CVR Energy(CVI) - 2020 Q4 - Annual Report

GLOSSARY OF SELECTED TERMS This section provides definitions for key terms used throughout the Annual Report on Form 10-K, primarily related to the petroleum refining and nitrogen fertilizer industries, such as '2-1-1 crack spread,' 'Ammonia,' 'Bpd,' 'Capacity,' 'Petroleum coke,' 'UAN,' and 'WTI' - Defines industry-specific terms like '2-1-1 crack spread' (approximate gross margin from processing crude oil), 'Ammonia' (direct application fertilizer), 'Bpd' (barrels per day), and 'UAN' (aqueous solution of urea and ammonium nitrate used as a fertilizer)[9][10][11][30] - Explains 'Capacity' as the throughput a process unit is capable of sustaining, distinguishing between maximum sustainable, nameplate, and economic capacity[13] - Clarifies crude oil types ('Heavy crude oil,' 'Light crude oil,' 'Sour crude oil,' 'Sweet crude oil') based on relative density, viscosity, and sulfur content, which impact processing requirements and cost[18][26][27] Important Information Regarding Forward Looking Statements This section outlines the company's forward-looking statements, emphasizing that actual results may differ due to various risks and uncertainties, including market volatility, the COVID-19 pandemic, regulatory changes, and operational hazards, with no obligation to update publicly - Identifies numerous risks that could cause actual results to differ materially from forward-looking statements, including volatile margins in refining, liquidity, the severity and impact of the COVID-19 pandemic, changes in market conditions, regulatory changes (e.g., Biden Administration actions on oil and gas), and operational interruptions[35][36] - States that all forward-looking statements are valid only as of the report date, and the company undertakes no obligation to publicly update or revise them to reflect future events or circumstances, except as required by law[37] PART I Item 1. Business CVR Energy, Inc. is a diversified holding company primarily engaged in petroleum refining (CVR Refining) and nitrogen fertilizer manufacturing (CVR Partners), providing an overview of its two segments, including facilities, supply, marketing, competition, seasonality, environmental matters, and human capital Overview CVR Energy, Inc. operates as a diversified holding company with primary engagements in petroleum refining and nitrogen fertilizer manufacturing, with Icahn Enterprises L.P. holding a significant ownership stake - CVR Energy, Inc. is a diversified holding company primarily engaged in petroleum refining (CVR Refining) and nitrogen fertilizer manufacturing (CVR Partners)[40] - As of December 31, 2020, Icahn Enterprises L.P. and its affiliates owned approximately 71% of CVR Energy's outstanding common stock[41] - CVR Energy owned the general partner and approximately 36% of CVR Partners' outstanding common units, and all outstanding common units of CVR Refining as of December 31, 2020, following a full acquisition in January 2019[42][43] Petroleum Segment The Petroleum Segment operates two crude oil refineries in Kansas and Oklahoma, with a combined nameplate capacity of 206,500 barrels per day, and is converting the Wynnewood Refinery's hydrocracker to a renewable diesel unit - The Petroleum Segment operates two refineries: Coffeyville, Kansas (132,000 bpd nameplate capacity) and Wynnewood, Oklahoma (74,500 bpd nameplate capacity)[48][49] - The Wynnewood Refinery is converting its hydrocracker to a Renewable Diesel Unit (RDU), expected to produce 100 million gallons of renewable diesel per year by June 2021, which will reduce the refinery's crude oil capacity by approximately 17,000 bpd to 57,500 bpd[50] Petroleum Segment Throughput and Production Data (2020 vs. 2019) | Metric (in bpd) | 2020 Coffeyville | 2020 Wynnewood | 2020 Total | 2019 Coffeyville | 2019 Wynnewood | 2019 Total | | :-------------- | :--------------- | :------------- | :--------- | :--------------- | :------------- | :--------- | | Total crude throughput | 100,722 | 70,636 | 171,358 | 129,878 | 73,180 | 203,058 | | All other feedstock and blendstock | 8,321 | 3,616 | 11,937 | 9,160 | 3,753 | 12,913 | | Total throughput | 109,043 | 74,252 | 183,295 | 139,038 | 76,933 | 215,971 | | Gasoline production | 59,419 | 38,640 | 98,059 | 71,817 | 38,864 | 110,681 | | Diesel fuels production | 43,209 | 30,638 | 73,847 | 57,549 | 32,380 | 89,929 | | Other refined products production | 7,072 | 2,654 | 9,726 | 10,383 | 3,253 | 13,636 | | Total production | 109,700 | 71,932 | 181,632 | 139,749 | 74,497 | 214,246 | - The company's gathering system and trucking operations supplied approximately 53% and 88% of the Coffeyville and Wynnewood Refineries' crude oil demand, respectively, in 2020, benefiting from transportation cost advantages[56] Petroleum Segment Crude Oil Throughput by Type (2020 vs. 2019) | Crude Type (in bpd) | 2020 Coffeyville | 2020 Wynnewood | 2020 Total | 2019 Coffeyville | 2019 Wynnewood | 2019 Total | | :------------------ | :--------------- | :------------- | :--------- | :--------------- | :------------- | :--------- | | Regional Crude | 34,652 (34%) | 56,932 (81%) | 91,584 (53%) | 49,093 (38%) | 53,848 (74%) | 102,941 (51%) | | WTI | 51,656 (51%) | — | 51,656 (30%) | 67,382 (52%) | 3 (—%) | 67,385 (33%) | | WTL | — | 6,235 (8%) | 6,235 (4%) | 473 (—%) | 668 (1%) | 1,141 (1%) | | Midland WTI | — | 1,262 (2%) | 1,262 (1%) | 3,888 (3%) | 10,995 (15%) | 14,883 (7%) | | Condensate | 8,243 (8%) | 6,207 (9%) | 14,450 (8%) | 4,331 (3%) | 7,666 (10%) | 11,997 (6%) | | Heavy Canadian | 1,020 (1%) | — | 1,020 (1%) | 4,711 (4%) | — | 4,711 (2%) | | Other Crude Oil | 5,151 (6%) | — | 5,151 (3%) | — | — | — | | Total crude throughput | 100,722 (100%) | 70,636 (100%) | 171,358 (100%) | 129,878 (100%) | 73,180 (100%) | 203,058 (100%) | - The top two customers accounted for 26% of the Petroleum Segment's net sales for the year ended December 31, 2020[66] - The Petroleum Segment competes primarily on price, supply reliability, product availability, and location, facing competition from other mid-continent refineries and trading companies[67][69] - Operations experience seasonal fluctuations, with higher demand for gasoline in summer and diesel during planting/harvesting seasons, generally leading to lower results in the first and fourth calendar quarters[70] Nitrogen Fertilizer Segment The Nitrogen Fertilizer Segment operates two facilities in Kansas and Illinois, producing UAN and ammonia, facing global price competition and demand driven by agricultural factors - The Nitrogen Fertilizer Segment operates two facilities: Coffeyville, Kansas (utilizes pet coke gasification, 1,300 tpd ammonia, 3,000 tpd UAN) and East Dubuque, Illinois (uses natural gas, 1,075 tpd ammonia, 1,100 tpd UAN)[72][73] Nitrogen Fertilizer Segment Raw Material Costs (2020 vs. 2019 vs. 2018) | Raw Material | 2020 Cost | 2019 Cost | 2018 Cost | | :----------- | :-------- | :-------- | :-------- | | Coffeyville