CVI - Earnings call transcript Q1 2020

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Operator

Greetings, and welcome to the CVR Energy, Inc.

First Quarter 2020 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Jay Finks, Vice President of Finance and Treasurer. you. Thank

begin. may You

Jay Finks

Lamp, Good Chief this We Energy afternoon call. of Officer; are XXXX Michelle. Jackson, Officer; you Chief management. Officer, our first much and joining earnings Financial Dave today me us for Landreth, With Chief afternoon, you, Executive very Tracy our everyone. Dave appreciate quarter our Commercial Thank our members CVR other

that remind term discussing XXXX defined forward-looking first you, me this our let contain conference to securities Prior statements federal results, as is under laws. may call quarter

For that this be historical be this purpose, any statements to made facts are during call forward-looking deemed of not statements. statements may

in You be our our affected release. are forth may Securities in these filings set cautioned statements by with important and and latest that earnings factors the Commission Exchange

result, or the differ materially actual in forward-looking a may operations statements. from the results discussed results As

publicly law. obligation for of the except forward-looking directly and reconciliation We call. to measures release by most required new to also The such financial disclosures future related measures. whether result to events information, undertake update or GAAP otherwise, with financial includes various This we as included extent a non-GAAP non-GAAP the period earnings be any the in will discussed our during filed no quarter to are measures call XX-Q XXXX the including Form and first that comparable SEC statements the

I'll said, that turn With to the over call Dave.

Dave Lamp

joining you earnings thank Thanks, afternoon, for our and Jay. everyone, Good call.

a share $XX Partners $X.XX. call reported first loss quarter a you the million of net had to we negative loss Yesterday, a of Hopefully, earlier quarter today. the per opportunity for to demand for throughput and a earnings to results the of EBITDA the was oil listen pandemic product prices, combination consolidated CVR severely of planned and all the COVID-XX in the volumes in quarter. crude the The our a decline turnaround Coffeyville impacted million. due as collapse result dramatic lower $XXX

U.S. per in industry our faced to and first $X.XX the has - elected the uncertainties global the reduce share. industry, Board economy to the of light In refining dividend quarter

remains sheet RIN to liquidity balance cash of around Board return the in sufficient future our and prudent demand uncertainties given was the felt product the prices. strong on have preserve we refined the While available, it

believes current are environment, level at and dividend including going forward. Board higher shareholder consolidation. to in quarter time, industry continue return first the The potential decision appropriate Board opportunities for there relates the dividend evaluate to also market will the the This the this of only

as market, quarter dividend The be record May May close the on of will first XX. of to of paid stockholders XX

Petroleum during per began was of For XXXX. quarter - the turnaround quarter the total Coffeyville throughput Wynnewood our segment, of at the first the compared ran April. barrels approximately was day XXXX of it in XXX,XXX quarter downtime. of meaningful XXX,XXX well as The first combined no week day February for to the with per last quarter of completed and barrels

tighter in Gulf to Coast. primarily the $XX.XX were to compared X-X-X Group last of XXXX first XXXX. crack the barrel per to new of $XX.XX the quarter in as Texas compared quarter spread West Domestic crude year, of the first in start-up per pipelines due The quarter from the barrel averaged differentials to

per XXXX differential of XXXX. as The was quarter Midland quarter first WTI Brent/TI barrel in $X.XX first $X.XX Cushing under averaged barrel barrel differential $X.XX the per the per per of to in The compared to to of same under compared differential barrel WCS the $X.XX as period to last The barrel $XX.XX per compared quarter the $XX.XX barrel, per TI year. the in in first quarter was in XXXX.

processed. oil for XXX% yield was product the quarter Light crude on

Refinery catalyst XX% total the of hydrocracker to the change quarter prior-year period, by yield XX% crude Our in Wynnewood oil first was impacted percentage in compared a February. throughputs the of in out distillate as at a XXXX

yield consistently the as of ranks refiners. distillate among the U.S. Our highest one

per compared barrels year. In quarter XXX,XXX of oil during total, same the XXXX of period crude XXX,XXX first last barrels per to day day gathered we as approximately for the

prices, in declining. With production crude the U.S. oil is recent collapse

a in the fall result, fallen likely gathering volumes and have continue our will As near to term.

location and a from crude of However, system. of our to given our options economic our to Texas, West refineries we in access our Cushing have oils variety supply

