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CVR ENERGY INC

CVR ENERGY INCCVIEarnings & Financial Report

NYSE · Energy · Petroleum Refining

CVR Energy Inc is a United States-based energy holding company operating two core segments: petroleum refining and nitrogen fertilizer manufacturing. It produces a wide range of products including gasoline, diesel, jet fuel, and agricultural fertilizers, primarily serving commercial, industrial and agricultural customers across North America.

What changed in CVR ENERGY INC's 10-K — 2023 vs 2024

Top changes in CVR ENERGY INC's 2024 10-K

607 paragraphs added · 504 removed · 388 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

96 edited+35 added−40 removed70 unchanged
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.
Environmental Matters Our businesses are subject to extensive and frequently changing federal, state, and local environmental laws, rules, 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.
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.
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 seek to manage our manufacturing and distribution operations to best serve our customers during these critical periods.
Crude oils sourced outside of our gathering system are delivered to Cushing by various third-party pipelines, including the Keystone and Spearhead pipelines, on which we can be subject to proration, and subsequently to the Broome Station facility via the Midway JV pipeline.
Crude oils sourced outside of our gathering system are delivered to Cushing by various third-party pipelines, including the Keystone and Spearhead pipelines, on which we can be subject to proration, and subsequently to the Broome Station facility via the Midway Pipeline.
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.
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, Renewables, and Nitrogen Fertilizer Segments, primarily gasoline, diesel and aviation fuels, renewable diesel, UAN, and ammonia.
The volatility of RIN prices also increased significantly in response to a number of factors, which we believe include, but are not limited to, the actions of RIN market participants including those not deemed by the EPA to be obligated parties, various government laws, rules, policies and initiatives relating to climate change, and the actions of the EPA in administrating the RFS, such as the EPA’s failure to include blenders in the definition of obligated parties, its failure to timely administer the RFS and its multiple blanket denial of SREs.
The volatility of RIN prices also increased significantly in response to a number of factors, which we believe include, but are not limited to, the actions of RIN market participants including those not deemed by the EPA to be obligated parties, various government laws, rules, policies and initiatives relating to climate change, and the actions of the EPA in administrating the RFS, such as the EPA’s failure to include blenders in the definition of obligated parties, its failure to timely administer the RFS and its multiple blanket denials of SREs.
Nitrogen is the most quickly depleted nutrient and must be replenished every year, whereas phosphate and potassium can be retained in soil for up to three years. Plants require nitrogen in the largest amounts, and it accounts for approximately 56% of primary fertilizer consumption on a nutrient ton basis, per the International Fertilizer Association (“IFA”).
Nitrogen is the most quickly depleted nutrient and must be replenished every year, whereas phosphate and potassium can be retained in soil for up to three years. Plants require nitrogen in the largest amounts, and it accounts for approximately 58% of primary fertilizer consumption on a nutrient ton basis, per the International Fertilizer Association (“IFA”).
CVR Partners’ N 2 O abatement projects are registered with the Climate Action Reserve (the “Reserve”), a carbon offset registry for the North American market. The Reserve employs high-quality standards and an independent third-party verification process to issue its carbon credits, known as Climate Reserve Tonnes.
CVR Partners’ N 2 O abatement projects are registered with the Climate Action Reserve (the “Reserve”), a carbon offset registry for the North American market. The Reserve employs standards and an independent third-party verification process to issue its carbon credits, known as Climate Reserve Tonnes.
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”).
Refer to Part II, Item 8, Note 5 (“Equity Method Investments”) of this Report for further discussion. (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 support of the personal development of our employees and our goal of employing and retaining effective and dynamic leaders, we provide in-person supervisor training to managers at all levels, which focuses on a combination of business and leadership strategies, including coaching and performance management, goal setting, critical thinking, effective communication and listening, development and succession planning, delegation techniques, and legal aspects of leadership, among other topics.
In support of the personal development of our employees and our goal of employing and retaining effective and dynamic leaders, we provide in-person supervisor training to managers at all levels led by our executives, which focuses on a combination of business and leadership strategies, including coaching and performance management, goal setting, critical thinking, effective communication and listening, development and succession planning, delegation techniques, and legal aspects of leadership, among other topics.
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.
These assets include the following: As of December 31, 2024 Pipeline Segment Length (miles) Capacity (bpd) Joint Ventures: 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: Cushing to Broome 16” (“Midway Pipeline”) (3) 99 131,000 Kelly to Caney Jct. 8” 66 13,000 Humboldt to Broome 8” 63 6,000 (1) Through our subsidiaries, we own a 40% interest in Enable JV.
In addition, our Corporate Governance Guidelines, Codes of Ethics and Business Conduct, and the charters of the Audit Committee, the Nominating and Corporate Governance Committee, the Compensation Committee, and the Environmental, Health and Safety Committee of the Board of Directors are available on our website.
In addition, our Corporate Governance Guidelines, Codes of Ethics and Business Conduct, and the charters of the Audit Committee, the Nominating and Corporate Governance Committee, the Compensation Committee, and the Environmental, Health and Safety Committee of the Company’s Board of Directors (the “Board”) are available on our website.
Seasonality Our Petroleum Segment operations experience seasonal fluctuations as demand for gasoline products is generally higher during the summer months than during the winter months due to seasonal increases in highway traffic and road construction work. Demand for diesel fuel is higher during the planting and harvesting seasons.
Seasonality Our Petroleum Segment experiences seasonal fluctuations as demand for gasoline products is generally higher during the summer months than during the winter months due to seasonal increases in highway traffic and road construction work. Demand for diesel fuel is higher during the planting and harvesting seasons.
The East Dubuque Fertilizer Facility has the flexibility to vary its product mix, thereby enabling it to upgrade a portion of its ammonia production into varying amounts of UAN, nitric acid, and liquid and granulated urea, depending on market demand, pricing, and storage availability.
The East Dubuque Fertilizer Facility has the flexibility to vary its product mix, thereby enabling it to upgrade a portion of its ammonia production into varying amounts of UAN and nitric acid, depending on market demand, pricing, and storage availability.
Current RCRA financial assurance requirements for the Wynnewood Refinery include less than $1 million for hazardous waste storage tank closure and $3 million for the post-closure monitoring of a closed storm water retention pond and the projected clean-up costs at the Wynnewood Refinery. These RCRA financial assurance obligations are currently being satisfied by a surety bond.
Current RCRA financial assurance requirements for the Wynnewood Refinery include approximately $3 million for hazardous waste storage tank closure, the post-closure monitoring of a closed storm water retention pond, and the projected clean-up costs at the Wynnewood Refinery. These RCRA financial assurance obligations are currently being satisfied by a surety bond.
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.
December 31, 2024 | 20 Table of Contents 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.
Environmental Remediation As is the case with all companies engaged in similar industries, we face potential exposure from claims and lawsuits involving environmental matters, including soil and water contamination and personal injury or property damage allegedly caused by crude oil or hazardous substances that we processed, handled, used, stored, transported, spilled, disposed of, or released.
December 31, 2024 | 23 Table of Contents Environmental Remediation As is the case with all companies engaged in similar industries, we face potential exposure from claims and lawsuits involving environmental matters, including soil and water contamination and personal injury or property damage allegedly caused by crude oil or hazardous substances that we processed, handled, used, stored, transported, spilled, disposed of, or released.
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.
December 31, 2024 | 18 Table of Contents 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.
December 31, 2023 | 22 Table of Contents Human Capital Our employees are the most important part of our business and help us work to achieve our Mission to be a top-tier North American renewable fuels, petroleum refining and nitrogen-based fertilizer company as measured by safe and reliable operations, superior financial performance and profitable growth.
Human Capital Our employees are the most important part of our business and help us work to achieve our Mission to be a top-tier North American renewable fuels, petroleum refining and nitrogen-based fertilizer company as measured by safe and reliable operations, superior financial performance and profitable growth.
The site pollution legal liability policy and the pollution coverage provided in the casualty insurance policies are subject to retentions and deductibles and contain discovery requirements, reporting requirements, exclusions, definitions, conditions, and limitations that could apply to a particular pollution claim, and there can be no assurance such claim will be adequately insured for all potential damages.
The site pollution legal liability policy and the Casualty Policies are subject to retentions and deductibles and contain discovery requirements, waiting periods, reporting requirements, exclusions, definitions, conditions, and limitations that could apply to a particular pollution claim, and there can be no assurance such claim will be adequately insured for all potential damages.
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.
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.
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”).
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 renewable fuels industry, and the nitrogen fertilizer manufacturing industry through its interest in CVR Partners, LP, a publicly traded limited partnership (“CVR Partners”).
We are generally able to purchase natural gas at competitive prices due to the facility’s connection to the Northern Natural Gas interstate pipeline system, which is within one mile of the facility, and a third-party owned and operated pipeline.
We are generally able to purchase natural gas at competitive prices due to the connection of our East Dubuque Fertilizer Facility to the Northern Natural Gas interstate pipeline system, which is within one mile of the facility, and a third-party owned and operated pipeline.
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.
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.
Our Code of Ethics and Business Conduct and our anti-discrimination and harassment policies also help us maintain a work environment where individuals are treated with respect and dignity, and where diversity of thought and perspective is valued. Available Information Our website address is www.CVREnergy.com.
Our Code of Ethics and Business Conduct and our anti-discrimination and harassment policies also help us maintain a work environment where individuals are treated with respect and dignity, and where diversity of thought and perspective is valued. December 31, 2024 | 25 Table of Contents Available Information Our website address is www.CVREnergy.com.
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.
The Petroleum Segment’s top customer represented 13% of its net sales for the year ended December 31, 2024, and its top two customers represented 27% and 25% of its net sales for the years ended December 31, 2023 and 2022, respectively.
In January 2021, the EPA announced it is undertaking a plan to review and update effluent standards for many industries. EPA is prioritizing those sectors that are ranked high in point source categories for total nitrogen discharges, including fertilizer manufacturers. The EPA’s review eventually could result in different regulations governing the Company.
In January 2021, the EPA announced it is undertaking a plan to review and update effluent standards for many industries. In that announcement, the EPA prioritized those sectors that are ranked high in point source categories for total nitrogen discharges, including fertilizer manufacturers. The EPA is continuing its review, which eventually could result in different regulations governing the Company.
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.
From the Broome Station facility, crude oil is delivered to the Coffeyville Refinery via the Petroleum 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.
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
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 | 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.
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.
The table below reflects, as of the date hereof, the annual RVO under the RFS for the compliance years 2021 through 2025: 2021 to 2025 Renewable Volume Obligation % 2021 2022 2023 2024 2025 D6 - Ethanol 8.19 8.43 8.57 8.71 8.82 D4 - Biodiesel 2.16 2.33 2.58 2.82 3.15 D3 - Cellulosic 0.33 0.35 0.48 0.63 0.81 D5 - Advanced 0.51 0.48 0.33 0.34 0.35 Total RVO % 11.19 11.59 11.96 12.50 13.13 Coffeyville Resources Refining & Marketing, LLC (“CRRM”) and Wynnewood Refining Company, LLC (“WRC”, and together with CRRM, the “obligated-party subsidiaries”) have been deemed by EPA to be obligated parties under the RFS.
The table below reflects, as of the date hereof, the annual RVO under the RFS for the compliance years 2021 through 2025: 2021 to 2025 Renewable Volume Obligation % 2021 2022 2023 2024 2025 D6 - Ethanol 7.89 8.43 8.57 8.71 8.82 D4 - Biodiesel 2.30 2.33 2.58 2.82 3.15 D3 - Cellulosic 0.32 0.35 0.48 0.63 0.81 D5 - Advanced 0.31 0.48 0.33 0.34 0.35 Supplemental Standard — 0.14 0.14 — — Total RVO % 10.82 11.73 12.10 12.50 13.13 Coffeyville Resources Refining & Marketing, LLC (“CRRM”) and Wynnewood Refining Company, LLC (“WRC”, and together with CRRM, the “obligated-party subsidiaries”) have been deemed by EPA to be obligated parties under the RFS.
