Positive results at CVR Energy Inc.’s nitrogen business helped offset lower refining results during the second quarter ending June 30, 2008. Nitrogen operating income was $23.1 million on sales of $58.8 million, compared to the year-ago $11.7 million and $35.8 million.
“The fertilizer business enjoyed improving nitrogen fertilizer prices in the second quarter, while high crude costs and weak crack spreads limited our petroleum business,” said Jack Lipinski, CVR chairman and CEO. “The outlook for our fertilizer business is positive. The business is exhibiting upward momentum from an already strong performance in recent quarters. Fertilizer prices have continued to rise, and market demand is strong. Mid-continent refining margins have improved somewhat from recent lows, but they continue to be below historical levels. In aggregate, the improvement in our fertilizer business helps offset weakness in our refining business.”
For the second quarter, average plant gate sales prices for ammonia and UAN were $528/st and $303/st, versus the year-ago $366/st and $218/st, respectively. Second-quarter ammonia and UAN sales volumes were 19,100 st and 138,600 st., versus the year-ago 13,400 st and 126,800 st, respectively.
Six-month nitrogen income was $49.2 million on sales of $121.4 million, versus the year-ago $21 million and $74.3 million, respectively.
CVR was also impacted by $52.4 million in realized losses associated with cash flow swaps. It expects the impact of these swaps will lessen beginning July 1, 2009, when the notional volumes of the swap decrease significantly. In addition, the company recognized $3.7 million in bad debt expense related to the bankruptcy of energy trader SemGroup LP, which is expected to fully cover the company’s exposure.
Petroleum operating income was $101.9 million in the second quarter on sales of $1.46 billion, compared to the year-ago $166.3 million and $809 million, respectively. Six-month petroleum income was up at $165.5 million on sales of $2.63 billion, versus the year-ago $102.9 million and $1.16 billion, respectively.
CVR second-quarter net income was $31 million ($.36 per diluted share) on sales of $1.5 billion, versus the year-ago $100.1 million ($1.16 per share) and $843.4 million, respectively. Six-month net income was $53.2 million ($.62 per share) on sales of $2.73 billion, versus the year-ago loss of $54.3 million ($.63 per share) and $1.23 billion, respectively.