Q2 2023 CVR Energy Inc Earnings Call
Greetings and welcome to the CVR Energy, Inc. Second quarter 2023 conference call.
At this time all participants are in a listen only mode.
Brief question and answer session will follow the formal presentation.
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As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Richard Roberts, Vice President of F P&A and I are.
Thank you Mr. Roberts you may begin.
Thank you Melanie good afternoon, everyone.
I much appreciate you joining us this afternoon for our CVR energy second quarter 2023 earnings call with me today are Dave lamp, our Chief Executive Officer, Dave Newman, Our Chief Financial Officer, and other members of management practice.
Prior to discussing our 2023 second quarter results. Let me remind you that 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.
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.
To take 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, but disposals related to such non-GAAP measures, including reconciliation to the most directly comparable GAAP financial measures are included in FY2023 second quarter earnings release that we filed with the SEC and Form 10-Q for the period and will be discussed during the call that said I'll turn the call over to Dave. Thank.
Thank you Richard Good afternoon, everyone and thank you for joining our earnings call yes.
Yesterday, we reported second quarter consolidated net income of 168 million and earnings per share of $1 29 <unk>.
EBITDA for the quarter was $300 million.
Our solid results for the quarter were driven by continued strength in gasoline and diesel crack spreads.
We are pleased to announce the board of directors has authorized a special dividend of the dollar per share. This is in addition to the regular second quarter dividend of <unk> 50 per share both of which will be paid on August 21 to shareholders of record at the close of the market on August 14th.
Our annualized dividend yield excluding special dividends is approximately five 5% based on yesterday's closing price.
It remains best in class among the independent refiners.
In our petroleum segment combined total throughput for the second quarter of 2023 was approximately 201000 barrels per day and light product yield was 100% on crude oil process.
We completed the planned coker turnaround at Coffeyville in early April .
We currently do not have any additional turnarounds planned for the remainder of the year.
Although we experienced a fire in the gasoline hydro treater at when he went during the quarter the impact of the operations at the plant was minimal and we're able to run the refinery without the hydro treater and operation by consuming sulfur credits.
We expect to have the hydro treater repaired and back in service in the next week.
Benchmark cracks.
Benchmark crack spreads remain Ela remained elevated during the second quarter with group 3211, averaging $32 33 per barrel RIN prices declined slightly from the first quarter, but remained stubbornly high at over $7 per barrel.
Last month, the EPA continued down their ridiculous and misguided path once again.
Denied petitions for small refinery waivers and fund small refinery exemptions, including Winnie Woods petitioned for 2022.
We've already followed lawsuits.
And received the state from the fifth circuit related to the denial of when he would small refinery exemptions for 2017 through 2021 and.
And we expect to challenge. This most recent denial in court very soon.
As we have continually stated the RFS Ricky let regulation was written specifically to protect small refineries like when he would who disproportionate economic harm caused by the RFS regulation.
And we will continue to fight for our rights that we believe went up when the wood is entitled to.
We completed a second catalyst change at the winter you would renewable diesel unit in April and we processed approximately 18 million gallons.
Vegetable oil feedstock in the second quarter, we also switched catalysts providers with the most recent with the most recent change and so far we are seeing an increase in renewable diesel yields the.
The hobo spread improved slightly from the first quarter and despite the lower throughput volumes. We once again saw improved results relative to the previous quarter.
As a reminder, our renewable diesel business is currently reported in our corporate and other segment.
In the fertilizer segment, both facilities ran well during the quarter with a consolidated ammonia utilization rate of a 100%.
Fertilizer prices continued to decline during the second quarter, although we sold more so more than 40% of our second quarter volume in the first quarter at higher prices.
We recently completed both the summer fill and fault prepaid ammonia ordering from customers who have a good order book heading into the fall.
Now, let me turn the call over to Dave to discuss our financial highlights. Thank you, Dave and good afternoon, everyone.
For the second quarter of 2023, our consolidated net income was $168 million.
Earnings per share was $1 29 and <unk>.
EBITDA was $300 million.
