Any idea what "constrained river movements" have to do with UAN ammonia sales? Somehow they seem to be beneficial, but how?
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At East Dubuque, the ammonia plant operated at 98% utilization, which was also higher than the prior year period. Low natural gas prices, combined with strong demand and constrained river movements resulted in Fertilizer's solid contribution to CVR Energy's consolidated results.
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And this snippet is in CVI's conference call. CVI is the parent MLP, it used to own large position in CVRR refinery and (I think) a 34% position in UAN. A while ago it bought all of CVRR bring it back into CVI as the main entity, and then there's the ~34% position of UAN inside CVI......
we (CVI) initiated a bank process to evaluate potential strategic alternatives for the company.
And he says this later in the Q&A - I think there are some questions around what we would do with UAN, the Fertilizer business versus refining. And that will just play out as it does depending on what we do on the bank process.
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I wonder what that means? CVI may go private, or sell itself, or separate UAN and CVI? who knows man....?
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A bit more on this in the CVI Q&A.
Q:the exploratory process for strategic units -- alternatives for the company and sort of just get an update on where we stand on it. There's 2 sort of things I want you to be addressing at -- get your take on. One is there has been speculation in the market or looking at where you trade versus peers, it might be attractive for CVI potentially to be a consolidator in the market. I wanted to sort of get your thoughts around that with arbs staying wide here.
The second is that given where the share price is and supported by a strong dividend yield, we are certainly at a share price were, like previously indicated, we were -- it would have been minimally acceptable, almost minimally acceptable for a sale of the company. So I wonder if that -- how that plays or how that thought of selling the company given that you have strong cash flows, you have a good dividend yield, as a going concern, the company is robust. So just wanted to get updated thoughts around both of those factors and overall on the process?
Comment - why can't this guy ask a clear question? Does he mean he doesn't think they should "sell the company"? "It would be minimally acceptable for a sale of the company" means what?
A:Well, most I can probably say on that subject is really that we just started this bank process and we're just into it now. And it's really premature to make any conclusions from it at this point. I think as I have stated before, the timing of the offering is based on really the tailwinds of the industry and what we see coming forward. And I believe that it's a reasonable time to make this offering. I can't explain exactly why the stock has done what the stock has done, but I'm glad for it. And we look forward to exploring all the options available to us in the future, and that's what we'll do through -- via this bank process.
That's a non-answer to an unclear question I can't understand. What "offering" is he talking about? I don't know.....
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Here is the CVI CEO's forward commentary on fertilizer - But the second quarter was very good to us because we -- the river constraints really added value to what -- and we were able to sell at pretty high rates, both ammonia and UAN and keep our inventories under control. So I think we're well positioned for what should be a very good planting season next year assuming the weather cooperates, which is hard to predict.
just the fact that when the price goes up like this, the farmers tend to plant more corn. And this is a historic. I mean it's probably a 5-year peak on prices. So I really think they're going to plant a lot of corn versus beans. And that bodes well for our business,
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So it seems the fertilizer idea is that the wet season will cause a weak corn production number, resulting in less corn, and as a result the price of corn now is high, so they expect over the next year farmers will plant MORE corn than usual, and that means more demand for their fertilizer business over the next year.
UAN seems like a gem. I'm surprised it's still sub - $4.00. |