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”).
Certain carbon oxide capture and December 31, 2024 | 19 Table of Contents 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”).
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.
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.
The RFS established annually increasing volume targets, called Renewable Volume Obligations (“RVOs”), for biomass-based diesel through 2012 and for the remaining December 31, 2023 | 18 Table of Contents three categories of renewable fuel (cellulosic biofuel, advanced biofuel, and total renewable fuel) through 2022.
The RFS established annually increasing volume targets, called Renewable Volume Obligations (“RVOs”), for biomass-based diesel through 2012 and for the remaining three categories of renewable fuel (cellulosic biofuel, advanced biofuel, and total renewable fuel) through 2022.
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.
For the year ended December 31, 2024, the gathering system, which includes the pipelines outlined above and our trucking operations, supplied approximately 71% and 98% of the Coffeyville and Wynnewood Refineries’ crude oil demand, respectively.
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.
The Casualty Policies generally provide 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.
The Company’s financial assurance mechanisms are re-evaluated and adjusted on an annual basis. December 31, 2023 | 21 Table of Contents Waste Management - There are fourteen closed hazardous waste units at the Coffeyville Refinery. There is one closed hazardous waste unit and one active hazardous waste storage tank at the Wynnewood Refinery.
The Company’s financial assurance mechanisms are re-evaluated and adjusted on an annual basis. Waste Management - There are fourteen closed hazardous waste units at the Coffeyville Refinery. There is one closed hazardous waste unit and one active hazardous waste storage tank at the Wynnewood Refinery.
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.
For the acquisition of crude oil within close proximity of the Refineries, we operate a fleet of 116 trucks as of December 31, 2024 and have contracts with third-party trucking fleets to acquire and deliver crude oil to our pipeline systems December 31, 2024 | 13 Table of Contents or directly to the Refineries for consumption.
In addition, 30 years of long-term post-closure care was completed at one closed, interim status, hazardous waste landfarm located at the now-closed Phillipsburg terminal and is no longer subject to monitoring.
In March 2021, 30 years of long-term post-closure care was completed at one closed, interim status, hazardous waste land treatment facility located at the now-closed Phillipsburg terminal and is no longer subject to monitoring.
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.
While we have the ability to exercise influence through our participation on the board of directors of Enable JV, we do not serve as the day-to-day operator. We have determined that this entity should not be consolidated and is accounted for under the equity method.
Combining our nitrous oxide abatement and CO 2 sequestration activities should reduce our CO 2 e footprint by an average of over 1 million metric tons per year. In addition, our Coffeyville Fertilizer Facility is uniquely qualified to produce hydrogen and ammonia that could be certified ‘blue’ to a market that is increasingly demanding reduced carbon footprints.
By combining our nitrous oxide abatement and CO 2 sequestration activities, we reduced our CO 2 e footprint by over 1.3 million metric tons in 2023. In addition, our Coffeyville Fertilizer Facility is uniquely qualified to produce hydrogen and ammonia that could be certified ‘blue’ to a market that is increasingly demanding reduced carbon footprints.
Facilities Coffeyville Refinery - We operate a complex full coking, medium-sour crude oil refinery in southeast Kansas, approximately 100 miles from Cushing, Oklahoma (“Cushing”) with a name plate crude oil capacity of 132,000 bpd (the “Coffeyville Refinery”).
Facilities Coffeyville Refinery - Various of our subsidiaries own or operate, as applicable, a complex full coking, medium-sour crude oil refinery in southeast Kansas, approximately 100 miles from Cushing, Oklahoma (“Cushing”) with a name plate crude oil capacity of 132,000 bpd (the “Coffeyville Refinery”).
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.
The United States is the world’s largest exporter of coarse grains, accounting for 30% of world exports and 26% of world production for the fiscal year ended December 31, 2024, according to the United States Department of Agriculture (“USDA”). A substantial amount of nitrogen is consumed in production of these crops to increase yield.
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.
Similar to the Coffeyville Refinery, the Wynnewood December 31, 2024 | 11 Table of Contents Refinery benefits from unit redundancies, including two crude oil distillation units and two vacuum towers as well as four hydrotreating units.
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.
Competition Our Petroleum Segment competes primarily on the basis of price, reliability of supply, availability of multiple grades of products, and location.
The Coffeyville Refinery is connected to the mid-continent natural gas liquid commercial hub at Conway, Kansas by the inbound Enterprise Pipeline Blue Line, through which natural gas liquid blendstocks, such as butanes and natural gasoline, are sourced and delivered directly into the refinery.
We also lease tank storage totaling 2.2 million barrels, including 2.0 million barrels at Cushing. The Coffeyville Refinery is connected to the mid-continent natural gas liquid commercial hub at Conway, Kansas by the inbound Enterprise Pipeline Blue Line, through which natural gas liquid blendstocks, such as butanes and natural gasoline, are sourced and delivered directly into the refinery.
The Wynnewood Refinery has a name plate crude oil capacity of 74,500 bpd capable of processing 20,000 bpd of light sour crude oil (the “Wynnewood Refinery” and together with the Coffeyville Refinery, the “Refineries”) with major operations including fractionation, fluid catalytic cracking, hydrotreating, reforming, alkylation, sulfur recovery, and propane and butane recovery.
The Wynnewood Refinery has a name plate crude oil capacity of 74,500 bpd with major operations including fractionation, fluid catalytic cracking, hydrotreating, reforming, alkylation, sulfur recovery, and propane and butane recovery.
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.
Global fertilizer use, consisting of nitrogen, phosphate, and potash, is projected to increase by 1% through 2025 to meet global food demand according to a study funded by the Food and Agricultural Organization of the United Nations.
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.
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.
Petroleum Our Petroleum Segment is composed of the assets and operations of two refineries located in Coffeyville, Kansas and Wynnewood, Oklahoma and supporting logistics assets in the region.
December 31, 2024 | 10 Table of Contents Petroleum Our Petroleum Segment is composed of the assets and operations of two refineries located in Coffeyville, Kansas and Wynnewood, Oklahoma and supporting crude gathering and logistics assets in the region.
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.
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.
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.
If delivered by truck, products are most commonly sold on a shipping point basis, and freight is normally arranged by the customer. If delivered by railcar, products are most commonly sold on a destination point basis, and we typically arrange the freight.
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.
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; and LSB Industries, Inc. Domestic customers generally demonstrate sophisticated buying tendencies that include a focus on cost and service.
The Wynnewood Refinery ships its finished product via pipeline, railcar, and truck, focusing its efforts in Oklahoma and parts of Arkansas, as well as eastern Missouri. The pipeline system used by the Wynnewood Refinery is capable of multi-directional flow, providing access to Texas markets as well as adjoining states with pipeline connections.
Products produced at our Wynnewood Refinery are generally shipped via pipeline, railcar, and truck, focusing its efforts in Oklahoma and parts of Arkansas, as well as eastern Missouri. The pipeline system connected to our Wynnewood Refinery is capable of multi-directional flow, providing access to Texas as well as adjoining states with pipeline connections.
The pipelines are connected to a third-party distribution system at the Chicago Citygate receipt point and at the Hampshire interconnect from which natural gas is transported to the East Dubuque Fertilizer Facility.
The pipelines are connected to a third-party distribution system at the Chicago Citygate receipt point and at the Hampshire interconnect from which natural gas is transported to the East Dubuque Fertilizer Facility. Marketing and Distribution Our Nitrogen Fertilizer Segment primarily markets UAN products to agricultural customers and ammonia products to agricultural and industrial customers.
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.
In addition, the East Dubuque Fertilizer Facility is regulated under the Maritime Transportation Security Act. 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.
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.
Competition We face competition from renewable fuel producers and others that have been offering or might offer products with lower emissions. 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.
Our recruiting efforts that include focus on veteran and diverse college populations, support our diverse and inclusive environment, as do the activities of our Diversity & Inclusion Committee. We provide diversity and inclusion training that includes focus on unconscious bias where employees learn to recognize and address the effects thereof by encouraging diversity of experience and opinion.
Our recruiting efforts that include focus on veteran and diverse college populations, support our diverse and inclusive environment, as do the activities of our Diversity & Inclusion Committee. We provide diversity and inclusion training that covers, among other topics, unconscious bias and encouraging diversity of experience and opinion.
Jet fuel produced at the Wynnewood Refinery is sold to the U.S. Department of Defense via the segregated truck rack at the Wynnewood Refinery. Customers Customers for the Refineries’ petroleum products primarily include retailers, railroads, farm cooperatives, and other refiners/marketers in Group 3 of the PADD II region because of their relative proximity to the Refineries and pipeline access.
Customers Customers for the petroleum products produced at the Refineries primarily include retailers, railroads, farm cooperatives, and other refiners/marketers in Group 3 of the PADD II region because of their relative proximity to the Refineries and pipeline access.
If we fail to timely or properly report a release, or if a release violates the law or our permits, we could become the subject of a governmental enforcement action or third-party claims. Government enforcement or third-party claims relating to releases of hazardous or extremely hazardous substances could result in significant expenditures and liability.
If we fail to timely or properly report a release, or if a release violates the law or our permits, we could become the subject of a governmental enforcement action or third-party claims.
Recent Greenhouse Gas Footprint Reduction Efforts In October 2020, the Nitrogen Fertilizer Segment announced that it generated its first carbon offset credits from voluntary nitrous oxide abatement at its Coffeyville Fertilizer Facility. The Nitrogen Fertilizer Segment has similar nitrous oxide abatement efforts at its East Dubuque Fertilizer Facility.
Recent Greenhouse Gas Footprint Reduction Efforts The Nitrogen Fertilizer Segment has generated carbon offset credits from voluntary nitrous oxide (“N 2 O”) abatement at its Coffeyville Fertilizer Facility since October 2020, with similar N 2 O abatement efforts at its East Dubuque Fertilizer Facility since June 2011.
Our renewable diesel operations are not allocated or aggregated to our reportable segments, but are reflected in our consolidated results of operations.
Results of the Renewables Segment were not previously allocated or aggregated to our reportable segments, but were reflected in our consolidated results of operations.
Rack sales are at posted prices that are influenced by the competitive forces in Group 3 of the PADD II region among other factors. In addition, we sell hydrogen and by-products of our refining operations in Coffeyville, Kansas, such as pet coke, to an affiliate, Coffeyville Resources Nitrogen Fertilizer, LLC (“CRNF”), which is an indirect, wholly-owned subsidiary of CVR Partners.
In addition, we sell hydrogen and by-products of our refining operations in Coffeyville, Kansas, such as pet coke, to an affiliate, Coffeyville Resources Nitrogen Fertilizer, LLC (“CRNF”), which is an indirect, wholly owned subsidiary of CVR Partners.
Domestic customers generally demonstrate sophisticated buying tendencies that include a focus on cost and service. We also encounter competition from producers of fertilizer products manufactured in foreign countries, including the threat of increased production capacity. In certain cases, foreign producers of fertilizer that export to the United States may be subsidized by their respective governments.
We also encounter competition from producers of fertilizer products manufactured in foreign countries, including the threat of increased production capacity. In certain cases, foreign producers of fertilizer that export to the United States may be subsidized by their respective governments which could put us at a competitive disadvantage.
