Q4 2019 Earnings Call
Greetings and welcome to the CVR energy Inc. fourth quarter 2019 conference call.
I'm all participants are they listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator systems. During the conference. Please press star zero on your telephone keypad.
I might or this conference is being recorded.
My pleasure to introduce your host Jay Finks, Vice President Finance and Treasurer thinking you may begin.
Thank you Michelle.
Good afternoon, everyone.
We very much appreciate you joining us this afternoon for CVR energy fourth quarter 2019 earnings call.
With me today.
Our Chief Executive Officer, Tracy Jackson, our Chief Financial Officer Day later, it or Chief commercial officer and other members of management.
Prior to discussing our 2019 full year and fourth quarter results. Let me remind you that this conference call may contain forward looking statements.
Term as 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.
The foregoing the words outlook believes anticipates plans expects and similar expressions are intended to identify forward looking statements.
You are cautioned these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings at least.
As a result actual operations our 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 except to the extent required by law.
This call also includes various non-GAAP financial measures.
Disclosures related to such non-GAAP measures, including reconciliations to the most directly comparable GAAP financial measures are included in our 2019 important poor earnings release, we filed with the FCC yesterday after close of the market.
That said I'll turn the call or a day or Chief Executive Officer Dan.
You Jay Good afternoon, everyone. Thank you for joining earnings call.
Hopefully you had an opportunity to listen to the CVR partners earnings call earlier today.
I'd like to begin the call today with a brief discussion of our accomplishments in 2019, and then discuss our operating performance for the quarter as well as for the year.
2000, 2019 was another successful year for CVR energy.
Last year outlined a handful of strategic initiatives for 2019, and I'm happy to report several accomplishments for the company, including.
Significant year over year improvement in environmental Health and safety performance is all plants.
Total recordable incident rate declined by 11% in 2019, followed by a reduction of 50% in 2018 tier one process safety occurrences declined by 50%.
In environmental events declined by 14% after a reduction of 35% in 2018.
We maintained our commitment to return cash to shareholders with a 7% increase in our quarterly cash dividends.
The board authorized share repurchase program, a $300 million and we closed on our sale are gonna are underutilized Cushing tank farm.
Assets as planned for consideration of 44 million, including inventory for a gain of $9 million.
Some specific.
Since accomplishments specific to work <unk> petroleum segment include.
The increase in our throughput of regional crudes and show by 20%, while reducing our reliance on Cushing and Midland T. W. T.I. crude oils.
The quality adjusted advantage of the got the gathering crude oil.
Versus Cushing common typically averaged approximately $52 per.
Per barrel.
As a result of the benzene repositioning project completed in March as was the replacement of reformer catalyst at both refinery.
Both refineries, we have increased our production of premium gasoline by more than 25% in 2019 compared to 2018.
Premium gasoline production approached 70000 barrels per day in December.
An increase of over 85% compared to our 2018 average the group three.
Premium gasoline averaged 26 cents.
<unk> per gallon over subgrade in 2019.
We further increased our internal rent internal rins generation by approximately 12% by blending bio diesel across.
Both refinery racks for the full year.
The board approved the Winnie what I Summarization project, which we expect will further improve our capture it.
Earlier today CVR partners CEO, Mark Pytosh announced the following accomplishments for the fertilizer segment in 2019.
The planned turnaround at East Dubuque fall was completed safely and were receipt and we achieved.
A record ammonia production levels at that facility in December.
Total cash distribution to 40 cents per unit were paid during the year.
And the board approved the Ria reliability and expansion project at our Coffeyville plant.
Yesterday, we reported CVR energys full year and fourth quarter results for the full year of 2019 consolidated net income was $362 million and diluted earnings per share were $3.78.
Fourth quarter consolidated net income was 28 million and diluted earnings per share were 44 cents.
EBITDA for the year was 880 million and for the quarter was 142 million.
We posted improved results in both of our business segment year over on a year over year basis.
And the petroleum segment, the EBITDA improvement was driven by increased Throughputs.
Hi, or capture rates and higher refining margins, despite lower crack spreads achieved through fewer lost profit opportunities higher fertilizer sales.
And.
Sales volumes and prices drove improvement in the fertilizer segment.
We announced a fourth quarter.
Dividend of 80 cents per share, which would be paid on March nine to shareholders of record March 2nd.
