022 | 76 Table of Contents
Refer to Part I, Item 1A, “Risk Factors”, Part II, Item 7, “Management’s Discussion and Analysis” and Part II, Item 8, Note 14 (“Commitments and Contingencies”), of this Report for further discussion about compliance with the RFS and the potential impacts on our business. December 31, 2023 | 74 Table of Contents
The Petroleum Segment uses a crude oil purchasing intermediary, Vitol, Inc., to purchase the majority of its non-gathered crude oil inventory for the refineries, which allows it to take title to and price its crude oil at locations in close proximity to the refineries, as opposed to the crude oil origination point, reducing its risk associated with volatile commodity prices by shortening the commodity conversion cycle time.
This arrangement allows the Petroleum Segment to take title to and price its crude oil at locations in close proximity to the refineries, as opposed to the crude oil origination point, reducing its risk associated with volatile commodity prices by shortening the commodity conversion cycle time.
The commodity conversion cycle time refers to the time elapsed between raw material acquisition and the sale of finished goods. In addition, the Petroleum Segment seeks to reduce the variability of commodity price exposure by engaging in hedging strategies and transactions that will serve to protect gross margin as forecasted in the annual operating plan.
December 31, 2023 | 73 Table of Contents In addition, our refining business seeks to reduce the variability of commodity price exposure by engaging in hedging strategies and transactions that will serve to protect gross margin as forecasted in the annual operating plan.
Removed
In November 2021, the Board approved the renewable feedstock pretreater project at the Wynnewood Refinery, which is currently expected to be completed in the third quarter of 2023 at an estimated cost of $95 million.
Added
Beginning on January 1, 2024, the Petroleum Segment will utilize a new crude oil purchasing intermediary, Gunvor USA LLC, to purchase the majority of its non-gathered crude oil inventory for the refineries (prior to January 1, 2024, Vitol, Inc. was the intermediary; refer to Note 14 (“Commitments and Contingencies”) for additional information).
Added
The commodity conversion cycle time refers to the time elapsed between raw material acquisition and the sale of finished goods.

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