Our obligated-party subsidiaries are not able to meet the majority of their annual RVOs through blending, so, unless their RVOs are waived or exempted, they have had to and currently expect to be required in the future to purchase RINs on the open market and, in years in which they are made available by the EPA, cellulosic waiver credits.
Our obligated-party subsidiaries are not able to meet the majority of their annual RVOs through blending, so, unless their RVOs are waived or exempted, they have had to and currently expect to be required in the future to purchase RINs on the open market from third parties, including but not limited to its affiliates who generate RINs through the Wynnewood Renewable Facility.
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 Nitrogen Fertilizer Segment’s top customer represented 14% of its net sales for the year ended December 31, 2024, and its top two customers represented 25% and 30% of its net sales for the years ended December 31, 2023 and 2022, respectively.
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.
Environmental Insurance We are covered by site pollution legal liability insurance policies, which insure any location owned, leased, rented, or operated by the Company, including the Refineries and the Facilities. The policies insure certain pollution conditions at or migrating from a covered location, certain waste transportation and disposal activities, and business interruption.
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 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. Despite the expiration of the CFATS in June 2023, our Facilities continue to adhere to its requirements.
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.
From 2020 to 2023, the N 2 O abatement systems at the East Dubuque Fertilizer Facility’s two nitric acid plants and the Coffeyville Fertilizer Facility’s nitric acid plant have abated, on average, the annual release of approximately 277,000 and 340,000 metric tons of carbon dioxide-equivalent (“CO 2 e”), respectively.
The Coffeyville Fertilizer Facility is the only nitrogen fertilizer plant in North America that utilizes a pet coke gasification process to produce nitrogen fertilizer. The Coffeyville Fertilizer Facility’s largest raw material cost used in the production of ammonia is pet coke, which it purchases from our Coffeyville Refinery and third parties.
The Coffeyville Fertilizer Facility is the only nitrogen fertilizer facility in North America that utilizes pet coke, which is purchased from our Coffeyville Refinery and third parties, in a gasification process to produce hydrogen for use in manufacturing nitrogen fertilizer.
These redundancies allow the Coffeyville Refinery to continue to receive and process crude oil even if one tower requires maintenance without having to shut down the entire refinery. Wynnewood Refinery - We operate a complex crude oil refinery in Wynnewood, Oklahoma, approximately 65 miles south of Oklahoma City, Oklahoma and approximately 130 miles from Cushing.
These redundancies allow the Coffeyville Refinery to continue to receive and process crude oil even if one tower requires maintenance without having to shut down the entire refinery.
This increased competition from non-traditional food producers creates a unique December 31, 2023 | 8 Table of Contents dynamic of competing priorities for food versus fuel. Our renewables business is also highly dependent upon government subsidies, including tax and carbon credits. Our renewable diesel operations are not part of our reportable segments discussed below.
This increased competition from non-traditional food producers creates a unique dynamic of competing priorities for food versus fuel. Governmental Credits Our Renewables Segment is also highly dependent upon government subsidies, such as tax and carbon credits.
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.
Fertecon Limited, an agency which provides market information and analysis on fertilizers and fertilizer raw materials, estimates indicate that China, India, and the United States are the top consumers representing 27%, 17%, and 10% of total global nitrogen fertilizer consumption for 2024, respectively. North American nitrogen fertilizer producers predominantly use natural gas as their primary feedstock.
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.
When feasible, RCRA-regulated materials are recycled instead of being disposed of on-site or off-site. RCRA establishes standards for the management of solid and hazardous wastes. 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.
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 April 2022, a group of Midwestern governors December 31, 2024 | 21 Table of Contents petitioned EPA to allow summertime sales of E15 in their states, including Kansas, under the CAA. On July 21, 2022, the Governor of Kansas rescinded Kansas’ summertime E15 request.
In January 2024, WRC submitted a notice of intent to sue the EPA if a decision on its 2023 SRE petition is not timely issued. • In December 2023, WRC and CRRM submitted a petition for rulemaking to the EPA demanding that it cures its violation of the RFS, which we believe required the EPA to establish a credit trading program under which only obligated parties who over-comply with their RFS obligations could sell RINS generated through such over-compliance to other obligated parties.
Other than seeking writ of certiorari from the Supreme Court of the United States (“SCOTUS”) relating to the Fifth Circuit’s ruling that venue for the case was proper in the Fifth Circuit, the EPA has yet to act on those remanded petitions. • In December 2023, WRC and CRRM submitted a petition for rulemaking to the EPA demanding that it cures its violation of the RFS, which we believe required the EPA to establish a credit trading program under which only obligated parties who over-comply with their RFS obligations could sell RINS generated through such over-compliance to other obligated parties.
The Wynnewood Refinery has qualified, and is currently expected in the future to qualify, as a “small refinery” defined under the RFS as a refinery with an aggregate daily crude oil throughput no greater than 75,000 barrels, which enables WRC to seek small refinery exemptions (“SREs”) under the RFS should it be able to establish it suffered disproportionate economic hardship, which WRC believes it has already established for the compliance periods 2017 through 2023.
The Wynnewood Refinery has qualified, and is currently expected in the future to qualify, as a “small refinery” defined under the RFS as a refinery with an aggregate daily crude oil throughput no greater than 75,000 barrels.
As a result of these factors, UAN typically commands a premium price to urea and ammonia, on a nitrogen equivalent basis. Demand Global demand for fertilizers is driven primarily by grain demand and prices, which, in turn, are driven by population growth, farmland per capita, dietary changes in the developing world, and increased consumption of bio-fuels.
December 31, 2024 | 17 Table of Contents Demand Global demand for fertilizers is driven primarily by grain demand and prices, which, in turn, are driven by population growth, farmland per capita, dietary changes in the developing world, and increased consumption of bio-fuels.
The price of RINs has also been impacted by the depletion of the carryover RIN bank, requiring carryover RINs from the RIN bank to be used to settle RVOs.
The blend wall is generally considered to be reached when more than 10 percent ethanol by volume (“E10”) is blended into gasoline. The price of RINs has also been impacted by the depletion of the carryover RIN bank, requiring carryover RINs from the RIN bank to be used to settle RVOs.
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.
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. The selling prices of its products fluctuate in response to global market conditions, feedstock costs, and changes in supply and demand.
Customers Retailers and distributors are the main customers for UAN and, more broadly, the industrial and agricultural sectors are the primary recipients of our ammonia products. Given the nature of our nitrogen fertilizer business, and consistent with industry practice, we sell our products on a wholesale basis under a contract or by purchase order.
Given the nature of our nitrogen fertilizer business, and consistent with industry practice, we sell our products on a wholesale basis under a contract or by purchase order. Contracts with customers generally contain fixed pricing and have terms of less than one year.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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A company of which more than 50% of the voting power is held by an individual, a group, or another company is a “controlled company” within the meaning of the NYSE rules and may elect not to comply with certain corporate governance requirements of the NYSE, including the requirements that a majority of our board of directors consist of independent directors; we have a nominating/corporate governance committee that is composed entirely of independent directors; and we have a compensation committee that is composed entirely of independent directors.
A company of which more than 50% of the voting power is held by an individual, a group, or another company is a “controlled company” within the meaning of the NYSE rules and may elect not to comply with certain corporate governance requirements of the NYSE, including the requirements that a majority of our Board consist of independent directors; we have a nominating/corporate governance committee that is composed entirely of independent directors; and we have a compensation committee that is composed entirely of independent directors.
These provisions include preferred stock that could be issued by our board of directors to make it more difficult for a third-party to acquire, or to discourage a third-party from acquiring, a majority of our outstanding voting stock; limitations on the ability of stockholders to call special meetings of stockholders; limitations on the ability of stockholders to act by written consent in lieu of a stockholders’ meeting; and advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by our stockholders at stockholder meetings.
These provisions include preferred stock that could be issued by our Board to make it more difficult for a third-party to acquire, or to discourage a third-party from acquiring, a majority of our outstanding voting stock; limitations on the ability of stockholders to call special meetings of stockholders; limitations on the ability of stockholders to act by written consent in lieu of a stockholders’ meeting; and advance notice requirements for nominations of candidates for election to our Board or for proposing matters that can be acted upon by our stockholders at stockholder meetings.
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.
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 CVR Energy’s Amended and Restated ABL Credit Facility (the “CVR Energy ABL”), 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.
Violations of applicable environmental laws and regulations or of the conditions of permits issued thereunder can result in substantial penalties, injunctive orders compelling installation of additional controls or other injunctive relief, civil and criminal sanctions, operating restrictions, permit revocations, and/or facility shutdowns, which may have a material adverse effect on our ability to operate our facilities and accordingly our financial performance.
Violations of applicable environmental laws, rules, and regulations or of the conditions of permits issued thereunder can result in substantial penalties, injunctive orders compelling installation of additional controls or other injunctive relief, civil and criminal sanctions, operating restrictions, permit revocations, and/or facility shutdowns, which may have a material adverse effect on our ability to operate our facilities and accordingly our financial performance.
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.
A failure to operate at full capacity could adversely affect our profitability and cash flows. The Petroleum Segment’s commodity derivative strategy and 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.
The international market for nitrogen fertilizers is influenced by such factors as the relative value of the U.S. dollar and its impact upon the cost of importing nitrogen fertilizers, foreign agricultural policies, the existence of, or changes in, import or foreign currency exchange barriers in certain foreign markets, changes in the hard currency demands of certain countries, and other regulatory policies of foreign governments, as well as the laws and policies of the U.S. affecting foreign trade and investment.
In addition, the international market for nitrogen fertilizers is influenced by such factors as the relative value of the U.S. dollar and its impact upon the cost of importing nitrogen fertilizers, foreign agricultural policies, the existence of, or changes in, import or foreign currency exchange barriers in certain foreign markets, changes in the hard currency demands of certain countries, and other regulatory policies of foreign governments, as well as the laws and policies of the U.S. affecting foreign trade and investment.
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.
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 the East Dubuque Fertilizer Facility went on strike in October 2023, after its collective bargaining agreement expired.
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.
Our operations are subject to extensive federal, state, and local environmental laws, rules, 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.
Our ability to restructure or refinance debt will depend on the condition of the capital markets and our financial condition, including that of our operating segments, at such time. Any refinancing of existing debt could be at higher interest rates and may require compliance with more onerous covenants, which could further restrict business operations.
Our ability to restructure or refinance debt will depend on the condition of the capital markets and our financial condition, including that of our segments, at such time. Any refinancing of existing debt could be at higher interest rates and may require compliance with more onerous covenants, which could further restrict business operations.
In addition, a default under existing debt facilities and instruments would trigger a cross default under other agreements and could trigger a cross default under the agreements governing future indebtedness. Our operating segments’ results may not be sufficient to service existing indebtedness or to fund other expenditures, and we may not be able to obtain financing to meet these requirements.
In addition, a default under existing debt facilities and instruments would trigger a cross default under other agreements and could trigger a cross default under the agreements governing future indebtedness. Our segments’ results may not be sufficient to service existing indebtedness or to fund other expenditures, and we may not be able to obtain financing to meet these requirements.
Our ability to pay dividends on our common stock is subject to market conditions and numerous other factors. Dividends are subject to change at the discretion of the board of directors and may change from quarter to quarter and may not be paid at historical rates or at all.
Our ability to pay dividends on our common stock is subject to market conditions and numerous other factors. Dividends are subject to change at the discretion of the Board and may change from quarter to quarter and may not be paid at historical rates or at all.
The existence of a controlling stockholder may have the effect of making it difficult for, or may discourage or delay, a third-party from seeking to acquire a majority of the Company’s outstanding common stock, which may adversely affect the market price of the Company’s common stock. Mr.
