CVR ENERGY INC
For the period ended Dec 31, 2024. Filed Feb 19, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 19, 2025
CVI$38.13-4.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-21.
0001376139-24-000006
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-19.
0001376139-25-000008
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 216 previous paragraphs and 261 current paragraphs.
92 unchanged; 83 reworded; 76 added; 39 removed; 2 previous and 10 current paragraphs rearranged.
Tables are not compared: 34 previous and 35 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (76)
Current report
Potential Strategic Transactions
Current report
As previously disclosed in a Schedule 13D amendment filed on March 18, 2024, Icahn Enterprises L.P. and its affiliates (“IEP”) and the Company are considering potential strategic transactions available to the Company and our subsidiaries, which may include the acquisition of additional entities, assets or businesses, including the acquisition of material amounts of refining assets through negotiated mergers or stock or asset purchase agreements by the Company or our subsidiaries. IEP may participate in such acquisitions, including by providing financing to us or our subsidiaries through the acquisition of additional equity of us or our subsidiaries, providing loans to us or our subsidiaries or otherwise. In addition, IEP and the Company are considering strategic options involving CVR Partners, which may include the acquisition by IEP, the Company, a combination of IEP and the Company or other affiliated entities of some or all of the outstanding common units of CVR Partners not already indirectly owned by the Company (the “public common units”), the sale of CVR Partners or the Company’s interest therein, or other transactions. Any such acquisition, sale or transaction could be effectuated through open market purchases, tender or exchange offers, exercise of the limited call right contained in CVR Partners’ limited partnership agreement, value enhancing partnerships, negotiated merger transactions, privately negotiated transactions, sale transactions or otherwise. At this time, there can be no assurance that IEP or the Company will pursue any such potential strategic transactions or that any transactions, if pursued, will be completed on attractive terms or at all.
Current report
Recent Events
Current report
As described further below, volatile commodity pricing and higher industry utilization and oversupply have had an unfavorable impact on our business and have negatively impacted our cash from operating activities and liquidity. As a result, the Board elected to suspend payment of the cash dividend, defer new growth capital spending, and reduce certain expected capital expenditures, as further discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” of this Report.
Current report
On December 19, 2024, certain of the Company’s subsidiaries entered into a senior secured term loan facility in the amount of $325 million (the “Term Loan”), which was borrowed in full on the closing date.
Current report
On December 23, 2024, a subsidiary of the Company sold the 50% limited liability company interest (the “Membership Interests”) it owned in Midway Pipeline LLC (“Midway”) to Plains Pipeline, L.P. pursuant to an Assignment and Assumption of Units in exchange for cash consideration of approximately $90 million. Midway operates a crude oil pipeline that connects the Broome Station facility to Cushing, Oklahoma. In connection with the sale of the Membership Interests, a subsidiary of the
Current report
Company entered into a pipeline transportation agreement with Midway that allows the Company to deliver a variety of crude oils from Cushing, Oklahoma to the Coffeyville Refinery over the long-term.
Current report
Regulatory Environment - In addition to existing regulations like the Renewable Fuel Standard (“RFS”) of the Clean Air Act, which significantly impacts our business, there have been several proposed and enacted climate-related rules and compliance requirements at federal, state, and international levels. While the Biden Administration had advanced significant climate-related initiatives, including stricter EPA emissions standards and the SEC’s proposed climate risk disclosure rule, recent changes under the Trump Administration following the 2024 U.S. presidential election has begun to and may further shift regulatory priorities. Through executive orders and regulatory rollbacks, certain of these initiatives have been curtailed or reevaluated and incentives to increase fossil fuel production have been promoted, creating a more uncertain regulatory landscape which may materially impact our business, operations, feedstock and compliance costs, results and market stability.
Current report
•We characterize current crack spreads as below mid-cycle levels. This is due to a combination of the refined products market being oversupplied, as refinery utilization has been above the 5-year history for most of 2024, improved fleet mileage, and reduced manufacturing activity which has lead to weak gas and diesel demand.
Current report
•Industrial production slowed in 2024, and truck, rail, and ship tonnage and freight volumes were reduced, which lowered distillate pricing into 2025. In addition, distillate crack spreads continue to be pressured by the low price levels of natural gas causing a lack of distillate demand to generate electricity around the world. Moreover, new liquid natural gas (“LNG”) projects coming online and expansion of export capacity in the United States has contributed to the increase of global supply of natural gas and thus downward pressure on prices, and may also support fleet shifting from diesel to LNG. Gasoline and distillate pricing has continued to decline into 2025.
Current report
•Refining capacity has increased around the world over the past two years, with major projects being completed in the Middle East, Asia, Mexico, and Africa. Refining capacity in the United States has also increased approximately 500,000 bpd from post-pandemic levels, mainly due to the completion of expansion projects that were underway pre-pandemic, and capacity creep. While these ongoing projects may encounter various challenges and come to market slower than anticipated, they have begun to and should have a growing impact on global oil and refined product flows. At the same time, these capacity expansions could be offset by additional conversions to renewable fuels production and further refinery fleet rationalization through planned shutdowns, or currently unplanned shutdowns due to future economic constraints given refined product consumption is slowing in the United States and remains weak in Europe. Currently announced refinery closures in the U.S. and Europe account for nearly 800,000 bpd of capacity expected to be shut in by the end of 2025.
Current report
•Asian refiners appear to be benefiting from discounted crude oil offered by sanctioned countries like Russia and Iran, adding product to an oversupplied global market.
Current report
•While the Chinese government has taken several steps to spur economic activity, the Chinese economy is still weighed by a weak property sector and lower domestic demand for transportation fuels. China has seen a significant increase in EV sales as well as the conversion of heavy trucks to LNG. Any lasting effects of these factors remains to be seen.
Current report
•During 2024, multiple bills were introduced in Congress that would extend the Biodiesel Blenders’ Tax Credit (“BTC”). While extensions of this tax incentive have been passed by Congress and signed into law close to, and even after, expiration dates in the past, we believe provisions of the Inflation Reduction Act that created the Clean Fuel Production Credit (“PTC”) could signal the end of the BTC, and if not renewed, would likely affect RIN prices.
Current report
•In April 2024, the Board approved a distillate yield improvement project at the Wynnewood Refinery to modify one of the vacuum towers, which may increase distillate production at the refinery by up to approximately 4,000 bpd. Final completion is currently expected in 2027 at a capital cost of less than $15 million. The Company is also studying a similar project at the Coffeyville Refinery which will be installed in phases. Modification to the crude tower will be made in early 2025 during the scheduled turnaround.
