UAN - The variable distribution MLP that could go a long way Message Board

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Non-Tech : UAN - The variable distribution MLP that could go a long way

UAN 109.10

+0.5%

Jan 9 9:30 AM EST

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From: Elroy	5/2/2023 8:09:54 PM
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CVI is CVR parent company. Here are some fertilizer comments from the CVI conference call. seekingalpha.com Over the next two years, we plan to invest some additional capital in the fertilizer plants, intended to further improve their reliability, lower their carbon footprint and prepare for potential capacity expansions in one or both facilities. We are also continuing to evaluate the potential transaction to spin off our GP and LP interests in CVR Partners, and I look forward to providing you additional details at the appropriate time. If we do the spin-off, I think we’ll have to look at the dividend again because that’s just the effect of doing the spin-off. No idea what this means..... --- on the monetization of the tax credits at UAN, how do those work in general? And how do you -- how do they impact future cash flows at UAN in terms of what you’re giving up? And then, following the $19 million payment in 1Q, how should we think about the potential for future payments and timing there? Dane Neumann Yes. I’ll take this one. So really, what we had in place previously was an existing CO2 sales contract with a counterparty. And we ended up contributing that sales contract to a JV with the same counterparty. And as a result, it allows the tax equity investor to claim those credits that we’re receiving for the sequestration activity. So what occurred is the contract was deemed a value of $46 million. We put that as deferred revenue on our balance sheet and recognized an equity method investment of $46 million. The cash receipt of $19 million, it was $18 million net of fees, was really just the first payment in the string of payments we expect to receive associated with the JV. And that payment drew down some of the equity method investment. On a go-forward basis, we will recognize that deferred revenue off our balance sheet into other income for our Fertilizer segment, call it $1 million, $1.5 million each quarter. And there will be periodic payments each quarter as well as opportunity for milestone payments annually.

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