CVR Energy Inc. (CVI) 2008年年度報告「NYSE」.pdf

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1、annual reportstepping up to challenges seizing opportunitiesC o r por at e pr ofileCVR Energy,Inc.(NYSE:CVI)benefits from a geographic advantage in serving the refined petroleum products and nitrogen fertilizers markets in the midcontinent of the United States.Flexible production operations located

2、in Coffeyville,Kansas,experienced management,sophisticated technologies,a commitment to safe and environmentally responsible operations and products,and an unwavering entrepreneurial spirit are what distinguish CVR Energy.The companys subsidiary and affiliated businesses include an independent petro

3、leum refiner that operates a 115,000 barrel per day refinery in Coffeyville and markets high-value transportation fuels supplied to customers through tanker trucks and pipeline terminals;a crude oil gathering system serving central Kansas,northern Oklahoma,eastern Colorado,western Missouri and south

4、west Nebraska;an asphalt and refined fuels storage terminal business in Phillipsburg,Kansas;and through a limited partnership,an ammonia and urea ammonium nitrate(UAN)fertilizer business located in Coffeyville.“At CVR Energy,we believe this:A company that is well managed and remains profitable durin

5、g periods of economic challenge will excel when better markets return.”John J.Lipinski,Chairman,President and Chief Executive Officerthe Continuous Catalytic reforming Unit(CCr)in CVr energys refinery at Coffeyville,Kansas.CVr energy|2008 ANNUAl REPORT/03 *Net income(loss)adjusted for unrealized gai

6、n or loss from Cash Flow Swap results from adjusting for the derivative transaction that was executed in connection with the acquisition of our business on June 24,2005.The derivative took the form of three NYMEX swap agreements(the“Cash Flow Swap”)whereby if crack spreads fall below the fixed level

7、,J.Aron&Company(“J.Aron”)agreed to pay the difference to us,and if crack spreads rise above the fixed level,we agreed to pay the difference to J.Aron.We have determined that the Cash Flow Swap does not qualify as a hedge for hedge accounting purposes under current GAAP.As a result,our periodic state

8、ments of operations reflect in each period material amounts of unrealized gains and losses based on the increases or decreases in market value of the unsettled position under the Cash Flow Swap agreements which is accounted for as a liability on our balance sheet.As the crack spreads increase we are

9、 required to record an increase in this liability account with a corresponding expense entry to be made to our statement of operations.Conversely,as crack spreads decline we are required to record a decrease in the swap related liability and post a corresponding income entry to our statement of oper

10、ations.Because of this inverse relationship between the economic outlook for our underlying business(as represented by crack spread levels)and the income impact of the unrecognized gains and losses,and given the significant periodic fluctuations in the amounts of unrealized gains and losses,manageme

11、nt utilizes Net income(loss)adjusted for unrealized gain or loss from Cash Flow Swap as a key indicator of our business performance.For more information see footnote 9 to Item 6,“Selected Financial Data,”in the Form 10-K attached hereto.The following is a reconciliation of net income(loss)adjusted f

12、or unrealized gain or loss from Cash Flow Swap to net income:2008 2007 2006 Net income(Loss)adjusted for unrealized gain or loss from Cash Flow Swap$11.2 (5.6)115.4 Plus:unrealized gain(Loss)from Cash Flow Swap,net of taxes 152.7 (62.0)76.2 Net income(Loss)$163.9(67.6)191.6(Dollars in millions excep

13、t per share data and as otherwise indicated)2 0 0 82 0 0 72 006f i na nCial DataNet Sales$5,016.1$2,966.9$3,037.6Operating Income148.7186.6281.6Net Income(Loss)adjusted for unrealized gain or loss from Cash Flow Swap*11.2(5.6)115.4Net Income(Loss)163.9(67.6)191.6Earnings Per Share,Basic1.90Earnings

14、Per Share,Diluted1.90Pro Forma Earnings(Loss)Per Share,Basic(.78)2.22Pro Forma Earnings(Loss)Per Share,Diluted(.78)2.22Stockholders/Members Equity579.5432.776.4Employees654584591op e r at in g DataPetroleum BusinessNet Sales4,774.32,806.22,880.4Operating Income31.9144.9245.6Total Crude,Feed,&Blendst

15、ocks Throughput(Bpd)117,71982,065102,591Gross Profit Per Crude Oil Throughput Barrel2.697.798.39nitrogen Fertilizer BusinessNet Sales263.0165.9162.5Operating Income116.846.636.8Operating Income as a Percent of Net Sales44.4%28.1%22.6%Ammonia Gross Production(Thousands of tons)359.1326.7369.3Ammonia(

16、Net available for sale)112.591.8111.8UAN Production(Thousands of tons)599.2576.9633.1Ammonia Pricing(Plant gate)(Dollars/ton)557376338UAN Pricing(Plant gate)(Dollars/ton)303211162f i na n C i a l Hi g Hl i gHtsCVr energy|2008 ANNUAl REPORT04/Our company turned in a profitable 2008,even given the rol

17、ler coaster nature of the petroleum refining and fertilizer markets.Net income for the year was$163.9 million on$5,016.1 million in net sales.Our refinery posted high capacity utilization rates,operating at nearly 92 percent of its rated capacity for the year despite unplanned maintenance in the fou

18、rth quarter that resulted in reduced crude runs.The petroleum segment reported$31.9 million operating income for the year even after recording a$42.8 million non-cash goodwill impair-ment and the negative impact of first-in,first-out(FIFO)accounting as detailed elsewhere in this report.OPERATIONAL F

19、LEXIBILITYThe key to a profitable 2008 for the petroleum segment was our focus on optimization,operational reliability and safety,and our ability to exploit flexibility gained from more than$500 million in capital projects completed during the prior two years.These capital projects raised the refine

