CVI - Earnings call transcript Q4 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings and welcome to the CVR Energy, Inc. Fourth Quarter 2020 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Richard Roberts, Senior Manager of Financial Planning and Analysis and Investor Relations. Thank you, sir.

begin. may You

Richard Roberts

and of that may Lamp, Good joining call laws. Christine. Financial federal fourth We much are fourth very XXXX statements Jackson, to Officer; Thank as XXXX our is this afternoon, management. afternoon you Dave today me us call. Energy contain discussing Chief defined for appreciate Executive securities conference Officer; earnings Tracy Chief you, With everyone. our our quarter results, that let this Prior our term under quarter me other members remind you forward-looking CVR

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

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

result a any operations actual results to in extent the materially results no except to statements, statements. differ forward-looking required publicly events whether new discussed the by may obligation result, As law. undertake a information, We future of forward-looking or update otherwise, from the or as

CVR turn with over that period filed GAAP said, discussed Dave. are the will a also call includes the in included XXXX. be completed references related disclosures you the we fourth SEC various measures, XX-K on unit non-GAAP financial measures Any that earnings are November of directly to financial Partners With units This me Let reconciliation split during per a X-for-XX XX, to call the release this measures. The made split-adjusted its comparable call that common will most basis. including our remind on reverse on non-GAAP also XXXX to and such I and quarter call. for the Form

Dave Lamp

our then thank XXXX the you, call XXXX begin Thank I was our Good our challenging year like for the quarter as a company. would afternoon, earnings for our operating year. to the well United call. as accomplishments for with brief today’s and in and discuss of performance States, you for discussion our everyone industry joining a Richard.

liquidity pandemic we successfully were forced were and crisis beginning planned in We during our year, strategy billion conditions January in shutdown a which safe, demand towards $X offering and these functions on an to worth As on and at of modernization COVID with plants. project strategy completed highlighting. additional our realigned for at XXXX, us number the We time We of the and turnarounds accomplishments rates. turnaround reduced notes crisis. completed the deferred we have of the sustainability. we at provided ERP reliable the a country the focus budget. completed during refinery and of a to challenges our major adapt and presented. back We with We the adjust refined operations fertilizer maintained Wynnewood cash COVID Despite products, attractive office business Coffeyville both

at a also With and our Wynnewood, gathered refinery. renewable lighter diesel capacity renewable refining while gravity crudes to reduce plan diesel production, the Board-approved for transitioning we project retool to at the

nitrous too current diesel we of our spread IV, acquisition in discipline our our trucking reduce our acquisitions but operating costs, operating and in court We February are following investments expenditures production the our to accomplishments review focusing Fertilizer has Court, in reducing segment in for the reach Supreme of Record utilization reduction CVR oil our between the the two agreed the to Energy’s year. to Oklahoma, for Tenth In early wide. and case. felt began refused XXXX. to when growing we Mark which Circuit PADD ruling the Partners’ XXX,XXX towards expenses. Certification to a misguided our refining, exceeding ammonia the announced evaluated combined plants, capital CVR CEO, costs. of a pipeline business tons search LPGs renewed XX% capital was capabilities Pytosh, appealed a posting plants Earlier Blueknight maintain today, of reliability intend fourth first crude of crude While Partners’ the which assets credits and our as the with will company-wide, reductions tank, Messer which the SG&A, in was Yesterday, further overpay renewable SG&A contract gathering full million footprint. at business, favorable We reported CVR We Energy’s carbon our in of carbon long-term – to we maintained efforts our wellhead. significant achieved at for closed our offset and and goal conditions, ever in year bid/ask we for multiple with of still new hauling expands of result oxygen quarter results. oxide annual separation assets air including we We improve and gasifier new Coffeyville. $XX abatement announced addition

we XXXX, of of loss $XXX loss a million per reported a and For share. $X.XX the year net of full

quarter. heavy RIN the year quarter the regard year the reported uncertain, For market. and a full $X RIN for Weaker crack million. market our consume from and result the EBITDA portion to the a negative of available positive of a of volatile was million dramatically results loss currently on and weighed which loss a for pandemic quarter, $XX a The in refining $X.XX. destruction higher margin $X significant and was in remains a of prices, the share and particularly million prices net per the we fourth spreads demand for as the

of for the As a quarter Directors did of result, the a Board approve not XXXX. dividend fourth

earning few light our were well opportunities we in ongoing the On as potential acquisition our position I that of liquidity preserving and pandemic the balance on sheet as focus evaluating. have discussed last calls,

transactions. on acquisitions potential ultimately, these the time, we Although are are to down there there active discussions really wide. a too bid/ask we be At got the path as far viewed attractive, spread that of no – on proved number this

clear made do any Delek. it also have have that in currently not acquiring we We interest

the largest shareholder, see improve to and to its stock Delek some take Although have as undervalued continue we actions business. suggested should its as

its for to Delek’s to election board notified of meeting. three also nominate We at upcoming Delek our annual directors intent