We paid total cash dividends for the year 2019 of $3.05, bringing our total cash returned to shareholders for the year to approximately 306 million.
Our current annualized dividend a $303.20 per share represents an industry leading dividend yield.
Build of over 9% based on Yesterdays close.
Now I'll speak to some of the fourth quarter highlights for each of our business segment for the fourth quarter Petroleum segment.
The combined total throughput for the fourth quarter 19 was approximately 213000 barrels per day as compared to 221000 barrels per day in the fourth quarter of 2018.
The group.
211 crack spread averaged $16 at 65 cents in the fourth quarter of 90 compared to $80.48 for the fourth quarter of 2018.
Domestic crude differentials have tightened compared to a year ago levels, primarily due to the startup and Phil line fill up new pipelines from Midland to Cushing to the Gulf Coast.
Brent Ti.
Crude differential averaged $55 and fit 55 cents per barrel in the fourth quarter of 2019 compared to $9.26 per barrel in the fourth quarter 2018.
The Midland Cushing differential turned negative for the quarter with Midland, averaging 94 cents per barrel premium over Cushing compared to a discount a $5.96 per barrel in the fourth quarter of 80.
The WCS the WCS differential was $18.98 per barrel compared to $33.86 per barrel. The same period last year. The tightening of the WCS differentials largely the result of continued production curtailment imposed by the Alberta government.
Light product deal for the quarter was 101% on crude processed.
Our distillate yield as percentage of total crude oil throughputs was 44% in the fourth quarter for 2019 compared to 45% in the prior year.
Our distillate yield continues to rank as one of the highest among the independent refiners.
In total we gathered approximately 148000 barrels per day.
During the fourth quarter compared to 113000 barrels per day in the fourth quarter of 18 during the quarter, we reached New records forget.
Crude oil gathered volumes of approximately 154000 barrels per day in November.
The fertilizer segment finished the quarter with strong operating performance at both facilities. After completing planned turnaround at the east Dubuque facility.
Coffeyvilles ammonia unit operated at 90% compared to 96% in the fourth quarter of 18 and east Dubuque It.
At East Dubuque, its ammonia unit operated at 80, 88% utilization FLIR adjusted for the planned turnaround compared to 95% in the fourth quarter of 18.
CVR partners did not generate cash available for distribution for the fourth quarter 2019, now let me turn call over to Tracy discuss our financial highlights. Thank you David Good afternoon, everyone.
As Dave mentioned for the fourth quarter 2019, we reported net income of 28 million diluted earnings per share a 44 cents an EBITDA of 142 million. This compares to net income of 95 million diluted earnings per share of 73 cents, an EBITDA 202 million in the fourth quarter 2018, the effective.
Tax rate for the fourth quarter of 2019 was 40% compared to 13% for the prior year for the full year 2019, our effective tax rate was 26% compared to 18% for the prior year period, the increase in our fourth quarter and full year 2019 effective tax rate was primarily due to the reduction of non controlling interests.
As a result of the equity transaction completed in January 2019, the effective tax rate was also elevated in the fourth quarter 2019, due to an increase in income subject to tax as well as losses of CVR partners and changes in certain state income tax items. We currently estimate our full year 2020 effective tax rate to be approximately 25%.
The petroleum segments EBITDA for the fourth quarter 2019 was 135 million compared to 172 million in the same period in 2018. The decrease in EBITDA year over year was mainly the result in lower group three crack spreads and narrower crude oil differentials.
In the fourth quarter of 2019, our petroleum segments refining margin, excluding inventory revaluation impact was $1.86 per total throughput barrel compared to $17.47 and the same quarter of 2018, the increase in crude oil flat price through the quarter generated a positive inventory valuation impact.
61 cents per barrel during the fourth quarter 2019. This compares to a three dollar an 80 cents per barrel negative impact during the same period last year, excluding inventory revaluation impacts an unrealized derivative gains and losses the capture rate for the fourth quarter of 2019 is approximately 79% compared to 85.
Present in the prior year period, we estimate lost profit opportunities negatively impacted our capture rate by approximately 7% in the fourth quarter 2019.
Total derivative losses for the fourth quarter of 2019 totaled 19 million, which include the unrealized losses of 24 million associated with open commodity derivative instruments and open purchases of crude oil Canadian crude oil that are scheduled for future delivery in the fourth quarter of 2018, we had total derivative gains of 70 million, which inc.