XX% Coffeyville outages XX% plant to the quarter utilization utilization compared the Fertilizer the days quarter resulting the unit in as for period. the XX% first fertilizer East ammonia the quarter, unplanned for of quarter segment, Dubuque, In to third-party to downtime the ammonia of prior at led XXXX. XX compared during the at of the XXX% at for for as operated utilization At a plant

resulted sales Stable consolidated in prices been CVR provides have seen was season. EBITDA positive lower positive Fertilizer's segment diversification is the application Energy's Company the and Fertilizer has of to cash a contribution flow volumes business results. segment as good gas fertilizer we financial of natural a spring the start clear strong the The and benefit. a our Fertilizer EBITDA to near-term outlook historically contributor year-over-year planning to and

recently, the has repurchase up to of unit CVR Board Given program million. $XX units the a its the of authorized of underperformance partner Partners general

Now let turn call to the Tracy, additional discuss financial to highlights. me over

Tracy Jackson

Thank you, good Dave, and afternoon, everyone.

net of to of of This and million diluted quarter million income we share diluted compares quarter first first $XXX per a for the net for XXXX. mentioned, $X per of $XXX of reported and consolidated the XXXX, loss Dave loss earnings $X.XX. of As a share

of and million million. for XXXX $X $XX related $XX Delek. of a Our in include consolidated of first inventory of the gain to million $XX valuation our an of investment results mark-to-market million and write-down dividends quarter Inventory impacts

quarter the XX% loss for XXXX gain would rate effective impacts, been XXXX and diluted share first have prior-year tax first for unrealized approximately the $X.XX. period. Delek quarter The XX% on our compared of per the to inventory the Excluding was

full-year We will tax XXXX between our and be XX%. expect rate XX% that effective

million decline the driven demand. Coffeyville and positive the the period segment's value Petroleum of dramatic The EBITDA products, the a was of crude oil of throughput result XXXX in lower in the for same planned compared volumes as decline $XXX The turnaround in EBITDA million by $XX and refined was XXXX. negative product a to lower quarter first a year-over-year

Excluding the segment $XX impacts, have been inventory would Petroleum EBITDA our million.

the of our of million the through a impact In compares during prices margin total quarter. inventory Petroleum write-down during a $XX.XX $X.XX per impact of in period valuation the $XX.XX refined segment's in The barrel to crude per excluding XXXX, year. barrel per first and barrel $XXX to same compared inventory product of last This same quarter negative throughput inventory generated an first the was $X.XX positive decline oil refining impacts and XXXX. quarter the quarter

valuation are gains was write-down the as totaled quarter compared gains commodity in derivative the open XXXX the the oil quarter quarter rate of of inventory impacts of Canadian losses. that which delivery. in unrealized open XXXX. and had Derivative capture $X to XX% first included quarter gains unrealized The and $XX million, first In inventory associated million, which of of instruments derivative of first for purchases of first the for $XX crude million total excluding the $XX XX% XXXX million of scheduled future with we XXXX, includes

same RINs turnaround. by on Based and driven the expense lower to plan, the $XX million our increase recent due of period in the that RINs current primarily in prices $XX Coffeyville estimate will we lower a RIN in and to $XX prices RINs be biodiesel market million RVO expense approximately production now million RINs year-over-year XXXX. was in last $XX The by to offset XXXX was ethanol an in compared first the expense of million somewhat increase RIN quarter year. prices,

of Petroleum due from XXXX The a due $X.XX per by expenses barrel Coffeyville. the segment's throughput direct the direct expenses. barrel compared first lower as to the Total $X.XX as quarter higher per-barrel total planned basis, operating operating result lower prior-year in throughput XXXX On direct of the for $X at the of the to the prior-year volumes were period, primarily were approximately expenses quarter utility period. declined first of to per operating in expenses quarter in turnaround a million

loss of net of $X.XX income $XX XXXX, This common and $X segment to an common per the of first or of unit. and million a or loss million $X For quarter is operating $X.XX million operating per XXXX quarter Fertilizer a million the $X first loss net of reported compared unit.