20、rys complexity to 12.1,giving us the ability to run multiple slates of crude and produce high value products.The refinerys location in Coffeyville,Kansas,just 100 miles north of the major crude oil trading hub of Cushing,Oklahoma,allowed CVR Energy to optimize its crude slate around continually shif

21、ting petroleum market economics.Meanwhile,the nitrogen fertilizers segment produced its best ever annual results,posting operating income of$116.8 million for the year,even as it completed a planned major turnaround in the fourth quarter.Again,opera-tional flexibility was key.When prices for ammonia

22、 and urea ammonium nitrate(UAN)fertilizer began spiking early in the year,CVR Energys nitrogen fertilizer managers determined they could safely postpone a planned spring/summer turnaround until October,by which time prices had declined.TO OUR STOCKhOLDERS:At CVR Energy,we believe this:A company that

23、 is well managed and remains profitable during periods of economic challenge will excel when better markets return.the gasifier complex at the nitrogen fertilizer plant at Coffeyville,Kansas.CVr energy|2008 ANNUAl REPORT06/VOLATILE MARKETSCVR Energy optimized its profitability in every quarter even

24、though crude oil traded as high as$146 per barrel in July and as low as$33 in December.NYMEX 2-1-1 crack spreads were equally volatile,dipping below$5 per barrel on occasion and peaking above$20 per barrel for a short time.Price gyrations affected the nitrogen fertilizer business as well,with averag

25、e Southern Plains ammonia commanding$958 per ton at one point but falling back to$295 per ton by the end of the year.Average Mid Cornbelt UAN commanded as high as$525 per ton,but fell to$297 per ton by year end.Of course,the global recession is on our minds in 2009.In response to this situation,we w

26、ill continue to focus on optimization,reliability and safety.however,we also see an opportunity in 2009 to build shareholder value and expand our financial flexibility through a strengthened balance sheet.As a result,whenever prudent we will defer capital projects,clear out legacy financial issues r

27、emaining from the initial terms for acquiring the business and flood recovery,and use excess cash flow to pay down debt.LEGACY ISSUES RECEDESeveral legacy issues are now receding in our rearview mirror.These include a long term Cash Flow Swap that was required under our lender agreement at the time

28、of acquisition in 2005,significant capital expenditures that were needed to improve our original asset base,and finally,the 2007 flood that required us to defer certain payments owed to J.Aron&Company under the Cash Flow Swap.At the end of June 2009,our Cash Flow Swap ramps down from 5.9 million bar

29、rels per quarter to 1.5 million barrels per quarter,or at that point to about only 15 percent of production.One year later,on June 30,2010,our Swap obligations are fully satisfied.As this Swap rolls off,the noise in our earnings statements from realized and unrealized gains and losses will lessen an

30、d a clearer picture of our earnings will emerge.left John J.lipinski,Chairman,President and Chief Executive Officer.aboVe the Coffeyville refinery at dusk.faCing page,left to rigHt the Pressure Swing Absorption unit and the petroleum coke gasifier at the nitrogen fertilizer plant in Coffeyville.CVr

31、energy|2008 ANNUAl REPORT/07/07/With respect to the 2007 flood,we incurred a significant liability related to the temporary shutdown of our facilities.J.Aron agreed to defer certain payments owed them under the Cash Flow Swap,thus allowing us to use that cash to recover from the flood.One year ago t

32、his liability totaled$123.7 million.We have now completely paid off the deferral balance prior to its July 2009 due date.We satisfied this deferral with a combination of cash flow from operations,insurance proceeds and ad valorem taxes returned to us under a property tax settlement with the local ta

33、xing authority.CAPITAL EXPENDITURESWe fully recognize the uncertainties of commodity markets and the operating risks inherent in our businesses.Last November we embarked on a plan to strengthen our balance sheet.We believe the capital expenditures made over the past few years now give us the opportu

34、nity to be more selective with capital for the next few years.Consequently,we have deferred the completion of our UAN expansion project as well as other smaller discretionary projects.Also,as a result of additional maintenance work performed during the 2007 flood recovery and subsequent maintenance

35、outages,we have moved our 2010 refinery turnaround into 2011.As we have witnessed,each year presents new challenges that test the mettle of our organization.Be it a catastrophic event like the flood of 2007 or the vagaries of crude oil and product prices in 2008,the key is that we respond decisively

36、 and emerge a stronger organization.Given the current global economic situation,this mettle will surely be tested again,and I can assure you that CVR Energy is up to the challenge.As always,thank you for your continued support of CVR Energy.Respectfully,JoHn J.lipinsKiChairman,President and Chief Ex

37、ecutive OfficerMarch 200908/The petroleum segment includes an independent petroleum refiner that operates a 115,000 barrel per day(bpd)complex full coking medium sour crude refinery in Coffeyville,Kansas.Our supporting businesses include a crude oil gathering system serving Kansas,northern Oklahoma,

38、western Missouri,eastern Colorado and southwest Nebraska;storage and terminal facilities for asphalt and refined fuels in Phillipsburg,Kansas;a 145,000 bpd pipeline system that transports crude oil to our refinery and associated crude oil storage tanks with a capacity of 1.2 million barrels;and a ra

39、ck marketing division supplying product through tanker trucks directly to customers located in close geographic proximity to Coffeyville and Phillipsburg and to customers at throughput terminals via pipelines.In addition,through a limited partnership,CVR Energy owns and operates a nitrogen fertilize

40、r manufactur-ing facility located in Coffeyville,Kansas,consisting of a 1,225 ton per day ammonia unit,a 2,025 ton per day urea ammonium nitrate(UAN)unit,and an 84 million standard cubic foot per day gasifier complex.In these businesses,location of production facilities at Coffeyville,in the heart o