As into visibility of around more in returned Board sustained the shares. appropriate and form. in own the refining current our trading value of continue to we the with shareholders At discussions rebound there buying be what cash we get level the our market, back could levels, more

narrow remained XXXX For X light during crude ran the to favor as continue barrel capabilities for Board, per the of combined crude very crack of Across to averaged day the $X.XX benchmark a the fourth Petroleum significantly total of naphtha and quarter, the quarter per day running segment, light throughput quarter processing although the deteriorated approximately crude year barrels for the XXX,XXX throughput barrels well in as the the spreads the XXX,XXX Group per X-X-X compared facilities fourth fourth differentials Both XXXX. differentials ago. was constrained total XXXX. from slate. by cracks quarter

However, in Midland barrel The per RINs consumed the the XX% compared $X.XX differential when WTI Group per period. year. processed. prior the of to in fourth of Brent-TI quarter The X-X-X that Cushing per $X.XX to barrel on product the differential $X.XX XXXX was last quarter quarter $XX.XX the $X.XX per barrel was at period per quarter barrel. the differential RINs over $X.XX in yield of over $XX.XX fourth compared quarter the crude compared WTI $XX.XX in $X.XX The X WTI same averaged barrel. per to fourth to for averaged in year was only the approximately and WCS oil XXXX in XXX% barrel Light crude were to

the in period. as Our the barrels of of to was distillate consistent compared day quarter In XXXX total prior the XXXX gathered barrels yield a as oil per XX% XXX,XXX with fourth we approximately percentage XXX,XXX fourth throughputs for last same of year. total, period day during quarter crude per year

on Our including barrels current Fertilizer had quarter during pipelines and both from have approximately day, of XX% strong acquired utilization the volumes recently XXX% Dubuque. the volumes Blueknight. at XXX,XXX facilities at East per In we we at the Coffeyville segment, gathering our at are ammonia the

year-over-year sales production were and in Although fertilizer ammonia. higher volumes remained for fourth prices UAN both soft the and quarter,

in for improved higher and With over the have the driven considerably rally economics inputs. demand has past prices farmer few crop months, crop this

and UAN the outlook beginning spring looks the for planning favorable. and currently the significantly since year have result, of prices a As increased ammonia

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

Tracy Jackson

afternoon and everyone. good you, Dave Thank

of fourth gain quarter loss share diluted of and consolidated net $XX of our impact million. million Delek per mark-to-market to $XX loss $XX favorable a valuation Our $X.XX inventory related includes investment and million of

XX% fourth the The tax effective these for have XXXX prior approximately quarter the quarter of XX% loss period. XXXX $X.XX. compared been would share our to impacts, diluted fourth per rate for year was Excluding

the was Petroleum with we an provisions fourth spreads the by positive refund million compared and quarter NOL RINs negative of was to in the of result full the a narrower XXXX. for million for a and EBITDA driven $XXX crack tax our segment’s CARES in As currently XXXX accordance year $XX loss elevated to significantly The of in same the net anticipate EBITDA million. The income year-over-year period $XX Act, million prices. XXXX of $XX decline a carry-back

been our impacts, through prices period of quarter in to quarter a crude total to million, a XXXX. segment’s in positive impact the barrel compares valuation This the refining per in same compared impacts our positive and was last $X.XX period have million. XXXX, excluding per same product of the generated inventory EBITDA during during fourth Petroleum quarter per of refined barrel $X.XX $X.XX impact of XXXX. valuation valuation The would the barrel negative year. inventory inventory the fourth increase oil Excluding margin, $XX segment a $XX Petroleum throughput In $XX.XX