Alluded unrealized gains at 37 million.
Rent expense in the fourth quarter of 2019 was 13 million or 63 cents per barrel of total throughput inline with the same period last year. The full year 2019, Rins expense was 43 million as compared to 60 million in 2018. The recent really by the 10th Circuit Court has caused a significant increase in the price of ethanol rins.
Although biodiesel rents have been less affected due the extension of the biodiesel blenders tax credit based upon recent market prices of Rins and current estimates of production rate, we estimate that our rins expense for.
For 2020 will be 100, 110 million and petroleum segments direct operating expenses were $4.63 per barrel of total throughput in the fourth quarter of 2019 as compared to $4.41 per barrel in the fourth quarter of 2018, the increases primarily associated with higher personnel expenses.
An increase material spending for maintenance activities offset somewhat by lower expenses for utilities and outside services.
For the full year 2019, CVR partners reported operating income of 27 million and the net loss of 35 million or 31 cents per common unit.
This is compared to full year 2018, operating income of 6 million and the net loss of 50 million or 44 cents per common unit EBITDA was 107 million for the full year 2019, compared to 84 million for the prior year, you approximate 27% year over year increase in EBITDA was primarily due to the improved netback pricing.
A 20% at 15% for both ammonia and UAN, respectively, along with increased ammonia sales volume.
For the fourth quarter of 2019, CVR partners reported operating losses of 9 million at a net loss of 25 million or 22 cents per common unit. This is compared to operating income of 8 million and a net loss of 1 million or one cent per common unit for the fourth quarter. Two 2018, EBITDA was 11 million for in the fourth quarter 2009.
Keep teen compared to 33 million for the prior year period year over year decline in EBITDA was driven by turnaround expenses incurred in the fourth quarter as well as lower you weigh in sales volumes and pricing in the quarters. The results are challenging weather conditions.
Total consolidated capital spending for the full year 2019 was 114 million, which included 89 million from the petroleum segment and 20 million from the fertilizer segment.
Oh, this total environmental and maintenance capital spending comprised 102 million, including 79 million in the petroleum segment, an 18 million and fertilizer segment actual spending for the year came in below expectation as a result of certain capital project shifting into subsequent years, we estimate the total consolidated capital spending for 2020 to be.
130 to 150 million of which 80 to 90 million is expected to be environmental and maintenance capital. This excludes planned turnaround spending, which we estimate will be 145 to 155 million for the year expected turnaround spending for 2020 includes some spending ahead of the planned turnaround at the Wynnewood refinery in 2021.
Our cash position remained strong as we ended the quarter with with cash of approximately 652 million on a consolidated basis, which includes 37 million in the fertilizer segment. Subsequent to year end, we completed a $1 billion senior unsecured notes offering in January at a blended interest rate of $5.
5.4 or 5%.
After repaying the existing 500 million of six and half senior notes due 2022, we added approximately 500 million of additional cash for the balance sheet further improving our liquidity position.
Looking ahead for petroleum segment, we estimate total throughput for the first quarter of 2020 to be 155 to 165000 barrels per day, reflecting the impact of the planned turnaround of coffee, though we expect total direct operating expenses for the first quarter to be 85 to 95 million and total capital spending to range between 45 to 55 million.
Turnaround spending is expected to be between 115 in 125 million for the fertilizer segment, we estimate our ammonia utilization rate to be between 95, and 100%. We expect direct operating expenses to be 35 to 40 million, excluding inventory impacts and total capital spending to be between four and 7 million would that Dave I'll turn the.
All back to you. Thank you Tracy.
In summary, 2019 was a successful year for CVR energy.
For 2020, our mission remains to be a top tier north American petroleum refining and fertilizer company as measured by safe and reliable operations.
Superior financial performance and profitable growth.
Looking at 2020 tracts of are having a typical soft start to the new year on top of that the weather has been warm and the corona drivers as reduced worldwide demand.
The industry or industries response has been to cut roads. Despite these factors, we see a number of positive market trends to drive our constructive outlook for the year.
GDP growth low unemployment increases in the workforce participation rates and low gasoline prices.
Our deriving refined product demand with vehicle miles traveled up 1% in 2019.
Shale oil production in exports from the US continue to grow crude oil production for the major US show oil basins increased by over 1.2 million barrels per day in 2019, as a and is expected to increase another 400 to 500000 barrels per day in 2020.