EBITDA to first lower due quarter the XXXX for of period. cash million to was CVR first XXXX. and for in the EBITDA the for million prior-year was $XX ammonia primarily compared in prices available UAN. in The quarter of not $XX distribution year-over-year generate did decline Partners

in which million quarter XXXX maintenance the $X environmental from of Petroleum Of capital $XX Petroleum million, capital the million, and million segment $XX the $XX the was $X including million Total segment million spending and $XX this total, and in segment. the from included Fertilizer Fertilizer comprised first segment. spending consolidated for

million, XXXX to estimate maintenance $XXX capital turnaround million we excludes million $XX which estimate of capital. spending, be $XXX and $XXX planned $XX million environmental to approximately approximately the consolidated approximately $XX million We year. which total to million This be for will spending is for to

projects for or critical critical to is on focused year reliable spending that required a only future and are capital for operations Our safe the path work.

$XX quarter flow free in was capital was a first from activities use cash as cash million Cash the which less from flow and million. a operations of and expenditures quarter, turnaround flow use define the we operating of of for XXXX $XXX

$XXX notes million the offering billion in sheet, CVR of Refining's million we notes to balance adding senior to refinance balance January, senior allowing and the Turning sheet. approximately $X to cash of completed $XXX unsecured us unsecured a

standalone XX, XX-month approximately EBITDA a debt the approximately in million trailing two consolidated X.X Partners times. CVR ended with the Fertilizer On We approximately our quarter debt At a cash our which times, $XX net of on was basis, million the level excluding balance strong segment. and EBITDA. debt at March to a includes $XXX CVR was basis, to EBITDA

was CVR of million As which of for $XXX of liquidity, base available excluding we sale $XXX in million of borrowing $XXX of approximately availability under of $XXX March included ABL securities million million. the the XXst, comprised cash, of and Partners, $XXX cash had less million

confident our and strong sheet continue position. balance in to liquidity We feel

throughput Looking Group dependent to second we barrels demand. XXX,XXX approximately per quarter ahead be XXX,XXX XXXX estimate for estimate of segment, on our product is total day. the Petroleum to This for X

will We levels. economics in based runs inventory the modify Magellan on

million expect range $XX to expenses quarter approximately the $XX second and and spending million. total million capital total $XX to between million direct for to operating be We $XX

between be is expected segment. We XXX%. $XX between the ammonia estimate and utilization rate Fertilizer XX% million $XX our million range spending to for Turnaround and to

million operating expenses $XX direct million. to to spending $XX capital and between to expect impacts million $XX $X approximately We excluding inventory million, be total be and

that With back turn you. to Dave, call I'll the

Dave Lamp

Tracy. Thanks

and never can to we industry everything business the are environment. The horizon XXXX been quarter refined a this doing recovery seen before. product presented we to disarray The which manage demand of in first difficult of our see over is that challenges market And is the complete we have through unknown.

we Our to balance focus maintaining the safe, to and cash strong eventual our number liquidity a so have positioned be liquidity. the available To manner, be steps sheet we that of to - a and and advantage in reliable take recovery. end, market position, operating can maintained of continues controlling taken and costs a preserve adequate

safe, As or I deferral Coffeyville Wynnewood share deferred per to the later operations crude share elected Board reduce annualized $X.XX This an quarter be future the or for work to the or had reliable to earlier, first are Capital not on $X.XX optionality projects mentioned critical includes that isom and project date. per basis. project. canceled are dividend will required the to of a

crude We the order return in we operating optionality of near for minimums as wait refineries demand. preserve to are our throughput

$XX corporate office. facilities expenses targeting our reduction in across SG&A and are million We in operational

to fall turnaround planned 'XX at the Refinery the from 'XX. deferring Wynnewood are of spring We of

'XX being is Partners turnaround summer facility half 'XX fall fall CVR pushing moved the of from the the of turnaround 'XX. East also Coffeyville addition, for Dubuque second to In of to of the 'XX. The planned the of planned is

anything as believe Holdings. interest current this are number unique on we not could US will At - have opportunity we to challenges, evident disclosing XX.X% in ultimately market directions new do the there our some of front. And Despite we any time, believe this by filing new present also this of go. report Delek purchase opportunities this recent a