Our second quarter results included an unfavorable inventory valuation impact of 26 million.
Unrealized derivative losses of $19 million and a negative mark to market on our estimated outstanding rate obligation of $2 million.
Excluding the above mentioned items adjusted EBITDA for the quarter was $347 million and adjusted earnings per share was $1.64.
Adjusted EBITDA in the Petroleum segment was $258 million for the second quarter, driven by strong product cracks in the mid con.
Our second quarter realized margin adjusted for inventory valuation unrealized derivative losses and rent mark to market impacts was $20 27 per barrel, representing a 63% capture rate on the group 3211 benchmark.
<unk> expense for the quarter, excluding the mark to market impact was $88 million or $4 85 per barrel, which negatively impacted our capture rate for the quarter by approximately 15%.
Estimated accrued RFS obligation on the balance sheet was 599 million at June 30th representing 373 million Rins Mark to market at an average price of $1.61.
As a reminder, our estimated outstanding rent obligation excludes the impact of any small refinery exemptions.
Direct operating expenses in the petroleum segment were $5 46 per barrel for the second quarter compared to $6 12 per barrel in the second quarter of 2022.
The decrease in direct operating expenses was primarily due to lower natural gas and electricity prices somewhat offset by higher repair and maintenance expenses.
Adjusted EBITDA in the fertilizer segment was 87 million for the second quarter with strong production for the quarter somewhat offsetting the decline in nitrogen fertilizer prices relative to the second quarter of 2022.
The partnership declared a distribution of $4 14 per common unit for the second quarter of 2023.
CVR energy owns approximately 37% of CVR partners common units, we will receive a proportionate cash distribution of approximately $16 million.
Cash provided by operations for the second quarter of 2023 was $367 million and free cash flow was $271 million.
Uses of cash in the quarter included $97 million of capital and turnaround spending.
70 million paid for the Noncontrolling interest portion of the CVR partners first quarter distribution.
4 million paid for cash taxes and interest in.
50 million paid for the <unk> first quarter dividend.
Total consolidated capital spending was 48 million, which included 22 million in the petroleum segment $6 million in the fertilizer segment 18 million on the pretreatment unit really are to you.
Turnaround spending in the second quarter was $11 million.
For the full year 2023, we estimate total consolidated capital spending to be approximately $200 million to $225 million and turnaround spending to be approximately $55 million to $65 million.
Turning to the balance sheet.
Entered the quarter with a consolidated cash balance of $751 million, which includes $69 million of cash in the fertilizer segment.
Total liquidity as of June 30, excluding CVR partners was approximately $937 million, which was comprised primarily of $682 million of cash and availability under the ABL facility of $255 million.
In light of our upcoming senior notes maturity in 2025, we are currently intending to hold higher levels of cash on the balance sheet in order to offset the potential for a growing RIN liability as we await the outcome of the lawsuits related to when you went small refinery exemptions.
Looking ahead to the third quarter of 2023 for our Petroleum segment, we estimate total throughput to be approximately 200 to 215000 barrels per day.
Direct operating expenses to range between 95, and $105 million and total capital spending to be between 45 and 49 million.
For the fertilizer segment, we estimate our third quarter 2023, ammonia utilization rate to be between 95 and 100%.
Direct operating expenses to be approximately $50 million to $55 million, excluding inventory impacts and total capital spending to be between 14 and $16 million.
For renewables, we estimate third quarter 2023, total throughput to be approximately 17 to 22 million gallons.
Operating expenses to be between six and $8 million and total capital spending to be.
Be between 23% and $25 million.
With that Dave I'll turn the call back over to you. Thanks, Dan in summary, we had another strong quarter with solid contributions from both the refining and fertilizer segments. We saw another quarter of improved results with the new renewable diesel business as well.
As we look at the underlying fundamentals driving our business. We are optimistic about the near term outlook and were pleased.
To be paying another special dividend to our shareholders.
Starting with refining.
Crack spreads remain remained elevated in the second quarter of 2023 with the increase in gas cracks during the quarter nearly offsetting the decline in distillate cracks.