Current report
•In connection with our settlement with the EPA on certain environmental issues at the Coffeyville Refinery, the Company plans to install a flare gas recovery system at a cost of approximately $50 million, which is expected to be operational in late 2026.
Current report
Renewables Segment
Current report
Current Market Outlook
Current report
•The near-term outlook for the renewables market is likely to be heavily influenced by U.S. government policies, particularly as related to the recently expired BTC and PTC, which is awaiting formal IRS rule making, along with the RVO levels to be set for 2026 and the resulting potential impacts on RINs prices.
Current report
•The $1 per gallon BTC expired on December 31, 2024, and formal IRS rule making for he PTC has not been issued. With the loss of the BTC there could be additional volatility in pricing for renewables fuels feedstocks, as well as in prices of other credits generated by renewable fuels production, particularly RINs prices and Low Carbon Fuel Standard (“LCFS”) credit prices.
Current report
•After a substantial build-out of renewable diesel production capacity in the United States over the past four years, where capacity increased from less than 900 million gallons per year in January 2021 to over 4.5 billion gallons per year in October 2024, further renewable diesel production capacity expansion is expected to slow significantly due to the uncertainties around U.S. government policies and support of renewables businesses.
Current report
Regulatory Environment
Current report
•Profitability in the Renewables Segment is highly dependent on the prices of government credits, particularly RINs prices, LCFS credit prices, and the BTC. RINs prices are mainly influenced by supply and demand dynamics, with the demand being heavily impacted by the annual RVO levels established by the EPA. Current market prices for renewable feedstocks are significantly higher than the prices for renewable fuels. Without sufficient government support to stabilize prices for credits generated by renewable fuels production, many renewable fuel producers may not be able to generate profits.
Current report
Company Initiatives
Current report
•The Company is evaluating a potential project to convert the Wynnewood Renewable Diesel Unit to produce sustainable aviation fuel (“SAF”), which approval would be subject to numerous conditions and requirements, such as approval of our Board, regulators, and potential other 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.
Current report
Chicago Board of Trade (“CBOT”) soybean oil is an industry wide benchmark that is utilized in the pricing of renewable fuel feedstocks. The pricing differences between CBOT soybean oil and other renewable feedstocks such as distiller’s corn oil, used cooking oil and animal fats is typically driven by the carbon intensity (“CI”) score related to each feedstock along, with overall supply and demand in the market for various feedstocks. Feedstock CI scores play a significant role in the generation of Low Carbon Fuel Standard (“LCFS”) credits, where lower CI score feedstocks generate higher credit values than higher CI score feedstocks. The PTC that is intended to replace the BTC would also be calculated based on CI scores, with lower CI scores generating higher credit values.
Current report
Approximately 60% of combined biodiesel and renewable diesel production in 2023 was produced from Vegetable oils, with animal fats comprising the remaining 40%. Of the Vegetable oils consumed, soybean oil comprised over 60%, making it one of the primary feedstock pricing benchmarks in the renewables market. As a performance benchmark and a comparison with other industry participants, we utilize the HOBO spread and a Benchmark Renewable Diesel Margin that incorporates the HOBO spread along with RINs, LCFS credits, and BTCs generated by renewable diesel production.
Current report
The HOBO spread tightened during 2024 compared to 2023, primarily as a result of declining soybean oil pricing in 2024 more than offsetting a decline in ULSD prices. The HOBO spread averaged $(0.90) per gallon in 2024 compared to $(1.50) per gallon in 2023. Despite the improvement in the HOBO spread in 2024, the Benchmark Renewable Diesel Margin declined in 2024 compared to 2023, primarily due to declines in prices for RINs and LCFS credits. The Benchmark Renewable Diesel Margin averaged $1.82 per gallon in 2024, compared to $2.53 per gallon in 2023.
Current report
Average monthly prices for RINs decreased 56% during 2024 compared to 2023, while LCFS credit prices decreased 17% during 2024 compared to 2023.
Current report
Benchmark Renewable Diesel Margins (1) (2) (3)
Current report
(2)Renewable Diesel Indicator Margin calculated as follows:
Current report
(OPIS CARB ULSD + (D4 RIN * 1.7x) + BTC + LCFS Credit(65CI) + CAR + LCFS Fee) - (CBOT Soybean Oil * 7.6 lbs/gal).
Current report
(3)HOBO spread represents the Heating Oil – Bean Oil Spread and is calculated as CARB ULSD price per gallon less CBOT Soybean Oil price per gallon.
Current report
As part of growth capital projects, CVR Partners has undertaken several initiatives to continually improve reliability of its Facilities. In December 2024, an additional piece of oxygen equipment was installed to provide better reliability of a third-party air separation plant which supplies contract volumes of oxygen, nitrogen, and compressed dry air to the Coffeyville Fertilizer Facility gasifiers.
Current report
Effective with this Annual Report on Form 10-K for the year ended December 31, 2024 and due to the prominence of the renewables business relative to the Company’s overall 2024 performance, we have revised our reportable segments to reflect a new reportable segment – Renewables. The Renewables Segment includes the operations of the renewable diesel unit and renewable feedstock pretreater at the Wynnewood Refinery. Results of the Renewables Segment were not previously included within our reportable segments discussed below, rather included within “Other”. Prior period segment information has been retrospectively adjusted to reflect the current segment presentation, and year-to-year comparisons between all periods presented for the Renewables Segment are discussed herein.
Current report
Overview - For the year ended December 31, 2024, the Petroleum Segment’s operating income and net income were $12 million and $70 million, respectively, compared to operating income and net income of $982 million and $1.1 billion, respectively, for the year ended December 31, 2023. The decline in both operating income and net income compared to the prior period was primarily due to decreases in gasoline and distillate crack spreads in 2024, decreased production and increased maintenance resulting from the fire at the Wynnewood Refinery during the second quarter of 2024 (the “Wynnewood Fire”) and unplanned downtime at the Coffeyville Refinery (together with the Wynnewood Fire, the “Petroleum Unplanned Outages”), and increased RFS-related expense in 2024.
Current report
Refining Margin (1)
Current report
•Unfavorable sales volume impacts related to the Petroleum Unplanned Outages; and
Current report
•An increase in RFS-related expense, net of RINs sales, of $42 million, which includes unfavorable RINs revaluation adjustments of $195 million as a result of a smaller decrease in RINs prices in the current period compared to the previous period.