CVI. So attractive far this investment for has been an

the The the $X.XX Brent and spread with per at of barrel quarter as barrel follows. quarter-to-date per the at $XX.XX $X.XX Group XXXX, cracks Cushing differential X-X-X $X.XX to averaged Looking are metrics WTI. have TI over per Midland barrel $X.XX WTL second differential at WCS X under $XX.XX barrel TI. Cushing under per at price. has WCS at averaged has X and was $X.XX barrel X-X-X under Brent Product The barrel WTI. averaged per yesterday. cracks was the Group $X.XX differential TI were per

consumption the are the trough, will hardest, our be fuels oil by the country the Refined at return over demand we the markets, In prices down was transportation was crude products' reopens relatively dictated term, and was demand gasoline near bearish of on hit In while as unchanged. diesel prices. rebound. XX% of and

lost The in and diesel refining to responded have industry The run jet demand refineries cases to problematic entirely. supply-demand some including fuel due through mainly idling but reducing the oil CVI runs has gasoline crude length. balanced cuts remains

three refinery $X.XX. we by of RINs averaged - Appeals decision Since The the market recent panel's reduced to on small in about but Tenth us our the refineries recover vacating averaged Court at have biodiesel not re-hear was $X.XX low XX%. exemptions gasoline and Appeals have have both disappointing. of rates. Current the Circuit continue RINs decision ethanol points, seen Quarter-to-date are supportive markets economics demand to run of

believe The ruling review And next We is seek all the this continue some by it fashion. Court. across support in got to to refineries wrong. small likely Circuit of United the we Supreme believe that such States a step will review Tenth

At ruling affect comply Circuit the refinery how with will to before to point, we for wait expect RFS all if the ruling. rules exemptions. exhausted EPA to appeals not small do issued We be adjust Tenth the or they this know do previously

Authority. We the - to Circuit, rulings regulations ruling the intended continue as by authority the Tenth the national which conflicts policy, circuits well other exceeds sets Circuit's with Circuit by as as previous and Tenth Congress, believe Tenth

to capacity continue ways hydrogen offset units to selected reduce converting to we diesel explore at production. existing both we looking refineries our utilizing of are exposure, or excess and renewable RIN As desulfurization

forward of additional this We phases details are but to project still look in early we the as along. have providing further

ready operator, for that, questions. With we're

Operator

Rao proceed Instructions] comes line Prashant your of first question. from with Our Citigroup. question Please the [Operator with

Unidentified Analyst

et the Coast Prashant. assets sale. we know you've of want seeing then, the PADD previously some This sales, logistics, it's even - on are today. is behalf part talked cetera. Joe opportunity for Gulf assets Rockies, set some Dave, are I IV put thoughts on marketed that your about of other for being being the to up of Since not the And Gulf the the of Coast, terms to et Thank the take cetera? current if expansion assets features, as the the market would Gulf making right, what Is the is into be opportunity parts for about you. it of possibility opportunity well? Coast, what And in capacity, the capabilities, other Mid-Con? right if in

Dave Lamp

the the before, had type Mid-Con. area or of - concentrated mainly PADD that the in stated previously We main a - Sure. that we were interest something interested refinery in considering is There's most just IV in portfolio we nature. our

you volume with don't - Our more is a very around niche large optionality, Gulf around portfolio has you a markets. if built Coast future. crude operating have a of cost, lot of low have capacity really much really with don't a

really we're not that's where targeting. area So an

I not mentioned very we enough more there This in scale, think those to which been smart forward. said, future we future. XX compete sense. big it's to here PADD industry we opportunities the including difficult counterparties evaluating you're makes think corona And focus delayed opportunities have is as come there - all going that virus, ourselves. earlier, enough place if but several more is to are going probably our still the all be There and IV, for are is by consolidation and in That have are the on

Unidentified Analyst

your priorities, mentioned the few leaning to you're given for in fair bit that this you. strategic on enhancing changes look now is years, for to CapEx current more you And M&A? projects next like a which environment? discount more returns the And towards the Thank have the potential it

Dave Lamp

on are whatever the be market the norm wouldn't the more I future. they what those today's things They're good in say Yes. projects. to just We we're the of forward difficult very a see - call may to discouraged it's would projects. still return, path that norm think until I uncertainty, -

from the unknowable delay recovers reason are really pandemic. want world We the - just right they probably some are signals And that's of the what And just as market this now. we hard see them. to to it's

delay some So get until we'll clarity that. we on that,

that that of matter are we of cost peers we'd are doing. of and assets taxpayer one our did the shy five-fold excess potential, building is on away to of one is have which we ours. a even hydrogen that The the think mention anybody But many some renewable I from the though of would grassroots a completely and dependent pursuing the it we existing diesel, in to or capital convert lot fact mandates greenfield general. has We credits, which is government have tend have

So in there others. the first we as think we compared should line be to

Operator

Suisse. Our next proceed of from question. question with line your with Credit the Manav Gupta comes Please