As to domestic production volumes have increased crude oil exports from the use of increased over 1 million barrels a day in 2019, averaging nearly 3 million nearly 3 million barrels per day for the year.
Although crude differentials of narrow with the addition of the new Midland to Gulf Coast pipeline capacity, we continue to believe that need to export incremental light shale oil drives a sustained differential between Brent and WT.
The abundance of natural gas gas production in the U.S. has driven prices to a new low even in the winter cheap natural gas is a key advantage for our refining and fertilizer businesses and the industry and industrial activity in general.
Corn plantings are expected to increase to 90 to 95 million acres. This year.
Above the 2019 level of less than 90 million acres.
And although production product inventories are currently elevated they're not alarming for this time of year, the upcoming RVP spec change and heavy global spring maintenance should clean up the inventory picture.
The impacts of tier three gasoline are showing up in the marketplace with octane spreads averaging 25 cents a gallon so far and 20 820 as well as.
Above the same period last year.
Prices for tier three gasoline credits were over $3000 recently, 70% increase from a year ago.
We are currently producing below 10, P.M. gasoline and generating so for credits at both our refineries.
As expected with the implementation of the IMO 2020 video is being diverted away from cat crackers into the marine fuel oil market.
The should reduce gasoline and further Titan product inventory.
And finally, western Canadian crudes continued to be constrained by pipeline takeaway capacity, although some progress has been made on future pipeline capacity additions.
We believe we are well positioned in regard to all of these market forces and we continue to progress make progress on our suite of income improving.
Projects that are intended to capitalize on these dynamics our focus remains on further increasing our ability to make premium gasoline.
Increase our liquid yields and expand our feedstock optionality.
Our board gave final approval to do C. C. Six isom unit or when you would refinery.
It'll capital spending is estimated at.
Hundred $17 million for this project and we expect the project to could complete and an operation by the end of 2000.
22.
This project will improve our ability to efficiently process more ship light show oils and kept in improve our capture rates.
We're developing a similar project at our Coffeyville refinery, which leverages the Wynnewood iPhone project.
If approved this project would increase coffeyvilles capability to run natural gasoline that efficiently process light shale crudes.
And finally, we can continue to evaluate the replacement of HF.
Acid catalyst at our new at Wynnewood Alkylation unit.
If approved this project would eliminate the use of HF acid catalyst and that in an addition to increase in Argentina premium gasoline production company capability.
We expect to complete schedule engineering in the second half of this year and make a technology selection by the end of the year.
We currently expect these each of these projects should generate returns of greater than 40%.
We also believe this runway of attractive high return projects not only improves our competitive position could but could also creates the potential for future shareholder returns.
Our recent bond offering.
Could provide the funding required for these capital projects. In addition to providing additional financial flexibility to fund potential acquisitions share repurchases and other distributions to our shareholders.
As we look at the first quarter of 2020, the Coffeyville refinery as scheduled.
Surface Coffeyville refinery turnaround is on schedule and is expected to start next week. The turnaround is currently expected to last approximately 40 to 50 days.
Looking at the market quarter to quarter to date metrics are as follows.
Group three cracks have averaged $12, a 91 cents per barrel, Brent WTI spread has averaged $55.54 per barrel the Midland Midland over Cushing by 70 cents per barrel and WGCL has averaged five cents per barrel under Cushing WT.
WCS differentials averaged $21.02 per barrel under WCS.
Prop crack prop group three cracks were at $16, a nine cents per barrel yesterday, Brent Ti spread was $5.83 per barrel and the WCS differential was $17.58 under WCS.
Quarter to date ethanol Rins have averaged 20 cents in biodiesel rins have averaged 43 cents recent developments.
Have resulted in mixed direct direction of prices the approval of the Brender. The biodiesel blenders credit retroactive due to 2018 produced a windfall for some refineries in the fourth quarter.
And biodiesel Rins declined by nearly.
By nearly 20% from the beginning of two the ended the quarter.
However, the recent 10th circuit.
Court ruling has caused RIN prices to increase particularly ethanol rins.
The court ruled in favor afford trade associations related to exemptions from obligations under the renewable fuel standard.
That were properly Glenn granted to a few small refiners under the clean Air Act, let me be clear.
We believe the Tensorflow got at all wrong.