Pet Coke (total) | ~$18 million | ~$20 million | ~$13 million | | Coffeyville Pet Coke (avg. per ton) | $35.25 | $37.47 | $28.41 | | East Dubuque Natural Gas (total) | ~$22 million | ~$21 million | ~$23 million | | East Dubuque Natural Gas (avg. per MMBtu) | $2.35 | $3.08 | $3.15 | - Global fertilizer demand is projected to increase by 1% through 2023, driven by population growth, dietary changes in developing countries, and increased consumption of biofuels[77] - The U.S. is the world's third-largest consumer and largest importer of nitrogen fertilizer, representing 11% of total global nitrogen fertilizer consumption in 2020[78] - In 2020, the Coffeyville Fertilizer Facility's pet coke supply from the Coffeyville Refinery declined to approximately 33% (from an average of just under 60% over the past five years), increasing reliance on third-party purchases[80] - UAN and ammonia, including freight, accounted for approximately 65% and 28%, respectively, of the Nitrogen Fertilizer Segment's net sales for the year ended December 31, 2020[84] - The top two customers in the aggregate represented 26% of the Nitrogen Fertilizer Segment's net sales for the year ended December 31, 2020[87] - The Nitrogen Fertilizer Segment experiences seasonal fluctuations, with higher net sales typically in the first half of the calendar year (planting season) and lower sales in the second half (fill season)[91] Environmental Matters The company's operations are subject to extensive federal, state, and local environmental, health, and safety laws, requiring numerous permits and incurring significant compliance costs and potential liabilities - Operations are subject to extensive federal, state, and local environmental laws and regulations, including the Clean Air Act (CAA), Clean Water Act (CWA), CERCLA, and RCRA, requiring numerous permits and potentially leading to significant compliance costs and liabilities[92][93][94][105][107][108] - The company monitors and reports GHG emissions under the CAA and has undertaken efforts to reduce its CO2e footprint by over 1 million metric tons per year through nitrous oxide abatement and CO2 sequestration[95][98] - The Petroleum Segment faces significant costs and volatility due to the Renewable Fuel Standard (RFS), requiring blending renewable fuels or purchasing RINs, with the Wynnewood RDU project expected to significantly reduce RFS exposure[99][100][101][102][103][104] - The company is involved in ongoing environmental remediation at its Coffeyville Refinery, Phillipsburg terminal, and Wynnewood Refinery, with an accrual of approximately $6 million for probable and reasonably estimable obligations as of December 31, 2020[109][110] - The company maintains site pollution legal liability and umbrella/excess casualty insurance policies to cover pollution claims, subject to retentions, deductibles, and other policy limitations[115][116][117] Health, Safety and Security Matters The company is subject to federal and state laws regulating worker safety, process safety management, and chemical facility security, acknowledging inherent risks despite comprehensive programs - The company is subject to federal and state laws like OSHA and CFATS, regulating worker safety, process safety management, and chemical facility security[118][119] - Despite operating comprehensive safety, health, and security programs, the company acknowledges the inherent risk of accidents resulting in injuries or fatalities[119] Human Capital CVR Energy had 1,423 employees as of December 31, 2020, with a focus on core values, diversity, inclusion, and a safe workplace through compliance and training - As of December 31, 2020, CVR Energy had 1,423 employees in the U.S., with 411 (approximately 29%) covered by collective bargaining agreements[121] - The company's core values include Safety, Environment, Integrity, Corporate Citizenship, and Continuous Improvement, aiming to achieve excellence for employees, communities, and stockholders[122] - Committed to diversity and inclusion, the company strives to attract and retain talent and ensure a safe and healthy workplace through strict compliance and robust training[123][124] Available Information The company's website provides free access to its annual, quarterly, and current reports, along with corporate governance documents - The company's website (www.CVREnergy.com) provides free access to its annual reports (Form 10-K), quarterly reports (Form 10-Q), current reports (Form 8-K), and corporate governance documents[125] Item 1A. Risk Factors This section details significant risks across CVR Energy's entire business, its Petroleum and Nitrogen Fertilizer segments, its capital structure, and corporate structure. Key risks include the ongoing impact of the COVID-19 pandemic, highly volatile commodity markets, intense competition, geographic concentration, dependence on major customers, stringent environmental regulations, operational hazards, cybersecurity threats, and the influence of its controlling stockholder, Mr. Carl C. Icahn - The COVID-19 pandemic has caused significant business and operational disruptions, negatively impacting worldwide economic activity, financial markets, and demand/prices for crude oil and petroleum products, potentially leading to inventory losses and liquidity concerns[128][129][130] - Both the Petroleum and Nitrogen Fertilizer segments operate in cyclical and highly volatile commodity markets, where prices are influenced by global supply/demand, economic conditions, and governmental policies, leading to potential adverse effects on financial results[131][132][135][136] - The company faces intense competition in both petroleum refining and nitrogen fertilizer manufacturing from numerous domestic and foreign producers, some with greater financial resources or government subsidies, which could reduce profitability and market share[137][138] - Geographic concentration of operations in the PADD II region and seasonal demand variations expose the company to regional economic downturns and impact production levels, transportation costs, and inventory/working capital[139][140][141][142] - Dependence on a few significant customers (top two account for 26% of net sales in both segments) means the loss or significant reduction in purchase volume by these customers could materially impact financial results[143][144] - Compliance with and changes in environmental laws and regulations, including those related to climate change and the Renewable Fuel Standard (RFS), could require substantial capital expenditures, increase operating costs, and adversely affect performance[145][146][147][171][172][173] - Operational hazards, unplanned shutdowns, and environmental liabilities (e.g., spills, contamination cleanup) pose significant risks, potentially causing property damage, production declines, and substantial costs not fully covered by