CVR 3Q nitrogen income off 108 percent, reports big turnaround in UAN prices

CVR Energy Inc. reported a 108 percent drop in nitrogen operating results for the third quarter ending Sept. 30, 2009, to an operating loss of $3.9 million on sales of $45.9 million, versus the year-ago operating income of $46.5 million and sales of $74.2 million. For the third quarter, average plant sale prices for ammonia and UAN were $247/st and $133/st, respectively, compared to the year-ago $685/st and $324/st.

Nine-month nitrogen operating income was $41.9 million on sales of $169 million, down from the year-ago $95.6 million and $195.6 million.

“Besides lower commodity prices that affected our industries, the company was particularly impacted by unexpected production interruptions at the refinery during the third quarter, especially problems involving our Fluid Catalytic Cracking Unit and our Continuous Catalytic Reformer,” said CEO Jack Lipinski. “This lost production and related maintenance costs resulted in operating income being reduced by an estimated $19 million for the quarter.” The company said without these interruptions and maintenance costs, results should have been near breakeven. Some of the maintenance was slated for a 2011 turnaround, so CVR said it gets a two-year benefit from doing it now.

Third-quarter on stream factors remained high for gasification, ammonia, and UAN. Petroleum coke feedstock prices were down for the third quarter, to an average of $24/st compared to the year-ago $32/st. Year-to-date prices were about level, at $30/st versus the year-ago $31/st. CVR said its UAN sales book has 200,000 st stretching into next year. It said it has sold prepaid product netting back to $180/st FOB.

Lipinski told analysts that nitrogen fertilizer prices bottomed in June when the company was taking UAN orders in the low $120s/st. He said the company took a substantial number of orders in the week of Oct. 26 in the high $160s/st FOB. On capital expenses, CVR expects to spend $16 million in 2009 and $15 million in 2010, which includes $4 million for a fertilizer plant turnaround.

Company-wide, CVR reported a net loss of $13.4 million ($.16 per diluted share) on sales of $811.7 million, versus the year-ago net income of $99.7 million ($1.16 per share) and $1.58 billion. Nine-month net income was $59.9 million ($.69 per share) on sales of $2.2 billion, versus the year-ago $152.9 million ($1.77 per share) and $4.3 billion.

The petroleum division had a third-quarter operating loss of $300,000 on sales of $766.4 million, versus the year-ago income of $20.2 million and $1.5 billion. Nine-month petroleum operating income was $161.2 million on sales of $2.05 billion, versus the year-ago $185.7 million and $4.12 billion.