Manav Gupta

on So made you in income see from we gain statement, that your Delek. million $XX an investment

here think I is which the consolidation [X%] in million, of is gain. which trying - monetize talked should in think this gain? a $XXX was quarter, you process how gain understand about in like a was is investment a to recognized that's which it you about to in investment terms that Or an of just about return single quarter, made thought single so made I'm Delek? $XX have excellent you million this what we more industry and

Dave Lamp

the of discuss is important Well, this lots what directions future. mass in there's and of able go. critical to - scale additional to really that's as niche are, the in not those an industry something different the could but we We're remarks, to consolidation to get opportunities, said this the lots prepared compete prepared in be

an pursuing of and I all will them. think be So here anything we option is

Manav Gupta

if Delek do form do mean Is think to come you stuff that together? that and see the eventually that to synergies it? of you do I right way decide So and about some -

Dave Lamp

There Certainly, to our very companies not there early I'm much is there our markets, operations leads and and are our to product. in we is how two product some public in one going some market synergies. be But market they there, overlap, it's going something too synergies, sure, - to say. to not how but the

Manav Gupta

just one then follow-up. And

has you of mentioned quarter it. but reviewing the continuously that a dividend that's kind if You lowered, been

is alternatives in very these $X.XX to I'm the say, demand does for improve some So back work rebounds don't trying out, quickly? just understand, dividend two strategic quarters a or to right and possibility let's one reason, that there

Dave Lamp

one has - make comments you XX% thing were and in this the One yield I'd much quarter, don't But comment earlier, think at other maybe the we I Tracy some market for that. or rewards here. - what really first

So of element one that's it.

The is, pretty is other opportunities for. balance really on we a other side valuable of could there sheet that truly the there lot be cash believe out

what the think it is So returns business think Yes, has Board you because of a of flow. those lot historically if considering that to would all dividend come back been, generated factors. see I quickly the cash I we

Operator

from Scotiabank. comes with of Chang proceed line your the question Please Paul with next question. Our

Paul Chang

know is but about to there can share DK? answer, related a decision timeline you going that probably that you're I make Dave, difficult is what to to

Dave Lamp

at don't any I I color at Paul, it's unknown on think that you this yes, No, all, give time. can

Paul Chang

too reduce I And the to concerned you to think too about ago, that much And do stiffness. everyone how're concerned about business that? What's you going yield? given, flexibility much say, for your gasoline, a Okay. everyone month

Dave Lamp

gas to XX% Well, and typical diesel. different swing between refiner XX% and can we're no about

Paul Chang

again. problem a But Yes. then problem we do if is gasoline that, that, the become

Dave Lamp

That's the exactly right. And dilemma. that's

crack be starts all to to result isn't going the to that flying in fuel the for of think has and distillate jet change be diesel airline where dumped going here until to trend that's again. a the I as lower be is that

Paul Chang

in the it of the pool? that Is there possibility can Is business other part sense you gasoline into pushing there back the areas any say any other gasoline? to outside some

Dave Lamp

aren't some volume, it's cut - jet and make many out impact fuel. few Well, of that Paul. to there such options, go that same much. we others I come of paint small do to But solvents a do just not a that's that that going industry

Paul Chang

demand jet the fuel that and come really realistically, we on the over until So back have the stock gasoline?

Dave Lamp

right. That's

Paul Chang

talking And curious you're on depends another Okay. there's that, just your opportunity cash. about can that you use

willing far to balance right your the you're much how How For sheet? willing push opportunity, to push? you're

Dave Lamp

any have you that? fill Tracy, for

Tracy Jackson

us think say. it's to early for I too

Dave Lamp

you Yes. of on you're discussion It's because generic it's anyway. end pro It And you anything kind going dependent Paul. just to depends forma with. off up the to much, so on earning - deal opportunity get so hard the do a what be sheet in of

Paul Chang

No. comfortable? point mean good that direct. I is feel just at sheet, Or that will would is matter deal no of how I you balance not comfortable? question guess how my what more far feel the you

Dave Lamp

any refiner. I the think different and to any any Well, of where kind value. typically your - XX% than don't don't that's enterprise other higher, we're of we X.X of is go want

Tracy Jackson

really We've that cycle. said times would to as high be two normal EBITDA go we Yes. would want to debt as in a

pricing In balance, our market given than has crude which the have established half talked a balance. minimum cash more comes addition, we it down when the where quite in dropped environment, cash of was minimum that we current historically probably bit about

of wouldn't in levered back So or an get be cash for below wouldn't period a highly want our a minimum path that be time ability we balance. to We were where without want times that. we two an to extended position forward above to to

really So can't beyond we that, comment.