The existence of a controlling stockholder may have the effect of making it difficult for, or may discourage or delay, a third-party from seeking to acquire a majority of the Company’s outstanding common stock, which may adversely affect the market price of the Company’s common stock.
Our board of directors may authorize us to issue the available authorized shares of common stock or preferred stock without notice to, or further action by, our stockholders, unless stockholder approval is required by law or the rules of the NYSE.
Our Board may authorize us to issue the available authorized shares of common stock or preferred stock without notice to, or further action by, our stockholders, unless stockholder approval is required by law or the rules of the NYSE.
In addition, our board of directors may in the future elect to pursue other strategic options, including acquisitions of other businesses or asset purchases, which would reduce cash available to service our debt obligations.
In addition, our Board may in the future elect to pursue other strategic options, including acquisitions of other businesses or asset purchases, which would reduce cash available to service our debt obligations.
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.
Icahn indirectly controlled 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.
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.
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 December 31, 2024 | 40 Table of Contents 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.
These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change of control or change in our management and board of directors.
These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change of control or change in our management and Board.
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.
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 and the CVR Partners ABL, which, in each case, could allow lenders to accelerate indebtedness owed to them.
The regions in which our facilities are located and in which our customers operate are susceptible to severe storms, including hurricanes, thunderstorms, tornadoes, floods, extended periods of rain, ice storms and snow, some of which we or our customers have experienced in recent years. Such inclement weather conditions or other unforeseen developments could damage our facilities or logistics assets.
The regions in which our facilities are located and in which our customers operate are susceptible to severe storms, hurricanes, thunderstorms, tornadoes, floods, extended periods of rain, ice storms, snow, and wildfires, some of which we or our customers have experienced in recent years. Such inclement weather conditions or other unforeseen developments could damage our facilities or logistics assets.
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.
For example, in August 2022, President Biden signed into law 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.
Delaware law provides that for a period of three years from the date of an impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the company for the distribution amount. Public investors own approximately 63% of the Nitrogen Fertilizer Segment through CVR Partners.
Delaware law provides that for a period of three years from the date of an impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the company for the distribution amount. Public investors own approximately 61% of the Nitrogen Fertilizer Segment through CVR Partners.
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.
Risks Related to the Petroleum and Renewables Segments 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.
Acts of sabotage or terrorist attacks (including cyberattacks), threats of war, armed conflict, or war, as well as events occurring in response to or in connection with such events may harm our business or have an adverse impact on our future results of operations and financial condition.
Acts of sabotage or terrorist attacks (including cyberattacks), threats of war, armed conflict, or war or trade wars, as well as events occurring in response to or in connection with such events may harm our business or have an adverse impact on our future results of operations and financial condition.
Our renewables business faces competition from other renewable fuel producers. In recent years, there has been an increase in renewable fuel capacity and production as new renewables projects have come online, which impacts the prices at which we are able to sell renewable fuel.
Our Renewables Segment faces competition from other renewable fuel producers. In recent years, there has been an increase in renewable fuel capacity and production as new renewables projects have come online, which impacts the prices at which we are able to sell renewable fuel.
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.
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, December 31, 2024 | 30 Table of Contents contamination, fires, 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, 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.
Any disruption of these systems or security breach or event resulting in the misappropriation, loss or other unauthorized disclosure of confidential information, whether by us directly or our third-party service providers, could damage our reputation, expose us to the risks of litigation and liability, disrupt our business, or otherwise affect our results of operations.
Despite our mitigation efforts, any disruption of these systems or security breach or event resulting in the misappropriation, loss or other unauthorized disclosure of confidential information, whether by us directly or our third-party service providers, could damage our reputation, expose us to the risks of litigation and liability, disrupt our business, or otherwise affect our results of operations.
If events such as storms, including hurricanes, thunderstorms, tornadoes, floods, extended periods of rain, ice storms and snow become more intense or more frequent, they could have an adverse effect on our continued operations, as well as the operations of our suppliers and customers.
If events such as severe storms, hurricanes, thunderstorms, tornadoes, floods, extended periods of rain, ice storms, snow, and wildfires become more intense or more frequent, they could have an adverse effect on our continued operations, as well as the operations of our suppliers and customers.
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.
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.
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.
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, 2024, public investors own approximately 61% of CVR Partners’ outstanding common units.
Although there has been discussions among members of OPEC+ to stabilize oil prices, declines in the market prices of crude oil and certain other petroleum products below the carrying cost of such commodities in the Company’s inventory have required, and may continue to require, the Company to adjust the value of, and record a loss on, certain inventories, which has had, and may continue to have a negative impact on our operating income; adversely impact our ability to profitably operate our facilities, and our results of operations, such as revenues and cost of sales; could result in significant financial constraints on certain producers from which we acquire our crude oil; and could result in an increased risk that customers, lenders, and other counterparties may be unable to fulfill their obligations in a timely manner, or at all.
Declines in the market prices of crude oil and certain other petroleum products below the carrying cost of such commodities in the Company’s inventory have required, and may continue to require, the Company to adjust the value of, and record a loss on, certain inventories, which has had, and may continue to have a negative impact on our operating income; adversely impact our ability to profitably operate our facilities, and our results of operations, such as revenues and cost of sales; could result in significant financial constraints on certain producers from which we acquire our crude oil; and could result in an increased risk that customers, lenders, and other counterparties may be unable to fulfill their obligations in a timely manner, or at all.
In addition, the Petroleum Segment’s purchases of crude oil, although based on WTI prices, have historically been at a discount to WTI because of the proximity of the Refineries to the sources, existing logistics infrastructure, and quality differences.
Further, the Petroleum Segment’s purchases of crude oil, although based on WTI prices, have historically been at a discount to WTI because of the proximity of the Refineries to the sources, existing logistics infrastructure, and quality differences.
Further, if general economic conditions continue to remain uncertain for an extended period of time, our liquidity and ability to repay our outstanding debt may be harmed and the trading price of our common stock, which has seen recent volatility, may decline.
Further, if general economic conditions continue to remain uncertain for an extended period of time, our liquidity and ability to repay our outstanding debt may be harmed and the trading price of our common stock, which has seen recent volatility, may decline. Our businesses face intense competition.
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 ultimate outcome of these and other factors have in the past resulted and may again 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.
RIN prices are dependent upon a variety of factors, including EPA regulations, the availability of RINs for purchase, levels of transportation fuels produced, the mix of the petroleum business’ petroleum products, our purchasing as well as the fuel blending performed at the Refineries and downstream terminals, all of which can vary significantly from period to period.
RIN prices are dependent upon a variety of factors, including EPA regulations, the availability of RINs for purchase from third parties or our Renewables Segment, levels of transportation fuels produced, the mix of the petroleum business’ petroleum products, our purchasing as well as the fuel blending performed at the Refineries and downstream terminals, all of which can vary significantly from period to period.
These initiatives to reduce energy consumption or incentivize a shift away from fossil fuels could reduce demand for hydrocarbons, thereby reducing demand for the products of our Petroleum Segment, and adversely impact our business, financial condition, results of operations and cash flows. There is also increased agency interest in polyfluoroalkyl substances or PFAS.
These initiatives to reduce energy consumption or incentivize a shift away from fossil fuels could reduce demand for hydrocarbons, thereby reducing demand for the products of our Petroleum Segment, and adversely impact our business, financial condition, results of operations and cash flows. In 2024, there was an increased agency interest in polyfluoroalkyl substances or PFAS.
In contrast to many of our competitors, we do not have a retail business and therefore are dependent upon others for outlets for our refined products, and we do not have arrangements exceeding a twelve-month period for much of our petroleum output and thus cannot offset losses from refining operations with profits from retail operations and may be less able to withstand periods of depressed refining margins or feedstock shortages.
In contrast to many of our competitors, we do not have a retail December 31, 2024 | 27 Table of Contents business and therefore are dependent upon others for outlets for our refined products, and we do not have arrangements exceeding a twelve-month period for much of our petroleum output and thus cannot offset losses from refining operations with profits from retail operations and may be less able to withstand periods of depressed refining margins or feedstock shortages.
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. As of December 31, 2023, approximately 42% and 31% of our Petroleum and Nitrogen Fertilizer Segment employees, respectively, were represented by labor unions under collective bargaining agreements.
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. As of December 31, 2024, approximately 41% and 27% of our Petroleum and Nitrogen Fertilizer Segment employees, respectively, were represented by labor unions under collective bargaining agreements.
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 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 December 31, 2024 | 38 Table of Contents could affect future corn-based ethanol demand and production, including the RFS program.
If we are unable to meet the ESG standards or investment, lending, ratings, or voting criteria and policies set by these parties, we may lose investors, investors may allocate a portion of their capital away from us, we may become a target for ESG-focused activism, our cost of capital may increase, the price of our securities may be negatively impacted, and our reputation may also be negatively affected.
If we are unable to meet the ESG standards or investment, lending, ratings, or voting criteria and policies set by these parties, we may lose investors, investors may allocate a portion of their capital away from us, we may become a target for ESG- December 31, 2024 | 37 Table of Contents focused activism, our cost of capital may increase, the price of our securities may be negatively impacted, and our reputation may also be negatively affected.
Risks Related to Our Entire Business Certain developments in the global oil markets have had, and may continue to have, material adverse impacts on the operations, business, financial condition, liquidity, and results of operations of the Company or its customers, suppliers, and other counterparties.
Certain developments in the global oil markets have had, and may continue to have, material adverse impacts on the operations, business, financial condition, liquidity, and results of operations of the Company or its customers, suppliers, and other counterparties.
Our ability to continue paying dividends is subject to our ability to continue to generate sufficient cash flow from our operating segments, and the amount of dividends we are able to pay each year may vary, possibly substantially, based on market conditions, crack spreads, our capital expenditure and other business needs, covenants contained in any debt agreements we may enter into in the future, covenants contained in existing debt agreements, and the amount of distributions we receive from CVR Partners.
Our ability to continue paying dividends is subject to our ability to continue to generate sufficient December 31, 2024 | 45 Table of Contents cash flow from our segments, and the amount of dividends we are able to pay each year may vary, possibly substantially, based on market conditions, crack spreads, our capital expenditure and other business needs, covenants contained in any debt agreements we may enter into in the future, covenants contained in existing debt agreements, and the amount of distributions we receive from CVR Partners.
Members of the investment community are also increasing their focus on ESG practices and disclosures, including those related to climate change, GHG emissions targets, business resilience under demand-constraint scenarios, and net-zero ambitions in the energy industry in particular, and diversity, equity, and inclusion initiatives, political activities, and governance standards among companies more generally.
Some members of the investment community are focused on ESG practices and disclosures, including those related to climate change, GHG emissions targets, business resilience under demand-constraint scenarios, and net-zero ambitions in the energy industry in particular, and diversity, equity, and inclusion initiatives, political activities, and governance standards among companies more generally.
Investor and market sentiment towards climate change, fossil fuels, GHG emissions, environmental justice, and other Environmental, Social and Governance (“ESG”) matters could adversely affect our business, cost of capital, and the price of our common stock and debt securities.
Investor and market sentiment towards climate change, fossil fuels, GHG emissions, environmental justice, and other ESG matters could adversely affect our business, cost of capital, and the price of our common stock and debt securities.
Any damage or injury to persons, equipment or property or other disruption of our ability to produce or distribute products could result in a significant decrease in operating revenues and significant additional costs to replace or repair and insure our assets, which could have a material adverse effect on our results of operations, financial condition and ability to pay dividends.
Any damage or injury to persons, equipment or property or other disruption of our ability to produce or distribute products could result in a December 31, 2024 | 39 Table of Contents significant decrease in operating revenues and significant additional costs to replace or repair and insure our assets, which could have a material adverse effect on our results of operations, financial condition and ability to pay dividends.