approximately quarter impact million was XX% year. crack of crude included to of Derivative the million RINs compared losses of capture fourth total barrel million million, $XX $X.XX In million. for for item margin XXXX same losses prior XX%. oil XX% capture our expense quarter year fourth to for throughput derivative by spread XXXX, was unrealized The approximately $XX most significant derivatives. the and per elevated unrealized quarter prices, losses, XXXX which and $XX which rate in of RINs of was last the of rate quarter unrealized Canadian fourth losses or for XXXX of the $XX had the of period. we reduced $XXX fourth Excluding inventory million, the losses $XX period capture including quarter impacting the with associated the compared totaled derivative in valuation

on RINs $X.XX to was impact $XX $XX which market fourth impacted an at million was million of average compared full The obligation, RINs expense the from year other price at $XXX by quarter in end and mark-to-market XXXX XXXX. expense our accrued activities. RIN RFS year as Our mark-to-market million was

internal expected blending For XXXX, we approximately of refining forecast a net million volumes. from our operations adjusted obligation RINs XXX for

accrued our year obligation. any approximately XXXX. RFS X%. per as Petroleum total million in XXXX be half expect XX Subsequent quarter also obligation diesel is RIN of in RINs. were year, bringing necessary XXX RINs XXXX remaining per quarter for to barrel the approximately of as million fourth to compared for as on anticipated direct throughput any RIN million to our fourth the We by expenses have XXXX comprised the XXXX generate expected $X.XX obligation we approximately to second operating from RINs of expense mark-to-market XXX in of obligation segment’s the of reduced to end, cost this $X.XX well RIN the of renewable barrel net The

by SG&A the cost costs believe should segment costs we the XXXX. expenses most sustainable compared savings For year and year The direct of the in we in operating full full be expenses year $XX reduction to result initiatives, were which of Petroleum XXXX, going forward. SG&A and operating a full approximately our reduced million

expenses and million segment of For million. loss loss quarter of fourth $XX offset net primarily $XX volumes million. year-over-year ammonia. $X.XX operating higher quarter This due and prices XXXX or compared lower was the of The a XXXX, million sales net EBITDA the million of million, somewhat of or to UAN and of and by common $X.XX loss for to fourth improvement per unit lower EBITDA and $XX EBITDA $X loss a per $XX and is turnaround $X operating a unit Fertilizer common of reported operating

operating expenses by For in the the year Fertilizer XXXX. the to $XX full compared million segment XXXX, we reduced costs full SG&A and over year

is XXXX million from XXX,XXX at CVR the for X-for-XX million, quarter, segment, a common total, total, and of XXX,XXX low and distribution of the comprised of as full at of XX.X general $XX spending and of including XX%. in the million, approximately consolidated end million $X million reverse for $XXX $XX is capital the and over In spending certain Partners the the spending capital million segment and $XX repurchase for $XXX Petroleum environmental projects The of $XXX fourth the capital million at renewable the $XX project. consolidated expected renewable to for nearly or canceling environmental declare capital Board million Partners’ $XX its to XXXX. project Directors partner and of Partners maintenance Actual year common Fertilizer the The CVR Energy XX During a shifting for units our the million in million the owns segment, for million, Petroleum related were from Total for million $XX in million units of included result this of outstanding to Wynnewood. estimate million. million end was diesel came approved segment. authorization. range to be additional expected $XXX in total of $X CVR units Of quarter $XXX did CVR and $XXX million, diesel into $XX approximately spending unit partnership total to Fertilizer the year which be XXXX repurchased has XXXX repurchased which We XXXX split to which million not maintenance future. an the the its completed the

our and be for we preparation capital in XXXX by obligation. the Our operations of capital to primarily fourth approximately at excludes consolidated million quarter for the the million provided turnaround plan in and $XX estimate spending Cash Working $X $XX the XXXX. free in spending, flow cash million. was $XXX the million a quarter in planned planned source accrued turnarounds was quarter of was which in Wynnewood will an of year RFS due increase approximately Coffeyville

of from million. cash free operations million flow $XXX was year, cash use the $XX For and was a

$XXX refinanced January addition, and of million in In XXXX, net our cash. which notes, upsized we generated a

we ended with approximately to million year. $XXX the balance Turning from of slight prior sheet, the a cash, the year increase

Fertilizer Our consolidated segment. the cash balance includes in $XX million

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

operations per segment, weather power reduced to by to XXX,XXX over first Wynnewood the and the the throughput we XXXX, Coffeyville past and our currently natural total of curtailments be X of and resuming day. the our to We rates. quarter Due weeks, Looking winter refineries the gas both for facilities ahead estimate both Petroleum normal at approximately to end anticipate XXX,XXX extreme at month. barrels ran