insurance[148][149][153][154][194][195][196] - Cybersecurity risks and other cyber incidents could disrupt operations, damage reputation, expose the company to litigation and liability, and adversely affect financial results[165] - Mr. Carl C. Icahn's indirect control of approximately 71% of the company's voting power allows him to exert significant influence over strategic decisions, and his interests may conflict with those of other stockholders[214][215][217] - The company's indebtedness could limit its ability to obtain additional financing, fund working capital and capital expenditures, service debt obligations, and react to changing market conditions, adversely affecting financial flexibility and results of operations[200][201][202][203][204][205][206][207][208][209][210] Item 1B. Unresolved Staff Comments There are no unresolved staff comments to report - No unresolved staff comments were reported for the period[239] Item 2. Properties The company's core business properties are detailed in Item 1, 'Petroleum' and 'Nitrogen Fertilizer,' and also include leased executive and marketing offices in Sugar Land, Texas, and Kansas City, Kansas - The company's core business properties are described in Item 1, covering its petroleum refining and nitrogen fertilizer manufacturing facilities, along with leased executive and marketing offices in Sugar Land, Texas, and Kansas City, Kansas[240] Item 3. Legal Proceedings The company is involved in several legal proceedings, including an inquiry from the U.S. Attorney's office regarding RFS activities, a DOJ/KDHE lawsuit alleging Clean Air Act violations, and multiple 'Call Option Lawsuits' from former CVR Refining unitholders. The Wynnewood Refinery's small refinery exemption (SRE) is also under review by the Supreme Court. The outcomes of these matters are currently uncertain but are not expected to have a material impact on liquidity or financial position - The U.S. Attorney's office contacted CVR Energy in September 2017 seeking information on RFS activities and Mr. Carl C. Icahn's former role as an advisor to former President Trump; CVR Energy is cooperating and believes the inquiry will not have a material impact[242] - A lawsuit from the DOJ and KDHE alleges Clean Air Act violations at the Coffeyville refinery, seeking stipulated and civil penalties, with negotiations ongoing[243] - Multiple 'Call Option Lawsuits' have been filed by former CVR Refining unitholders alleging breach of contract and other violations related to the company's 2019 unit purchase, with discovery ongoing and the company intending to vigorously defend[244] - The Wynnewood Refinery's 2017 small refinery exemption (SRE) under the RFS program is under review by the Supreme Court, with the outcome uncertain and potentially impacting RIN prices and waiver applications[247] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to CVR Energy, Inc[248] PART II Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities This section provides a performance graph comparing CVR Energy's common stock to the S&P 500 and a peer group. It also notes the company's NYSE listing, number of record holders, and a $300 million stock repurchase program authorized in October 2019, under which no shares were repurchased in 2019 or 2020 - CVR Energy's common stock is listed on the New York Stock Exchange (NYSE) under the symbol 'CVI,' with 117 holders of record as of December 31, 2020[252] - The Board of Directors authorized a $300 million stock repurchase program in October 2019, but no common stock was repurchased during the years ended December 31, 2020, and 2019[253][254] Item 6. Selected Financial Data This item is not applicable to the company - This item is not applicable to CVR Energy, Inc[255] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a detailed discussion of CVR Energy's financial condition, results of operations, and cash flows for 2020 and 2019, highlighting the impact of the COVID-19 pandemic, market volatility, and strategic initiatives. It covers the company's mission, core values, strategic objectives, and segment-specific performance, including significant declines in operating income and net sales in 2020, particularly in the Petroleum Segment, and a goodwill impairment in the Nitrogen Fertilizer Segment Strategy and Goals CVR Energy's mission is to be a top-tier North American petroleum refining and nitrogen-based fertilizer company, prioritizing safe and reliable operations, superior performance, and profitable growth, guided by five core values - CVR Energy's mission is to be a top-tier North American petroleum refining and nitrogen-based fertilizer company, prioritizing safe and reliable operations, superior performance, and profitable growth[259] - The company's five core values are Safety, Environment, Integrity, Corporate Citizenship, and Continuous Improvement[259][260][261][262] - Strategic objectives include achieving continuous improvement in EHS, industry-leading utilization rates, maximizing market capture, and maintaining financial discipline[266][267][268] 2020 Key Achievements by Strategic Objective | Category | Achievement | Strategic Objective | | :------- | :---------- | :------------------ | | Corporate | Increased liquidity and extended debt maturity with $1.0 billion redemption of Senior Unsecured Notes due 2025 and 2028, and the CVR Refining Senior Notes due 2022 | Financial Discipline | | Corporate | Operated facilities safely and reliably amid COVID-19 pandemic, maintaining financial discipline | Safety, Reliability, Financial Discipline | | Corporate | Reduced consolidated operating and SG&A expenses by over 12% compared to 2019 | Financial Discipline | | Corporate | Reduced lost profit opportunities by $46 million compared to 2019 | Reliability, Market Capture, Financial Discipline | | Corporate | Achieved over 20% reduction in environmental events compared to 2019 | Safety | | Corporate | Reduced capital spending by over $21 million compared to initial plans | Financial Discipline | | Petroleum Segment | Safely completed planned turnaround of Coffeyville Refinery in April 2020, limiting exposure to volatile margin environment | Safety, Reliability, Market Capture, Financial Discipline | | Petroleum Segment | Received Board approval for Renewable Diesel Unit (RDU) project at Wynnewood Refinery | Market Capture, Financial Discipline | | Petroleum Segment | Announced agreement to acquire Oklahoma crude oil pipeline business from Blueknight Energy | Market Capture, Financial Discipline | | Petroleum Segment | Reduced operating and SG&A expenses by 13% compared to 2019 | Financial Discipline | | Petroleum Segment | Reduced lost profit opportunities by $32 million compared to 2019 | Reliability, Market Capture, Financial Discipline | | Petroleum Segment | Reduced capital spending by $20 million compared to initial plans | Financial Discipline | | Petroleum Segment | Achieved over 40% reduction in environmental