Current report
Factors partially offsetting the decrease in refining margin were:
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Removed paragraphs (39)
Previous report
Renewables Business
Previous report
Since 2022, we have focused significant efforts on decarbonization initiatives including but not limited to the completion of the renewable diesel unit (“RDU”) project at the Wynnewood Refinery, the creation of an Environmental, Social and Governance (“ESG”) committee and the publication of multiple ESG reports. In February 2023, we completed the transfer of various assets to one or more new entities primarily formed in 2022 to, among other purposes, better align our organizational structure with management and financial reporting. We also achieved mechanical completion of the renewable feedstock pretreater project at the Wynnewood Refinery at the end of 2023. We currently expect to continue to explore options to decarbonize our business in areas with attractive economics, low risk of government subsidies, and in ways intended to support our Mission and Values.
Previous report
Other Events
Previous report
Following good faith bargaining by East Dubuque Nitrogen Fertilizer, LLC, the United Automobile Workers Union and its Local 1391 representing approximately 90 employees at the Nitrogen Fertilizer Segment’s facility in East Dubuque, Illinois (the “East Dubuque Fertilizer Facility”) went on strike on October 18, 2023 after its collective bargaining agreement expired the previous day. The East Dubuque Fertilizer Facility has continued to operate and is currently expected to continue normal operations during the strike.
Previous report
Environmental, Social & Governance (“ESG”) Highlights
Previous report
•After substantial declines in demand for gasoline and diesel due to the COVID-19 pandemic in 2020, the combination of improving demand, declining inventories, loss of domestic and foreign operating refining capacities, and conversions to renewable diesel facilities led to an increase in refined products prices and crack spreads during 2022 and 2023. While the refining market has largely recovered since the pandemic, refined product demand declined 3% nationwide in the fourth quarter of 2023 from the pre-pandemic fourth quarter of 2019. Group 3 demand has been relatively strong compared to other parts of the country following the pandemic; however, high regional refinery utilization through the second half of 2023 and typical seasonal inventory builds have pressured the prompt crack spreads. We would characterize the current NYMEX crack spread environment as above mid-cycle; however, the Group 3 basis is historically wide and the current forward curves for Group 3 crack spreads remain near or below mid-cycle levels.
Previous report
•Contributing to the ultra-low sulfur diesel (“ULSD”) supply constraints is the International Maritime Organization’s limit on the sulfur content in the fuel oil used on board ships (“bunker fuel”) effective January 1, 2020, which lowered the sulfur limit of bunker fuel from 3.5% to 0.5% (the “IMO 2020 Regulations”), which necessitated blending ULSD into bunker fuel to meet the new specifications. The resulting reduction of supply for traditional ULSD demand was initially muted by the pandemic-induced demand contraction.
Previous report
•In the second half of 2023, industrial production slowed and truck, rail, and ship tonnage and freight volumes were reduced, which reduced distillate pricing heading into the fourth quarter of 2023. Gasoline and distillate pricing declined significantly through the end of the quarter.
Previous report
•Significant refining capacity additions are expected in 2024, headlined by major projects scheduled to start up in the Middle East, Asia, Mexico, and Africa. Some of the capacity additions could be offset by renewable diesel conversions and planned shutdowns, but refined product consumption is slowing in the United States and remains weak in Europe.
Previous report
Market Indicators
Previous report
Market Indicators
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(1)See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measure shown above.
Previous report
Overview - The Petroleum Segment’s operating income and net income for the year ended December 31, 2023 were $982 million and $1,071 million, respectively, representing an improvement of $263 million and $312 million, respectively, compared to an operating income and net income of $719 million and $759 million, respectively, for the year ended December 31, 2022. The improvement in both operating income and net income compared to the prior period was primarily due to lower RFS related expense and a favorable derivatives impact in the current year.
Previous report
(1)See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measure shown above.
Previous report
(1)See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measures shown above.
Previous report
The primary factors contributing to the $227 million increase in refining margin were:
Previous report
•A decline in RFS-related expense of $483 million, which includes a reduction in RINs revaluation impact of $419 million;
Previous report
•Favorable derivative impacts of $61 million from gains on open crack spread swap positions in the current period and wider margins on Canadian crude oil forward purchases and sales compared to the prior period;
Previous report
On a consolidated basis, the Nitrogen Fertilizer Segment’s utilization increased 19% to 100% for the year ended December 31, 2023 compared to the year ended December 31, 2022. This increase was primarily due to reduced production volumes and utilization during the planned turnarounds at both fertilizer facilities in the third quarter of 2022, which subsequently improved operational reliability. In addition, there was increased unplanned downtime in 2022 associated with the third-party air separation plant operated by Messer LLC (the “Messer Outages”) at the Coffeyville Fertilizer Facility and various pieces of equipment being down at the East Dubuque Fertilizer Facility.
Previous report
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. These variances were primarily driven by decreased product sales prices, offset by increased production and sales volumes, compared to 2022.
Previous report
(1)See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measures shown above.
Previous report
For the year ended December 31, 2023 compared to the year ended December 31, 2022, ammonia and UAN sales prices were unfavorable primarily due to lower natural gas prices and increased global supplies of nitrogen fertilizers in the current year. Total product sales volumes were favorable driven by reduced production volumes and utilization during the planned turnarounds at both fertilizer facilities in the third quarter of 2022, which subsequently improved operational reliability. In addition, there was minimal unplanned downtime in 2023 compared to 2022 due to the Messer Outages at the Coffeyville Fertilizer Facility and various pieces of equipment being down at the East Dubuque Fertilizer Facility in 2022.
Previous report
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. The $35 million variance was primarily due to turnaround expenses in the prior period associated with the planned turnarounds taking place at both fertilizer facilities in the third quarter of 2022, coupled with decreased personnel costs from share-based compensation and lower natural gas and electricity costs in the current period.
Previous report
Refining Margin, adjusted for Inventory Valuation Impacts- Refining Margin adjusted to exclude the impact of current period market price and volume fluctuations on crude oil and refined product inventories purchased in prior periods and lower of cost or net realizable value adjustments, if applicable. We record our commodity inventories on the first-in-first-out basis. As a result, significant current period fluctuations in market prices and the volumes we hold in inventory can have favorable or unfavorable impacts on our refining margins as compared to similar metrics used by other publicly-traded companies in the refining industry.
Previous report
Reconciliation of Petroleum Segment Total Throughput Barrels and Metrics per Total Throughput Barrel
Previous report
The demand for refined products has returned to pre-COVID levels, and the supply impacts of refinery closures in the United States and globally have kept inventories of refined products at or below five-year average levels. However, current geopolitical matters, such as the conflict between Israel and Hamas and the ongoing Russia-Ukraine war, pose significant risks to global markets and could contribute to further oil inventory tightening and price volatility, and disrupt the production and trade of fertilizer, grains, and feedstock supply through several means, including trade restrictions and supply chain disruptions.