Refined product inventories remain at or below five year range.
Or below low end of five year ranges demonstrating the impact of reduced refining capacity in the U S and the heavy turnaround activity and unplanned unplanned outages in the first half of the year.
Product inventories have also benefited from continued strong exports of gasoline and diesel out of the United States.
Which have averaged over 2 million barrels per day in the first half of 2023.
Gasoline demand in the U S has been trending above 2022 level since March although diesel demand has been lower for most of the year by about 5% on average.
Slowing diesel demand has been one of the primary areas of concern in the market with freight rail and truck movements all down this year, although freight rates have started to increase recently.
The other item, we continue to watch it as the startup of new refining capacity around the world.
The impact that may have on exports of refined products out of the U S.
On our last earnings call I highlighted the hedging program that we entered into earlier this year, which generated a realized gain of over $11 million in the second quarter.
For the second half of 2023, we have approximately 20% of our expected gasoline and diesel production volumes headed.
And for 'twenty, four we have approximately 50% hedged.
On the crude side of the equation commercial inventories have moved.
Above the five year average levels, which can also be partially attributed to elevated turnaround activity in the first half of 'twenty three.
Heavy crude spreads remain narrow.
And we have been we've been running very little WCS at Coffeyville as a result.
Shallow production in the United States continues to grow slowly.
And our grad gathered volumes to increase in the second quarter, averaging over 145000 barrels per day.
Crude oil exports out of the U S had been averaging around 4 million barrels per day and we believe.
We believe continued to continued crude exports at this level supports a sustained breath ti spread.
We continue to make progress on some of the refining projects. We have discussed in previous calls we have received a permit for the project to replace hff's acid with a solid catalyst and the alky unit at the Wynwood refinery with an expected completion in 2026.
This change will increase our alkylation alky capacity by 200 2500 barrels per day as well.
We are also continuing to progress our diesel yield improvement projects, which we believe could increase our distillate yield from the two refineries by approximately 6000 barrels per day within two or three years.
This would increase our distilled total distillate yield from approximately 43% today to over 46%.
Turning to the fertilizer segment nitrogen fertilizer prices declined further in the second quarter in part due to the significant decline in natural gas prices in Europe Asia and the U S.
We believe customer inventories are now at the lowest levels in recent years, and we will need to be replenished over the coming months.
In July we completed both with both the summer UA Unfelt in the fault prepay ammonia ordering from customers.
With the reset in prices, we saw strong demand for both products and believe we have seen a recent bottom pricing in UAS and ammonia.
In June we announced that we concluded our evaluation of potential transaction to spin off our GP and LP interest in CVR partners and the board decided not to pursue the transaction at this time.
Ultimately the board concluded the complexity associated with the transaction may not deliver appropriate value under the current conditions. We will continue to explore ways to capitalize on the unique assets of CVR energy and CVR partners.
Finally in renewables construction on the PTU is progressing.
However, delays in equipment delivery of equipment have shifted the expected in service date to the fourth quarter of 2023.
Over the past three months.
Past few months, we have had preliminary discussions with various.
Parties that may be potentially interested in partnering on a renewable diesel project with an option for Saf production at our Coffeyville location.
We are currently contemplating a significantly larger facility at Coffeyville than we have at what he would ask.
We look for ways to take it.
Explore look for as.
As we look to explore the potential of taking <unk> taken advantage of the economies of scale.
We would also like to be able to utilize some of the existing infrastructure at the refinery discussions are still in the preliminary phase at this point, but so far we have received initial interest from a variety of partners.
I look forward to providing additional details as we progress these discussions.
Looking at the third quarter of 2023 quarter to date metrics are as follows group 211 cracks have averaged $34 51 per barrel.
But the Brent Ti spread of $4 32 in the Midland differential of $1 50 over W. Ti.
Prompt fertilizer prices are approximately.
$4 50 per ton.
And.
Uhm is $2 50 per ton.
As of yesterday group 3211 cracks were $43 eight per barrel Brent Ti was $3 76 per barrel WCS was $15 65 since under W. T.