events compared to 2019 | Safety | | Nitrogen Fertilizer | Maintained high asset reliability and a combined utilization rate of 98% at both facilities through Q4 2020 | Safety, Reliability, Market Capture | | Nitrogen Fertilizer | Achieved record shipments of ammonia from the East Dubuque Fertilizer Facility during April 2020 | Reliability, Market Capture | | Nitrogen Fertilizer | Reduced lost profit opportunities by $14 million compared to 2019 | Reliability, Market Capture, Financial Discipline | | Nitrogen Fertilizer | Generated Coffeyville Fertilizer Facility's first carbon offset credits related to N2O abatement and continued sequestration of CO2 for enhanced crude oil recovery | Safety, Financial Discipline | | Nitrogen Fertilizer | Reduced operating and SG&A expenses by over 12% in 2020 as compared to 2019 | Financial Discipline | | Nitrogen Fertilizer | Reduced capital spending by $9 million compared to initial spending plans | Financial Discipline | | Nitrogen Fertilizer | Amended and extended the Nitrogen Fertilizer ABL during the third quarter of 2020 | Financial Discipline | | Nitrogen Fertilizer | Completed Messer contract renewal with favorable conditions including new O2 tank | Financial Discipline | | Nitrogen Fertilizer | Repurchased $7 million of CVR Partners common units during 2020 | Financial Discipline | Industry Factors and Market Conditions The COVID-19 pandemic significantly impacted the company's segments, causing demand declines, increased RFS compliance costs, and a goodwill impairment, while long-term demand for nitrogen fertilizer is anticipated to grow - The COVID-19 pandemic significantly impacted the worldwide economy, leading to a 10% decline in demand for gasoline and diesel in the Petroleum Segment's operating regions in 2020 compared to 2019, and causing refinery closures[271][275] - The Petroleum Segment experienced significant volatility and increased RFS compliance costs in 2020 ($190 million) compared to 2019 ($43 million), driven by higher RIN prices and regulatory uncertainty[276][278] - The Wynnewood RDU project, approved in December 2020, is expected to produce 100 million gallons of renewable diesel annually and generate 170-180 million RINs, significantly reducing RFS exposure and capturing tax credits[277] NYMEX and Group 3 2-1-1 Crack Spreads (Average per barrel) | Crack Spread | 2020 Average | 2019 Average | Change (YoY) | | :----------- | :----------- | :----------- | :----------- | | NYMEX 2-1-1 | $11.73 | $19.93 | -41.1% | | Group 3 2-1-1 | $9.41 | $18.22 | -48.4% | - The Nitrogen Fertilizer Segment recorded a $41 million non-cash goodwill impairment charge in 2020 for its Coffeyville Fertilizer Facility due to lower market expectations and CVR Partners' common unit performance[292] - Despite short-term volatility, the company anticipates long-term demand growth for the U.S. nitrogen fertilizer industry, driven by increasing global population, decreasing arable land, and dietary shifts[294] - Strong demand for ammonia and fertilizer crop inputs for spring 2021 was observed due to higher crop prices, lower grain inventories, and favorable weather conditions[302] Results of Operations This section details the consolidated and segment-specific financial performance, including significant declines in operating income and net sales in 2020, particularly in the Petroleum Segment, and a goodwill impairment in the Nitrogen Fertilizer Segment Consolidated Financial Highlights Consolidated operating and net losses in 2020 significantly decreased from 2019, primarily due to declines in both the Petroleum and Nitrogen Fertilizer segments, partially offset by investment income Consolidated Financial Highlights (in millions) | Metric | 2020 | 2019 | 2018 | Change (2020 vs 2019) | | :------------------------------------------ | :--- | :--- | :--- | :-------------------- | | Operating (Loss) Income | $(333) | $580 | $532 | $(913) | | Net (Loss) Income Attributable to CVR Energy Stockholders | $(256) | $380 | $259 | $(636) | - Consolidated operating loss and net loss in 2020 were $333 million and $320 million, respectively, representing significant decreases of $913 million and $682 million from 2019, primarily due to declines in both the Petroleum and Nitrogen Fertilizer segments[311] - Investment income from marketable securities in 2020 totaled $41 million, including $7 million in dividend income and $34 million in unrealized gains from a 14.9% ownership interest in Delek US Holdings, Inc[312] - Income tax benefit for 2020 was $95 million (23.0%) of loss before income taxes, compared to an expense of $129 million (26.2%) of income in 2019, primarily due to changes in pretax income and the Nitrogen Fertilizer Segment's goodwill impairment[313] Petroleum Segment Financial Highlights and Results of Operations The Petroleum Segment experienced a $2.4 billion decrease in net sales and an $855 million operating loss in 2020, driven by lower demand, reduced prices, increased RFS compliance costs, and a planned refinery turnaround Petroleum Segment Financial Highlights (in millions) | Metric | 2020 | 2019 | 2018 | Change (2020 vs 2019) | | :---------------------- | :--- | :--- | :--- | :-------------------- | | Net Sales | $3,586 | $5,968 | $6,780 | $(2,382) | | Operating (Loss) Income | $(281) | $574 | $544 | $(855) | | Net (Loss) Income | $(271) | $559 | $511 | $(830) | | EBITDA | $(74) | $788 | $748 | $(862) | - Net sales for the Petroleum Segment decreased by $2.4 billion in 2020 compared to 2019, primarily due to lower sales volumes and prices resulting from reduced demand and excess supply caused by the COVID-19 pandemic, and a planned 57-day turnaround at the Coffeyville Refinery[319] Petroleum Segment Refining Margin (in millions and per throughput barrel) | Metric | 2020 | 2019 | 2018 | Change (2020 vs 2019) | | :-------------------------------------------------- | :--- | :--- | :--- | :-------------------- | | Refining Margin (in millions) | $298 | $1,203 | $1,178 | $(905) | | Refining Margin (per total throughput barrel) | $4.44 | $15.26 | $15.18 | $(10.82) | | Refining Margin (excluding Inventory Valuation Impacts, in millions) | $356 | $1,160 | $1,211 | $(804) | | Refining Margin (excluding Inventory Valuation Impacts, per total throughput barrel) | $5.31 | $14.71 | $15.60 | $(9.40) | - The decrease in refining margin was primarily driven by a 41% decline in the Group 3 2-1-1 crack spread, higher RFS compliance costs ($190 million in 2020 vs. $43 million in 2019), and unfavorable inventory valuation impacts of $58 million[324] - Direct operating expenses per total throughput barrel increased to $4.76 in 2020 from $4.56 in 2019, largely due to decreased throughput volumes from the Coffeyville Refinery turnaround and reduced operating rates[329] - Selling, general, and administrative expenses decreased to $58 million in 2020 from $68 million in 2019, primarily due to lower personnel