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

to the operating utilization for the due greater rate be rates weather Dubuque to ammonia pricing, the we segment, extreme XX% week estimate For and quarter. Fertilizer reducing despite at conditions natural gas last our East than

million, will back to inventory capital With $XX impacts, $X total direct $X expenses expect to million million. it be We and excluding between turn be $XX spending to and to you. Dave, that, million I operating

Dave Lamp

Thank you, to any XXXX challenging we to are in navigate Tracy. believe and very eventual market. difficult well this a we In were on positioned the environment year, was summary, upswing but through capitalize we able

operations, North tier be American financial to company profitable safe, and refining remains as a top mission superior fertilizer measured by Our growth. reliable and performance

year, cracks for out-of-control most of start prices improved XXXX, being RINs. the to at is consumed increase Looking have the although by

starting generally optimistic crude our to encouraging, so inventories seen we oil, In without action demand. are on and for by increase increase. products. firmly with meaningful widened in are Shale the Crude refined are that starting of still still any cautiously XX% inventories to we we and utilization low declining, worldwide. corresponding have crude differentials but but remains balanced, drawn have demand inventories Brent-TI by not has is is the pickup outlook fundamentals production a see. supported taken the declines Domestic some. backwardation near-term, place, While far oil about in is the the Saudis. vaccines market down in increase based in oil narrow, And spread excess drilling but is still is Starting

normal. inventories are putting RINs system Moving still imports demand weak, miles and barrels X $X day vehicle Magellan products, approximately the inventories down near demand declines. demand cost to and X-year is per are due averages, high costs. are million remains approaching is X-year per low, are on ridiculous, overall, RINs near while little above refined high. barrel, Jet to traveled showing demand and operating gasoline but are are U.S. Exports approaching mainly in Domestic travel. international averages.

and cracks. turnaround up of believe sustaining approximately see Looking capital still remain believe at in Diesel barely X seen at are worldwide XX%. of been low supports RINs question in The we cracks need demand day to Crack the not from trending long potential more X.X cracks, domestic To-date, in and the and and see at considering permanent happens announced we is spending. cracks million closures higher between per until with RINs. sustained capacity but utilization States. will barrels weak conditions, temporary these cracks order these million operations move plus have the spreads utilization with industry RIN levels are term. requirements refining United have to free in keeping that prices is contango flow refinery up over level. idling shutdowns, rationalization going We sufficient unsustainable We generating Right cash now, in the the forward? at is XX% what relatively to

focus in operations reliable in any in continue the the as to company. can market the what the remain position we to control advantage Safe, market. key term, best to us remains we us improvement a optimistic take focus for of near a on While on put cautiously we

than We will to spending critical applicable safe, regulations. to operations and our to what capital we work reliable on system other consider continue minimize with refining compliant remain

We the and our oil maximize Blueknight of working of our to are from system assets in common. process acquired by our pipeline to integrating our value we crude purchases Cushing reducing

renewable on are We strategy. executing our diesel

Our complete. is on Phase now X getting mechanically primary focus

in We construction. currently are

We have remain although it schedule, everything is ordered. We on tight. generally

move we and on marketing diesel will As oil focus through renewable procurement we completing agreements. construction, soybean

Next, we Phase adding pretreatment. which begin the X, will development involve of would

build and unit technologies could different evaluating the and if potentially the XXXX and could currently approvals. a of are by subject other end or third installed go what Board a We considering to have pretreatment where through we we We capacity. sooner unit party,

will also We Coffeyville. begin for potential planning Phase the at X

large decision We of projects X. likely on to final will wait until first market completed are making where before the wave the renewable most the diesel goes see Phase

continue renewable a there believe early and time an is that will being commodity We diesel to advantage become clear mover. over for that a

optimistic in more For NOLA bottomed have the likely Fertilizer XXXX, have to believe demand we demand currently price urea XX% overseas prices are for for be LNG for economics as and the on surged. strong inputs October, improving expect The UAN to in nitrogen ammonia significantly outlook. crop We since natural XXXX. gas higher. near-term and prices fertilizers prices and increase we has segment, rallied farmer continued Corn driving over and

as have Partners’ strengthened, lower As credit the senior refinancing at notes improved cost. business much CVR to we intend has on focus potential markets those and

have credit. are low-carbon diesel fertilizer metrics $XXX based Brent-TI averaged has $X.XX a of under XXXX, RINs, prices $XX.XX and X includes WTI a WTI. has WTI. increased of quarter-to-date over responded. while differential have Group have oil on prices $X.XX Cushing X-X-X with WCS have the and a Renewable barrel barrel X spread have the of per tax ton. fuel lenders first soybean averaged Ammonia averaged to over with per Midland prices follows. are barrel per differential was $XXX WTL standard $X.XX and differential margins gallon prices UAN the credits per per intensity Corn and and soybean per $XX.XX carbon and increased $X.XX barrel quarter ton, over at as quarter-to-date Looking averaged significantly

was yesterday, under were WTI. of Group $XX.XX X Brent-TI $X.XX X-X-X $XX.XX and cracks was per WCS As barrel.

