CVR Refining Fell 15% after 2Q17 Results, Refining Margin Hit
CVRR’s 2Q17 refining margin
Refining MLP CVR Refining (CVRR) reported its 2Q17 results on July 27, 2017, before the markets opened. The company didn’t generate any available cash for distribution—that’s used to pay distributions to unit holders.
CVRR’s adjusted EBITDA1 fell to $43.1 million from $84.7 million in 2Q16. CVRR’s 2Q17 results were severely hit by RINs (renewable identification numbers) costs.
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CVR Refining’s total crude oil throughput barrels per day increased to 213,841 in 2Q17 from 202,536 in 2Q16. Direct operating expenses fell to $4.44 per crude oil throughput barrel in 2Q17, compared to $4.56 per throughput barrel in 2Q16. Despite this, CVRR’s refining margin per barrel fell to $7.48 in 2Q17, compared to $9.56 during the same period in 2016.
The fall in CVRR’s refining margin was primarily driven by higher RINs costs. “Renewable Identification Numbers (RINs) remain the single largest headwind we face,” said Jack Lipinski, chief executive officer of CVRR.
Commenting further on the continued pressure of RINs costs on CVRR, Lipinski added, “The EPA must fix this broken system or small, independent merchant refiners will remain in financial distress and at risk of closure.”
The EPA’s Renewable Fuel Standard (or RFS) requires refiners to “either blend ‘renewable fuels’ in with their transportation fuels or purchase renewable fuel credits”—called RINs—in lieu of blending. Higher RINs costs have hit CVRR Refining’s earnings from the last several quarters. You can learn more in How Higher Costs Weakened CVR Refining’s Q2 Numbers.
Alon USA Partners (ALDW), which released its 2Q17 results on July 27 after the markets closed, reported a refining margin of $12.68 per barrel for 2Q17 compared to $8.53 per barrel for the same period in 2016.
ALDW’s refining margin for the quarter rose on a higher Gulf Coast 3-2-1 crack spread, a widening of the WTI (West Texas Intermediate) Cushing to WTI Midland and WTI Cushing to WTS (West Texas Sour) spreads, and a stronger wholesale marketing environment.
Specialty refiner Calumet Specialty Products Partners (CLMT) plans to report its 2Q17 results on August 4, 2017.
- earnings before interest, tax, depreciation, and amortization ↩