And returns were approximately $7 84 per barrel.
We continue to strive to operate our plants safe reliable environmentally responsible manner and to explore opportunities to grow our renewables business continues to focus on maximizing free cash flow, which underpins our peer leading dividend yield.
With that operator, we're ready for questions.
Yeah.
Thank you.
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One moment, please while we poll for questions.
Thank you and our first question is from Matthew Blair with Tudor Pickering, Holt and company. Please proceed with your question.
Hey, Dave Thanks for taking my questions and congrats on the strong results I wanted to circle back to your comments on the product crack hedges.
Did I hear you correctly that the realized gain was only $11 million in the quarter. We thought it was probably looking to be a little bit higher and I guess, if you mark that portfolio today do you have.
A sense on whether Q3 would have a similar gain or.
Or maybe something a little bit higher thank you.
Well the $11 million is correct that is that is that.
Directly from our crack hedges, we had some other hedging activities that are that increase that number a bit but but around crude another other products.
But right now if you look at the portfolio, we have were mostly underwater.
In the FERC in the third quarter at this point.
That has a way of shifting though.
Some of the some of the cracks we have in 'twenty four are still above water, but in general the.
The market as you know is really heavily backward dated.
It's the front months that are really hitting us pretty hard.
Okay makes sense and then on the potential Coffeyville Rd project.
I appreciate that you're still.
In the early stages here, but I guess do you have any any more details you can share on potential size of the project. Both in terms of the capacity as well as Capex and clarify would this be.
Greenfield project or would it be partial conversion of the refinery and then if you could also maybe just talk about what type of partner you would be looking for would this be more of like a financial partner or more of our feedstock partner.
Sure well I think you've you've heard us talk about the conversion of a cut in doing what we did it when he was in the past at Coffeyville, we've looked at that pretty hard and it really doesn't pay out.
The best option is to build more I wouldn't call it greenfield that call it more brownfield.
<unk>.
Proximity to the refinery there would be some synergies with the refinery, but in any case all of this the economics are always better with you get scale as you get bigger.
So we're looking we're looking at Donnelley upsizing, it but building, what's largely practical to ship into Coffeyville itself isn't that's usually limited by rail access, which as you know vessels no bigger than 40 feet in diameter or something like that.
So I think we're looking at something much larger than what's it when he was in.
The type of partners, we are really looking for or are all of the above.
This is be a fairly pricey.
Project should we decide to do it.
But first levels of activity are really around doing the design doing a full cost estimate by having the land to put it on.
And getting the permits submitted so until we have that we don't really.
We're pretty wide open on who partners might be but we have as we mentioned have had a lot of conversations with people that are interested in.
Investing in this space.
And we'll look to try to monetize our position at when he would.
With the construction of this this this joint venture however, we might structure it.
Sounds good thank you very much.
Welcome.
Okay.
Thank you. Our next question is from Manav Gupta with UBS. Please proceed with your question.
Good morning, guys faced strong refining results.
Didn't know that.
And how did that the gasoline hydro treater.
The way that is also tell you that so help us understand because we do know there was some kind of outage.
How you manage around this out again.
It had not happened what the results would have been actually even better than what we saw yesterday.
Well.
As you know the word the fire occurred was in a gasoline hydro treater, which basically takes Scott gasoline and treats down the sulfur to meet tier three specs.
We've been running that unit for quite a long time and at both Coffeyville and when he wouldn't have generated significant credits.
We monetize some of those credits during this time and those all those credits are on our balance sheet at a zero value. So you didn't see much impact in the financials. We are hurt a little bit because those are credits we could have sold which right now are selling around 2500 Bucks.
For credit band.
We could have sold those in the future.
It did impact us in some ways.
However, even though the fire did did cause a disruption for a short period of time, we were pretty well able to catch that back up I will remind you too that we finished up the coker turnaround at Coffeyville.
Towards the beginning of the first quarter.
But it did impact our rates as we had high inventories that we had to write off until we until we got those inventories back in control, we werent at full crude rates at Coffeyville either.
So okay.