Previous report
•Focused future capital allocation to high-return assets and opportunities that advance participation in the energy industry transformation; and
Previous report
•Continued to focus on disciplined management of operational and general and administrative costs.
Previous report
On September 26, 2023, CVR Partners and certain of its subsidiaries entered into Amendment No. 1 to the Credit Agreement (the “CVR Partners ABL Amendment”) with Wells Fargo Bank, National Association, a national banking associate (“Wells Fargo”), as administrative agent, collateral agent and a lender. The CVR Partners ABL Amendment amended that certain Credit Agreement, dated as of September 30, 2021 (as amended by the CVR Partners ABL Amendment, the “CVR Partners ABL”), by and among the credit parties thereto and Wells Fargo, as administrative agent, collateral agent and a lender, to, among other things, (i) increase the aggregate principal amount available under the credit facility by an additional $15 million to a total of $50 million in the aggregate, with an incremental facility of an additional $15 million in the aggregate subject to additional lender commitments and certain other conditions, and (ii) extend the maturity date by an additional four years to September 26, 2028.
Previous report
On December 21, 2023, CVR Energy completed the issuance of $600 million in aggregate principal amount of 8.50% Senior Notes due 2029 (the “2029 Notes”), which mature on January 15, 2029, unless earlier redeemed or purchased. Interest on the 2029 Notes is payable semi-annually in arrears on February 15 and August 15 each year, commencing on February 15, 2024. As of December 31, 2023, the net proceeds of the offering were reserved to fund the redemption of the Company’s outstanding 5.25% Senior Notes due 2025 (the “2025 Notes”). On February 15, 2024, CVR Energy redeemed the outstanding 2025 Notes, at par, and settled accrued interest of approximately $16 million to the date of redemption. Refer to Part II, Item 8, Note 8 (“Long-Term Debt and Finance Lease Obligations”) of this Report for further discussion.
Previous report
We do not have any “off-balance sheet arrangements” as such term is defined within the rules and regulations of the SEC.
Previous report
(1)On December 21, 2023, the Company delivered a notice of redemption to the holders of its 2025 Notes, that all outstanding amounts of the 2025 Notes, plus any accrued and unpaid interest to the redemption date, would be redeemed on February 15, 2024. As such, the outstanding balance of the $600 million principal amount of the 2025 Notes was classified as short-term as of December 31, 2023. On February 15, 2024, the 2025 Notes were paid in full, at par, plus accrued and unpaid interest to the redemption date.
Previous report
In November 2021, the Board approved the renewable feedstock pretreater project at the Wynnewood Refinery, which was mechanically completed in the fourth quarter of 2023 at a cost of $94 million.
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(1)Includes renewables spending for the Wynnewood Refinery’s renewable feedstock pretreater project. As of December 31, 2023, Renewables does not meet the definition of a reportable segment as defined under Accounting Standards Codification Topic 280.
Previous report
On May 26, 2021, the Company announced a special dividend of approximately $492 million, or equivalent to $4.89 per share of the Company’s common stock, to be paid in a combination of cash (the “Cash Distribution”) and the common stock of Delek US Holdings, Inc. (“Delek”) held by the Company (the “Stock Distribution”). On June 10, 2021, the Company distributed an aggregate amount of approximately $241 million, or $2.40 per share of the Company’s common stock, pursuant to the Cash Distribution, and approximately 10,539,880 shares of Delek common stock, which represented approximately 14.3% of the outstanding shares of Delek common stock, pursuant to the Stock Distribution. IEP received approximately 7,464,652 shares of common stock of Delek and $171 million in cash. The Stock Distribution was recorded as a reduction to equity through a derecognition of our investment in Delek, and the Company recognized a gain of $112 million from the initial investment in Delek through the date of the Stock Distribution.
Previous report
For the fourth quarter of 2023, the Company, upon approval by the Board on February 20, 2024, declared a cash dividend of $0.50 per share, or $50 million, which is payable March 11, 2024 to shareholders of record as of March 4, 2024. Of this amount, IEP will receive $33 million due to its ownership interest in the Company’s shares.
Previous report
There were no quarterly distributions declared or paid by CVR Partners related to the first quarter of 2021 and the fourth quarter of 2020.
Previous report
On October 23, 2019, the Board authorized a stock repurchase program (the “Stock Repurchase Program”), which authorized the Company to repurchase up to $300 million of the Company’s common stock. 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. 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.
Previous report
The change in net cash provided by operating activities for the year ended December 31, 2023 compared to the year ended December 31, 2022 was driven primarily by a decrease in working capital of $262 million primarily associated with decreases in accrued liabilities, resulting from reduced RFS costs associated with decreased RINs prices coupled with increased RINs generation from ethanol and biodiesel blending, and accounts payable, partially offset by increases in inventory, primarily from temporary purchases due to changing the crude oil purchasing intermediary, and accounts receivable. This variance was partially offset by a $234 million increase in net income during 2023 as a result of decreases in RFS compliance and utility costs offset by commodity price fluctuations, a litigation settlement expense in 2022, as well as a decrease in asset disposals of $9 million.
Reworded paragraphs (83)
Previous wording
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. References to “CVR Energy”, “CVR”, the “Company”, “we”, “us”, and “our” may refer to consolidated subsidiaries of CVR Energy, including CVR Partners, as the context may require.
Current wording
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. References to “CVR Energy”, “CVR”, the “Company”, “we”, “us”, and “our” may refer to consolidated subsidiaries of CVR Energy, including CVR Partners, as the context may require.
Previous wording
This discussion and analysis covers the years ended December 31, 2023 and 2022 and discusses year-to-year comparisons between such periods. 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.
Current wording
With the exception of the Renewables Segment, as defined below, which discusses year-to-year comparisons between all periods presented, this discussion and analysis covers the years ended December 31, 2024 and 2023 and includes year-to-year comparisons between such periods. 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.
Previous wording
Reflected in this discussion and analysis is how management views the Company’s current financial condition and results of operations along with key external variables and management’s actions that may impact the Company. Understanding significant external variables, such as market conditions, weather, and seasonal trends, among others, and management actions taken to manage the Company, address external variables, among others, which will increase users’ understanding of the Company, its financial condition and results of operations. This discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Report.
Current wording
Reflected in this discussion and analysis is how management views the Company’s current financial condition and results of operations, along with key external variables and management’s actions that may impact the Company. This discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this Report.