Our stock price may decline due to sales of shares by Mr. Carl C. Icahn. Sales of substantial amounts of the Company’s common stock, or the perception that these sales may occur, may adversely affect the price of the Company’s common stock and impede its ability to raise capital through the issuance of equity securities in the future. Mr.
Carl C. Icahn. Sales of substantial amounts of the Company’s common stock, or the perception that these sales may occur, may adversely affect the price of the Company’s common stock and impede its ability to raise capital through the issuance of equity securities in the future. Mr.
The economic effects from public health crises such as the COVID-19 pandemic on our business were and may again be significant.
The economic effects from public health crises, such as a pandemic, on our business were and may again be significant.
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.
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.
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.
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.
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.
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 operating area could also materially adversely affect our revenues and cash flows.
Even if such licenses are available, we may be required to pay the licensor substantial royalties based on sales of our products, and such licenses may be non-exclusive, which December 31, 2023 | 27 Table of Contents could give our competitors access to the same intellectual property licensed to us.
Even if such licenses are available, we may be required to pay the licensor substantial royalties based on sales of our products, and such licenses may be non-exclusive, which could give our competitors access to the same intellectual property licensed to us.
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.
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 or harm to our businesses.
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.
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 and the CVR Partners’ ABL, the availability of which depends on, among other things, complying with the covenants in the applicable facility and with covenants in our new term loan facility in the amount of $325 million (the “Term Loan”); and future ability to obtain other financing.
In addition, key executive officers of the Company, including its president and chief executive officer, chief financial officer, and general counsel, will face conflicts of interest if decisions arise in which CVR Partners and the Company have conflicting points of view or interests.
In addition, key executive officers of the Company, including its president and chief December 31, 2024 | 44 Table of Contents executive officer, chief financial officer, and general counsel, will face conflicts of interest if decisions arise in which CVR Partners and the Company have conflicting points of view or interests.
Our petroleum and nitrogen fertilizer businesses are, and commodity prices are, cyclical and highly volatile, which could have a material adverse effect on our results of operations, financial condition and cash flows. Our Petroleum Segment’s financial results are primarily affected by margin between refined product prices and prices for crude oil and other feedstocks.
Risks Related to Our Entire Business Our businesses are, and commodity prices are, cyclical and highly volatile, which could have a material adverse effect on our results of operations, financial condition and cash flows. Our Petroleum Segment’s financial results are primarily affected by margin between refined product prices and prices for crude oil and other feedstocks.
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.
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, which was completed in 2022, and the conversion of a hydrotreater to renewable diesel service at the Coffeyville Refinery, which is currently being evaluated.
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 products.
The issuance of additional shares of common stock or preferred stock may significantly dilute the equity ownership of the current holders of our common stock. An increase in interest rates will cause our debt service obligations to increase.
The issuance of December 31, 2024 | 41 Table of Contents additional shares of common stock or preferred stock may significantly dilute the equity ownership of the current holders of our common stock. An increase in interest rates will cause our debt service obligations to increase.
If we are unable to maintain sales of our products at a price that reflects such increased costs, or could result in reduced demand for our fertilizer and hydrocarbon products, there could be a material adverse effect on our business, financial condition and results of operations.
This could lead to increased monitoring obligations, costs and potential liability related thereto. If we are unable to maintain sales of our products at a price that reflects such increased costs, or those costs result in reduced demand for our fertilizer and hydrocarbon products, there could be a material adverse effect on our business, financial condition and results of operations.
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.
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.
We may not be able to locate or employ such qualified personnel on acceptable terms, or at all. Furthermore, our operations require skilled and experienced laborers with proficiency in multiple tasks.
We may not be able to locate or employ such qualified personnel on acceptable terms, or at all. December 31, 2024 | 33 Table of Contents Furthermore, our operations require skilled and experienced laborers with proficiency in multiple tasks.
The constantly evolving regulatory and legislative environment surrounding data privacy and protection poses increasingly complex compliance challenges, and complying with such data protection laws could increase the costs and complexity of compliance.
December 31, 2024 | 34 Table of Contents The constantly evolving regulatory and legislative environment surrounding data privacy and protection poses increasingly complex compliance challenges, and complying with such data protection laws could increase the costs and complexity of compliance.
Compliance with the Renewable Fuel Standard (“RFS”) could have a material adverse effect on our business, financial condition and results of operations. The EPA has promulgated and implemented the RFS pursuant to the Energy Policy Act of 2005 and the EISA.
Compliance with the RFS could have a material adverse effect on our business, financial condition and results of operations. The EPA has promulgated and implemented the RFS pursuant to the Energy Policy Act of 2005 and the Energy Independence and Security Act.
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.
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 280,000 tons of third-party supply of pet coke through December 2025.
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.
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 | 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.
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.
In February 2023, the Company completed the transformation of its business to segregate its renewables business, which included the transfer of assets into multiple newly formed entities and the execution of contractual arrangements among the Company’s subsidiaries. Such reorganization could subject the Company to increased costs and operational complexity and other risks.
Risks Related to Our Corporate Structure The Company’s reorganization of its entities and assets could trigger increased costs, complexity and risks. In February 2023, the Company completed the transformation of its business to segregate its renewables business, which included the transfer of assets into multiple newly formed entities and the execution of contractual arrangements among the Company’s subsidiaries.
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.
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.
Operations and equipment at the Wynnewood Refinery were not materially impacted by the incident; however, any similar events in the future or claims related to the Wynnewood Refinery incident could have a significant impact on the Company and its operations, may not be insured, and could be the subject of litigation or an enforcement action, which could result in significant expense to the Company and which could have a material adverse effect on our results of operations, financial condition and cash flow.
Any similar events in the future or claims related thereto could have a significant impact on the Company and its operations, may not be insured, and could be the subject of litigation or an enforcement action, which could result in significant expense to the Company, and which could have a material adverse effect on our results of operations, financial condition and cash flow.
Icahn could elect in the future to request that the Company file a registration statement to sell shares of the Company’s common stock. If Mr. Icahn were to sell a large number of shares into the public markets, Mr. Icahn could cause the price of the Company’s common stock to decline.
Icahn could elect in the future to request that the Company file a registration statement to sell shares of the Company’s common stock. If Mr. Icahn were to sell a large number of shares into the public markets, or if investors perceived that such a sale may occur, the price of the Company’s common stock could decline.
As a consequence of this seasonality, distributions by our Nitrogen Fertilizer Segment of available cash, if any, may be volatile and may vary quarterly and annually. Public health crises such as the COVID-19 pandemic have had, and may continue to have, adverse impacts on our business, financial condition, results of operations, and liquidity.
As a consequence of this seasonality, distributions by our Nitrogen Fertilizer Segment of available cash, if any, may be volatile and may vary quarterly and annually. December 31, 2024 | 28 Table of Contents Public health crises have had, and may continue to have, adverse impacts on our business, financial condition, results of operations, and liquidity.
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.
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.
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.
As of December 31, 2024, we have established an accrual of approximately $3 million for probable and reasonably estimable obligations associated with environmental matters. December 31, 2024 | 31 Table of Contents Regulations concerning the transportation, storage, and handling of hazardous chemicals and materials could result in higher operating costs.
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.
The extent to which the effects of a pandemic or other public health crisis may adversely impact our future business, financial, and operating results, and for what duration and magnitude, depends on factors that continuously evolve, are difficult to predict and, in many instances, are beyond our control.
In addition, new environmental laws and regulations, including as a result of climate change and the ongoing energy transition efforts, new interpretations of existing laws and regulations, or increased governmental enforcement of laws and regulations, could require us to make additional unforeseen expenditures.
December 31, 2024 | 29 Table of Contents In addition, new environmental laws, rules, and regulations, including as a result of climate change and the ongoing energy transition efforts, new interpretations of existing laws, rules, and regulations, including as a result of the change in U.S. presidential administration, or increased governmental enforcement of laws, rules, and regulations, could require us to make additional unforeseen expenditures.
December 31, 2023 | 29 Table of Contents Acts of terror or sabotage, threats of war, armed conflict, or war may have an adverse impact on our business, our future results of operations and our overall financial performance.
Acts of terror or sabotage, threats of war, armed conflict, or war or trade wars may have an adverse impact on our business, our future results of operations and our overall financial performance.
Our Coffeyville Fertilizer Facility obtained 43% of its pet coke from our Coffeyville Refinery in 2023.
Our Coffeyville Fertilizer Facility obtained 46% of its pet coke from our Coffeyville Refinery in 2024.
Our operations are dependent on third-party suppliers, which could have a material adverse effect on our results of operations, financial condition and cash flows. Operations of our Coffeyville Fertilizer Facility depend in large part on the performance of third-party suppliers, including the adjacent third-party air separation plant and a third-party electric supplier.
Our nitrogen fertilizer business depends in large part on third-party suppliers, which could have a material adverse effect on our results of operations, financial condition and cash flows. Our nitrogen fertilizer business depends in large part on the performance of third-party suppliers, such as the adjacent third-party air separation plant and a third-party electric supplier.
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.
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 or the CVR Partners ABL, if any. Our stock price may decline due to sales of shares by Mr.
Regional 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.
Regional 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.
Icahn exerts significant influence over the Company, and his interests may conflict with the interests of the Company’s other stockholders. Mr. Carl C.
Icahn exerts significant influence over the Company, and his interests or those of IEP or their affiliates may conflict with the interests of the Company’s other stockholders. As of December 31, 2024, Mr. Carl C.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Management utilizes certain tools and controls to detect, monitor, prevent, mitigate, and remediate cybersecurity threats to our systems, networks, applications, and data. Management also conducts annual cybersecurity training and periodic phishing tests, which provide contemporaneous feedback and instruction to our employees and strengthen the Company’s defenses against cyber threats.
Management utilizes certain tools and controls to detect, monitor, prevent, mitigate, and remediate cybersecurity threats to our systems, networks, applications, and data. Management also conducts annual cybersecurity training and periodic phishing tests, which provide contemporaneous feedback and instruction to our employees and seek to strengthen the Company’s defenses against cyber threats.
Material Impact on Company During 2023 , the Company did not experience any cybersecurity threats or incidents that have materially affected or are reasonably likely to materially affect the Company , including its business strategy, results of operations, or financial condition.
Material Impact on Company During 2024 , the Company did not experience any cybersecurity threats or incidents that have materially affected or are reasonably likely to materially affect the Company , including its business strategy, results of operations, or financial condition.
The Company’s information technology function has a dedicated cybersecurity team comprised of employees with, on average, nearly 20 years of experience and expertise in cybersecurity, and includes individuals with degrees in Computer Studies and cybersecurity-related certifications including Certified Information Systems Security Specialist (CISSP), Certified in Risk and Information Systems Controls (CRISC), and Certified Information Security Manager (CISM).
The Company’s information technology function has a dedicated cybersecurity team comprised of employees with, on average, nearly 20 years of experience and expertise in cybersecurity, and includes individuals with degrees in Computer Studies and cybersecurity-related certifications including December 31, 2024 | 46 Table of Contents Certified Information Systems Security Specialist (CISSP), Certified in Risk and Information Systems Controls (CRISC), and Certified Information Security Manager (CISM).
Management of Cybersecurity Matters At the management level, the Company’s cybersecurity risk management activities are integrated into the day-to-day activities of the Company’s information technology function led by our Chief Information Officer, who operates under the supervision of our Chief Financial Officer.