I just have a quick follow up.
You are looking at various back not option then I understand at this point you're limited in what you can see but would you pay for a single partner who comes in for both the refining assets or are you actually looking for different partners on the two different assets that would potentially be IV Unix.
Well as you know, we restructured our company to breakout renewables as a separate company ultimately with the idea that we could spin that if if.
We built the scale that we think we can do.
So I think what we're looking really add is some type of partnership with the with multiple probably multiple parties because of the size of this.
This company would be a.
Probably six to 700 million gallons.
A year of renewable diesel and probably half of that.
So it's a sizable venture.
Decent market cap. So we think it's a.
It has the potential to be a stand alone company.
And this is precisely why we did the restructuring this will allow us to to pursue this type of activity.
I think we want strategically want financial we want.
All types, we'd love somebody to come in at.
Has the ability to sort of help us source feet.
Advantage Steve.
We think coffeyville is a really good location to build something like this because it's right in the AG Bell and its close proximity to a lot of ethanol plants, which are as you know corn oil is a fairly low ci material that would allow.
Allow us to capture BTC.
Any kind of SaaS, we might make.
And enhanced BTC I'll say.
Uh huh.
It's still really early but it's but it's wide open.
I'll just be exploring what all the alternatives are.
Thank you so much detailed response.
Youre welcome.
Hum.
Thank you. Our next question is from John <unk> with Jpmorgan. Please proceed with your question.
Hi, good afternoon, Thanks for taking my question.
So just on the special dividend.
I think I've asked in the past couple of calls and Dave you've talked about needing to see kind of a remarkable environment to do specials going forward and.
Perhaps we are in a remarkable environment right now, particularly with July gasoline cracks where they were.
Is that still the bar only paying out at very strong environments or are you shifting policy more towards maybe something like a 100% payout policy.
Well.
I think you've told you.
Our whole drive here is to maintain attractive invincible investment portfolio, but by focusing on free cash flow generation and cash returns to our shareholders.
That is that's everyday in our DNA and we really are targeting.
Above average cash returns to shareholders and unit holders.
And we look at repurchasing stock units.
Buying down debt all.
All the options.
Every every quarter and we only do those when they are value added.
The stock price, where it is today stock.
Stock buybacks don't make any sense to us.
And then a debt buyback is we don't have anything pressing us immediately but that'll.
And that'll be on our equation going forward as.
As far as the cracks go I would tell you if you look back five years.
Back to 2018, which was a pretty good year for refining.
You know the gas crack was around rub 14 Bucks.
On a rent adjusted basis it was around 12 today.
Today, we're looking at 27.
On an unadjusted basis 19 on adjusted basis.
Diesel back in 2018, an unadjusted written basis was 20 almost $23.
Today, it's 37.
Adjusted forensic 21, and 29 almost 30.
So they're fairly remarkable they're not quite as a diesel is a little less than what it was in 'twenty two but gasoline is a very very much stronger than what 22 was.
So I would still tell you theyre pretty remarkable at least to my experience of 40 years in this business.
So you know when we have the cash we're going to every every quarter the board looks at all the options and.
And decides where to where to put it.
If we don't have good investments or something that is a high return.
Go back to shareholders.
And that's that's exactly what we did this time.
That's very helpful. Thanks, Dave and then maybe along the same lines.
Pro forma for the special it looks like your cash balance is about $650 million or so you.
You talked about wanting to hold higher levels from here.
Do you have a minimum cash balance that you are thinking of right now with that in mind.
And is there any impact from the hedge program on.
Additional cash that you have to hold there.
Yeah I'll grab this one.
The minimum cash balance will fluctuate just based on commodity pricing levels heavily focused on crude price today, we'd say our minimum cash balances in the 400 to $4 50 range.
And as we talked about holding a little excess cash the primary driver there is it to not allow our reinsurer, particularly for when he went to grow much more.
So when we talk excess cash it's really just that balance that we'd want to cover on any growing short for the 23 position.
And then the rest after that would become available potential cash.
Okay. Thank you.
Got it.
Sure.