Previous wording
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”). The Petroleum Segment is an “independent petroleum refiner”, in that it does not have crude oil exploration or production operations and is a marketer of high value transportation fuels primarily in the form of gasoline and diesel fuels. CVR Partners produces and markets nitrogen fertilizers primarily in the form of urea ammonium nitrate (“UAN”) and ammonia. CVR Energy also produces and markets renewable diesel. Our renewable diesel operations are not allocated or aggregated to our reportable segments discussed within this Report, but are reflected in our consolidated results of operations.
Current wording
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”). The Petroleum Segment is an “independent petroleum refiner”, in that it does not have crude oil exploration or production operations and is a marketer of high value transportation fuels primarily in the form of gasoline and diesel fuels. The Renewables Segment refines feedstocks, including soybean oil, corn oil, and other related renewable feedstocks, into renewable diesel. CVR Partners produces and markets nitrogen fertilizers primarily in the form of urea ammonium nitrate (“UAN”) and ammonia.
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We operate under two reportable segments: petroleum and nitrogen fertilizer, which are referred to in this document as our “Petroleum Segment” and our “Nitrogen Fertilizer Segment”, respectively.
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We operate under three reportable segments: petroleum, renewables, and nitrogen fertilizer, which are referred to in this document as our “Petroleum Segment”, our “Renewables Segment”, and our “Nitrogen Fertilizer Segment”, respectively.
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In the past year, we achieved numerous milestones through our commitment to ESG initiatives, including environmental and safety stewardship, diversity and inclusion, community outreach and sound corporate governance. In December 2023, we published our 2022 Environmental, Social & Governance Report (“2022 ESG Report”) which is based on the Sustainability Accounting Standards Board standards and is available at CVR Energy’s website at www.CVREnergy.com. 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.
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In January 2025, we published our 2023 Environmental, Social & Governance Report (“2023 ESG Report”), which continues to benchmark our Company’s performance against specific Sustainability Accounting Standards Board metrics and is available at CVR Energy’s website at www.CVREnergy.com. 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.
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Geopolitical Matters - The conflict between Israel and Hamas, which began in October 2023, and the ongoing Russia-Ukraine war, can significantly impact global oil, fertilizer, and agriculture markets. These conflicts pose significant geopolitical risks to global markets, raise concerns of major implications, such as the enforcement of sanctions, and could contribute to further oil inventory tightening and price volatility, and disrupt the production and trade of fertilizer, grains, and feedstock through several means, such as trade restrictions. 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.
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Geopolitical Matters - The Middle East conflict, which began in October 2023 and impacted global oil, fertilizer, and agriculture markets, alongside other conflicts, like the ongoing Russia-Ukraine war, continue to present significant geopolitical risks to global markets as does the potential for future trade wars and the potential changes in U.S. economic trade policy. These concerns, including the enforcement of sanctions, could lead to further oil price volatility and disruptions in the production and trade of fertilizer, grains, and feedstock through various means, such as trade restrictions. 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.
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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. The cost to acquire crude oil and other feedstocks and the price for which refined products are ultimately sold depends on factors beyond the Petroleum Segment’s control, including the supply of and demand for crude oil, as well as gasoline, distillate, and other refined products which, in turn, depend on, among other factors, changes in domestic and foreign economies, driving habits, weather conditions, domestic and foreign political affairs, production levels, the availability or permissibly of imports and exports, the marketing of competitive fuels, and the extent of government regulations. 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. 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.
Current wording
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. The cost to acquire crude oil and other feedstocks and the price for which refined products are ultimately sold depends on factors beyond the Petroleum Segment’s control, including the supply of and demand for crude oil, as well as gasoline, distillate, and other refined products which, in turn, depend on, among other factors, changes in domestic and foreign economies, driving habits, weather conditions, domestic and foreign political affairs, production levels, the availability or permissibly of imports and exports, the marketing of competitive fuels, and the extent of government regulations. 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. 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.
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The prices of crude oil and other feedstocks and refined products are also affected by other factors, such as product pipeline capacity, system inventory, local and regional market conditions, inflation, and the operating levels of other refineries. Crude oil costs and the prices of refined products have historically been subject to wide fluctuations. 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. Moreover, the refining industry typically experiences seasonal fluctuations in demand for refined products, such as increases in the demand for gasoline during the summer driving season and for volatile seasonal exports of diesel from the United States Gulf Coast. Specific factors impacting the Company’s operations are outlined below:
Current wording
The prices of crude oil and other feedstocks and refined products are also affected by other factors, such as product pipeline capacity, system inventory, local and regional market conditions, inflation, and the operating levels of other refineries. Crude oil costs and the prices of refined products have historically been subject to wide fluctuations. 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. Moreover, the refining industry typically experiences seasonal fluctuations in demand for refined products, such as increases in the demand for gasoline during the summer driving season and for volatile seasonal exports of diesel from the United States Gulf Coast. Specific factors impacting the Company’s operations are outlined below:
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•Winter 2022/2023 weather was warmer than average in Europe and when combined with natural gas conservation measures caused demand and prices for natural gas to fall significantly in the region, which contributed to the flattening of the global cost curve and has reduced the U.S. refiners’ advantage compared to refiners in Europe.
Current wording
•Winter 2023/2024 weather was warmer than average in North America and Europe and, when combined with natural gas conservation measures, has caused demand and prices for natural gas to fall significantly, which contributed to the flattening of the global cost curve and has reduced the U.S. refiners’ advantage compared to refiners in Europe. If similar conditions are experienced during the 2024/2025 winter, these impacts could persist into 2025.
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•Shale oil production continues to increase in the shale oil basins, albeit at a slower pace than in prior years, including in the Anadarko Basin. Crude oil exports have continued above the 4 million bpd rate, and we believe our Petroleum Segment benefits from these exports through the Brent crude differential to WTI, as do all refineries in PADD II.
Current wording
•Shale oil production continues to increase in the shale oil basins, albeit at a slower pace than in prior years, including in the Anadarko Basin. Crude oil exports have sustained a 4 million bpd rate, and we believe the Petroleum Segment benefits from these exports through the Brent crude differential to WTI, as do all refineries in PADD II.
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•Renewable identification number (“RIN”) prices continued to decline in the fourth quarter of 2023. This decline was partly due to higher distillate prices and higher biomass based diesel RIN (“D4”) production rates. We expect D4 production to exceed the renewable volume obligation (“RVO”) significantly going forward, creating a RIN surplus. In June 2023, the Environmental Protection Agency (“EPA”) set the D4 RVO for 2023, 2024, and 2025 at 2.82, 3.04, and 3.35 billion gallons, respectively.
