The generally glowing reports from Coffeyville Resources were a little off kilter for the first quarter ending March 31, 2007, with the company posting a net loss of $154.4 million on sales of $390.5 million, versus the year-ago net income of $22.1 million and $669.7 million.
Most of the negative numbers came from the petroleum business, where the company incurred $137.0 million in losses on derivatives versus the year-ago derivatives loss of $17.6 million.
Coffeyville’s refinery completed a turnaround in April 2007 at a cost of $77 million. It processed crude until Feb. 11, 2007, at which time a staged shutdown began. The refinery recommenced operations March 22, and all key units were back up by April 23. Additional capital expenditures of $156 million will be required to finish the expansion currently scheduled for completion by the end of 2007. After completion, processing capacity will be increased by 115,000 barrels per day. Coffeyville said while the turnaround had a significant adverse impact on first quarter results, the impact will not be as significant on the second quarter.
The petroleum business had an operating loss of $63.5 million on sales of $352.5 million, versus the year-ago income of $41.6 million on sales of $619.6 million. Due to the turnaround, volumes were off significantly. Prices were also.
Nitrogen results were off in the first quarter to an operating income of $9.3 million on sales of $38.6 million, versus the year-ago $24.0 million and $51.5 million, respectively.
Coffeyville reported lower nitrogen prices in the first quarter. It sells a good deal of its product on a forward basis, and as a result was not as able to take advantage of rising spot prices. Ammonia and UAN prices were off 16 and 13 percent from year-ago levels. The average first-quarter plant gate prices for ammonia and UAN prices were $347/st and $169/st, versus the year-ago $410/st and $195/st FOB, respectively.
The nitrogen business also saw decreased ammonia volumes, which it said was due to unscheduled downtime at the fertilizer plant because it had to transfer hydrogen to the petroleum unit to facilitate sulfur recovery in the ultra low sulfur diesel production unit. Ammonia capacity utilization was off at 87 percent for the quarter, versus the year-ago 103.8 percent. UAN capacity utilization was up at 122.7 percent from 118.8 percent.
Ammonia production and sales were off at 86,200 st and 20,700 st for the first quarter, down from the year-ago 102,700 st and 35,600 st. UAN production was actually up at 165,700 st, though sales were down slightly at 166,800 st. Year-ago UAN numbers were 160,400 st and 170,100 st, respectively.
In the meantime, the owners of Coffeyville are in the midst of an IPO (GM May 21, 2007, p. 1). On that front, the company is now planning to sell $375 million worth of stock versus $300 million. The company is still eyeing a $40 million nitrogen upgrade that would boost UAN capacity by 50 percent, to 1 million st/y.
As of March 31, 2007, Coffeyville says it has $775 million in term loans and $150.0 million in funded letters of credit outstanding under its credit facility and availability of $114.1 million under its revolving credit facility. Also at the end of March, net property, plant, and equipment was valued at $1.113 billion.