Management of Cybersecurity Matters At the management level, the Company’s cybersecurity risk management activities are led by our Chief Executive Officer and his executive team and is integrated into the day-to-day activities of the Company’s information technology function led by our Chief Information Officer, who operates under the supervision of our Chief Financial Officer, and reports regularly to the Audit Committee on cybersecurity risks, typically on a quarterly basis.
Board Oversight of Cybersecurity Matters The Company’s board of directors (the “Board”) considers oversight of CVR Energy’s risks and risk management activities, including those related to cybersecurity risk, to be a responsibility of the entire Board.
Board Oversight of Cybersecurity Matters The Board considers oversight of CVR Energy’s risks and risk management activities, including those related to cybersecurity risk, to be a responsibility of the entire Board. The Board also delegates certain risk oversight responsibilities to certain of its committees, and oversight of the Company’s cybersecurity risk is delegated by the Board to its Audit Committee.
The Board also delegates certain risk oversight responsibilities to certain of its committees, and oversight of the Company’s cybersecurity risk is delegated by the Board to its Audit Committee. The Audit Committee receives regular reports, typically on a quarterly basis, from management regarding information technology, cybersecurity risk, and efforts to prevent and mitigate such risks.
The Audit Committee receives regular reports, typically on a quarterly basis, from management regarding information technology, cybersecurity risk, AI use and governance, and efforts to prevent and mitigate such risks. The Chairperson of the Audit Committee subsequently reports on these activities to the full Board, which equips the Board and its committees to fulfill their risk oversight role.
On a quarterly basis, the ERM Committee evaluates past, existing, and future risks to the Company; the likelihood, severity, and velocity of such risks; and the controls and mitigation tools implemented to December 31, 2023 | 42 Table of Contents address such risk.
The Board and Audit Committee are supported in their oversight capacity by the Company’s ERM Committee, and internal audit and information technology functions. On a quarterly basis, the ERM Committee evaluates past, existing, and future risks to the Company; the likelihood, severity, and velocity of such risks; and the controls and mitigation tools implemented to address such risk.
Removed
The Chairperson of the Audit Committee subsequently reports on the Company’s cybersecurity risk, monitoring, and mitigation activities to the full Board, which equips the Board and its committees to fulfill their risk oversight role. The Board and Audit Committee are supported in their oversight capacity by the Company’s ERM Committee, and internal audit and information technology functions.
Added
Refer to Part I, Item 1A, “Risk Factors— We are subject to cybersecurity risks and may experience cyber incidents resulting in disruption or harm to our businesses ” of this Report for further discussion of our processes for managing cybersecurity risks.
Added
Management also monitors AI usage and has implemented a framework that tracks use and is governed by CVR Energy’s Artificial Intelligence Policy, which was most recently updated in 2024, and includes a review and approval process for adopting use of AI tools. Such governance activities are designed to mitigate the risks presented by AI.
Added
Management also monitors AI usage and has implemented a framework that tracks use and is governed by the Company’s Artificial Intelligence Policy, which was most recently updated in 2024, and includes a review and approval process for adopting use of AI tools. Such governance activities are designed to mitigate the risks presented by AI.

Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties Refer to Part I, Item 1, “Petroleum” and “Nitrogen Fertilizer” of this Report for more information on our core business properties. We also lease property for our executive and marketing offices in Sugar Land, Texas and Kansas City, Kansas, respectively.
Item 2. Properties Refer to Part I, Item 1, “Petroleum”, “Renewables”, and “Nitrogen Fertilizer” of this Report for more information on our core business properties. We also lease property for our executive and marketing offices in Sugar Land, Texas and Kansas City, Kansas, respectively.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Refer 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.
Refer to Part II, Item 8, Note 14 (“Commitments and 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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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.
The graph assumes that the value of the investment in common stock and each index was $100 on December 31, 2019 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.
Removed
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.
Added
The Company has 107 holders of record of the outstanding shares as of December 31, 2024. Item 6. [Reserved]
Removed
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
The 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.

Item 7. Management's Discussion & Analysis

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

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Widespread expansion or upgrades of third-party facilities, price volatility, international political and economic developments, and other factors are likely to continue to play an important role in refining industry economics. These factors can impact, among other things, the level of inventories in the market, resulting in price volatility and a reduction in product margins.
Widespread expansion or upgrades of third-party facilities, shutdowns, price volatility, international political and economic developments, and other factors are likely to continue to play an important role in refining industry economics. These factors can impact, among other things, the level of inventories in the market, resulting in price volatility and a reduction in product margins.
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.
No amounts were recognized in 2022. 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.
Petroleum EBITDA and Nitrogen Fertilizer EBITDA - Segment net income (loss) before segment (i) interest expense, net, (ii) income tax expense (benefit), and (iii) depreciation and amortization. Refining Margin - The difference between our Petroleum Segment net sales and cost of materials and other.
Petroleum EBITDA, Renewables EBITDA, and Nitrogen Fertilizer EBITDA - Segment net income (loss) before segment (i) interest expense, net, (ii) income tax expense (benefit), and (iii) depreciation and amortization. Refining Margin - The difference between our Petroleum Segment net sales and cost of materials and other.
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.
Adjusted EBITDA, Petroleum Adjusted EBITDA, Renewables Adjusted EBITDA, and Nitrogen Fertilizer Adjusted EBITDA - EBITDA, Petroleum EBITDA , Renewables 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.
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.
In 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.
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.
Our 2023 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.
When considering the market conditions and actions outlined above, we currently believe that our cash from operations and existing cash and cash equivalents, along with borrowings, as necessary, will be sufficient to satisfy anticipated cash requirements associated with our existing operations for at least the next 12 months.
Considering the market conditions and actions outlined above, we believe that our cash from operations and existing cash and cash equivalents, along with borrowings, as necessary, will be sufficient to satisfy anticipated cash requirements associated with our existing operations for at least the next 12 months.
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.
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, 2024. (2) Information used within this chart was obtained from the USDA, National Agricultural Statistics Services, as of December 31, 2024.
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 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 2023 and 2024, could impact our RFS expense from period to period.
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 in Europe to fall significantly in the first quarter of 2023 and remain below the 2021/2022 price levels.
Winter 2023/2024 weather was warmer than average in Europe and when combined with natural gas conservation measures caused demand and prices for natural gas in Europe to fall significantly in the first quarter of 2024 and remain below the 2021/2022 price levels throughout 2024.
Management’s estimate for current pricing reflects up-to-date pricing in each facility’s market as of the end of each reporting period. Reductions to selling prices for unreimbursed freight costs are included to arrive at net realizable value, as applicable.
Management’s estimate for current pricing reflects up-to-date pricing in each business’s market as of the end of each reporting period. Reductions to selling prices for unreimbursed freight costs are included to arrive at net realizable value, as applicable.
Regulatory Environment We continue to be impacted by significant volatility and costs associated with current and proposed laws, rules, regulations and policies relating to climate change, the RFS, energy transition and related matters. • Certain of the Petroleum Segment’s subsidiaries are subject to the RFS (collectively, the “obligated-party subsidiaries”), which, each year, absent exemptions or waivers, requires such obligated-party subsidiaries to blend renewable fuels with transportation fuels, purchase RINs in lieu of blending, or otherwise face liability.
Regulatory Environment We continue to be impacted by significant volatility and costs associated with current and proposed laws, rules, regulations and policies, including the reinterpretation and amplification thereof, relating to climate change, the RFS, energy transition and related matters. • Certain of the Petroleum Segment’s subsidiaries are subject to the RFS (collectively, the “obligated-party subsidiaries”), which, each year, absent exemptions or waivers, requires such obligated-party subsidiaries to blend renewable fuels with transportation fuels, purchase RINs in lieu of blending, or otherwise face liability.
Certain governmental regulations and incentives associated with the automobile transportation and agricultural industries, including the ones related to corn-based ethanol and sustainable aviation fuel production or consumption can directly impact our business.
Certain governmental regulations and incentives associated with the automobile transportation and agricultural industries, including the ones related to corn-based ethanol and sustainable aviation fuel production or consumption can impact, and have directly impacted, our business.
Results of Operations Consolidated The following sections should be read in conjunction with the information outlined within the previous sections of this Part II, Item 7 and the consolidated financial statements and related notes thereto in Part II, Item 8 of this Report.
Consolidated The following sections should be read in conjunction with the information outlined within the previous sections of this Part II, Item 7 and the consolidated financial statements and related notes thereto in Part II, Item 8 of this Report.
The effect of changes in crude oil prices on the Petroleum Segment’s results of operations is partially influenced by the rate at which the processing of refined products adjusts to reflect these changes.
The effect of changes in crude oil prices on the Petroleum Segment’s results of operations is also influenced by the rate at which the processing of refined products adjusts to reflect these changes.
If the sum of the undiscounted expected future cash flows of an asset group is less than the carrying value, including applicable liabilities, the carrying value is written down to its estimated fair value.
If the sum of the undiscounted expected future cash flows of an asset group is less than the carrying value, including applicable liabilities, the carrying value may be written down to its estimated fair value.
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.
Our cost to comply with the RFS is dependent upon a variety of factors, which include but are not limited to the availability of December 31, 2024 | 52 Table of Contents 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.
Our costs to comply with the RFS are also impacted by, and dependent upon the outcome of, the numerous lawsuits filed by multiple refiners including our obligated-party subsidiaries, biofuels groups and others. Refer to Part II, Item 8, Note 14 (“Commitments and Contingencies”).
Our costs to comply with the RFS are also impacted by, and dependent upon the outcome of, the numerous lawsuits filed by multiple refiners including our obligated-party subsidiaries, biofuels groups and others. Refer to Part II, Item 8, Note 14 (“Commitments and Contingencies”) in this Report.
Company Overview CVR Energy is a diversified holding company 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”).
Company Overview CVR Energy is a diversified holding company primarily engaged in the petroleum refining and marketing industry (the “Petroleum Segment”), the renewable fuels industry (the “Renewables 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”).
We also estimate the usual and customary transportation costs required to move the inventory from our plants to the appropriate points of sale, if material.
We also estimate the usual and customary transportation costs required to move the inventory from our facilities to the appropriate points of sale, if material.
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.
The tables below are presented, on a per barrel basis, by month through December 31, 2024: Crude Oil Differentials against WTI (1)(2) December 31, 2024 | 54 Table of Contents NYMEX Crack Spreads (2) PADD II Group 3 Product Crack Spread and RIN Pricing (2)(3) ( $/bbl ) December 31, 2024 | 55 Table of Contents 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.
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.
Refer to Part II, Item 8, Note 8 (“Long-Term Debt and Finance Lease Obligations”) of this Report for further discussions of these debt instruments. 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.
Lower inventory levels of corn and soybeans are expected to be supportive of grain prices into the spring of 2024. Ethanol is blended with gasoline to meet RFS requirements and for its octane value.
Inventory levels of corn and soybeans are expected to be supportive of grain prices into the spring of 2025. Ethanol is blended with gasoline to meet RFS requirements and for its octane value.
In 2022, miles per gallon of the new auto fleet continued to increase, averaging 26 miles per gallon (“MPG”). The EPA expects the new fleet average to increase in 2023 by approximately 1 MPG. Vehicle miles traveled continues to increase but the effect of electric vehicle (“EV”) penetration in the fleet is clear and present.
In 2023, miles per gallon of the new auto fleet continued to increase, averaging 27.1 miles per gallon (“MPG”). The EPA expects the new fleet average to increase in 2024 by approximately 1 MPG. Vehicle miles traveled continues to increase but the effect of electric vehicle (“EV”) penetration in the fleet is clear and present.