is have ‘XX bio-diesel $X.XX be I with have evidence in market. obligations should the the $X.XX are in cracks issue benchmark Although most despite of in RINs, driving averaged the and clear this that XXXX, ethanol to waivers outstanding have EPA’s averaged averaged increased earlier, price mentioned improved, program past volume six-fold while Quarter-to-date broken. associated RINs $X.XX. the ethanol rule on bio-diesel RFS over significant and have RINs is ethanol refusal we RINs averaged January X increase failing refinery a factors XXXX legal A seen as what renewable small obligation RIN RINs of and year $X.XX. for In move nearly RINs to in XXXX their year for prices.

would by We quarter. Supreme RFS are refinery would which With effect which we was decided hear our for and anytime. the questions. been case RFS capture XX% be ruling have We of ready the for appeal the the at ruling. not end The not of encouraged XXXX, that, the original regulation been at operator, questions rate the obligations the Tenth position, that have taken did applied. higher about waivers small the misguided of do waiver that for Circuit obligation and have could accrued they for this our of serious applied Without mark-to-market Court Wynnewood they are to have the believe if an approximates we at XXXX XXXX had intent

Operator

Thank you. Instructions] [Operator you. Thank

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

Prashant Rao

for afternoon. Thanks good Hi, taking question. the

change course RIN versus Trump Dave, administration. detail they have you one, yesterday prices high, as from we indications quite to on and getting been EPA are the the Biden SREs that have press are going elaborated release First in

like they prices is respect situation exceeding we’re ask expectations expansion, have we near-term. to your seeing, I or RINs in more a range is these the this you year to the with levels over of look will the higher view the economics be thought? renewable next though, the looks of wanted is about within when it current economic X your those could do Or projects, in sort price end market you like this for years? are first, that what your of these So or structurally diesel value thought price that

Dave Lamp

they they high, down what at don’t their eventually, this us don’t the members. you it’s we the and in And of the if some understand business higher tend price I not this any affect going by really, they all think RIN I past it. consumer approved Renewable are consumer way than have Association gotten – history, benefits because how look higher Well, other Fuels fathom when under. approach, most to project don’t back just including originally be And like in anybody, the and knocked of think and going to change to is a

think expectations it some down but at my point. now, will thoughts exceeding So are, our it’s I come

Prashant Rao

expectation. But low your – mean, a even original fairly under like seems it given the short payback I project period cost Wynnewood short given the is

as sounds savings if project like the with the So elevated pretreatment? question I specifically, online, what putting the early is, in the or generation. if half year, cash or be Wynnewood aggressive cash, down be, get this How from excess there current to It sheet? be in Or that some that excess my environment the starting Brent in generation My there? looking it little but first more the bit of cash towards that’s debt priority, would question balance on maybe next XXXX, to more I short-term, guess the comes a guess, time, the pay you persists? remain back would be could would project at take you address excess, would

Dave Lamp

will month, this or the at they the mentioned debt, looks Well, to made cash, that with remarks back we else I evaluating so. the I’ve And do buying should whether think something that buying prepared are right they if quarter every sense. doing down including now and Board every in continue be shares

everything nothing we next consider So but the quarter, guarantee every decided quarter, and that, that to for that quarters. will remain doesn’t they this do

it’s I – I – think our sheet. optimum, our cash say at $XXX have million. look we that on we you around requirements cash would our think It’s and the much If minimum are not too balance –

have we can of marketplace. the you cash, So but excess see lot a also have uncertainty we in

think king environment we degree. this to is So cash some in

Prashant Rao

you and upon on for Makes reduces you us we our RIN is facility, me, savings the that given assumption. based just – can that? anything of more we should think do But sort much sense. about the RVO, on there cash pretreatment add or Wynnewood project Last on offer would much of price thinking how the total terms remind flows, math very if clear could be reduction pre-treatment the How you’ve in us net the question that does could how that be your cost numbers I to incremental helpful?