Starting with granting standing to these trade associations not to mention misreading. The most important part of the renewable fuel standard regulation protecting small refineries from disproportionate harm caused by compliance with the renewable fuel standard.
To go directly from the RFS.
Regulation a refinery.
May at any time petition to administer administrator for an extension of its small refinery exemption for the reason of disproportionate economic hardship.
We think there is positively no proof that these trade associated with have been harmed by these smaller refinery exemptions in fact, the blended volume of ethanol has increased every year. Despite the issuance of exemptions.
We intend to fight this ruling with all the necessary reinforces resources going forward and believe this this ruling conflicts with both the regulations as well as other rulings and sets national policy, which exceeds the 10th circuit, So 10th Circuit authority.
With that operator, we're ready for questions.
Thank you we will now be conducting a question and answer session. If he would like to ask a question. Please press star one on your telephone keypad. It confirmation telling more indicate your line is another question Q.
Sorry to if you'd like to your question from the Q for participants you think speaker equipment, maybe necessary to pick up your hands that before passing the starkey when my plays well for your questions.
Our first question comes from the line of Prashant Rao with Citigroup. Please proceed with your question.
Hi, This is Joe on for Sean.
Well, what past January 2020, and I am tailwinds on showing up as people expected.
For the M&A market are you seeing more attractive feet off right.
What occurring at the end the Rockies makes sense, given youre keeping your capital structure.
I would add although I'd say, we see more attractive.
Spread bid ask spreads but.
They are coming in a bit.
Most of the assets that are available out there or what I'd call full valued.
So.
Really have to have some synergies or something that.
An angle to which you could add value to your but existing business with that make any of them work.
Okay got it.
Second question.
Like the same.
Weak can you speak a little bit about that market dynamic and how should we think about the long term profitability and Beth.
Well I consider the fertilizer segment to be sort of like a chemical businesses.
Typical boom bust cycle.
It's still a I'd say in the recovery phase of that boom bust cycle that happened in the 14 15 <unk> timeframe.
Demand is is strong however, and but theres plenty of material out there to be sold worldwide.
Some of that still needs to be to be soaked up before you really see a return to margins that we have headed in the past.
On that on the other side of its a pretty relatively steady business for us is better than it is being the benefiting by the low natural gas prices.
We expect that to continue going forward.
Thank you.
Thank you. Our next question comes from the line of Neil Mehta with Goldman Sachs. Please proceed with your question.
Good good afternoon team that I wanted to stay on the topic here of Rins extending from your prepared remarks, and Dave the 100 to iron 10 numbers, probably a little higher than than what we had model. Dan can you just walk us through the assumptions that are embedded in there.
With the de CIX price.
And then is there a small refinery.
Stems from the filter for a number.
Yes, we we project forward without any any potential waiver.
But what we do tend to do at Neal is take the current prices look at that for the full year, So thats where that number comes from.
The spot prices were.
Spot price today is about 30.
Yes.
Third.
33, and a half roughly on a blended basis.
That's what's embedded in through the balance the year that's right.
Okay.
You take off of that what we generate internally which is.
As has has moved up in the past years.
But.
Thats still our basic ARVO somewhere around the 320 million range take off the.
The internally generated about today about 72 to 75 million Reds and you can should be able to do the math.
Effect and that is that pretty ratable across the quarters.
Yes generally okay.
Okay and then it can you just expand a little bit more on your comments, how do you feel that the.
And the court decision.
It was not consistent with the letter of the law and how concerned are you that this is going to ultimately be the catalyst that sense rins prices higher.
Over the next.
Next couple of years.
Well, there's two factors there.
I don't know I'm sure you're up on the.
The EPA has elected to try to phase in a reallocation of small refiner waivers to to the large refiners, which is not in the law number one.
As Fred frankly, unfair and was never never intended in the RFS regulation.
But I think more importantly, this this didn't circuit really if you took it at face value and and put it in.
It vial it goes directly against the renewable fuel standard in the from the standpoint that.
That small refinery waiver exemption was put in there to save small refiners from going out of business.
And if you Theres about point, there, where if you are friends go to a certain value.
Don't know where it is maybe between one dollar to dollar as you start putting a lot of these small refineries right out of business I just can't afford it.
Free cash flow goes to zero.
FTR turnarounds and sustaining capital and all the other things you have to do to run this business.