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•While renewable identification number (“RIN”) prices increased slightly during the fourth quarter of 2024, they are still lower than the fourth quarter of 2023. Production of renewable fuels in the United States continues to increase as new plants start up, which may continue through 2025. We also expect biomass based diesel RIN (“D4”) production to exceed the renewable volume obligation (“RVO”) significantly going forward, creating a RIN surplus. In June 2023, the Environmental Protection Agency (“EPA”) set the D4 RVO for 2024 and 2025 at 3.04 and 3.35 billion gallons, respectively. The EPA released a unified agenda during spring 2024 delaying finalization of the 2026 RFS rule until December 2025.
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•Electric vehicle penetration of new vehicle sales in the U.S. light vehicle market has increased significantly, up approximately 30 percent from the prior year. 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. We expect this trend to continue.
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•In the fourth quarter of 2024, new electric vehicle sales in the United States increased approximately 15.2% from the fourth quarter of 2023. 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. We expect this trend to continue. Based on 9.2 billion miles traveled per day, a 1 MPG change in fuel efficiency represents approximately 300,000 bpd of gasoline demand.
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•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. 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 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 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”). Wynnewood Refining Company, LLC filed its SRE petition for 2023, which has not yet been ruled on by the EPA. As a result, our costs to comply with RFS (excluding the impacts of any exemptions or waivers to which the Petroleum Segment’s obligated-party subsidiaries may be entitled) increased significantly throughout 2022, remained significant in 2023 and is expected to remain significant through 2024 and beyond.
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•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. 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 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. 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. As a result, our costs to comply with RFS (excluding the impacts of any exemptions or waivers to which the Petroleum Segment’s obligated-party subsidiaries may be entitled) increased significantly throughout 2022, remained significant through 2024 and is expected to remain significant through 2025 and beyond.
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•In April 2023, the EPA issued new proposed federal vehicle emissions standards for light-, medium-, and heavy-duty vehicles for model year 2027 and beyond, under which automakers are expected to produce 60% EVs by 2030 and
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•In March 2024, the EPA finalized new motor vehicle emissions standards for light-, medium-, and heavy-duty vehicles for model year 2027 and beyond. As a result of these new standards, the EPA is expected to propose new automobile limits requiring at least 50% of new vehicles sold to be EVs by 2030. In the United States in 2024, approximately 8.1% of new-vehicle sales were EVs.
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•The Company is installing a fuel by rail facility at its Coffeyville Refinery which will allow the Company to load gasoline, jet, and additional diesel into rail cars. This system will allow the Company to ship refined products to high priced markets in PADD IV.
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•During 2024, the Company installed a fuel by rail facility at its Coffeyville Refinery which allows the Company to load gasoline, jet, and additional diesel into rail cars. This system allows the Company to ship refined products to high priced markets in PADD IV.
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•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. The capital investment is estimated at $136 million and the project eliminates the need for a hydrofluoric acid mitigation system which would have a cost of approximately $45 million.
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•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 capital investment is estimated at $136 million, and the unit is expected to become operational by the second quarter of 2027.
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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. 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.
Current wording
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. 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.
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NYMEX WTI crude oil is an industry wide benchmark that is utilized in the market pricing of a barrel of crude oil. The pricing differences between other crude oils and WTI, known as differentials, show how the market for other crude oils such as WCS, White Cliffs (“Condensate”), Brent Crude (“Brent”), and Midland WTI (“Midland”) are trending. Due to the COVID-19 pandemic, the Russia-Ukraine war, the Israel-Hamas conflict, and, in each case, actions taken by governments and others in response thereto, refined product prices have experienced extreme volatility. As a result of the current environment, refining margins have been and should continue to be volatile.
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NYMEX WTI crude oil is an industry wide benchmark that is utilized in the market pricing of a barrel of crude oil. The pricing differences between other crude oils and WTI, known as differentials, show how the market for other crude oils, such as WCS, White Cliffs (“Condensate”), Brent Crude (“Brent”), and Midland WTI (“Midland”), are trending. Due to geopolitical events, such as the Russia-Ukraine war and the conflict in the Middle East, and, in each case, actions taken by governments and others in response thereto, refined product prices have experienced extreme volatility. As a result of the current environment, refining margins have been and will likely continue to be volatile.
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As a performance benchmark and a comparison with other industry participants, we utilize NYMEX and Group 3 crack spreads. These crack spreads are a measure of the difference between market prices for crude oil and refined products and are a commonly used proxy within the industry to estimate or identify trends in refining margins. Crack spreads can fluctuate significantly over time as a result of market conditions and supply and demand balances. The NYMEX 2-1-1 crack spread is calculated using two barrels of WTI producing one barrel of NYMEX RBOB Gasoline (“RBOB”) and one barrel of NYMEX NY Harbor ULSD (“HO”). 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.
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We utilize NYMEX and Group 3 crack spreads as a performance benchmark and a comparison with other industry participants. These crack spreads are a measure of the difference between market prices for crude oil and refined products and are a commonly used proxy within the industry to estimate or identify trends in refining margins. Crack spreads can fluctuate significantly over time as a result of market conditions and supply and demand balances. The NYMEX 2-1-1 crack spread is calculated using two barrels of WTI producing one barrel of NYMEX RBOB Gasoline (“RBOB”) and one barrel of NYMEX NY Harbor ULSD (“HO”). 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.
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Both NYMEX 2-1-1 and Group 3 2-1-1 crack spreads decreased during 2023 compared to 2022. 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.
Current wording
Both NYMEX 2-1-1 and Group 3 2-1-1 crack spreads decreased during 2024 compared to 2023. 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.
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Average monthly prices for RINs decreased 7.8% during 2023 compared to 2022. On a blended barrel basis (calculated using applicable RVO percentages), RINs approximated $6.95 per barrel during 2023 compared to $7.54 per barrel during 2022.
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Average monthly prices for RINs decreased 46.7% during 2024 compared to 2023. On a blended barrel basis (calculated using applicable RVO percentages), RINs approximated $3.76 per barrel during 2024 compared to $7.05 per barrel during 2023.
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•In November 2021, the Board approved the pretreater project at the Wynnewood Refinery, which was mechanically completed in the fourth quarter of 2023 at a cost of $94 million. Once operational, the pretreatment unit should lower our feedstock costs and enable us to process a wider variety of renewable diesel feedstocks at the Wynnewood Refinery, most of which have a lower carbon intensity than soybean oil and generate additional LCFS credits. With our existing renewable diesel production, this could effectively mitigate a substantial majority, if not all, of our future RFS exposure, assuming we receive SREs for our Wynnewood Refinery for its transportation fuels, which we believe we are legally entitled to and are pursuing in the courts. However, impacts from recent climate change initiatives under the Biden Administration, actions taken by the courts, resulting administration actions under the RFS, and market conditions, could significantly impact the amount by which our renewable diesel business mitigates our costs to comply with the RFS, if at all. 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.