Paul Chang

you me remind the minimum balance? what Tracy, cash can is

Tracy Jackson

it told said it I we re-ran it, was million million million. million. we've about and it everyone When and think talked recently $XXX was $XXX $XXX we And to between $XXX

Dave Lamp

is versus The $XX crude difference $XX.

Tracy Jackson

Right.

Paul Chang

that Or after the this the on this that form look in project, a or that sheet criteria be Okay. shape any is see forward shape your Is really doesn't that COVID when event form about or data this balance black debt. FIC those we parameters? your us, view on in And behind - there using any one to and some process, future, future? you At that business, we whether going this you into such event after swan leverage. change but your does allocation, fast change point on event the your capital the is view when at - final

Dave Lamp

the lot in don't I Well, industry. the consolidation for future, think make more much that But does of it it Paul. the to of it occur view all changes a important

the carbon that anyway. is the I that I California standard low Oregon that's this diesel. fuel think and have there talked renewable driving trend about that's What's embraced.

think fashion. industry molecule. and not is there come overtake most is I in of from the drifting the that It out that or to fossil United the tends at going point but fuel probably may some what mean feel States some away form be the that norm in that way, to

why that diversified that manage allows through so with to portfolio the do, and and demand So a build to sources difficult have don't to have business. EBITDA different it's destruction scale anything you to if you that with it's important don't from going this consolidate be ultimately compete carbon EBITDA to comes drivers, - fuel And you you through of in multiple that's standard. low

Paul Chang

it to from do question find necessarily target? that's could you, then final get right potential event that people not [indiscernible] then. you you If convince you the be to to to willing be a - the will agree me that yourself not that My in other or

Dave Lamp

or stated to another consolidatee. and consolidate is or always I always company to up, us go that way. We us have And can that we be have to think so consolidate either been there a for either value

Paul Chang

Thank Okay. you.

Dave Lamp

You're welcome.

Operator

with question. Matthew & with of Company. Blair Please Pickering, Our Holt from the comes Tudor, line proceed next your question

Matthew Blair

safe Dave on sound and QX a utilization you are to glad the Hey, guys and here. hear I question guidance. Tracy, morning, good had

showing But April. below I utilization, think course, you of turnaround midpoint which had seems in pretty low. the it's XX% Coffeyville

to impact quarter? guess turnaround of at is, kind in did running kind will the this be maybe full And of another on way June? have what So that and utilization you I what ask May

Dave Lamp

And improving the demand racks right, put said, our April. a for and mostly and say the your Well, specifically. But the zero most the that by you're down only lately, even our guidance and that looking - it here then you down come makes by lot. fact of that Coffeyville that, month demand, there utilization was impacted at in XX% about take is Magellan I'm when with is just of I

to numbers it's you find. want those you look If public a I can at up, number, think

far has we demand we'll last and ahead usually about to go If - with that XX% that it, higher. that, of cracks goes. number least week, And will we will to gasoline the wherever we down. in cracks or to to the go and improved tend - go If too The with stay up respond. get the be going are it there get tend we at -

up. that's what not guidance it's of And we recover. where this going is it So how ends it's is kind gave to knowing at unknowable point,

no but there's we can So way where really are we anything guidance today. give except

Matthew Blair

then And Sounds curious sense. I thoughts makes differentials. good, Dave, your was crude on on inland

is a Brent So XXXX. $X.XX a about if US $X to barrel. barrel crude TI happened, curve this closer production Future's now starts to decline, when in averaged XXXX in

you what next just for and year? So on are your stand this TI expectations where curious Brent

Dave Lamp

something this that the impaired back. is is world going with oil low the the is energy change. come and consumption to mix needs is it's that's crude world $XX to in to It's - oil higher. my for going don't the energy, the cure to I demand To best think prices has don't what matter And there, back that low level, Well, that's a is think of knows. I out pandemic. with come It fact the to for sustainable environment. XX% forever low for and what nobody that answer still is - usually not obviously, - prices, of the But very

no goes, lower swings the the the forevermore oil will back way. share way. And come price usually It be the - higher so dead, will and it of the other

will still be recover or shape being will market because any the to market in form way, to volume tooled export you an Brent aren't don't the it in I take, do that Permian export capable see run that Basin and spread the a means I they're And the will it. Basin or long how And TI me refiners but Anadarko don't that it of know, producing. soon. anytime shut So

now, in will So the they down every right are back. differentials come which way upside but