Dave Lamp

Yes. Well, CI big pre-treater the a advantage for is the getting down feedstock. of the

including that’s prize. And up, feedstocks for up. to probably CI us. $XX Every million in train that’s and what typically, the do dirty the pre-treater all about but to all And now, that the and real do is we’re still oils, a will right you penciling clean train. are getting project, is single at diesel the they all up, waste look parameter If the renewable

is And to but So the look really degree. really it, of cheaper really a – standard at to some that we at a fuel the optionality. get have really grail really in feedstock of even sort. create lot you here holy carbon credits the of if values oils getting biomass some and – low out is And to

Prashant Rao

you score ballpark pre-treater what range a there give – a much be of quick follow-up, improvement Is of how up? much Wynnewood could one a would How add us? will when versus just CI a it starts first

Dave Lamp

Yes.

being oil with about and so use soybean bleached XX, we end go oil improvement. corn, you washed that’s I’ll if a just think I will example, an probably as up XX. around substantial And corn to

Prashant Rao

questions. will the Okay. it much Thanks turn I for very taking over.

Dave Lamp

Sure.

Operator

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

Manav Gupta

Hey, to sent XX. wanted Delek Dave, you a I letter on ask you to January about

is would what from because want gone Delek. I you and us. of have think through suggestions perspective letter letter, these you own all a the of course Delek the to portion such We aim help how just you the of you actually here, how understand large the of

So if the letter walk of what’s through bit you little us and the your could aim here. a letter

Dave Lamp

the trying I our as Well, and And at it probably a but speak, think piece. The if I were still says, doing. is that main they And negative some be Springs I could as as are. shift And what to And is, marginal, as to not well as Dorado, of are that we’re I to present a they it took growth strategy. really, the free their flow read shrinking. it market gross they to are in activities going letter cleanup, what my and bodes bottom generation that’s the as feel which so as the think and them is from just mainly we time, think El and think suggested free is But I refineries says, two well far there what far we we flow, you and that mind of has – cash cash necessarily investment. what in says the investment growing, And math can. model they an is thought our undervalued big Delek to a are of represents right, we’ve Crop model is what a what margins. line CVI is on

Manav Gupta

the about those will talk have fair little and one. bit for think Board a fit right why the be members you Delek? you recommended you That’s a Can

Dave Lamp

the of extremely the been creation this lot. the are we and their flow experienced value and have members cash a all we entire basically think generation, Board – Well, suggested in around help in industry Board are will refresh in free have and careers

Manav Gupta

Okay. unit. actually there some pre-treatment about X RINs, cuts And flexibility you is, Phase over wondering, talked just a you I CVI, can always then Phase benefit Phase understand, is My obligation David, kind gets RINs? your where to Phase to and RINs still RINs, actually flexibility last prices? a long prioritize of could building a just And here I’m question has where can that short X get RVO is And X little here company Phase there. is been X start higher but X here Phase left was any the there trying long X lot, so there from some becomes long RIN which before

Dave Lamp

RIN, to the than it. option kind having force other but of is There it. to government really me capitulate more you makes into on with they Nothing and upset no other bear grin than

much think me. answer – gets I’d to the way see renewable Phase correctly, probably go if don’t built? math But down do the announced. How of XXX,XXX the I it that barrels has it will of I diesel of happen I if announced XX% the day X it a So is know. looks I almost question on been I like list,

And construction. it’s already in some of

Some of it permit. will not get

not course, is Some it, with happen. standard problems won’t probably low-carbon occurring tighter. that and has tightness RINs, a is of fuel lot of move. But of even already lot other it credits. but will XXX,XXX that a it’s also get to market mention will have move And has whole one, to number feedstock Everything of whole to

least Board the and anyway. our project – get of think little Wynnewood It and think it time the the I here up, then a or sees to to will for So the we our is way I in develop view mine us early get we’ll take watch market the some that at same while. want

whole year, about renewable a delaying lot years, to more don’t lot think by I a going So that. to X the going doing another we’re diesel. we’re we’re in – in know But it another

Manav Gupta

Thank Thank perfect you. makes Dave. you so That sense. all much,

Operator

of with your comes Please question question. from the proceed JPMorgan. line next Gresh Phil with Our