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•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.
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•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 enable the capture of synergies with the Petroleum Segment as our refinery in Coffeyville, Kansas (“Coffeyville Refinery”) has excess hydrogen capacity as well as potential access to third-party carbon capture use and storage.
Current wording
•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. This project, if approved and pursued, could enable the capture of synergies with the Petroleum Segment, such as the use of excess hydrogen capacity of our Coffeyville Refinery and potential access to third-party carbon capture use and storage.
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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. In August 2022, the Inflation Reduction Act was passed and introduced the Clean Fuel Production Credit incentivizing lower Carbon Intensity feedstocks, including corn oil, which may increase demand for corn planting. In June 2023, the EPA announced the renewable volume obligations for 2023, 2024, and 2025 which maintained the ethanol blending level at 15 billion gallons. These actions lead us to believe that the demand on food, in particular corn, for fuel will remain strong for the foreseeable future and support farmer economics that incentivize the use of nitrogen-based fertilizers.
Current wording
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. In June 2023, the EPA announced the renewable volume obligations for 2023, 2024, and 2025 which maintained the conventional biofuel blending level at 15 billion gallons. These actions lead us to believe that the demand on food, in particular corn, for fuel will remain strong for the foreseeable future and support farmer economics that incentivize the use of nitrogen-based fertilizers.
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In contrast, in April 2023, the EPA announced the proposed federal vehicle emission standards for 2027 through 2032, which, if finalized as proposed, would significantly reduce the use of internal combustion engine vehicles and the demand for liquid fuels including ethanol. In 2023, production of ethanol consumed approximately 37% of the annual United States corn crop used by the market.
Current wording
In contrast, in March 2024, the EPA finalized new motor vehicle emission standards for light-, medium-, and heavy-duty vehicles for model year 2027 and beyond, which could significantly reduce the use of internal combustion engine vehicles and the demand for liquid fuels, including ethanol. New heavy-truck requirements are also being proposed. In 2023, production of ethanol consumed approximately 37% of the annual United States corn crop used by the market.
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Corn and soybeans are two major crops planted by farmers in North America. Corn crops result in the depletion of the amount of nitrogen within the soil in which it is grown, which in turn, results in the need for this nutrient to be replenished after each growing cycle. Unlike corn, soybeans are able to obtain most of their own nitrogen through a process known as “N fixation”. As such, upon harvesting of soybeans, the soil retains a certain amount of nitrogen which results in lower demand for nitrogen fertilizer for the following corn planting cycle. 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.
Current wording
Corn and soybeans are two major crops planted by farmers in North America. Corn crops result in the depletion of the amount of nitrogen within the soil in which it is grown, which in turn, results in the need for this nutrient to be replenished after each growing cycle. Unlike corn, soybeans are able to obtain most of their own nitrogen through a process known as “N fixation”. As such, upon harvesting of soybeans, the soil retains a certain amount of nitrogen which results in lower demand for nitrogen fertilizer for the following corn planting cycle. Due to these factors, nitrogen fertilizer consumers generally operate a balanced corn-soybean rotational planting cycle as shown by the chart presented below.
Previous wording
The relationship between the total acres planted for both corn and soybeans has a direct impact on the overall demand for nitrogen products, as the market and demand for nitrogen increases with increased corn acres and decreases with increased soybean acres. Additionally, an estimated 12.8 billion pounds of soybean oil is expected to be used in producing cleaner 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.
Current wording
The relationship between the total acres planted for both corn and soybeans has a direct impact on the overall demand for nitrogen products, as the market and demand for nitrogen increases with increased corn acres and decreases with increased soybean acres. 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.
Previous wording
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 combined corn and soybean planted acres of 178.2 million in 2023 is an increase of 1.2% compared to the acreage planted in 2022. Due to lower input costs in 2023 for corn planting and the relative grain prices of corn versus soybeans, economics favored planting corn compared to soybeans in 2023. Lower inventory levels of corn and soybeans are expected to be supportive of grain prices into the spring of 2024.
Current wording
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. The combined corn and soybean planted acres of 177.8 million in 2024 is in line with the acreage planted in 2023. Due to lower input costs in 2024 for corn planting and the relative grain prices of corn versus soybeans, economics favored planting corn compared to soybeans in 2024. Inventory levels of corn and soybeans are expected to be supportive of grain prices into the spring of 2025.
Previous wording
Ethanol is blended with gasoline to meet RFS requirements and for its octane value. 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.
Current wording
Ethanol is blended with gasoline to meet RFS requirements and for its octane value. 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.
Previous wording
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. With tight grain and fertilizer inventory levels driven by the conflict in Ukraine, prices for grains remained elevated through 2023, although below the elevated prices experienced in the spring of 2022. 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.
Current wording
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. 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.
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Fertilizer input costs have been volatile since the fall of 2021. Natural gas prices were elevated in the fall of 2022 due to shortages in Europe and demand being driven by building natural gas storage for winter. 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. The decline in natural gas prices has led to a significant reduction in the price for nitrogen fertilizer globally due to lower input costs. While we expect that natural gas prices might remain below the elevated levels experienced in 2022 in the near term, we believe that the structural shortage of natural gas in Europe will continue to be a source of volatility into 2024. Although pet coke prices remain elevated compared to historical levels, third-party pet coke prices have declined into 2024.
Current wording
Fertilizer input costs have been volatile since the fall of 2021. Natural gas prices were elevated in the fall of 2022 due to shortages in Europe and demand being driven by building natural gas storage for winter. 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. The decline in natural gas prices, and the resulting reversal of capacity curtailments, among other factors, has led to a significant reduction in the price for nitrogen fertilizer from peak prices. While we expect that natural gas prices might remain below the elevated levels experienced in 2022 in the near term, we believe that the structural shortage of natural gas in Europe will continue to be a source of volatility through at least 2026. Although pet coke prices had been elevated since 2021 due to higher natural gas prices compared to historical levels, as natural gas prices remained low in 2024, third-party pet coke prices declined into 2024 and fell further into 2025.
Previous wording
CVR Partners has been conducting engineering studies on the potential to utilize natural gas as an optional feedstock to pet coke at its Coffeyville Fertilizer Facility. Based on these studies, CVR Partners subsidiaries could utilize either natural gas or pet coke to produce nitrogen fertilizer by making certain modifications to the plant. 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.