Demand for nitrogen fertilizer, as well as other crop inputs, was strong for the spring 2023 planting season and fall 2023 ammonia application, primarily due to elevated grain prices and favorable weather conditions for planting and fertilizer application. Fertilizer input costs have been volatile since the fall of 2021.
Demand for nitrogen fertilizer, as well as other crop inputs, was strong for the spring 2024 planting season, primarily due to elevated grain prices and favorable weather conditions for planting. Fertilizer input costs have been volatile since the fall of 2021.
Actual results could differ from the estimates and assumptions used. December 31, 2023 | 72 Table of Contents Inventory Valuation The cost of our products is determined under the FIFO method and our FIFO inventories are carried at the lower of cost or net realizable value.
Actual results could differ from the estimates and assumptions used. December 31, 2024 | 84 Table of Contents Inventory Valuation The cost of our products is determined under the FIFO method, and our FIFO inventories are carried at the lower of cost or net realizable value.
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.
The discussions of the year ended December 31, 2022 and year-to-year comparisons between the years ended December 31, 2023 and 2022 are not included in this Report but 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, 2023 filed on February 21, 2024 , and such discussions are incorporated by reference into this Report.
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.
The charts below show relevant market indicators for the Nitrogen Fertilizer Segment by month through December 31, 2024: 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.
Ethanol production has historically consumed approximately 37% of the U.S. corn crop used by the market, so demand for corn generally rises and falls with ethanol demand, as shown by the charts below, through December 31, 2023. U.S.
Since 2010, ethanol production has historically consumed approximately 37% of the U.S. corn crop used by the market, so demand for corn generally rises and falls with ethanol demand, as shown by the charts below, through December 31, 2024. U.S.
Factors Affecting Comparability of Our Financial Results Petroleum Segment Our results of operations for the periods presented may not be comparable with prior periods or to our results of operations in the future due to capitalized expenditures as part of planned turnarounds.
Factors Affecting Comparability of Our Financial Results Petroleum Segment Major Scheduled Turnaround Activities - Our results of operations for the periods presented may not be comparable with prior periods or to our results of operations in the future due to capitalized expenditures as part of planned turnarounds.
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.
In our Petroleum and Renewables Segments, 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 costs required to convert those feedstocks into refined products.
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.
Our future expenditures for turnaround, 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 and the outcome of litigation and other factors.
The decrease in net sales was due to decreased refined product prices resulting from declining demand and increasing inventory levels for the year ended December 31, 2023 compared to the year ended December 31, 2022. Further, higher net sales in 2022 were due to increased prices resulting from tight inventory levels and the Russia-Ukraine war.
The decrease in net sales was due to decreased refined product prices resulting from declining demand and increasing inventory levels for the year ended December 31, 2024 compared to the year ended December 31, 2023. Further, higher net sales in 2023 were due to increased prices resulting from tight inventory levels and uncertainty caused by the Russia-Ukraine war.
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.
The following table presents quarterly and special dividends paid to the Company’s stockholders, including IEP, during 2024, 2023, and 2022 (amounts presented in the 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 2023 - 4th Quarter March 11, 2024 $ 0.50 $ 17 $ 33 $ 50 2024 - 1st Quarter May 20, 2024 0.50 17 33 50 2024 - 2nd Quarter August 19, 2024 0.50 17 33 50 Total 2024 quarterly dividends $ 1.50 $ 51 $ 100 $ 151 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 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 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 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 fourth quarter of 2024 related to the third quarter of 2024, and there were no quarterly dividends declared or paid during the first quarter of 2022 related to the fourth quarter of 2021.
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.
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 RFS regulations.
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.
Nitrogen Fertilizer Segment As of December 31, 2024, the Nitrogen Fertilizer Segment had outstanding its 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.
Our consolidated results of operations include renewable fuels, certain other unallocated corporate activities, and the elimination of intercompany transactions and, therefore, do not equal the sum of the operating results of the Petroleum and Nitrogen Fertilizer Segments.
Our consolidated results of operations include certain unallocated corporate activities and the elimination of intercompany transactions and, therefore, do not equal the sum of the operating results of the Petroleum, Renewables, and Nitrogen Fertilizer Segments.
(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.
(in $/bbl) Average 2022 Average December 2022 Average 2023 Average December 2023 Average 2024 Average December 2024 WTI $ 94.41 $ 76.52 $ 77.57 $ 72.12 $ 75.77 $ 69.70 (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.
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.
CVR Energy As of December 31, 2024, CVR Energy has the 5.75% Senior Notes, due 2028 (the “2028 Notes”) and the 8.50% Senior Notes, due 2029 (the “2029 Notes”), 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.
If the net realizable value is less than cost, we recognize a loss for the difference in our statements of operations in the period in which it occurs. During the year ended December 31, 2023, we recognized losses on inventory of $4 million to reflect net realizable value associated with our renewables business.
If the net realizable value is less than cost, we recognize a loss for the difference in our statements of operations in the period in which it occurs. During the years ended December 31, 2024 and December 31, 2023, we recognized losses on inventory of $5 million and $4 million to reflect net realizable value associated with our Renewables Segment.
The Board will continue to evaluate the economic environment, the Company’s cash needs, optimal uses of cash, and other applicable factors, and may elect to make additional changes to the Company’s dividend (if any) in future periods.
The Board will continue to evaluate the economic environment, the Company’s cash needs, optimal uses of cash, payment of dividends (if any), and other applicable factors, and may elect to make additional changes to the Company’s capital allocation in future periods.
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.
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, 2024, direct operating expenses (exclusive of depreciation and amortization) were $421 million compared to $406 million for the year ended December 31, 2023.
The following are non-GAAP measures we present for the years ended December 31, 2023, 2022, and 2021: EBITDA - Consolidated net income (loss) before (i) interest expense, net, (ii) income tax expense (benefit) and (iii) depreciation and amortization expense.
December 31, 2024 | 74 Table of Contents The following are non-GAAP measures we present for the years ended December 31, 2024, 2023, and 2022: EBITDA - Consolidated net income (loss) before (i) interest expense, net, (ii) income tax expense (benefit) and (iii) depreciation and amortization expense.
If this project is approved by the board of directors of CVR Partners’ general partner (the “UAN GP Board”) and successfully implemented, it could allow CVR Partners to choose the lowest cost feedstock for production and would make the Coffeyville Fertilizer Facility the only nitrogen fertilizer plant in the U.S. with that feedstock flexibility.
If this project is approved by the board of directors of CVR Partners’ general partner (the “UAN GP Board”) and successfully implemented, it could allow CVR Partners to choose the optimal feedstock mix for production and would make the Coffeyville Fertilizer Facility the only nitrogen fertilizer plant in the United States with that feedstock flexibility.
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 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 decreased during 2024 compared to 2023.
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.
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.
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.
Direct Operating Expenses (exclusive of depreciation and amortization) - For the year ended December 31, 2024, direct operating expenses (exclusive of depreciation and amortization) were $214 million compared to $235 million for the year ended December 31, 2023.
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”).
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”).
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.
Due to these factors, nitrogen fertilizer consumers generally operate a balanced corn-soybean rotational planting cycle as shown by the chart presented below.
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.
Because the Petroleum Segment applies first-in, first-out (“FIFO”) accounting to value its inventory, crude oil and refined product price movements may impact margin as a result of changes in the value of its unhedged inventory.
Individual assets are grouped for impairment purposes based on a judgmental assessment of the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other assets (for example, at a refinery or fertilizer facility level).
Individual assets are grouped for impairment purposes based on a judgmental assessment of the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other assets.
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.
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.
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.
Additionally, an estimated 14 billion pounds of soybean oil is expected to be used in producing cleaner renewable fuels in marketing year 2024/2025. Multiple refiners have announced renewable diesel expansion projects for 2025 and beyond, which should only increase the demand for soybeans and potentially for corn and canola.
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.
December 31, 2024 | 72 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.
December 31, 2023 | 63 Table of Contents Nitrogen Fertilizer Segment Our results of operations for the periods presented may not be comparable with prior periods or to our results of operations in the future due to expenses incurred as part of planned turnarounds.
December 31, 2024 | 75 Table of Contents Nitrogen Fertilizer Segment Major Scheduled Turnaround Activities - Our results of operations for the periods presented may not be comparable with prior periods or to our results of operations in the future due to expenses incurred as part of planned turnarounds.
Distributions to CVR Partners ’ Unitholders Distributions, if any, including the payment, amount and timing thereof, and UAN GP Board’s distribution policy, including the definition of available cash, are subject to change at the discretion of the UAN GP Board.
No dividends were declared for the fourth quarter of 2024. Distributions to CVR Partners ’ Unitholders Distributions, if any, including the payment, amount and timing thereof, and UAN GP Board’s distribution policy, including the definition of available cash, are subject to change at the discretion of the UAN GP Board.
Refining Margin and Refining Margin adjusted for Inventory Valuation Impacts, per Throughput Barrel - Refining Margin and Refining Margin adjusted for Inventory Valuation Impacts divided by the total throughput barrels during the period, which is calculated as total throughput barrels per day times the number of days in the period.
Refining Margin per Throughput Barrel - Refining Margin divided by the total throughput barrels during the period, which is calculated as total throughput barrels per day times the number of days in the period.
Our core Values are driven by our people, inform the way we do business each and every day and enhance our ability to accomplish our mission and related strategic objectives.
December 31, 2024 | 49 Table of Contents Our core Values are driven by our people, inform the way we do business each and every day and enhance our ability to accomplish our mission and related strategic objectives.
The ultimate outcome of these conflicts and any associated market disruptions are difficult to predict and may affect our business, operations, and cash flows in unforeseen ways.
The ultimate outcome of these conflicts and/or economic policy, or further escalation or expansion thereof, and any associated market disruptions are difficult to predict and may affect our business, operations, and cash flows in unforeseen ways.
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.
Weather continues to be a critical variable for crop production. Even with high planted acres and above trendline yields per acre for corn in the United States, global inventory levels for corn and soybeans remain near historical 10-year averages and prices have remained elevated.
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.
For the years ended December 31, 2024 and 2023, net sales included $36 million and $42 million in freight revenue and $16 million and $18 million in other revenue, respectively.
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.
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.
This system will allow the Company to ship refined products to high priced markets in PADD IV. • The Company has decided to replace the hydrofluoric acid catalyst alky unit at its Wynnewood Refinery with a fixed bed catalyst system which will expand the alkylation unit by approximately 2,500 bpd, increasing product capture by reducing propylene production and increasing production of premium gasoline, and eliminate hydrofluoric acid inventory onsite.
This system allows the Company to ship refined products to high priced markets in PADD IV. • The Company has undertaken a project to replace the hydrofluoric acid catalyst alkylation unit at the refinery in Wynnewood, Oklahoma (the “Wynnewood Refinery”) with a fixed bed catalyst system, which should expand the alkylation unit by approximately 2,500 bpd, increase product capture by reducing propylene production/sales and increase production of premium gasoline, and eliminate hydrofluoric acid inventory onsite.
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.
The following tables December 31, 2024 | 82 Table of Contents present quarterly distributions paid by CVR Partners to CVR Partners’ unitholders, including amounts received by the Company, during 2024, 2023, and 2022 (amounts presented in the table 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 2023 - 4th Quarter March 11, 2024 $ 1.68 $ 11 $ 7 $ 18 2024 - 1st Quarter May 20, 2024 1.92 13 7 20 2024 - 2nd Quarter August 19, 2024 1.90 13 7 20 2024 - 3rd Quarter November 18, 2024 1.19 7 5 13 Total 2024 quarterly distributions $ 6.69 $ 44 $ 26 $ 71 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 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 For the fourth quarter of 2024, CVR Partners, upon approval by the UAN GP Board on February 18, 2025, declared a distribution of $1.75 per common unit, or $18 million, which is payable March 10, 2025 to unitholders of record as of March 3, 2025.