41、f the American mid-continent,provides geographic competitive advantages.Although the original company first began operations in Coffeyville more than 102 years ago,2008 marked CVR Energys first full year as a public company,traded on the New York Stock Exchange under the ticker symbol CVI.2008 RESUL

42、TSFor the full year 2008,CVR Energy reported net income of$163.9 million,or$1.90 per fully diluted share,on full-year net sales of$5,016.1 million,compared to a net loss for the full year in 2007 of$67.6 million,or a pro forma loss of$0.78 per fully diluted share.Results in 2007 were affected by a p

43、lanned major turnaround and expan-sion at the companys refinery and significant downtime and costs associated with a flood.Operating income for the full year in 2008 was$148.7 million,compared to$186.6 million in 2007.AN ADjUSTED VIEwCertain items affected full year 2008 and 2007 net income and dilu

44、ted earnings per share.These items included a benefit for the full year 2008 net income from reversals of non-cash share-based compensation expense of$32.4 million,net of tax,compared to an expense for the full year 2007 of$36.8 million,net of tax.Additionally,the full year 2008 net income was impac

45、ted by an unrealized gain from Cash Flow Swap of$152.7 million,net of tax,compared to an unrealized loss of$62.0 million,net of tax,for the full year 2007.CORPORATE AND FINANCIAL OVERVIEWCVR Energy,Inc.(NYSE:CVI)operates two primary businesses.Additionally,a goodwill impairment loss was taken in the

46、 fourth quarter 2008 in the amount of$42.8 million.The goodwill impairment loss represents a write-off of the entire balance of the petroleum segments goodwill from the application of impairment testing criteria under accounting policies.Results for the full year 2008 were unfavorably impacted by ou

47、r use of first-in/first-out(FIFO)accounting in the amount of$61.8 million,net of taxes.This compares to a favorable tax affected FIFO impact for the full year 2007 of$42.0 million.The after-tax FIFO impact for full year 2008 decreased earnings per fully diluted share by$0.72.After-tax FIFO increased

48、 pro forma earnings per share for full year 2007 by$0.49.The companys 2008 results were also impacted in the fourth quarter by a planned turnaround at the nitrogen fertilizer facility,an unplanned outage affecting the refinerys fluid catalytic cracking unit,and loss on extinguishment of debt of appr

49、oximately$10.0 million associated with amending the companys credit facility.LEGACY ISSUES RESOLVED2008 marked an important year for CVR Energy in which several legacy issues began to recede in the corpo-rate rearview mirror.These issues include a long term Cash Flow Swap that was required under a l

50、ender agreement at the time of acquisition,significant capital expenditures that were needed to improve the companys original asset base,debt covenants that could not anticipate the speed and depth in the drop in inventory values experienced when the prices of crude and products fell during 2008,and

51、,finally,the 2007 flood that required the company to defer certain payments owed to J.Aron&Company under the Cash Flow Swap.The company has now substantially completed its extensive capital expansion program to improve our asset base,amended its credit agreement to eliminate some of the potential is

52、sues of covenant compliance associated with the sharp drop in crude oil and product prices during 2008,and has completely paid off$123.7 million owed to J.Aron,which had been deferred as a result of the 2007 flood.In addition,the Cash Flow Swap will decrease at the end of June 2009 from approximatel

53、y 5.9 million barrels per quarter to 1.5 million barrels per quarter,or about 15 percent of our production.On June 30,2010,these Swap obligations will be fully satisfied.Also important to the companys operations,in December 2008 it executed a new two-year crude interme-diation agreement with Vitol I

54、nc.that provides enhanced operating flexibility for purchasing and managing physical barrels of crude oil.from left to rigHt:The Fluid Catalytic Cracking Unit(FCCU)at the refinery;samples awaiting analysis at the refinery laboratory;pipe racks at the refinery;operators conferring on a catwalk at the

55、 nitrogen fertilizer plant.the diesel treating area of the Coffeyville refinery.CVr energy|2008 ANNUAl REPORT/11 PETROLEUM BUSINESSSupporting the refinery are a crude oil gathering system serving central Kansas,northern Oklahoma,eastern Colorado,western Missouri,and southwest Nebraska;storage and te

56、rminal facilities for asphalt and refined fuels in Phillipsburg,Kansas;a 145,000 bpd pipeline system that transports crude oil to our refinery and associated crude oil storage tanks with a capacity of 1.2 million barrels;and a rack marketing division that supplies product through tanker trucks and t

57、hird party pipelines to customers in Arkansas,Iowa,Kansas,Missouri,Nebraska,Oklahoma and South Dakota.Because the refinery is located just 100 miles north of Cushing,Oklahoma,site of one of the largest trading and storage hubs in the United States,CVR Energy has access to numerous domestic and forei

58、gn varieties of crude oils in addition to its own gathered barrels.In fact,CVR Energy leases 2.7 million barrels of crude oil storage in Cushing,which represents approximately 6 percent of total crude storage available there.CVR Energy blends these oils to operate its refinery for maximum economic a

59、dvantage.In 2008,the refinery processed on average 73 percent light sweet crude oils,16 percent medium/light sour crude oil and 11 percent heavy sour crude.Gathered crude provides a base supply of feedstock for our refinery.Year over year,the company grew its crude gathering business in 2008 by 27 p

60、ercent to nearly 26,000 barrels per day.These base barrels serve as an attractive alternative to higher-priced foreign sweet crude.CVR Energy operates a 115,000 barrel per day(bpd)complex full coking sour crude refinery in Coffeyville,Kansas.Benefiting from major capital expansion projects in recent

61、 years,the refinery now has a complexity of 12.1,reflecting its ability to process a wide range of crude oils.12/2008 nymex CrUDe oil priCesJan2008feb2008mar2008apr2008may2008JUn2008JUl2008aUg2008sep2008oCt2008noV2008DeC2008Jan2009PETROLEUM BUSINESS RESULTSDespite volatile crude oil prices and crack