costs, reduced stock-based compensation, and a $10 million gain on the sale of Cushing tank assets in 2019[330] Nitrogen Fertilizer Segment Financial Highlights and Results of Operations The Nitrogen Fertilizer Segment's net sales decreased by $54 million in 2020 due to unfavorable pricing, despite higher sales volumes, and recorded a $41 million goodwill impairment charge Nitrogen Fertilizer Segment Ammonia Utilization (Two Years Ended) | Metric | 2020 | 2019 | | :----- | :--- | :--- | | Consolidated | 95% | 93% | | Coffeyville Fertilizer Facility | 95% | 94% | | East Dubuque Fertilizer Facility | 95% | 91% | - Consolidated ammonia utilization increased by 2% to 95% for the two years ended December 31, 2020, primarily due to overcoming ammonia storage capacity constraints and a turnaround at the East Dubuque Fertilizer Facility in 2019[335][336] Nitrogen Fertilizer Segment Production Volumes (in thousands of tons) | Metric | 2020 | 2019 | 2018 | | :----- | :--- | :--- | :--- | | Ammonia (gross produced) | 852 | 766 | 794 | | Ammonia (net available for sale) | 303 | 223 | 246 | | UAN | 1,303 | 1,255 | 1,276 | Nitrogen Fertilizer Segment Consolidated Sales and Pricing per Ton | Metric | 2020 | 2019 | 2018 | | :----- | :--- | :--- | :--- | | Ammonia Sales (thousand tons) | 332 | 241 | 202 | | UAN Sales (thousand tons) | 1,312 | 1,261 | 1,289 | | Ammonia Product Pricing at Gate ($/ton) | $284 | $392 | $328 | | UAN Product Pricing at Gate ($/ton) | $152 | $199 | $173 | Nitrogen Fertilizer Segment Financial Highlights (in millions) | Metric | 2020 | 2019 | 2018 | Change (2020 vs 2019) | | :---------------------- | :--- | :--- | :--- | :-------------------- | | Net Sales | $350 | $404 | $351 | $(54) | | Operating (Loss) Income | $(35) | $27 | $6 | $(62) | | Net Loss | $(98) | $(35) | $41 | $(63) | | EBITDA | $41 | $107 | $84 | $(66) | - Net sales decreased by $54 million in 2020 compared to 2019, primarily due to a $99 million impact from unfavorable pricing conditions, partially offset by a $46 million increase from higher sales volumes[342] Nitrogen Fertilizer Segment Impact of Sales Volume and Pricing Changes (2020 vs. 2019, in millions) | Product | Price Variance | Volume Variance | | :------ | :------------- | :-------------- | | UAN | $(63) | $10 | | Ammonia | $(36) | $36 | - Cost of materials and other decreased by $3 million to $91 million in 2020, driven by lower pet coke purchases from the Coffeyville Refinery, reduced freight, and lower other feedstock purchases, partially offset by increased third-party ammonia purchases[346] Non-GAAP Measures Management uses non-GAAP measures like EBITDA, segment EBITDA, Refining Margin, and Free Cash Flow to evaluate operating results, liquidity, and debt servicing ability, providing additional insights into financial performance - Management uses non-GAAP measures such as EBITDA, Petroleum EBITDA, Nitrogen Fertilizer EBITDA, Refining Margin, and Free Cash Flow to evaluate operating results and liquidity, providing insights into performance and debt servicing ability[347][348][349][350][351][352][353] Reconciliation of Net (Loss) Income to EBITDA (in millions) | Metric | 2020 | 2019 | 2018 | | :----- | :--- | :--- | :--- | | Net (loss) income | $(320) | $362 | $366 | | Add: Interest expense, net | 130 | 102 | 102 | | Add: Income tax (benefit) expense | (95) | 129 | 79 | | Add: Depreciation and amortization | 278 | 287 | 274 | | EBITDA | $(7) | $880 | $821 | Reconciliation of Net Cash (Used In) Provided By Operating Activities to Free Cash Flow (in millions) | Metric | 2020 | 2019 | 2018 | | :----- | :--- | :--- | :--- | | Net cash provided by operating activities | $90 | $747 | $628 | | Less: Capital expenditures | (124) | (121) | (102) | | Less: Capitalized turnaround expenditures | (159) | (38) | (8) | | (Negative) Free cash flow | $(193) | $588 | $518 | Reconciliation of Petroleum Segment Net (Loss) Income to EBITDA (in millions) | Metric | 2020 | 2019 | 2018 | | :----- | :--- | :--- | :--- | | Petroleum net (loss) income | $(271) | $559 | $511 | | Add: Interest (benefit) expense, net | (5) | 27 | 27 | | Add: Depreciation and amortization | 202 | 202 | 196 | | Petroleum EBITDA | $(74) | $788 | $734 | Reconciliation of Nitrogen Fertilizer Segment Net Loss to EBITDA (in millions) | Metric | 2020 | 2019 | 2018 | | :----- | :--- | :--- | :--- | | Nitrogen fertilizer net loss | $(98) | $(35) | $41 | | Add: Interest expense, net | 63 | 62 | 62 | | Add: Depreciation and amortization | 76 | 80 | 72 | | Nitrogen fertilizer EBITDA | $41 | $107 | $175 | Factors Affecting Comparability of Our Financial Results Comparability of financial results is affected by planned refinery turnarounds, a goodwill impairment charge, and a business interruption insurance recovery in prior years - The Coffeyville Refinery completed a 57-day planned turnaround in April 2020, with $155 million in capitalized costs, impacting financial comparability[356] - The Wynnewood Refinery completed the second phase of its hydrocracking unit turnaround in Q1 2019, with $24 million capitalized[357] - The East Dubuque Fertilizer Facility had a 32-day planned turnaround in 2019, costing approximately $1 million[359] - A $41 million non-cash goodwill impairment charge was recognized in 2020 for the Coffeyville Fertilizer Facility due to lower market expectations[360] - A $6 million business interruption insurance recovery was recognized in 2018 for a 2017 outage at the Coffeyville Fertilizer Facility, with no such income in 2019 or 2020[361] Liquidity and Capital Resources The company implemented proactive measures to conserve cash, including dividend reductions and capital spending deferrals, resulting in approximately $1 billion in total liquidity as of December 31, 2020, despite increased long-term debt - The COVID-19 pandemic significantly reduced U.S. economic activity, leading to decreased crude oil and refined product prices, and impacting the company's liquidity[367] - In response to market uncertainty, CVR Energy's board reduced the Q1 2020 cash dividend to $0.40 per share and declared no dividends for Q2-Q4 2020, focusing on cash conservation and financial discipline[368] - Proactive measures include deferring most growth capital spending (except Wynnewood RDU), reducing maintenance capital, cutting operational and G&A costs, and deferring turnarounds at both refineries and fertilizer facilities[368] - As of December 31, 2020, total liquidity was approximately $1 billion, consisting of $667 million in cash and cash equivalents, $365 million available under the Petroleum ABL, and $20 million under the Nitrogen Fertilizer ABL[373] Total Long-Term Debt, Including Current Portion (in millions) | Entity | Debt Type | Due Date | 2020 Balance | 2019 Balance | | :----- | :-------- | :------- | :----------- | :----------- | | CVR Partners | 9.25% Senior Secured Notes | June 2023 | $645 | $645 | | CVR Partners | 6.50% Senior Notes | April 2021 | $0 | $2 | | CVR Refining | 6.50% Senior Notes | November 2022 | $0 | $500 | | CVR Energy | 5.25% Senior Notes | February 2025 | $600 | $0 | | CVR Energy | 5.75% Senior Notes | February 2028 | $400 | $0 | | Total long-term debt, including current portion | | | $1,691 | $1,195 | - In January 2020, CVR Energy issued $600 million of 5.25% Senior Unsecured Notes due 2025 and $400 million of 5.75% Senior Unsecured Notes due 2028, using proceeds to redeem the 2022 Notes and for general corporate purposes[380] Capital Expenditures (in millions) | Segment | 2020 Actual Maintenance | 2020 Actual Growth | 2020 Actual Total | 2021 Estimate Maintenance (Low-High) | 2021 Estimate Growth (Low-High) | 2021 Estimate Total (Low-High) | | :------ | :---------------------- | :----------------- | :---------------- | :----------------------------------- | :------------------------------ | :----------------------------- | | Petroleum | $77 | $13 | $90 | $94-$100 | $0 | $94-$100 | | Nitrogen Fertilizer | $12 | $4 | $16 | $18-$20 | $5-$6 | $23-$26 | | Other (incl. RDU) | $3 | $12 | $15 | $3-$4 | $95-$100 | $98-$104 | | Total | $92 | $29 | $121 | $115-$124 | $100-$106 | $215-$230 | - The Wynnewood RDU project has estimated total costs of $110 million, with $12 million capitalized in 2020 and $95-$100 million estimated for 2021, and completion expected in June 2021[383][384][385] Dividends Paid to CVR Energy Stockholders (in millions) | Related Period | Date Paid | Dividend Per Share | Stockholders | IEP | Total | | :------------- | :-------- | :----------------- | :----------- | :-- | :---- | | 2019 - 4th Quarter | March 9, 2020 | $0.80 | $23 | $57 | $80 | | 2020 - 1st Quarter | May 26, 2020 | $0.40 | $12 | $28 | $40 | | Total | | $1.20 | $35 | $85 | $121 | - No dividends were declared for the second, third, or fourth quarters of 2020[389] - CVR Partners repurchased $7 million of its common units in 2020, increasing CVR Energy's ownership from 34% to 36%[394] - CVR Partners completed a 1-for-10 reverse unit split on November 23, 2020, to regain NYSE listing compliance[395] Consolidated Cash Flows (in millions) | Metric | 2020 | 2019 | 2018 | | :----- | :--- | :--- | :--- | | Net cash provided by (used in) Operating activities | $90 | $747 | $628 | | Net cash used in Investing activities | $(423) | $(121) | $(108) | | Net cash provided by (used in) Financing activities | $355 | $(642) | $(334) | | Net increase (decrease) in cash and cash equivalents and restricted cash | $22 | $(16) | $186 | - The change in operating cash flow in 2020 was primarily due to a $677 million reduction in operating results (excluding non-cash items), offset by favorable changes in working capital[397] - Investing activities in 2020 included a $140 million purchase of Delek common stock and a $121 million increase in turnaround expenditures for the Coffeyville Refinery[398] - Financing activities in 2020 were positively impacted by $1 billion from new senior notes issuance, partially offset by $500 million for debt redemption and reduced dividends/distributions[399] Recent Accounting Pronouncements The company refers to Note 2 ('Summary of Significant Accounting Policies') for a discussion of recent accounting pronouncements applicable to the Company - The company refers to Note 2 ('Summary of Significant Accounting Policies') for a discussion of recent accounting pronouncements applicable to the Company[401] Critical Accounting Estimates Critical accounting estimates include inventory valuation at the lower of FIFO cost or net realizable value, and impairment assessments for long-lived assets and goodwill, which significantly impact financial reporting - Critical accounting estimates include inventory valuation (lower of FIFO cost or net realizable value) and impairment of long-lived assets and goodwill[402][403][404][407] - A $59 million loss on inventory was recognized in 2020, primarily in the Petroleum Segment, to reflect net realizable value[403] - A $41 million non-cash goodwill impairment charge was recorded in 2020 for the Coffeyville Fertilizer Facility reporting unit due to significant pricing declines and market uncertainty[408] Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from commodity prices (crude oil, refined products, nitrogen fertilizers) and RINs prices, mitigating these through hedging strategies and developing a renewable diesel unit - The company is exposed to market risk from adverse changes in commodity prices (crude oil, refined products, nitrogen fertilizers) and RINs prices[410][411] - The Petroleum Segment uses a crude oil purchasing intermediary (Vitol) and engages in hedging strategies (futures, swaps, forward contracts) to reduce exposure to volatile commodity prices and protect gross margins[412] - To mitigate RFS compliance price risk, the Petroleum Segment performs ethanol and biodiesel blending, purchases RINs, and is developing a renewable diesel unit at the Wynnewood Refinery, estimated to generate approximately 180 million RINs annually[413] Item 8. Financial Statements and Supplementary Data This section presents the audited consolidated financial statements of CVR Energy, Inc. and its subsidiaries for the years ended December 31, 2020, 2019, and 2018, including the balance sheets, statements of operations, changes in equity, and cash flows, along with detailed notes. The independent registered public accounting firm, Grant Thornton LLP, issued an unqualified opinion on both the financial statements and the effectiveness of internal control over financial reporting. Critical audit matters included the Petroleum Segment's inventory valuation and the Nitrogen Fertilizer Segment's goodwill impairment assessment Report of Independent Registered Public Accounting Firm Grant Thornton LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting, highlighting inventory valuation and goodwill impairment as critical audit matters - Grant Thornton LLP issued an unqualified opinion on the consolidated financial statements for the three years ended December 31, 2020, and on the effectiveness of internal control over financial reporting as of December 31, 2020[416][417] - Critical audit matters identified were the Petroleum Segment's finished goods inventory valuation and the Nitrogen Fertilizer Segment's goodwill impairment assessment, both involving significant management estimates and subjectivity[421][423][425][426] Report of Independent Registered Public Accounting Firm (Internal Control) Grant Thornton LLP issued an unqualified opinion on the effectiveness of CVR Energy, Inc.'s internal control over financial reporting as of December 31, 2020, based on COSO criteria - Grant Thornton LLP issued an unqualified opinion on the effectiveness of CVR Energy, Inc.'s internal control over financial reporting as of December 31, 2020, based on criteria established in the 2013 Internal Control – Integrated Framework issued by COSO[430] Consolidated