CVR Refining, LP (CVRR)

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CVR Refining, LP (CVRR)

Q1 2013 Earnings Call

May 2, 2013 10:00 AM ET


Jay Finks - Director of Finance

Jack Lipinski - President and CEO

Susan Ball - CFO


Ed Westwick - Credit Suisse

Jeff Dietert - Simmons

Mohit Bhardwaj - Citigroup



Greetings and welcome to the CVR Refining, LP First Quarter 2013 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Jay Finks, CVR Refining Director of Finance. Thank you, Mr. Finks. You may now begin.

Jay Finks

Thank you, Jenna. Good morning. We very much appreciate you joining us this morning for CVR Refining first quarter 2013 earnings call. With me are John Lipinski, our Chief Executive Officer; Susan Ball, our Chief Financial Officer; and Stan Riemann, our Chief Operating Officer.

Prior to discussing our 2013 first quarter results, let me remind you this conference call may contain forward-looking statements, as that term is defined under Federal Securities Laws. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements, without limiting the foregoing, the words believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements.

You’re cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and our latest earnings release. As a result, actual operations or results may differ materially from the results discussed in the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

This call also includes various non-GAAP financial measures. The disclosures related to such non-GAAP measures, including reconciliation to the most directly comparable GAAP financial measures are included in our 2013 first quarter earnings release that we filed with the SEC this morning before the open of the market.

With that said, I'll turn the call over to Jack Lipinski, our Chief Executive Officer. Jack?

Jack Lipinski

Thanks, Jay, good morning everyone, and thanks for joining our conference call. As I always do, I’ll provide a brief recap of our financial results followed by our operating results and then Susan will provide more detail around the numbers reported this morning and then I’ll finish with some closing remarks.

The first quarter was great start to 201. As you know on January 23; we closed on our initial public offering of CVR Refining, LP. For the quarter, we set new operating records for crude throughput and our logistic business we set records on crude gathering for the quarter.

On a post IPO basis, our first quarter’s distribution is a $1.58 per common unit and this exceeds the previously announced post IPO distribution outlook of a $1.10 to $1.35 for common unit. The first quarter’s distribution will be paid on May 17 to unit holders on record as of May 10.

On a full quarter basis, the calculated distribution would have been a $1.76 per unit and this exceeds the IPO full quarter distribution outlook of a $1.21 which was made at that time. Again that was if the unit holders of (inaudible) LP were to get the results from the entire quarter but as you know there is stop period having closed on January 23rd.

The 2013 first quarter consolidated adjusted EBITDA was $309.9 million and that compares to $143 million in the first quarter of 2012. Susan again will give the more detail on the bridge between adjusted EBITDA and the cash available for distribution.

Some of the primary drivers of our earnings were strong crack spreads, our continuing access to price-advantaged crudes, and record high operating throughputs.

In the first quarter 2013, NYMEX 2-1-1 Crack Spread averaged $32.33 per barrel and that compares to $27.53 per barrel in the first quarter of 2012. The Brent WTI spread averaged $17.02 over the quarter and that compared to $15.34 for the same period a year ago.

In the first quarter, we realized strong seasonal product basis as compare to the year ago. PADD II Group 3 product basis was a negative $2.74 a barrel on a 2-1-1 basis as compared to a negative $4.21 in the same period last year and just remember it is pretty typical for us to have a strongly negative basis in the first and fourth quarter as typically early in the first and late in the fourth quarter.

Our overall realized refining margin adjusted for FIFO was $26.44 per barrel as compared to $18.62 per barrel for the same quarter last year. The real highlight of the quarter was our operating throughputs. In the first quarter, we ran 194,816 barrels of crude daily that’s barrels per day, 123,600 at Coffeyville and 71,200 at Wynnewood.

Our consolidated actual results or throughout were at the high-end of what we spoke about in our last quarterly call when I had estimated that the plants would run between 190,000 and 195,000 barrels a day. Like most mid-continent refiners, we continue to benefit from attractively priced crudes. Our purchased crude oil discount to WTI for the first quarter was $4.99 a barrel as compared to $1.45 a barrel in the same quarter in 2012. Some of the first quarter’s crude differential averages might be important to note. The WTI, WCS Western Canadian Select differential was $23.77 discount to WTI. The sweet sour spread WTI versus WTS was $4.88 and light sour blend Canadian crude versus WTI was $5.89.

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