62、 spreads during 2008,CVR Energy turned in good results.The petroleum segment reported operating income for the full year 2008 of$31.9 million on net sales of$4,774.3 million,compared to operating income of$144.9 million on net sales of$2,806.2 million for the full year in 2007.The 2008 fourth quarte

63、r was unfavorably impacted by FIFO accounting practices in the amount of$117.1 million and a goodwill impairment of$42.8 million.The key operating statistics for the refinery are throughput volumes and production.Crude throughput for the full year 2008 averaged 105,837 bpd,compared to an average thr

64、oughput of 76,317 bpd for the full year in 2007.Total throughput,including feed and blend stocks,averaged 117,719 bpd in 2008,compared to 82,065 bpd in 2007,the earlier year having been impacted by a turnaround and flood.from left to rigHt Stan Riemann,CVR Energy Chief Operating Officer;Robert Hauge

65、n,Executive Vice President of Refining Operations;and Mark Keim,Vice President of Refinery Operations.An aerial view of the Coffeyville facilities.A refinery employee oversees operations.Part of 1.2 million barrels of storage available at Coffeyville.CVr energy|2008 ANNUAl REPORT/13 2008 nymex 2:1:1

66、 CraCK spreaDsJan2008feb2008mar2008apr2008may2008JUn2008JUl2008aUg2008sep2008oCt2008noV2008DeC2008Refinery production,primarily gasoline and distillate,totaled 118,500 bpd in 2008 versus 82,400 bpd in 2007.Gross profit per barrel was$2.69 for the full year 2008,and refining margin per barrel for the

67、 full year 2008 was$8.39.A reconciliation of gross profit to refining margin can be found on page 56 of our Form 10-K included as part of this annual report.Direct operating expense(exclusive of depreciation and amortization)was$3.91 per barrel in 2008,down from$7.52 per barrel for the full year in

68、2007.In 2008,the refinery achieved capacity utilization approaching 92 percent for the year.As a result of additional maintenance work performed during the 2007 flood recovery and during subsequent unplanned outages,the company has moved its 2010 refinery turnaround into 2011.C02 absorber at the nit

69、rogen fertilizer plant in Coffeyville.CVr energy|2008 ANNUAl REPORT/15/15/By using petroleum coke instead of the more typical natural gas feedstock to produce hydrogen,and ultimately ammonia and UAN,CVR Energy is one of the low cost producers and marketers of ammonia and UAN in North America at curr

70、ent natural gas prices.Petroleum coke is a coal-like low-value by-product of refineries.With its gasifiers and other fertilizer manu-facturing facilities located adjacent to the companys Coffeyville,Kansas,refining operations,the nitrogen fertilizer business during the past five years has drawn abou

71、t 77 percent of its petroleum coke needs from the nearby CVR Energy refinery.FERTILIzER RESULTSIn 2008,the companys nitrogen fertilizer operations reported 2008 full year operating income of$116.8 million on net sales of$263.0 million,compared to$46.6 million on net sales of$165.9 for the full year

72、in 2007.The nitrogen fertilizer plant produced 112,500 tons of ammonia available for sale during 2008,compared to 91,800 net tons in 2007.The plant produced 599,200 tons of UAN during the full year 2008,compared to 576,900 tons in 2007.Through a limited partnership,CVR Energy owns and operates a nit

73、rogenfertilizer business that is the only such operation in North Americaemploying a petroleum coke gasification process to produce ammonia,most of which is further upgraded to urea ammonium nitrate(UAN)fertilizer.NITROGEN FERTILIzER BUSINESS2008 aVerage realizeD ammonia sales priCes2008 aVerage rea

74、lizeD Uan sales priCes$323.99Q4$323.61Q3$303.38Q2$261.70Q1left Petroleum coke slag leaving the gasifiers at the nitrogenfertilizer plant;aboVe Neal Barkley,Vice Presidentand Fertilizer Facility Manager,and Kevan Vick,Executive Vice President and Fertilizer General Manager;aboVe anD faCingpage Selexo

75、l chillers in the gasifier complex;the spare gasifier;and piping connecting units within the nitrogen fertilizer plant.$494.26$528.11$535.76Q1Q2Q3Q4$685.34$685.34CVr energy|2008 ANNUAl REPORT/17 2008 FERTILIzER PRICESThe nitrogen fertilizer business experienced unprecedented high pricing levels in 2

76、008.Reported prices for Mid Cornbelt and Southern Plains nitrogen-based fertilizers rose steadily during the year and sustained unusually high levels for several months before eventually declining sharply from late autumn through year-end.For the full year in 2008,average realized sale prices for am

77、monia and UAN were$557 per ton and$303 per ton respectively,compared to$376 per ton and$211 per ton for the full year in 2007.To understand the results of the companys nitrogen fertilizer business,it is important to understand that the companys UAN production is sold forward,which is then reflected

78、in the companys fertilizer order book.Thus,realized prices in any given quarter reflect both spot prices and historical contracts rather than just the peaks of spot sales.FLEXIBILITY AND TURNAROUNDTo benefit from the 2008 price environment,the nitrogen fertilizer business postponed a planned late sp

79、ring turnaround of its facility.In October 2008 as prices moderated,the company completed the delayed turnaround,afterwards achieving production of purity hydrogen in excess of 85 million standard cubic feet per day,which was a substantial improvement over the pre-turnaround rate.On-stream factors,c

80、ritical for fixed-cost processes like our nitrogen fertilizer business,also increased after the turnaround.Full-year on-stream factors adjusted for the turnaround were:gasification 91.7 percent;ammonia 90.2 percent;UAN 87.4 percent.Comparable numbers for 2007,adjusted for a flood which curtailed ope

