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Strategies & Market Trends : Value Investing

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E_K_S

To: LTBH who wrote (52829)	11/23/2013 12:24:33 AM
From: MNTNH	1 Recommendation Read Replies (1) of 78656

(UAN) CVR Partners LP Pet Coke as feedstock is certainly interesting. If the oil majors are desperate enough, I dont think a lack of proprietory technology will keep them from wanting to dump it to UAN for conversion to fertilizers. However CVRR supplies over 70% of their current pet coke feed stock. This article ought to allay your fears on the supply arrangement. Pet Coke supply contract with CVR is till 2027. UAN was down on issues with operational downtime as well as ammonia and urea fertilizer prizes headed south. Rentech Nitrogen Partners LP cut dividends due to ammonia sulfate issues which has little to do with UAN. Financially, UAN has high capex requirements which I am sure is bound to continue with their outlined expansion plans to increase production and storage capacities by some 50%. See FY 2012 where they had $133m OCF but over $80m capex alone. 2011 and 2010 had FCF c. $120m and $65m respectively. For a LP worth some $1.2B, not cheap enough for me but if it works for you ... Also, its not potash they are in. UAN deals with nitrogen based fertilizers. On the other hand, you may be right on the Potash cartel. rt.com

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