Balance Sheets This section presents the consolidated balance sheets, detailing assets, liabilities, and equity as of December 31, 2020, and 2019, reflecting the company's financial position Consolidated Balance Sheet Highlights (in millions) | Asset/Liability | December 31, 2020 | December 31, 2019 | | :-------------- | :---------------- | :---------------- | | Total Current Assets | $1,402 | $1,274 | | Property, Plant and Equipment, net | $2,240 | $2,336 | | Total Assets | $3,978 | $3,905 | | Total Current Liabilities | $659 | $596 | | Total Long-Term Liabilities | $2,100 | $1,641 | | Total Equity | $1,219 | $1,668 | | Total Liabilities and Equity | $3,978 | $3,905 | Consolidated Statements of Operations This section presents the consolidated statements of operations for 2020, 2019, and 2018, detailing net sales, operating income, net income, and earnings per share Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | 2020 | 2019 | 2018 | | :----- | :--- | :--- | :--- | | Net sales | $3,930 | $6,364 | $7,124 | | Cost of sales | $4,119 | $5,662 | $6,463 | | Operating (loss) income | $(333) | $580 | $532 | | Interest expense, net | $(130) | $(102) | $(102) | | Investment income from marketable securities | $41 | $0 | $0 | | (Loss) income before income taxes | $(415) | $491 | $445 | | Income tax (benefit) expense | $(95) | $129 | $79 | | Net (loss) income | $(320) | $362 | $366 | | Net (loss) income attributable to CVR Energy stockholders | $(256) | $380 | $259 | | Basic and diluted (loss) earnings per share | $(2.54) | $3.78 | $2.80 | | Dividends declared per share | $1.20 | $3.05 | $2.50 | Consolidated Statements of Changes in Equity This section presents the consolidated statements of changes in equity, detailing movements in total CVR Stockholders' Equity and noncontrolling interest for the year ended December 31, 2020 Consolidated Statements of Changes in Equity (in millions) | Metric | Balance at Dec 31, 2019 | Dividends paid to CVR Energy stockholders | Changes in equity due to CVR Partners' common unit repurchases | Net loss | Balance at Dec 31, 2020 | | :----- | :---------------------- | :---------------------------------------- | :------------------------------------------------------------- | :------- | :---------------------- | | Total CVR Stockholders' Equity | $1,393 | $(121) | $3 | $(256) | $1,019 | | Noncontrolling interest | $275 | $0 | $(11) | $(64) | $200 | | Total Equity | $1,668 | $(121) | $(8) | $(320) | $1,219 | Consolidated Statements of Cash Flows This section presents the consolidated statements of cash flows for 2020, 2019, and 2018, detailing net cash provided by or used in operating, investing, and financing activities Consolidated Statements of Cash Flows (in millions) | Metric | 2020 | 2019 | 2018 | | :----- | :--- | :--- | :--- | | Net cash provided by (used in) Operating activities | $90 | $747 | $628 | | Net cash used in Investing activities | $(423) | $(121) | $(108) | | Net cash provided by (used in) Financing activities | $355 | $(642) | $(334) | | Net increase (decrease) in cash and cash equivalents and restricted cash | $22 | $(16) | $186 | Notes to Consolidated Financial Statements This section provides detailed notes to the consolidated financial statements, covering organization, significant accounting policies, equity method investments, leases, other current liabilities, long-term debt, revenue recognition, derivative instruments, share-based compensation, income taxes, commitments and contingencies, business segments, supplemental cash flow information, and related party transactions (1) Organization and Nature of Business CVR Energy, Inc. is a diversified holding company primarily engaged in petroleum refining and nitrogen fertilizer manufacturing, with Icahn Enterprises L.P. holding a significant ownership stake - CVR Energy, Inc. is a diversified holding company primarily engaged in petroleum refining and nitrogen fertilizer manufacturing, with Icahn Enterprises L.P. (IEP) owning approximately 71% of its common stock as of December 31, 2020[447] - The Board of Directors authorized a $300 million stock repurchase program in October 2019, but no common stock was repurchased during 2020[448] - CVR Refining became a wholly-owned subsidiary in January 2019 after CVR Energy purchased all remaining common units for approximately $301 million[449] - CVR Partners completed a 1-for-10 reverse unit split on November 23, 2020, to regain NYSE listing compliance, reducing outstanding common units from approximately 111 million to 11 million[453][454] - CVR Partners repurchased 623,177 common units at a cost of $7 million in 2020 under a $10 million unit repurchase program, increasing CVR Energy's ownership from 34% to 36%[455][456] (2) Summary of Significant Accounting Policies This section outlines the company's significant accounting policies, including consolidation, inventory valuation, impairment testing, revenue recognition, and accounting for turnarounds and share-based compensation - The consolidated financial statements include CVR Energy and its majority-owned subsidiaries, with CVR Partners accounted for as a Variable Interest Entity (VIE) where CVR Energy is the primary beneficiary[458][459] - Inventories are valued at the lower of GAAP First-In, First-Out (FIFO) cost or net realizable value, with a $58 million loss recognized in Q1 2020 for the Petroleum Segment due to market price declines[468][470] - Long-lived assets and goodwill are tested for impairment; a $41 million non-cash goodwill impairment charge was recorded in 2020 for the Coffeyville Fertilizer Facility reporting unit due to market conditions[479][480][482] - Revenue is recognized when control over products or services transfers to a customer, with Petroleum Segment contracts typically based on market price at delivery and Nitrogen Fertilizer Segment contracts often having fixed pricing[486][488] - Effective January 1, 2019, the Petroleum Segment revised its accounting policy for planned major maintenance (turnarounds) from the direct-expense method to the deferral method, amortizing costs over a four-year period[494] - The Nitrogen Fertilizer Segment continues to follow the direct-expense method of accounting for turnaround activities[496] - Share-based compensation awards are liability-classified and re-measured at fair value at the end of each reporting period, with compensation expense fluctuating based on changes in share or unit prices[499][564] - The company adopted ASU 2016-13 (Credit Losses) and ASU 2018-13 (Fair Value Measurement) effective January 1, 2020, with no material impact on its consolidated financial statements[503][504] (3) Equity Method Investments CVR Refining holds equity method investments in Enable South Central Pipeline, LLC and Midway Pipeline, LLC, exercising influence through management committees - CVR Refining holds equity method investments in Enable South Central Pipeline, LLC (40% interest) and Midway Pipeline, LLC (50% interest), exercising influence through management committees but not serving as the day-to-day operator[509] Equity Method Investments Summary (in millions) | Investment | Balance at Dec 31, 2019 | Cash Distributions (2020) | Equity Income (2020) | Balance at Dec 31, 2020 | | :--------- | :---------------------- | :------------------------ | :------------------- | :---------------------- | | Enable JV | $6 | $(4) | $4 | $6 | | Midway JV | $75 | $(6) | $5 | $74 | | Total | $81 | $(10) | $9 | $80 | (4) Leases The company leases various assets including pipelines, storage tanks, and office space, with lease liabilities and right-of-use assets recognized on the balance sheet - The company leases pipelines, storage tanks, railcars, office space, land, and equipment, with most leases including renewal options extending from one to 20 or more years[510] Balance Sheet Summary of Leases (in millions) | Lease Type | ROU Assets (Dec 31, 2020) | ROU Assets (Dec 31, 2019) | Lease Liabilities (Dec 31, 2020) | Lease Liabilities (Dec 31, 2019) | | :--------- | :------------------------ | :------------------------ | :------------------------------- | :------------------------------- | | Operating Leases | $15 | $20 | $38 | $40 | | Finance Leases | $8 | $12 | $22 | $25 | Lease Expense Summary (in millions) | Expense Type | 2020 | 2019 | | :----------- | :--- | :--- | | Operating lease expense | $17 | $12 | | Finance lease expense (Amortization of ROU asset) | $6 | $7 | | Finance lease expense (Interest expense on lease liability) | $6 | $6 | | Short-term lease expense | $8 | $8 | Weighted-Average Lease Terms and Discount Rates | Metric | Dec 31, 2020 | Dec 31, 2019 | | :----- | :----------- | :----------- | | Operating Leases (remaining term, years) | 3.1 | 3.7 | | Finance Leases (remaining term, years) | 8.1 | 9.0 | | Operating Leases (discount rate) | 5.5% | 5.6% | | Finance Leases (discount rate) | 9.0% | 8.9% | Maturities of Lease Liabilities (in millions) | Year | Operating Leases | Finance Leases | | :--- | :--------------- | :------------- | | 2021 | $16 | $11 | | 2022 | $12 | $11 | | 2023 | $8 | $10 | | 2024 | $5 | $10 | | 2025 | $0 | $10 | | Thereafter | $0 | $33 | | Total lease payments | $41 | $85 | | Less: imputed interest | $(3) | $(25) | | Total lease liability | $38 | $60 | - A new Messer Agreement for an oxygen storage vessel at the Coffeyville Facility is classified as a finance lease, with $20-$25 million expected to be capitalized upon service commencement[516] (5) Other Current Liabilities This section details the components of other current liabilities, including accrued RFS obligation, taxes, deferred revenue, personnel accruals, and accrued interest Other Current Liabilities (in millions) | Liability | December 31, 2020 | December 31, 2019 | | :-------- | :---------------- | :---------------- | | Accrued RFS obligation | $214 | $7 | | Accrued taxes other than income taxes | $32 | $28 | | Deferred revenue | $31 | $28 | | Personnel accruals | $23 | $47 | | Accrued interest | $25 | $9 | | Accrued derivatives | $17 | $7 | | Operating lease liabilities | $14 | $14 | | Share-based compensation | $4 | $6 | | Accrued income taxes | $0 | $24 | | Other accrued expenses and liabilities | $9 | $9 | | Total other current liabilities | $369 | $179 | (6) Long-Term Debt and Finance Lease Obligations This section details the company's long-term debt and finance lease obligations, including senior secured notes, senior notes, and credit agreements, and recent debt issuance and redemption activities Long-Term Debt and Finance Lease Obligations (in millions) | Entity | Debt Type | Due Date | 2020 Balance | 2019 Balance | | :----- | :-------- | :------- | :----------- | :----------- | | CVR Partners | 9.25% Senior Secured Notes | June 2023 | $645 | $645 | | CVR Partners | 6.50% Senior Notes | April 2021 | $0 | $2 | | CVR Refining | 6.50% Senior Notes | November 2022 | $0 | $500 | | CVR Energy | 5.25% Senior Notes | February 2025 | $600 | $0 | | CVR Energy | 5.75% Senior Notes | February 2028 | $400 | $0 | | Total long-term debt and finance lease obligations, including current portion | | | $1,691 | $1,195 | - CVR Energy redeemed all $500 million of CVR Refining's 6.50% Senior Notes due 2022 in January 2020 for approximately $505 million, resulting in an $8 million loss on extinguishment of debt[527] - CVR Energy issued $600 million of 5.25% Senior Unsecured Notes due 2025 and $400 million of 5.75% Senior Unsecured Notes due 2028 in January 2020, with net proceeds of $993 million used for debt redemption and general corporate purposes[529][530] Credit Agreements (in millions) | Entity | Total Capacity | Amount Borrowed (Dec 31, 2020) | Outstanding Letters of Credit (Dec 31, 2020) | Capacity Available (Dec 31, 2020) | Maturity Date | | :----- | :------------- | :----------------------------- | :------------------------------------------- | :-------------------------------- | :------------ | | CVR Partners (Nitrogen Fertilizer ABL) | $20 | $0 | $0 | $20 | September 30, 2022 | | CVR Refining (Petroleum ABL) | $400 | $0 | $35 | $365 | November 14, 2022 | - CVR Partners amended its Nitrogen Fertilizer ABL in September 2020, reducing aggregate principal availability from $50 million to $35 million and extending the maturity date to September 30, 2022[524] - The company and its subsidiaries were in compliance with all applicable covenants under their respective debt instruments as of December 31, 2020[521] (7) Revenue This section disaggregates revenue by product and segment, detailing recognition policies for petroleum and nitrogen fertilizer sales, and identifying significant customer concentrations Disaggregated Revenue by Product and Segment (2020, in millions) | Product | Petroleum | Nitrogen Fertilizer | Other / Eliminations | Consolidated | | :------ | :-------- | :------------------ | :------------------- | :----------- | | Gasoline | $1,882 | $0 | $0 | $1,882 | | Distillates | $1,543 | $0 | $0 | $1,543 | | Ammonia | $0 | $94 | $0 | $94 | | UAN | $0 | $198 | $0 | $198 | | Other urea products | $0 | $15 | $0 | $15 | | Freight revenue | $18 | $33 | $0 | $51 | | Other | $79 | $10 | $(6) | $83 | | Crude oil sales | $63 | $0 | $0 | $63 | | Other revenue | $1 | $0 | $0 | $1 | | Total revenue | $3,586 | $350 | $(6) | $3,930 | - Petroleum Segment revenue from product sales is recorded upon delivery to customers, with pricing typically index-based, and freight revenue rebilled to customers[537][538][542] - Nitrogen Fertilizer Segment revenue is recognized when the customer obtains control of the product, generally upon delivery and acceptance, with most contracts having fixed pricing and terms of less than one year[543] - As of December 31, 2020, the Nitrogen Fertilizer Segment had approximately $6 million of remaining performance obligations for contracts with an original expected duration of more than one year,