Matthew Blair

question. Makes sense. then last And

So do CMA capture on refiners the modeling contango give is any that? can just to perspective, a you second showing quarter. far us From XXX% about a you so benefit this $X.XX thoughts or in XX%? Or of

Dave Lamp

Well, on and we the of role, up to barrel of volume is capture run on part CMA, our the back-month, the store lot and of kind equation anything because goes every we a and that we we is down. barrels the is and and buy that that around role and that front-month moves

So to is, tended the now, to our if before. yes, in nearly $X.XX, what whatever a about right that rate be was that not it is And so as normal. role down it's role it captured capture

Operator

next question from Mehta question. Goldman Neil your line of Sachs. with proceed the with comes Please Our

Neil Mehta

Dave so everybody Hope Thanks and much, is well. doing team.

time back the do The some Can on actually build a as actually continues retail would PADD that IV, you've pursuing PADD I actually it inspect indicated diligence? like deal a the assets hard is IV certainly question, potential which and through sweet challenges the where processes. about assets to transaction logistics spot that up on imagine coronavirus, the actually it's things just just in due first talk of interested in with standpoint, sort of you difficult advance also to to full want of to From logical you're there that to in. M&A be has the topic appealing are and a number

Dave Lamp

Yeah. makes kind the and But a can we a summarize electronic slowdown a do opportunities now. there's - do difficult a starting things Neil, well, electronic is down to hunker deal make halt. out. - But can comes everybody But right lot to just you It's things today come in so of out more lot there happen. of you world you lot of a at look not age, definitely there it to still that get all nothing it's virtually also, to continue and them. that

Neil Mehta

M&A the when believe involved on if largest would your as M&A balance has me shares, Delek I as is imagine. transaction And the relates of I'm ability sheet. well? the I to correct well, an IET initial then the that your wrong to there it done right transaction sponsor But obviously, have get donor Delek it too, comes - support the and bid, your with capacity as acquisition for provide to was or to

Dave Lamp

you shareholder. him and a He's Well, don’t an consider he himself donor. that. think important it's interesting a shareholder called I

Neil Mehta

I'm Owner, sorry.

Dave Lamp

not You said owner donor.

Okay.

interested is think business have we advantage I very invest looks that’s one to we somebody money. and have is that for the opportunity in right the

competitive have we versus advantage can. I way plan every use it we we to a believe it's and everyone else So,

Neil Mehta

longest couple the the RINs It's conference years. talked call last probably over been we've about on the of since

it up is outlook DX bring impacting what how see So, I And you your in particular for that here. I'd business? and price do thought your

Dave Lamp

when disappointing Well, intent multiple the Tenth Congress of the first I've ruling Circuit crazy biggest I reasons, the of not one said a think very is law is for they in us that times passed place. couple as being was RFS

Even as small least were enough protect crazy was, at as from to due. they smart it refiners certain

with or past do do they how is now come those going problem right, to How So, in do were do they the that of are what that lawsuits waved? out Fuels many Renewable I make from RINs and Association? that that think how they vacate we're the right

second up the levels - then that RINs are frankly have you've that to And scared. go that but nowhere to piece is

So, the it's is of to to of refineries one life a important for our which us, fight us.

hard direction. as in going we fight every as to which So, can we're

force looking capitulating the of to yourself try and whether And can into exposure the crazy argue exist to others not. or our which solutions continue problems that RIN is non-economic diesel high. they still what mandates, RIN, renewable that too to We - at you kind that that’s why this way mitigate we’re you

kind of bottom that's the So, line.

Neil Mehta

me on last WCS. is And for then question Okay.

the a a differential, tend here of, up because WCS about you your lot crude at bit playing inland affect a shutdown. How and see barrels call million from it that it, You does day out talked how little Canadian do volume?

Dave Lamp

WCS, space much and we in - run filled don't We historically resold but have have do we pipeline Okay. then Cushing. that sold and

for right day back I always world on corrects mostly the but come. when source some do the we're those to continue this needs it's needs crazy macro closed. far down that pieces now, will and that shipping - of crude. more are to those we'll there, world economic today, becomes as and And goes, The production the Canadian an it that is banking we’re we’ll while think, through. credits, that it upside arbs cycle the comes where energy, of but But one as We and

Operator

of Our from line the next comes question Jefferies. proceed with your Matt Vittorioso Please with questions.