So its bought bottom line is that was a safety relief output in by the legislators to protect the small refiners.
And then this ruling just goes against that in every way.
And the decision to not embed the small refinery sanction into your into your guidance. This data is that an element of conservatism or is that that just at least what we should base case from now on both.
We go we've always run our business that way is that we don't assume that it's a given to get an exemption.
As we tend to this is what hurts us and a lot of cases, weve actually incur pain because the EPA is so late in issuing these waivers like last year that was after the compliance period was over and we ended up with stranded rins that were of the 17 vintage that were useless at night.
Okay.
And we actually have litigation going on that with EPA now.
Because of that fact work we're doing for her.
So I think you really can't play in your business around these rent.
These exemption so without some risk that you're going to you're going to put yourself in a net short position and have to do a lot of cover in some cases in feasible to even cover because they have expired by the time that you an issue the rent the the waivers.
Yeah.
But just curious a whole bunch of uncertainty in the business that as it's no way to run a business as bottom line in Washington needs to do something to fix it.
Hi, I appreciate the commentary I think we're all hoping that we could put this topic of rins behind us it seems like a three emerging.
It's just come right back now with vengeance.
Thanks, Dan.
Yep.
Thank you. Our next question comes from the line of Manav Gupta with Credit Suisse. Please proceed with your question.
Can you elaborate more on the coffee that turnaround.
What would be the expenses incurred during this timeframe and which units how you actually need digging down for the turnaround.
Well. This is this a major turnaround for coffeyville its.
Four and a half years run after four now for your run so we're basically working not every unit in the refinery.
So we'll lose full production for at least 40 of those days.
And.
Partial startups in the last 10 days of various units as we ramp back up.
And what's the expense you expect incurred during this downtime.
Well, we've already spent some money on the turnaround but were between we were estimating between 115, a 125 million.
Okay.
Quick follow up question on Yahoo.
Then you would isomerization unit you will have indicated that the capex is close to 117.
Should we spudded between 20, and 21 or is it going to be more 22.
In line with this 20, if you can give us some idea how do you plan to spend the time in 17 again over the next two years.
Well, we're planning the heavily module wise. This this design, which means our spend will be will be slow this year and there will be fairly split between the next two years, So 21 and 22 of the heavy spend periods.
And they've done about 25 million can you help us understand something that on the sensitivity of that what could drive those numbers modular slotting in 45 at the same time, what could go against you and the number more in Kentucky, lower Codis, if you could give us some ideal the sensitivity on those.
Numbers.
The key key driver for this is the is basically.
Liquid bulk business, not only liquid volume yield, but its distillate yield and it's also.
On a premium we can make and you get you can get you can use premium it two ways.
Could either make more premium or you can cut the severe you in your existing reformer, which improves your liquid yield and improves your capture rates. So.
Those are the real those are the things that could go wrong.
What could make it really really good is high premium spreads, which were predicting because of the tier three gasoline in the octane shortage that's there.
And or higher crude prices, which improves the liquid yield.
Benefit others of course, this what prices are always that.
Hi, Thank you for taking my questions you're welcome.
Thank you. Our next question comes from the line of Paul Cheng with Scotiabank. Please proceed with your question.
Hey, guys good afternoon.
Hi, Paul.
Dave.
One of your competitor the and also means that they.
Did something quite interesting.
Following the JV, John John Venturing into we tap.
That could help them I think in terms on maybe some margin capture that we finding local we find rate and also with that maybe on the green side.
Do you see on the opportunity for you guys to do that.
Well Paul is I think you've heard me say before we've been evaluating investments in retail wholesale marketing.
That everything when we've been frankly, we had we were close on the deal.
This year that we ended up not being successful bidder on that would have really jump started us into that activity.
You know an alternative to that is some kind of joint venture. So like you mentioned and we continue to pursue those in every direction we can find.
It really makes a lot of sense for us in the mid con because of our lot of our mutter up what we produce goes goes directly to Oklahoma City, Kansas City.
Tulsa all those markets are big markets for Us, we're big Big that turn penetration in each of those and we continue to look for for those type of deals just haven't been successful yet.
Yeah, Dave when you say day is not successful can you are saying that whats the and Oh, yes. It just the price on what that does the control or what.
That.
It's a number of factors pause you know you know were and it's difficult deals to do because you're combining a business that.