We incurred turnaround expenses of $2 million, $33 million, and $3 million during the years ended December 31, 2023, 2022, and 2021, respectively. The next planned turnarounds are currently scheduled to take place in 2025 at the Coffeyville Fertilizer Facility and in 2026 at the East Dubuque Fertilizer Facility.
We incurred turnaround expenses of less than $1 million, $2 million, and $33 million during the years ended December 31, 2024, 2023, and 2022, respectively. The next planned turnarounds are currently scheduled to commence in the fourth quarter of 2025 at the Coffeyville Fertilizer Facility and in 2026 at the East Dubuque Fertilizer Facility.
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.
The table below presents these feedstocks for the Facilities for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31, 2024 2023 2022 Petroleum coke used in production (thousands of tons) 517 518 425 Petroleum coke used in production (dollars per ton) $ 59.69 $ 78.14 $ 52.88 Natural gas used in production (thousands of MMBtus) (1) 8,667 8,462 6,905 Natural gas used in production (dollars per MMBtu) (1) $ 2.56 $ 3.42 $ 6.66 Natural gas in cost of materials and other (thousands of MMBtus) (1) 7,755 8,671 6,701 Natural gas in cost of materials and other (dollars per MMBtu) (1) $ 2.50 $ 3.84 $ 6.37 (1) The feedstock natural gas shown above does not include natural gas used for fuel.
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 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.
Direct Operating Expenses per Throughput Barrel - Direct operating expenses for our Petroleum Segment divided by total throughput barrels for the period, which is calculated as total throughput barrels per day times the number of days in the period.
Direct Operating Expenses per Vegetable Oil Throughput Gallon - Direct operating expenses for our Renewables Segment divided by total Vegetable oil throughput gallons for the period, which is calculated as total Vegetable oil throughput gallons per day times the number of days in the period.
On February 20, 2024, the UAN GP Board, on behalf of CVR Partners, terminated the nominal authority remaining under the Unit Repurchase Program.
The Unit Repurchase Program authorized CVR Partners to repurchase up to $20 million of CVR Partners’ common units. On February 20, 2024, the UAN GP Board, on behalf of CVR Partners, terminated the nominal authority remaining under the Unit Repurchase Program.
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.
The NYMEX 2-1-1 crack spread averaged $23.79 per barrel in 2024 compared to $34.24 per barrel in 2023. The Group 3 2-1-1 crack spread averaged $18.05 per barrel in 2024 compared to $32.27 per barrel in 2023. Average monthly prices for RINs decreased 46.7% during 2024 compared to 2023.
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.
Net Sales Operating Income December 31, 2024 | 64 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, 2024, net sales for the Petroleum Segment was $6.9 billion compared to $8.3 billion for the year ended December 31, 2023.
Our costs to comply with the RFS further depend on the consistent, timely, and legal administration of the RFS program by the EPA, including the EPA’s unlawful failure to establish the RVOs by their statutory deadlines, its subsequent promulgation of RVOs exceeding the blendwall, its delay in issuing decisions on pending small refinery exemption (“SRE”) petitions, its subsequent denial of those SRE petitions and its failure to designate blenders as obligated parties under the RFS.
Our costs to comply with the RFS further depend on the consistent, timely, and legal administration of the RFS program by the EPA, including the EPA’s unlawful failure to establish the RVOs by their statutory deadlines, its subsequent promulgation of RVOs exceeding the blendwall, its delay in issuing and refusal to issue decisions on pending small refinery exemption (“SRE”) petitions, its subsequent denial of those SRE petitions, most of which have been overturned by courts, and its enabling non-obligated parties to generate, hoard and sell RINs.
The USDA data shows that in spring 2023 farmers planted 94.6 million corn acres, representing an increase of 6.8% as compared to 88.6 million corn acres in 2022. Planted soybean acres for spring 2023 are 83.6 million, representing a decrease of 4.5% as compared to 87.5 million soybean acres in 2022.
The USDA data estimates that in spring 2024 farmers planted 90.7 million corn acres, representing a decrease of 4.1% as compared to 94.6 million corn acres in 2023. Planted soybean acres for spring 2024 are 87.1 million, representing an increase of 4.2% as compared to 83.6 million soybean acres in 2023.
In addition, the change in the effective tax rate was due primarily to changes in pretax earnings attributable to noncontrolling interests, decreases in state tax rates and an increase in tax credits and incentives generated for the year ended December 31, 2023 compared to the year ended December 31, 2022.
In addition, the change in the effective tax rate was due primarily to changes in pretax earnings attributable to noncontrolling interests and the impact of federal and state tax credits and incentives generated in relation to overall pretax earnings for the year ended December 31, 2024 compared to the year ended December 31, 2023.
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.
Nitrogen Fertilizer Segment Financial Highlights Overview - For the year ended December 31, 2024, the Nitrogen Fertilizer Segment’s operating income and net income were $90 million and $61 million, respectively, compared to operating income and net income of $201 million and $172 million, respectively, for the year ended December 31, 2023.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition, results of operations and cash flow should be read in conjunction with our consolidated financial statements and related notes and with the statistical information and financial data included elsewhere in this Report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition, results of operations and cash flows should be read in conjunction with our consolidated financial statements and related notes and with the statistical information and financial data included elsewhere in this Report, as well as Part I, Item 1, “Business” and Part I, Item 1A, “Risk Factors” of this Report.
Growth capital projects generally involve an expansion of existing capacity and/or a reduction in direct operating expenses. We undertake growth capital spending based on the expected return on incremental capital employed.
Growth capital projects generally involve an expansion of existing capacity, reliability improvements, and/or a reduction in direct operating expenses. We undertake growth capital spending based on the expected return on incremental capital employed, which is typically funded by reserves taken in prior years.
Refining Margin (1) Refining Margin (excluding Inventory Valuation Impacts (1) (1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measures shown above. Refining Margin - For the year ended December 31, 2023, refining margin was $1.7 billion, or $21.82 per throughput barrel, compared to $1.4 billion, or $19.09 per throughput barrel, for the year ended December 31, 2022.
Refining Margin (1) (1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measures shown above. Refining Margin - For the year ended December 31, 2024, refining margin was $684 million, or $9.53 per throughput barrel, compared to $1.7 billion, or $21.82 per throughput barrel, for the year ended December 31, 2023.
The renewable diesel unit at the Wynnewood Refinery has the flexibility to be returned to hydrocarbon processing service primarily through a catalyst change or sustainable aviation fuel with additional capital outlays; depending on market conditions including but not limited to renewable diesel margins, contractual obligations and other factors, the Company could seek to return the unit to hydrocarbon processing service in the future. • The Company is evaluating a potential renewables project near its Coffeyville location, the approval of which would be subject to numerous conditions and requirements including but not limited to approval of our Board, regulators, and potential other third parties.
This project, if approved and pursued, could reduce the risks associated with government credits through an off-take structure with potential counterparties, by potentially shifting the exposure of those credit prices to the fuel purchaser. • The renewable diesel unit at the Wynnewood Refinery has the flexibility to be returned to hydrocarbon processing service primarily through a catalyst change, or to sustainable aviation fuel with additional capital outlays; depending on market conditions, such as renewable diesel margins, governmental regulations, contractual obligations and other factors, the Company could seek to return the unit to hydrocarbon processing service in the future. • The Company is also evaluating a potential renewables project near its Coffeyville Refinery, which approval would be subject to numerous conditions and requirements, including but not limited to, approval of our Board, regulators, and potential other third parties.
As of December 31, 2023, we have an estimated liability of $329 million for the Petroleum Segment’s obligated-party subsidiaries’ compliance with the RFS for 2020, 2021, 2022 and 2023, which consists of approximately 362 million RINs, excluding open, fixed-price commitments to sell a net 11 million RINs.
As of December 31, 2024, we have an estimated liability of $323 million for the Petroleum Segment’s obligated-party subsidiaries’ compliance with the RFS for 2020 through 2024, which consists of approximately 487 million RINs, excluding open, fixed-price commitments to purchase a net 7 million RINs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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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.
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 December 31, 2024 | 85 Table of Contents 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.
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
Refer to Part I, Item 1A, “Risk Factors”, Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” 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 | 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.
The commodity conversion cycle time refers to the time elapsed between raw material acquisition and the sale of finished goods. 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.
We believe that market prices of nitrogen products are affected by changes in grain prices, demand, natural gas prices, and other factors.
The value of fertilizer product inventory is subject to market risk due to fluctuations in the relevant commodity prices, which can lead to volatile prices of nitrogen fertilizer products. We believe that market prices of nitrogen products are affected by changes in grain prices, demand, natural gas prices, and other factors.
In the normal course of business, nitrogen-based fertilizer products are produced throughout the year to supply the needs of our customers during the high-delivery-volume spring and fall seasons. The value of fertilizer product inventory is subject to market risk due to fluctuations in the relevant commodity prices. Prices of nitrogen fertilizer products can be volatile.
The Nitrogen Fertilizer Segment has commitments to purchase pet coke and natural gas for use in the fertilizer facilities through short-term, fixed price, and index price purchase contracts. In the normal course of business, nitrogen-based fertilizer products are produced throughout the year to supply the needs of our customers during the high-delivery-volume spring and fall seasons.
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).
The Petroleum Segment utilizes a crude oil purchasing intermediary to purchase the majority of its non-gathered crude oil inventory for the refineries.
Alleviating 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.
Alleviating 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 Renewables Segment to partially satisfy their RFS obligations.
Removed
The commodity conversion cycle time refers to the time elapsed between raw material acquisition and the sale of finished goods.
Added
A $1.00 per MMBtu change in the price of natural gas would change the cost to produce a ton of ammonia and UAN by approximately $14.29 and $5.86, respectively. A $1.00 per ton change in the price of pet coke would change the cost to produce a ton of ammonia and UAN by approximately $0.66 and $0.27, respectively.
Removed
The Nitrogen Fertilizer Segment has commitments to purchase natural gas for use in the East Dubuque Fertilizer Facility at the spot market and through short-term, fixed supply, fixed price, and index price purchase contracts.
Added
In the opinion of our management, there are no financial instruments that correlate with our firm pet coke commitments and forecasted commodity sales transactions that could be used to effectively reduce commodity price risk.
Added
Interest Rate Risk We may be exposed to risk based on changes in interest rates related to the CVR Energy ABL, CVR Partners ABL, and the Term Loan, which bear interest at the Secured Overnight Financing Rate (“SOFR”) plus a premium.
Added
As of and during the year ended December 31, 2024, there were $325 million of outstanding borrowings under the Term Loan that were subject to variable interest rates, and no variable rate borrowings under the CVR Energy ABL or CVR Partners ABL as of and during the years ended December 31, 2024 and 2023.
Added
Based on the outstanding Term Loan balance at December 31, 2024, a hypothetical 50-basis point fluctuation in interest rates would result in an annual change of $2 million recognized in Interest expense, net on the Consolidated Statements of Operations.
Added
Further, fixed-rate debt, such as the 2028 Notes, 2028 UAN Notes, and 2029 Notes (collectively, the “Notes”), exposes us to changes in the fair value of our debt due to changes in market interest rates, but not our earnings or cash flows.
Added
Based on the Notes, a hypothetical 50-basis point fluctuation in interest rates at December 31, 2024 would have resulted in a change of $23 million in fair value disclosure.
Added
Fixed-rate debt also exposes us to the risk that we may need to refinance maturing debt with new debt at higher rates, or that we may be obligated to pay rates higher than the current market. December 31, 2024 | 86 Table of Contents

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