81、rations for several weeks,were:gasification 94.6 percent;ammonia 92.4 percent;and UAN 83.9 percent.After the 2008 turnaround,the gasifier on-stream rate rose to nearly 100 percent for the remainder of the year.In addition,maximum hydrogen output from our gasifier complex increased approximately 5 pe

82、rcent.18/The companys businesses have amassed solid records in the areas of Environmental,health and Safety,and CVR Energy is committed to finding ways to sharpen its focus on this fundamental facet of our business.In November 2008 refinery employees reached another company record by working more th

83、an 1 million hours without a lost-time accident.The transportation group is working on three years without a lost-time accident.At CVR Energy,we balance our approach to personal and process safety.Personal safety utilizes behavioral-based programs with the goals of increased awareness of safety issu

84、es and continuous improvement in practices and procedures to prevent accidents and incidents.Along with an emphasis on personal safety,CVR Energy continues to focus on process safety.We are investing significantly in facility sitings;expanding operator,maintenance and supervisory training programs;a

85、nd making substantial investments in equipment,reliability and mechanical integrity programs.COMMUNITY RELATIONSCVR Energy believes in being a good neighbor and maintaining relationships in the communities where we live and work.In Coffeyville,we have a Community Advisory Panel,which consists of civ

86、ic and business leaders,as well as educators,residents and elected officials.Management meets regularly with the advisory panel to encourage two-way communications and inform them about business plans and progress.In all of CVR Energys businesses,compliance with environmental and safety rules and re

87、gulations is a top priority,which can be seen in our compliance assurance programs and the quality of our products.These programs aim to build consistent and reliable processes and procedures that result in continuous improvement.Our significant investment in exceeding regulatory compliance is not r

88、equired,but CVR Energy believes it is the right way to do business.CVR Energy is focused on business fundamentals,and nothing is more fundamental than protecting our environment and the safety of those who work at our facilities and the surrounding community.ENVIRONMENTAL,hEALTh&SAFETYOperating in w

89、ays that protect the environment and ensure the health and safety of employees,contractors,neighbors and customers is simply good business.At CVR Energy,thats a core belief.UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549Form 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR

90、15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2008ORnTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period fromtoCommission file number:001-33492CVR Energy,Inc.(Exact name of registrant as specified in its

91、charter)Delaware61-1512186(State or Other Jurisdiction ofIncorporation or Organization)(I.R.S.EmployerIdentification No.)2277 Plaza Drive,Suite 500Sugar Land,Texas(Address of Principal Executive Offices)77479(Zip Code)Registrants Telephone Number,including Area Code:(281)207-3200Securities registere

92、d pursuant to Section 12(b)of the Act:Title of Each ClassName of Each Exchange on Which RegisteredCommon Stock,$0.01 par value per shareThe New York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as

93、 defined in Rule 405 of the SecuritiesAct.Yes nNo Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the ExchangeAct.Yes nNo Indicate by check mark whether the Registrant(1)has filed all reports required to be filed by Section 13 or 15(

94、d)of theSecurities Exchange Act of 1934 during the preceding 12 months(or such shorter period that the Registrant was required to filesuch reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No n.Indicate by check mark if disclosure of delinquent filers pursuant to I

95、tem 405 of Regulation S-K(229.405 of this chapter)isnot contained herein,and will not be contained,to the best of Registrants knowledge,in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.nIndicate by check mark whet

96、her the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or asmaller reporting company.See the definitions of“large accelerated filer,”“accelerated filer”and“smaller reporting company”inRule 12b-2 of the Exchange Act.(Check one):Large accelerated filernAccelerated

97、 filerNon-accelerated filernSmaller reporting company n(Do not check if a smaller reporting company)Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the ExchangeAct).Yes nNo The aggregate market value of the voting and non-voting common equity held by non-

98、affiliates of the registrant computed based onthe New York Stock Exchange closing price on June 30,2008(the last day of the registrants second fiscal quarter)was$443,002,175.Indicate the number of shares outstanding of each of the Registrants classes of common stock,as of the latest practicable date

99、.ClassOutstanding at March 10,2009Common Stock,par value$0.01 per share86,243,745 sharesDocuments Incorporated By ReferenceDocumentParts IncorporatedProxy Statement for the 2009 Annual Meeting of StockholdersItems 10,11,12,13 and 14 of Part IIITABLE OF CONTENTSPagePART IItem 1.Business.1Executive Of

100、ficers.Item 1A.Risk Factors.11Item 1B.Unresolved Staff Comments.30Item 2.Properties.30Item 3.Legal Proceedings.30Item 4.Submission of Matters to a Vote of Security Holders.30PART IIItem 5.Market For Registrants Common Equity,Related Stockholder Matters and Issuer Purchasesof Equity Securities.31Item

101、 6.Selected Financial Data.33Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.38Item 7A.Quantitative and Qualitative Disclosures About Market Risk.79Item 8.Financial Statements and Supplementary Data.82Item 9.Changes in and Disagreements With Accountants on

102、 Accounting and Financial Disclosure.133Item 9A.Controls and Procedures.133Item 9B.Other Information.133PART IIIItem 10.Directors,Executive Officers and Corporate Governance.133Item 11.Executive Compensation.133Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockh

103、olderMatters.134Item 13.Certain Relationships and Related Transactions,and Director Independence.134Item 14.Principal Accounting Fees and Services.134PART IVItem 15.Exhibits and Financial Statement Schedules.134iGLOSSARY OF SELECTED TERMSThe following are definitions of certain industry terms used i

104、n this Form 10-K.2-1-1 crack spread The approximate gross margin resulting from processing two barrels of crude oilto produce one barrel of gasoline and one barrel of heating oil.Barrel Common unit of measure in the oil industry which equates to 42 gallons.Blendstocks Various compounds that are comb