Thank you. Our next question is from Neil Mehta with Goldman Sachs. Please proceed with your question.
Good morning, David and congrats on a great quarter here.
Thank you for your question.
Thanks, David first question is just a.
Just your thoughts on the mid Con market, obviously, we're seeing strong cracks everywhere, but mid con sometimes can dislocate from from.
Gulf Coast and East Coast. So just your thoughts as we go to the back half of the year different considerations, maybe went up that demand profile.
Maintenance and of course that the spreads between Brent and <unk>.
Sure well.
Think of you know we had.
Barry if you look at demand on the Magellan system. That's it is basically hasnt changed much at all even though.
Mentioned the U S is down a bit on diesel.
Can't see it at all in the Midcon.
Actually.
Had the basis blew out a little bit into a negative.
In the quarter, but that has since come back to a positive numbers versus <unk>.
The New York Harbor.
And what.
What happens then is typically they are bolt ons between Gulf coast.
In mid con and barrels come up.
The pipelines to meet us they've.
They've been hesitant to do that a little bit just because of backwardation in the market products have been severely backward dated.
And that adds a lot of risk when you have seven days of ship time.
So that's been limited so the margins have been very good in the in the group.
The premium that has been even better than that numbers somewhere I think we averaged in the in the second quarter.
Let me see it about 41.
Premium.
To regular.
So really no trouble moving barrels no trouble at all making as much premium as we can.
And really.
It's been a very.
Open market for any kind of production increases we could make.
I'm, sorry, I forgot the rest of your question <unk>.
<unk> on the crude side as well, but that was great I'm Patrick yes.
Yes, Brent Ti Brent Ti.
We've always said that our shale oil what makes drives that number.
And in our area actual show production's up.
Several of the E&P companies have hit pretty big sized wells and did some farming activities that.
Coming on then.
So you can see it in our pipeline right, we're up to 145000 barrels, which we were during the Covid I think we bottomed right at 100 105 somewhere in there.
So it is still happening and with $4 million of exports that seem to be hanging in there pretty tight.
For dollar Brent Ti is necessary to force that off the market off the off the shore. So.
We still have that point of view that as long as shale oil productions.
Is maintaining where it has since the Gulf coast is mainly heavier crude refiners that all this light crude has to go offshore.
And then Dave I don't.
I don't Wanna get Ya animated here, but I do have to ask you every quarter about your perspectives on the on the Rins market then on RFS.
Just sort of your thoughts on how how ethanol and biodiesel rins can evolve here and what are what are the next things that we as an investing community should be looking forward to as we kind of see try to figure out what this means for <unk> or for the refining sector.
Well this does get me fired up Neil as you well know.
I just I just feel that the EPA is totally mismanaged. This.
The whole system for many many years and they did it again with the new RV OS that came out.
Keeping the ethanol mandate above the blend wall and.
Actually putting pretty pretty small numbers frankly for the <unk> or the <unk>.
Dance styles.
It was just it just seems like a complete mistake to me is what are you. What are you trying to encourage area just trying to keep RIN prices high to make the consumer pay another 30 cents a gallon or what.
Frankly, the six it should be cheap and the four should be expensive.
And if you use the BTC goes away I think youll see before has even have to go a lot higher to continue to.
Two.
To encourage production of renewable diesel and Saf so.
Yes. It just seems to me it's a they talk out of both sides of our mouth climate change is huge and we're going to do everything to do it but yet we can't put in RVO out that encourages more probably the lowest carbon lift.
Liquid fuel out there.
So as far as the future you know I think.
We've we've seen a big surge at our rack volumes, which helps us to blend more ethanol and biodiesel.
Which just means less to buy on the open market and we're pretty much long D force with the with a winning what situations. So.
I don't think our position is bad if we did something like a big R&D plan at Coffeyville, we'd be very long rents. So.
You know our strategy Hasnt changed were still investing in renewables and minimizing what we invest other than maintain our assets and any value.
Value projects that improve our feedstock supply.
Improve our capture or a product placement in the refining side.
It's definitely less of an issue than it was before for you guys I understand.