Matt Vittorioso

that good is you But with I feel in you about take sort about of liquidity. guys there out visibility good here? can around be bringing see quarters. questions are liquidity cycle guess you and just to burn potentially context up the we you high where next just the comfortable have Energy want liquidity again, from today. the level the today. couple you cash a anticipate shaping another dividend Just you today? PBF billion back, of Maybe the you talk down back. will understand in step context, sure the of pretty over have lot I to how And feel that guys on just are flow you I of a liquidity, that $X But you M&A raising do cash diminished. see about of

Dave Lamp

Well, remember will quarter turnaround. hit was quarter be our second Coffeyville by our our and first hit

that second But little biggest a burn that's have it And impact the right first a by was it. that's our biggest our results. similar had so be refinery, on impact the for So, there’ll weird the on quarter our numbers now. quarter results. cash And looked largest the far -

taking $XXX a it. with it the the an probably said, exception, made through pick the and it reduced cost because one Unfortunately, The we to But more that turnaround million the to showed And often was turnaround, roughly virus most little but cost to as time up ideal during as this the was it time. time did virus. take probably difficult ideal by got complete was take opportunity it we possible. opportunity

up think to week. just another demand last in the it's here encouraging come XX% see I

is it. is about core coming thinking shell. Missouri, Kansas the way. up, I are markets. which our is of of states one serve we opening think all their Oklahoma its Texas is out on well

bode jet So, exception to to well going our I or that for see the burn cash generation increase should forward. demand expect And fuel. with continue cash of

Matt Vittorioso

good - guys this you mean but about I’m sure right again, it’s hard in I the now liquidity. environment to Okay. you feel budget

Dave Lamp

Yes.

we opportunities that. really shape. that didn't have we're the shareholders getting be to We’re stock but in to cash market see good not in - could returning other the pretty to it returning shareholder cut dividend Xx, Again, we and Xx any credit for

right that's take. to think the we So, move

Matt Vittorioso

you're significant some crude away mean way guess you don't going those in do some do question environment, some suppliers going it? big producers how impacting the and I had gathering you've you that E&P of crude see see or given current on of own just and these - given just picture again Okay. of And I I of cheap your past. then the struggle that guys system one the have sort if forward shale source going you just generally to cost you advantage source any guys out the mean your those make how the from just picking of

Dave Lamp

Yes.

to it of bit. some far come the and even so wait said for it keep the that seen is most a last improve. we're going week, happened in have what's bought ground, And think in just little of them we've prices I in back to

if out another lot everywhere drift because down be So, that's up there, to there's or worked prices to off. as of I don’t I they’ll inventory a continue think hammer up, know got drift inventory have floating will

numbers of get plus. production day think a can't then. we make I didn’t money, they're we've a If they but to any gathering cash going most to manage we where were return. But quote XXX,XXX them leave that seen to on will So, block barrels

force how lines other right we do now. But lot up. going the change. to been. But again probably drain. till another about the Cushing to ultimately have And a for it’s filling and starting to of it's that's They're be I there’s is messy XX,XXX to down now, We're getting we the some other back worry supply people to Cushing have barrels - year dramatic have That’s a equilibrium. total day things rest here worried direction mean - to differentials probably to change think going to of to going come that

Operator

Thank you.

our session. any question-and-answer like We I’d reached remarks. back the the call to have over turn closing management end for of to

Dave Lamp

Again, CVR I'd for to interest Energy. you thank like your in all

of entire I'd recognized refineries their I our responsible and that trade environmentally employees Additionally, were the refineries really work refinery commitment to performance. like making no safety XXXX in incidents hard Coffeyville year the lost to Both recordable out both happen. hard our work operations. all and had accidents towards their time appreciate we point thank would no in at by that for XXXX, for all safe, for our group, like had and our and AFPM, reliable our - their

earnings With reviewing that, Thank second next quarter to forward our we results you. look during our call.

Operator

today’s you. Thank concludes teleconference. This

disconnect day. for You lines Thank have a your your may at wonderful you participation this time. and

CVR Energy (CVI) 7 May 202020 Q1 Earnings call transcript