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What Drove CVR Energy and CVR Refining’s Q2 2018 Results?

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CVR Refining’s second-quarter results

CVR Energy (CVI) and its subsidiary CVR Refining (CVRR) reported their second-quarter results on July 25 after the markets closed. CVR Refining’s adjusted EBITDA rose to $147 million—compared to $43 million in the same quarter last year. “The quarter’s success was attributable to a $4.88 increase in Group 3 crack spreads, low Renewable Identification Number (RIN) prices and wide crude oil differentials compared to the same period last year,” said Dave Lamp, CEO of CVR Refining’s general partner.

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As the above graph shows, CVR Refining’s refining margin improved from $7.21 per barrel in the second quarter of 2017 to $12.61 in the second quarter of 2018. CVR Refining, a variable distribution MLP, announced a second-quarter distribution of $0.66 per unit. CVR Refining paid a distribution of $0.51 per unit for the first quarter.

CVR Energy’s second-quarter results

CVR Energy’s net income for the quarter stood at $51 million—compared to a net loss of $11 million for the second quarter of 2017. The adjusted EBITDA for the second quarter was $103 million—compared to $38 million for the same quarter last year.

CVR Energy is engaged in petroleum refining and nitrogen fertilizer businesses through its holdings in CVR Refining and CVR Partners (UAN). CVR Energy owns 66% of CVR Refining and 34% of CVR Partners’ common units. CVR Refining contributed 100% of CVR Energy’s operating income. CVR Refining’s nitrogen fertilizer business didn’t generate any income for the second quarter.

For the first half of 2018, CVR Refining contributed $214 million of CVR Energy’s operating income. CVR Partners generated an operating loss of $4 million for the same period.

Exchange offer for CVR Refining

In May, CVR Energy announced an exchange offer for CVR Refining’s units. Once CVR Energy owns more than 80% of CVR Refining’s shares, it will have the right to purchase all of CVR Refining’s common shares, according to the agreement.

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