CVR Energy Inc. executives recently told analysts that the company is examining alternatives to the CVR Partners LP IPO (GM March 10, p. 1) in light of the changing fertilizer market. CVR Energy Inc. is itself a recent IPO, and trades on the New York Stock Exchange. CVR Partners LP was also to be an IPO and would include the CVR nitrogen plant and some other assets, with CVR Energy retaining majority ownership. CVR Energy consists of the refinery and nitrogen plants in Coffeyville, Kan.
“We are reviewing alternatives available to us to maximize the value of the fertilizer business in a public environment,” said John Lipinski, CVR CEO. “I mean we need to go back and revisit where we sit with all of that. In the short time that we have filed, the business has changed significantly?ǪWe are analyzing it to make sure we maximize shareholder value.”
Since the fertilizer IPO is still in the quiet period mandated by SEC, the officials could not comment as to what alternatives are being considered.
CVR has said that because of high fertilizer prices it has decided to postpone a planned mid-year turnaround of its fertilizer facility until October. In the meantime, the company said that in May it had to take a several day outage at the facility in order to replace a specialty catalyst. However, the company said last week that the plant is back in operation.
CVR is continuing with plans for a full conversion of its ammonia production to UAN and for the expansion of UAN capacity from 2,000 st/d to 3,000 st/d. It expects this upgrade to be in place during the second or third quarter of 2010. Of its two businesses, refining and fertilizer, CVR said that further investment in fertilizer is more attractive right now.
The company said most industry price forecasts are quite robust into 2010 for both ammonia and UAN. CVR said current ammonia prices are exceeding $660/st and UAN $400/st. CVR said that it has sold 85-90 percent of its fertilizer book through the remainder of the year.
CVR again touted its stance as the only petroleum coke-based nitrogen plant in North America, noting that with $10/mmBtu gas with an ammonia production cost of $350/st, that CVR’s own petcoke based production cost would only be around $100/st.
Another plus, said CVR, is its new Continuous Catalytic Reformer Unit in the refinery. The unit will produce hydrogen so that the refinery will no longer have to take hydrogen away from ammonia production.