That is typically a 12 to 14 multiple compared to a we traded at what six and a half somewhere in that neighborhood.
So anyway, you did the numbers that these retail businesses are going for a very high.
Compared to our base business so.
Imagine if we did one or two of them you'd be quickly ask you'd want to spend those off could you get a higher multiple.
So there you are circular argument and to us is.
If we can enhance our margin.
And are in a capture rates and capture Rins, where the it's not really something that's very strategic to us.
I said, okay. The board Youre, certainly, it's a bit sets that the common structure.
On the long haul do you think that does it say not substitutable at the soluble structure or that you're better off that full year to be fully consolidate and just bought back the minority interest.
Well you know personally for running the company it would be better to be consolidated but.
It has to be accretive to our shareholders and and.
Is that the current valuation that just not the case.
In energy.
The way that your family State you take lease on the Cowen structure, I mean forget though down in the minute about evaluation by days I quit.
That will be is there any strategic reason for them to keep yet as a separate entity like where they ought to be.
No I don't think so that the the MLP structure is falling of out of favor, there's probably a disincentive for them to be the way they are.
But you know the GP has to make that decision and it has to be accretive to CVI for anything to for that to occur. We still think we're in the right point of the cycle to do that right now.
A final question for me on you gave a the first quarter the full put guidance and.
Also with the Capex number.
Do you have a rough number that for the full year.
[noise], we probably have that somewhere but probably feel for capex I think I've read 130 to 150 I thought he was saying rate, but right now.
And with that that full put away for the year and also that you all cap ex faulty we have no other no other turnarounds or any other things planned on a plan basis, Paul So I think you're getting probably ramp up on that assumption.
Right. So the the coastal field tons of ammonia 40, 50 day. So yes, we'll extend that maybe into the second call it that way.
That's correct it will be partially in the second quarter <unk>.
<unk> and that in terms of but that seems that you capitalize that turned them on now so I'm not so youre takes on the absolute level that should then be impacted.
Yes, it shouldn't be at all that much.
Your denominator is changing so light will tell you when they cost we changed but that on the absolute dollar.
Since you're capturing that unless unless they expenses.
Hi, it and expect that all of that pull long longer than expected.
That's correct.
Okay.
Thank you.
Youre welcome.
Thank you. Our next question comes from the line of Matthew Blair with Tudor Pickering, Holt and company. Please proceed with your question.
Hey, good morning, Dave.
Good morning.
And I noticed C ran a record amount of regional shale crude it's now more than half your slate and definitely picked up both quarter over quarter and year over year could you talk about the economic uplift you see on these regional sale barrels and also just keeping in mind that rig count in stack Scoop is had.
Has declined over the past year is there any risk to these barrels coming down for you.
Sure Let me take the second one first the I think I've mentioned in my prepared remarks.
Today than in January we actually gathered a 140.
The bulk of that is the of the in any increase we get as in the in the stack Scoop area specifically the scoop.
And we've still you know I don't know that we're projecting large increases from here, but the are the people were aligned with.
That are direct coupled to our pipes, a production continues to maintain or or go up taking out seasonal effects.
You do get a weather affected the winter, where it gets to muddy or two snowy or something to get to the wells that for your truck at it.
The impact to us but in January we gathered 140000, we peaked at a 156. So in November 153 in November so.
So you can see there has been a slight decline, but I almost think that's as much seasonal as anything else and our partners are really say in there there continue to drill they have active rigs going and continue to do their farming activities.
That that that we enjoy so.
As far as the second part of the question is a these crudes are are right in our wheel house. There there are a w. TL like barrel.
And there are they really a blend well with the heavy that week, we could make a cocktail with a with the WCS. It.
Coffeyville that really fits that refinery well and when you would running a pure slate of it so.
With the W. appeal as a trip.
So our strategy remains the continue to pick this up and the.
50 cents to a dollar even to $1.50, sometimes it moves with that a dime exit dynamics of the market, but thats a typical advantage we see.
Very helpful. Thanks.
You're welcome.
Thank you we have reached the end of our question and answer session I would like to turn the floor back over to management for any closing remarks.
Again, I would like to thank you all for your interest and CVR energy. Additionally, we'd like to thank our employees for their hard work their commitment toward safety safe reliable and environmentally responsible operations.
We look forward to reviewing our first quarter 2020 results during our next earnings call.
Thank you all very much.
Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.