105、ined with gasoline or diesel from the crude oil refiningprocess to make finished gasoline and diesel fuel;these may include natural gasoline,FCC unit gasoline,ethanol,reformate or butane,among others.bpd Abbreviation for barrels per day.Bulk sales Volume sales through third party pipelines,in contra

106、st to tanker truck quantity sales.Capacity Capacity is defined as the throughput a process unit is capable of sustaining,either on acalendar or stream day basis.The throughput may be expressed in terms of maximum sustainable,nameplateor economic capacity.The maximum sustainable or nameplate capaciti

107、es may not be the most economical.The economic capacity is the throughput that generally provides the greatest economic benefit based onconsiderations such as feedstock costs,product values and downstream unit constraints.Catalyst A substance that alters,accelerates,or instigates chemical changes,bu

108、t is neither produced,consumed nor altered in the process.Coker unit A refinery unit that utilizes the lowest value component of crude oil remaining after allhigher value products are removed,further breaks down the component into more valuable products andconverts the rest into pet coke.Common unit

109、s The class of interests issued or to be issued under the limited liability companyagreements governing Coffeyville Acquisition LLC,Coffeyville Acquisition II LLC and Coffeyville Acquisi-tion III LLC,which provide for voting rights and have rights with respect to profits and losses of,anddistributio

110、ns from,the respective limited liability companies.Corn belt The primary corn producing region of the United States,which includes Illinois,Indiana,Iowa,Minnesota,Missouri,Nebraska,Ohio and Wisconsin.Crack spread A simplified calculation that measures the difference between the price for lightproduc

111、ts and crude oil.For example,the 2-1-1 crack spread is often referenced and represents the approximategross margin resulting from processing two barrels of crude oil to produce one barrel of gasoline and onebarrel of diesel fuel.Distillates Primarily diesel fuel,kerosene and jet fuel.Ethanol A clear

112、,colorless,flammable oxygenated hydrocarbon.Ethanol is typically produced chemi-cally from ethylene,or biologically from fermentation of various sugars from carbohydrates found inagricultural crops and cellulosic residues from crops or wood.It is used in the United States as a gasolineoctane enhance

113、r and oxygenate.Farm belt Refers to the states of Illinois,Indiana,Iowa,Kansas,Minnesota,Missouri,Nebraska,North Dakota,Ohio,Oklahoma,South Dakota,Texas and Wisconsin.Feedstocks Petroleum products,such as crude oil and natural gas liquids,that are processed andblended into refined products.Heavy cru

114、de oil A relatively inexpensive crude oil characterized by high relative density and viscosity.Heavy crude oils require greater levels of processing to produce high value products such as gasoline anddiesel fuel.Independent refiner A refiner that does not have crude oil exploration or production ope

115、rations.Anindependent refiner purchases the crude oil used as feedstock in its refinery operations from third parties.iiLight crude oil A relatively expensive crude oil characterized by low relative density and viscosity.Light crude oils require lower levels of processing to produce high value produ

116、cts such as gasoline and dieselfuel.Magellan Magellan Midstream Partners L.P.,a publicly traded company whose business is thetransportation,storage and distribution of refined petroleum products.MMBtu One million British thermal units:a measure of energy.One Btu of heat is required to raisethe tempe

117、rature of one pound of water one degree Fahrenheit.PADD II Midwest Petroleum Area for Defense District which includes Illinois,Indiana,Iowa,Kansas,Kentucky,Michigan,Minnesota,Missouri,Nebraska,North Dakota,Ohio,Oklahoma,South Dakota,Tennes-see,and Wisconsin.Pet coke A coal-like substance that is pro

118、duced during the refining process.Refined products Petroleum products,such as gasoline,diesel fuel and jet fuel,that are produced by arefinery.Sour crude oil A crude oil that is relatively high in sulfur content,requiring additional processing toremove the sulfur.Sour crude oil is typically less exp

119、ensive than sweet crude oil.Spot market A market in which commodities are bought and sold for cash and delivered immediately.Sweet crude oil A crude oil that is relatively low in sulfur content,requiring less processing to removethe sulfur.Sweet crude oil is typically more expensive than sour crude

120、oil.Throughput The volume processed through a unit or a refinery.Turnaround A periodically required standard procedure to refurbish and maintain a refinery thatinvolves the shutdown and inspection of major processing units and occurs every three to four years.UAN UAN is a solution of urea and ammoni

121、um nitrate in water used as a fertilizer.Wheat belt The primary wheat producing region of the United States,which includes Oklahoma,Kansas,North Dakota,South Dakota and Texas.WTI West Texas Intermediate crude oil,a light,sweet crude oil,characterized by an API gravitybetween 39 and 41 and a sulfur c

122、ontent of approximately 0.4 weight percent that is used as a benchmark forother crude oils.WTS West Texas Sour crude oil,a relatively light,sour crude oil characterized by an API gravity of30-32 degrees and a sulfur content of approximately 2.0 weight percent.Yield The percentage of refined products

123、 that is produced from crude and other feedstocks.iiiPART IItem 1.BusinessCVR Energy,Inc.and,unless the context otherwise requires,its subsidiaries(“CVR Energy”,the“Company”,“we”,“us”,or“our”)is an independent refiner and marketer of high value transportation fuels.Inaddition,we currently own all of

124、 the interests(other than the managing general partner interest and associatedincentive distribution rights(the“IDRs”)in CVR Partners,LP(the“Partnership”),a limited partnership whichproduces nitrogen fertilizers in the form of ammonia and UAN.Our petroleum business includes a 115,000 bpd complex ful

125、l coking medium sour crude refinery inCoffeyville,Kansas.In addition,our supporting businesses include(1)a crude oil gathering system servingcentral Kansas,northern Oklahoma,western Missouri,eastern Colorado and southwest Nebraska,(2)storageand terminal facilities for asphalt and refined fuels in Ph