Current wording
CVR Partners has been conducting engineering studies on the potential to utilize natural gas as an optional feedstock to pet coke at its facility in Coffeyville, Kansas (the “Coffeyville Fertilizer Facility”). Based on these studies, CVR Partners believes the Coffeyville Fertilizer Facility could utilize either natural gas or pet coke to produce nitrogen fertilizer by making certain modifications to the plant. 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.
Previous wording
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. 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.
Current wording
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. 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.
Previous wording
Overview - The Company’s operating income and net income were $1,123 million and $878 million, respectively, for the year ended December 31, 2023, increases of $160 million and $234 million, respectively, compared to operating income and net income of $963 million and $644 million, respectively, for the year ended December 31, 2022. These increases were driven by an improvement in operating income of $263 million within the Petroleum Segment, partially offset by a decline in operating income of $119 million within the Nitrogen Fertilizer Segment, for the year ended December 31, 2023 compared to the year ended December 31, 2022. Refer to our discussion of each segment’s results of operations below for further information.
Current wording
Overview - For the year ended December 31, 2024, the Company’s operating income and net income were $58 million and $45 million, respectively, compared to operating income and net income of $1.1 billion and $878 million, respectively, for the year ended December 31, 2023. Refer to our discussion of each segment’s results of operations below for further information.
Previous wording
Other Income (Expense), Net- The Company’s Other income (expense), net, was $14 million for the year ended December 31, 2023 compared to $(77) million for the year ended December 31, 2022. The change was primarily attributable to a litigation settlement that occurred during 2022.
Current wording
Other Income (Expense), Net- The Company’s Other income (expense), net, was $38 million for the year ended December 31, 2024 compared to $14 million for the year ended December 31, 2023. The change was primarily attributable to the gain on the Company’s sale of its Membership Interests in December 2024.
Previous wording
Income Tax Expense -The income tax expense for the year ended December 31, 2023 was $207 million, or 19.1% of income before income taxes, as compared to income tax expense for the year ended December 31, 2022 of $157 million, or 19.6% of income before income taxes. The increase in income tax expense was due primarily to an increase in overall pretax earnings, partially offset by 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, 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.
Current wording
Income Tax (Benefit) Expense -Income tax benefit for the year ended December 31, 2024 was $26 million, or (137.2)% of income before income taxes, compared to income tax expense for the year ended December 31, 2023 of $207 million, or 19.1% of income before income taxes. The decrease in income tax expense was due primarily to a decrease in overall pretax earnings. 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.
Previous wording
(1)Total Gasoline and Distillate divided by total Regional crude, WTI, WTL, Midland WTI, WTS, Condensate, Heavy Canadian, DJ Basin, and Bakken throughput.
Current wording
(1)Total Gasoline and Distillate divided by total Gathered crude, Other domestic, Canadian, and Condensate throughput (collectively, “Total Crude Throughput”).
Previous wording
(3)Total Distillate divided by total Regional crude, WTI, WTL, Midland WTI, WTS, Condensate, Heavy Canadian, DJ Basin, and Bakken throughput.
Current wording
(3)Total Distillate divided by Total Crude Throughput.
Previous wording
Net Sales - For the year ended December 31, 2023, net sales for the Petroleum Segment decreased by $1.6 billion when compared to the year ended December 31, 2022. The 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.
Current wording
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. 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.
Showing the first 40 of 83 pairs. Open the source sections for the rest.
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Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
The earnings and cash flows of the Renewables Segment are primarily affected by the relationship between renewable fuel prices, the prices for Vegetable oils and other feedstocks that are processed and blended into renewable fuels, as well as the prices of various credits generated by the production of renewable fuels together with the cost of operating the renewable diesel unit, including the pre-treatment unit. The cost to acquire Vegetable oils and other feedstocks and the price for which renewable fuels are ultimately sold depends on factors beyond the Renewables Segment’s control, including the supply of and demand for Vegetable oil and other feedstocks, as well as renewable diesel and other renewable fuels which, in turn, depend on, among other factors, changes in domestic and foreign economies, driving habits, weather conditions, domestic and foreign political affairs, production levels, the availability or permissibly of imports and exports, the marketing of competitive fuels, and the extent of government regulations. Similar to the Petroleum Segment, the Renewables Segment applies FIFO accounting to value its inventory, and product price movements may thus impact margin as a result of changes in the value of its unhedged inventory. The effect of changes in product prices on the Renewables Segment’s results of operations is partially influenced by the rate at which the processing of renewable fuels adjusts to reflect these changes.
Current report — wording carried from elsewhere
The prices of Vegetable oils and other feedstocks and renewable fuels are also affected by other factors, such as Vegetable oil production capacity, system inventory, local and regional market conditions, inflation, and the operating levels of other facilities. Vegetable oil costs and the prices of renewable fuels have historically been subject to wide fluctuations. 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 renewable fuel 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. Specific factors impacting the Company’s operations are outlined below:
Current report — wording carried from elsewhere
The tables below are presented by month through December 31, 2024:
Current report — wording carried from elsewhere
(1)Information used within these charts was obtained from reputable market sources, including the New York Mercantile Exchange (“NYMEX”), CBOT, and Argus Media, among others.
Current report — wording carried from elsewhere
The Renewables Segment utilizes certain inputs within its refining operations. These inputs include corn oil, soybean oil, and other vegetable oils (these are also known as “throughputs”).
Current report — wording carried from elsewhere
(1)Exclusive of depreciation and amortization expense.
Current report — wording carried from elsewhere
Renewables Margin - The difference between our Renewables Segment net sales and cost of materials and other.
Current report — wording carried from elsewhere
(1)The Renewables Segment’s basis for determining inventory value under GAAP is FIFO. Changes in renewable diesel and renewable feedstock prices can cause fluctuations in the inventory valuation of renewable diesel, work in process and finished goods, thereby resulting in a favorable inventory valuation impact when renewable diesel prices increase and an unfavorable inventory valuation impact when renewable diesel prices decrease. The inventory valuation impact is calculated based upon inventory values at the beginning of the accounting period and at the end of the accounting period.
Current report — wording carried from elsewhere
(1)Debt obligations consist of the Term Loan, 2028 Notes, 2029 Notes, and 2028 UAN Notes as of December 31, 2024.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
67% by 2032 to meet the requirements. In the United States in 2023, approximately 7.6% of new-vehicle sales were EVs.
Previous report — wording carried elsewhere
•Focused on maintaining adequate liquidity to help mitigate the potential impact of adverse government actions such as the EPA unlawfully denying SREs;