Unidentified Analyst

Nick for Hi, on is Phil. this

where things to the question really just how market guess Wynnewood, for at now secure how be supply standing for see right RD. around trying SBO do you’re availability First are feedstock you looking? going developing? I feedstock the then would for And forward,

Dave Lamp

I Yes. area for this future offshore. projects without is on, of now, doubt Well, is oil coming right concern bean exports think of going an a there but out still

really have problem in securing it don’t we a think the So I short-term.

we’re it, We going have to with after I how to we’re agreements that. mean to do very get though. close

have is CIs, don’t question the where that has to – to be a availability the in it it’s it to there. – there, how think securing It’s so we speak. as the that it. Grail, I It’s So more it. that’s Longer coming that’s I biomass it the we that more think of out industry problem really Holy term is Grail a biomass. it’s There a move X and – in there is short-term. There this a it is area. has do get timely Gen really of to is is term, just convert research, quality. question liquid is in the ways needs It’s really Holy longer negative to correctly this it – there I probably a and able And this to as get But get I CI. there but to think in secured being will lot more the to just right basically biomass mentioned, the converting a taking fuel favorable of

Unidentified Analyst

out the second market coming Thanks. RIN guess, RIN been possibility of limiting I participants is national LCFS there mentioned, I maybe standard you’ve a is SRE chance was the ex-RINs, reform further question. And it came with there yesterday market hearing admin, know Biden you under about? a admin of or think Do any the opinion. that any

Dave Lamp

the and And and is And really that rulemaking with think current we’re this of of Normally, these was a out years of takes is doing law have. Circuit "Well, the right." anything all say, by dramatic process. go history shift going get interpreting and I Well, XX-year Tenth the is on possible waivers to way say evidence they And strategy you reinterpret Well, the the through rulemaking to letter through suddenly things. just in they to now come administration. has the it the and mentioned. that EPA pretty

they I’m of And sections the reason sure There about pretty Court read law, because is are – an is One that’s darn clear. case Supreme in the thinking, what what the two talk exemption. extension world the just the obviously I blatantly took it’s you think So and it’s wrong. not if but waivers. it’s half confusing, of that the it

the at We run is, small waiver. renewable cut what look a time, The you can for other will you, apply just I can like We a at probably at we’re doing – for instance, any Wynnewood. required diesel, keep to we’re it barrels. below for choose with there. the rate that’s going barrels Well, XX,XXX to more another by refinery level waiver. give

under per We’re put in why be there. barrels going to around day. XX,XXX that was That’s in

a You and law them, change climate you enough to for the that. one could of refiner future – written reasons was choose flexible to be multiple that to do and could to the in become be small allow

So And has the first into a just job great Trump for in then apart RFS turned X it’s years really – political Obama the waivers. years RFS. years and was last for many fell a the Donald X as did on what football. then same, And no

particularly political. no that’s business. – railroad it’s run refining just So all way It’s to a and a

Unidentified Analyst

taking Appreciate the questions.

Operator

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

Neil Mehta

Thank the guys. you. Appreciate afternoon time this

The then how got especially to, dividend? Is around balance be clarity that of the first Just script, we framework And on you you how the and milestones it on you to it. you alluded through kind as do we demand buyback us capital Dave, the RINs? looking getting call alluded are do cash versus sheet? about the you for about as the capital your question return, that walk should but weigh is think returns. reinstatement think dividend? around in dependent just on What on of the

Dave Lamp

think I overriding Neil, is our is about. – flow cash what just all we’re free principle, is Well,

furthermore, are price that coming acquisition be in which our in the an at would with cash price diversify interested our in I price would shareholders is also. through more buybacks. our they And EBITDA, right, diversifying reflect So think would stock business our dividend back, either right coming think or interested we if stock up and the

So will sense. lot. became again, becomes diesel. higher kind it evolved it I was it excess tells actual to the probably of it was kind something whether can’t an a do the what itself. year, it RIN call it And it’s makes the corner of that an then tell buyback those it’s to were call into I of latter two, or acquisition do kind as is with year, as a do prices goes back and either it else. would think I something. backed but then government, capitulation then dividend last we with priority but others it cash, – you of a If it any through renewable And we But others, the

Neil Mehta

the – M&A. around That’s Yes. follow-up is

there. in at sort you IV the say but gave of can the PADD Can wasn’t it You then what path it, like us sounds of just and down you the kind went bid-ask of acquisitions you off hint and of terms think how future? a deal? table a there Or transpired? come And for going is the scenario your what do strategy, where about foreseeable that the Is you forward? acquisition back you just do unpack

Dave Lamp

never can predict you future, Well, the Neil.

