CVR Energy Inc. announced on June 13 that its board of directors has decided to retain its interest in the company’s nitrogen fertilizer business, which is indirectly owned by CVR Energy through the general and limited partner interests it holds in CVR Partners LP, a publicly traded limited partnership.
CVR in November (GM Nov. 22, 2022) said it was exploring a potential spin-off of the nitrogen fertilizer business to create a new public company that was separate from CVR’s refining and renewables businesses. The fertilizer facilities owned and operated by CVR Partners are located at Coffeyville, Kan., and East Dubuque, Ill., and produce ammonia, urea, and UAN.
CVR said the decision to keep the fertilizer business was made following a thorough review by the board of the potential transaction and current market conditions, and in consideration of the best interests of CVR Energy and its stockholders.
“Included within our exploration of a potential spin-off was how to create pure-play refining and fertilizer entities while still retaining the operational efficiencies both CVR Energy and CVR Partners enjoy from our current model,” said Dave Lamp, President and CEO of CVR Energy. “Following thoughtful and careful analysis, the board concluded that the complexity of a transaction that could accomplish both goals may not deliver the appropriate value under current conditions.”
CVR Partners reported first-quarter net income of $101.9 million on net sales of $226.3 million, up from the year-ago $93.7 million and $222.9 million, respectively (GM May 5, p. 26). CVR noted record production and improved reliability at both fertilizer facilities, with the combined ammonia utilization rate climbing to 105% from last year’s 88%.
“We will continue to explore ways to capitalize on the unique assets of each of CVR Energy and CVR Partners, particularly within the Coffeyville complex, including their proximity to the farm belt, excess hydrogen capacity, and existing CO2 sequestration capabilities,” Lamp said on June 13.
He noted as well that the new feed pre-treatment unit at CVR Energy’s Wynnewood, Okla., refinery remains on track for mechanical completion in late third quarter 2023, which the company expects “to enhance the renewables capture rate and profitability.” The unit is expected to be capable of producing 7,500 barrels/day of treated feedstock for the refinery’s Renewable Diesel Unit from vegetable oils and other renewable feeds.