126、illipsburg,Kansas,(3)a 145,000 bpd pipeline systemthat transports crude oil to our refinery and associated crude oil storage tanks with a capacity of 1.2 millionbarrels and(4)a rack marketing division supplying product through tanker trucks directly to customers locatedin close geographic proximity

127、to Coffeyville and Phillipsburg and to customers at throughput terminals onMagellan refined products distribution systems.Additionally,we lease 2.7 million barrels of storage capacityat Cushing,Oklahoma.The nitrogen fertilizer business consists of a nitrogen fertilizer manufacturing facility compris

128、ed of(1)a1,225 ton-per-day ammonia unit,(2)a 2,025 ton-per-day UAN unit and(3)an 84 million standard cubic footper day gasifier complex.The nitrogen fertilizer business is the only operation in North America that utilizes acoke gasification process to produce ammonia(based on data provided by Blue J

129、ohnson&Associates).Amajority of the ammonia produced by the nitrogen fertilizer plant is further upgraded to UAN fertilizer(asolution of urea and ammonium nitrate in water used as a fertilizer).We have two business segments:petroleum and nitrogen fertilizer.For the fiscal years ended Decem-ber 31,20

130、08,2007 and 2006,we generated combined net sales of$5.0 billion,$3.0 billion and$3.0 billion,respectively,and operating income of$148.7 million,$186.6 million and$281.6 million,respectively.Ourpetroleum business generated$4.8 billion,$2.8 billion and$2.9 billion of our combined net sales,respectivel

131、y,over these periods,with the nitrogen fertilizer business generating substantially all of the remainder.Inaddition,during these periods,our petroleum business contributed$31.9 million,$144.9 million and$245.6 million of our combined operating income,respectively,with the nitrogen fertilizer busines

132、s contribut-ing substantially all of the remainder.Our HistoryOur refinery assets,which began operation in 1906,and the nitrogen fertilizer plant,which was built in2000,were operated as a component of Farmland Industries,Inc.(“Farmland”),an agricultural cooperative,and its predecessors until March 3

133、,2004.Coffeyville Resources,LLC(“CRLLC”),a subsidiary of Coffeyville Group Holdings,LLC,won abankruptcy court auction for Farmlands petroleum business and a nitrogen fertilizer plant and completed thepurchase of these assets on March 3,2004.Coffeyville Group Holdings,LLC operated our business fromMa

134、rch 3,2004 through June 24,2005.On June 24,2005,pursuant to a stock purchase agreement dated May 15,2005,Coffeyville AcquisitionLLC(“CALLC”),which was formed in Delaware on May 13,2005 by certain funds affiliated with Goldman,Sachs&Co.and Kelso&Company,L.P.(the“Goldman Sachs Funds”and the“Kelso Fund

135、s,”respectively),acquired all of the subsidiaries of Coffeyville Group Holdings,LLC.CALLC operated our business fromJune 24,2005 until CVR Energys initial public offering in October 2007.CVR Energy was formed in September 2006 as a subsidiary of CALLC in order to consummate an initialpublic offering

136、 of the businesses operated by CALLC.Prior to CVR Energys initial public offering in October2007,(1)CALLC transferred all of its businesses to CVR Energy in exchange for all of CVR Energyscommon stock,(2)CALLC was effectively split into two entities,with the Kelso Funds controlling CALLC1and the Gol

137、dman Sachs Funds controlling Coffeyville Acquisition II LLC(“CALLC II”)and CVR Energyssenior management receiving an equivalent position in each of the two entities,(3)we transferred our nitrogenfertilizer business into the Partnership in exchange for all of the partnership interests in the Partners

138、hip and(4)we sold all of the interests of the managing general partner of the Partnership to an entity owned by ourcontrolling stockholders and senior management at fair market value on the date of the transfer.CVR Energyconsummated its initial public offering on October 26,2007.Petroleum BusinessWe

139、 operate a 115,000 bpd complex cracking and coking medium-sour oil refinery.This amount representsapproximately 15%of our regions output.The facility is situated on approximately 440 acres in southeastKansas,approximately 100 miles from Cushing,Oklahoma,a major crude oil trading and storage hub.For

140、the year ended December 31,2008,our refinerys product yield included gasoline(mainly regularunleaded)(48%),diesel fuel(mainly ultra low sulfur diesel)(41%),and coke and other refined products suchas NGC(propane,butane),slurry,reformer feeds,sulfur,gas oil and produced fuel(11%).Our petroleum busines

141、s also includes the following auxiliary operating assets:Crude Oil Gathering System.We own and operate a crude oil gathering system serving centralKansas,northern Oklahoma,western Missouri,eastern Colorado and southwestern Nebraska.Thesystem has field offices in Bartlesville,Oklahoma and Plainville

142、and Winfield,Kansas.The system iscomprised of over 300 miles of feeder and trunk pipelines,54 trucks,and associated storage facilitiesfor gathering sweet Kansas,Nebraska,Oklahoma,Missouri,and Colorado crude oils purchased fromindependent crude producers.We also lease a section of a pipeline from Mag

143、ellan,which isincorporated into our crude oil gathering system.Our crude oil gathering business grew by 27%tonearly 26,000 barrels per day in 2008 compared to 2007.Gathered crude oil provides a base supply offeedstock for our refinery and serves as an attractive alternative to higher priced foreign

144、sweet crudeoil.Phillipsburg Terminal.We own storage and terminalling facilities for asphalt and refined fuels inPhillipsburg,Kansas.The asphalt storage and terminalling facilities are used to receive,store andredeliver asphalt for another oil company for a fee pursuant to an asphalt services agreeme

145、nt.Pipelines.We own a 145,000 bpd proprietary pipeline system that transports crude oil from Caney,Kansas to our refinery.Crude oils sourced outside of our proprietary gathering system are delivered bycommon carrier pipelines into various terminals in Cushing,Oklahoma,where they are blended andthen

