CVR Refining, LP (CVRR)

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CVR Refining, LP (CVRR)

Q2 2013 Earnings Conference Call

August 1, 2013 12:00 ET


Jay Finks - Director of Finance

Jack Lipinski - Chief Executive Officer

Susan Ball - Chief Financial Officer

Stan Riemann - Chief Operating Officer


Mohit Bhardwaj - Citigroup

Jeff Dietert - Simmons



Greetings and thank you for joining the CVR Refining, LP’s Second 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 - Director of Finance

Thank you, Shay. Good morning everyone. We very much appreciate you joining us this morning for our CVR Refining second 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 second 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 are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in 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 second quarter earnings release that we filed with the SEC this morning before the open of the market.

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

Jack Lipinski - Chief Executive Officer

Thank you, Jay. Good morning everyone, and thank you for joining our earnings call. This morning I am pleased to report another solid quarter. Last Friday, as you know, we pre-released our second quarter earnings and declared our second quarter’s distribution of $1.35 per common unit. The second quarter’s distribution will be paid on August 14 to unitholders on record as of August 7.

In the 2013 second quarter, we reported a consolidated net income of $339.2 million as compared to $259.5 million a year ago. Our 2013 second quarter’s consolidated adjusted EBITDA was $250.6 million as compared to $379 million a year ago. Our realized refining margin adjusted for FIFO, first-in first-out, accounting was $19.18 per barrel as compared to $27.07 a barrel in the same quarter last year. The decrease year-over-year was partially driven by the decrease in the Group 3 2-1-1 crack spread as well as significant increases in RINs expenses associated with our obligations under the Renewable Fuel Standard.

In the second quarter 2013, the NYMEX 2-1-1 crack spread averaged $25.95 per barrel as compared to $29.27 per barrel in the second quarter of 2012. The NYMEX 2-1-1 has been impacted by the narrowing of the Brent-WTI spread which averaged $9.37 over the second quarter of this year and that compares to $15.44 for the same period a year ago. In the second quarter 2013, our RINs expense was $65.5 million as compared to $6 million in the second quarter of 2012. The pad 2 Group 3 product basis was a positive $1.83 per barrel on a 2-1-1 basis as compared to a negative $0.53 barrel in the same quarter last year.

Operationally, in the second quarter, we ran approximately 193,000 barrels a day of crude that was roughly 117,000 barrels a day at Coffeyville and 76,000 barrels a day at Wynnewood. Our crude throughputs were at the high end of our guidance provided during our last quarter’s call. Like most Mid-Continent refiners, we continued to benefit from attractively priced crudes in the second quarter. Our purchased crude oil discount of WTI for the second quarter was $2.43 a barrel as compared to $4.31 a barrel in the second quarters of 2012. The decrease year-over-year was due to lower heavy sour crude discounts primarily Cold lake and Western Canadian Select.

For example, in the second quarter 2013, the WTS discounts to WTI averaged $16.62 a barrel as compared to $20.45 a barrel a year. Also impacting our purchased crude discounts were lower discounts for lights sour crudes. The West Texas sours discount to WTI averaged $0.17 per barrel this year as compared to $5.28 a barrel in the second quarter last year. Our gathering system continues to grow and surpassed prior records. We gathered over 53,700 barrels a day for the second quarter which is a new quarterly record. In May we set a new single month’s gathering record of just over 54,300 barrels a day.

At this point I will turn the call over to Susan to talk more about financials. Susan?

Susan Ball - Chief Financial Officer

Thank you, Jack and good morning everyone. Net income was $339.2 million in the second quarter of 2013 as compared to net income of $259.5 million in the second quarter of last year. Adjusted EBITDA for the quarter was $250.6 million versus $379.6 million in the second quarter of 2012.

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