We lead and back, for fell we as who page. a of deals the up these there a may candidate knows. off come while, were Some

time, some never you back it could unpredictable. come know, at So

Neil Mehta

I Yes. And your I’ll on the value sneak one if just always more is in could, view there, macro. I

think over then for you margin, the where next path Brent-WTI about in disproportionate have talk the looks you distillate year. how exposure out and Just particular, looking

Dave Lamp

the on future bodes distillate and is on crack as that I’d Well, contango I And crude in is I the be continuing diesel crude you the side, and going think falling, the with distillate tell I backwardation. see you mentioned that think – well. up in to and price

think the where demand ever rebalancing. would I fuel it recovered, some the actually if I And bunker a of be distillate. that effect to coming IMO think industry more we XXXX lot may says seeing about into

worldwide. pretty right inventories it’s on and you so kind good – And I’m demands distillate of now, at if look

I put that’s recovered way. that rebalanced, been least So it’s or think let’s at it

we also more As reemerges more oil the the far be I’m drive to I To requires reemerges, capacity the believer have. higher think even Brent-TI Brent-TI Brent-TI higher. offshore as firm goes, and that pipeline a shale and with barrels

at differential oil and the WTI production. to If but a premium needs higher-value because a look it to crude is Cushing, Houston, shale by to WTI driven Midland it’s than – Brent, and is that remain you it that way price,

Neil Mehta

Thanks. Appreciate it. Thanks, Dave.

Dave Lamp

Sure.

Operator

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

Matthew Blair

Hey, I sounds had a from on question good outstanding it’s liability, RIN here. like morning. the which Wynnewood

have million down XX had then a number And QX? you at end you X%. was stands the Where it at today? on also did that think, believe mentioned of stand where QX. by that I cut you So end I that the do of about Tracy,

Tracy Jackson

That I item. is The What? the outlines filed is Yes. that specific detail accurate. line said. tonight what have will obligation be That accrued will K that

Matthew Blair

start to of – since say fair up it year. think the Is are RIN I the XX% that about prices

if you So year? higher obligation at today’s end ended have say by the than cut back of to the X%, where it is that you fair it is

Tracy Jackson

we an also obligation abnormal because would have built. had that Yes

Matthew Blair

the then the costs, million million-gallon and right, And pre-treatment XXX was to million-gallon Coffeyville plant well XXX cover Wynnewood on follow-up – as conversion? okay. wanted that $XX I as Right, that both the would the

Dave Lamp

the haven’t of one really we plant the build [indiscernible] really that what or Do pre-treaters? is do? decision $XX the do just to we that’s yet, made million common handle Well, Matt, is but one Wynnewood have, we And we two project. build

Matthew Blair

Got question. it. And last then

moving more think which than share to up regional more kind and share XX% of XX%. the year, your throughput, crudes. fell moved you’ve WTI dynamic? your seems just to total been a of of that like temporary in was regional a I lowest Was onetime your to crude like, a the in It of general,

what QX? in uptick in the Cushing-sourced barrels explained more So

Dave Lamp

gathering the and in as the down they oil recovering March, that way time, are again drilling, the rates pandemic Mainly slowly off April, are the for they quickest. now Without fall of any went occurs. to been barrels have as May, period way, our ones starting drop depletion a shale and

procurement miles, little uptick get barrels think a slight us I still now free XX,XXX on lined the the more although at are campaign. cash even can is up all again, they E&Ps fully pipeline are to up a Blueknight and all see system we are we it drilling get – That’s than it’s as bit on going. maybe start XXX added. much crude dependent running while a But current flow will more that the the You’ll once focused day, with drilling and – crude and know you E&Ps prices, think up much

States United think. this So guess I anybody’s how point, decline much at will in crude as the

Matthew Blair

very good. Sounds Thank you much.

Dave Lamp

You are welcome.

Operator

the to have now the management question-and-answer of would like I turn closing floor for back We comments. to session. reached end the over

Dave Lamp

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

operations. I’d like forward quarter reliable, earnings our we their our for Additionally, to thank We safe, in operate look contractors employees, the next and the call. you. during environmental reviewing communities to Thank responsible hard work their and commitment ‘XX towards results first

Operator

teleconference. today’s conclude does this gentlemen, and Ladies

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

CVR Energy (CVI) 23 Feb 212020 Q4 Earnings call transcript