You have so much.
Youre welcome.
Thank you and our next question is from Paul Cheng with Scotiabank. Please proceed with your question.
Hi, Thank you.
Jay I have to apologize first I came on late so you may already had you asked me.
<unk> pizza and the like when I look at the transcript.
Have you mentioned or that the school wasn't C O L D.
Quarter comparability.
And then also how we call it that's going to trend over the next couple of quarters.
We assume the margin yes.
Correct.
Well, we haven't published any numbers on R&D profitability, but we did mention that the second quarter was better than the first quarter and the first quarter was profitable.
So we continue to ramp up.
We went through our second catalyst change.
Btu comes on in the fourth quarter.
And we're anticipating that will add 30 40 50 to the.
Per gallon to the margin.
And you are a long term view of soybean oil.
In the current market is somewhere around $1 52 to $1 70.
Maybe a dollar to $1 70 on the actual margin.
And that looks to be still true to us.
Are you currently one thing, it's all soybean noise or that you are running from the west Cit's Paul.
We do run some corn oil treated corn oil, but most of it is soybean oil today, we will be shifting to more corn oil as we bring the <unk>.
Alright.
I was just curious I mean, a number of years ago.
Yeah.
Great quarter.
Trying to solve with that company, then looking point merger partner.
Since then that I think that's the.
A number of companies.
Management has changed in terms of your peers.
Have you, let the debt it's worth it.
We can get a better economy of scale.
The refining business.
Well I think.
We looked at all sides of the equation.
Paul as you know we've looked at.
Selling our assets too.
Or buying more assets and refining.
And we've kind of.
Got to the point, where I don't think we're consolidator, but we could be a consolidator.
But anything future wise, we're really focused on renewables in some form or fashion.
And any other thing that could be a carbon.
Carbon reduction in the in the field.
I'll tell you that's pretty tough growing.
There just aren't a lot of really great opportunities out there even with the IRS.
The problem with it is you know at last 10 to 12 years, and then what you're left with uncompetitive assets.
Compared to fossil fuel so it's difficult to make that kind of investment when you've got that short horizon.
And it takes you three to four years to build anything.
And thank you.
At that time.
John can I make sure I heard you might.
You've seen that at today's share price.
Thanks, so much.
So when you when the board and the management team.
Sorry about that you want to go for buyback or special dividend and maybe that on the buyback more matrix that you guys using timely.
Thank you, Mr Gopal buyback or special dividend.
Well I think it's not that complicated Paul it's really if the share price is cheap.
<unk> make a lot of sense.
But you know at $35, where we're at today, maybe a little higher than that now but but.
That's more difficult for us to see how that's accretive in the long haul.
And.
I'll just share buybacks reduced the number of shares but that's about all it does.
Okay.
Final one for me.
Do you have excess cash.
And one of your peers that when they have excess cash they actually get all.
The inventory.
I'll take that agreement.
Because quite frankly as that inventory off take agreement basically it's all condensate financing and they charge a fee and that thing is pretty high. So curious that when you're looking at that you guys. Just signed a new tier one here does it make sense for us to get from that deal.
That's one <unk> deals and trying to manage the inventory to go sell and then Youll puppy will be able to save money and yet your bonds JD is actually strong enough to be able to do and have excess cash.
Yeah, Paul I'll take this one.
We actually enjoy having the intermediation program in place, having just signed a new agreement, we don't find the cost to be overwhelming by any means.
And they help us with a lot of credit management.
There's other benefits that we enjoy outside of just having to manage our inventory. It is something we have looked at and again, we will look at from time to time, but.
At this time, we are very happy about where we're headed on the aviation front.
Alright, thank you.
Thank you.
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 closing comments.
I'd like to thank you all for your interest in CVR energy. Additionally, I'd like to thank our employees for their hard work and commitment towards safe reliable environmentally responsible operations.
We look forward to reviewing our third quarter 2023 results at our next earnings call.
Thank you and have a great day.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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Adam.
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Mhm.
Yeah.
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Yeah.
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Okay.
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