146、delivered to Caney,Kansas via a pipeline owned by Plains All American L.P.(“Plains”).We alsoown associated crude oil storage tanks with a capacity of approximately 1.2 million barrels locatedoutside our refinery.Our refinerys complexity allows us to optimize the yields(the percentage of refined prod

147、uct that isproduced from crude and other feedstocks)of higher value transportation fuels(gasoline and distillate).Complexity is a measure of a refinerys ability to process lower quality crude in an economic manner;greatercomplexity makes a refinery more profitable.As a result of key investments in o

148、ur refining assets,ourrefinerys complexity has increased from 10.3 to 12.1,and we have achieved significant increases in ourrefinery crude oil throughput rate over historical levels.Feedstocks SupplyOur refinery has the capability to process blends of a variety of crudes ranging from heavy sour to l

149、ightsweet crude oil.Currently,our refinery processes crude oil from a broad array of sources.We purchase foreigncrude oil from Latin America,South America,West Africa,the Middle East,the North Sea and Canada.Wepurchase domestic crude oil from Kansas,Oklahoma,Nebraska,Texas,Colorado,North Dakota,Miss

150、ouri,andoffshore deepwater Gulf of Mexico production.While crude oil has historically constituted over 90%of ourfeedstock inputs during the last five years,other feedstock inputs include isobutene,normal butane,naturalgasoline,alky feed,naptha,gas oil and vacuum tower bottoms.2Crude is supplied to o

151、ur refinery through our wholly owned gathering system and by pipeline.Weincreased the number of barrels of crude oil supplied through our crude gathering system in 2008 and nowsupply in excess of 24,000 bpd of crude to the refinery(approximately 23%of total supply).Locally producedcrudes are deliver

152、ed to the refinery at a discount to WTI,and although slightly heavier and more sour,offergood economics to the refinery.These crudes are light and sweet enough to allow us to blend higherpercentages of low cost crudes such as heavy sour Canadian while maintaining our target medium sour blendwith an

153、API gravity of 28-36 degrees and 0.9-1.2%sulfur.Crude oils sourced outside of our proprietarygathering system are delivered to Cushing,Oklahoma by various pipelines including Seaway,Basin andSpearhead and subsequently to Coffeyville via the Plains pipeline and our own 145,000 bpd proprietarypipeline

154、 system.For the year ended December 31,2008,our crude oil supply blend was comprised of approximately 73%light sweet crude oil,11%heavy sour crude oil and 16%medium/light sour crude oil.The light sweet crudeoil includes our locally gathered crude oil.For 2008,we obtained all of the crude oil for our

155、 refinery(other than crude oil that we acquired inKansas,Missouri,Nebraska,Oklahoma and all states adjacent thereto,and North Dakota)under a creditintermediation agreement with J.Aron&Company(“J.Aron”).This agreement expired on December 31,2008,and a new crude oil supply agreement was entered into w

156、ith Vitol Inc.(“Vitol”)effective December 31,2008 for an initial term of two years.Crude oil intermediation agreements help us reduce our inventoryposition and mitigate crude oil pricing risk.Marketing and DistributionWe focus our petroleum product marketing efforts in the central mid-continent and

157、Rocky Mountain areasbecause of their relative proximity to our oil refinery and their pipeline access.We engage in rack marketingwhich is the supply of product through tanker trucks directly to customers located in close geographicproximity to our refinery and Phillipsburg terminal and to customers

158、at throughput terminals on Magellansrefined products distribution systems.In the year ended December 31,2008,approximately 34%of therefinerys products were sold through the rack system directly to retail and wholesale customers while theremaining 66%was sold through pipelines via bulk spot and term

159、contracts.We make bulk sales(sales intothird party pipelines)into the mid-continent markets via Magellan and into Colorado and other destinationsutilizing the product pipeline networks owned by Magellan,Enterprise and NuStar.CustomersCustomers for our petroleum products include other refiners,conven

160、ience store companies,railroads andfarm cooperatives.We have bulk term contracts in place with many of these customers,which typically extendfrom a few months to one year in length.For the year ended December 31,2008,QuikTrip Corporationaccounted for 13%of our petroleum business sales and 64%of our

161、petroleum sales were made to our tenlargest customers.We sell bulk products based on industry market related indices such as Platts or the NewYork Mercantile Exchange(“NYMEX”)related Group Market(“Midwest”)prices.Through our rack market-ing division,the rack sales are at daily posted prices which ar

162、e influenced by the NYMEX,competitor pricingand group spot market differentials.CompetitionWe compete with our competitors primarily on the basis of price,reliability of supply,availability ofmultiple grades of products and location.The principal competitive factors affecting our refining operations

163、are cost of crude oil and other feedstock costs,refinery complexity(a measure of a refinerys ability to convertlower cost heavy and sour crudes into greater volumes of higher valued refined products such as gasoline anddistillate),refinery efficiency,refinery product mix and product distribution and

164、 transportation costs.Thelocation of our refinery provides us with a reliable supply of crude oil and a transportation cost advantage overour competitors.We primarily compete against seven refineries operated in the mid-continent region.Inaddition to these refineries,our oil refinery in Coffeyville,

165、Kansas competes against trading companies,as well3as other refineries located outside the region that are linked to the mid-continent market through an extensiveproduct pipeline system.These competitors include refineries located near the U.S.Gulf Coast and the Texaspanhandle region.Our refinery com

166、petition also includes branded,integrated and independent oil refiningcompanies.SeasonalityOur petroleum business experiences seasonal effects as demand for gasoline products is generally higherduring the summer months than during the winter months due to seasonal increases in highway traffic androa

167、d construction work.Demand for diesel fuel during the winter months also decreases due to winteragricultural work declines.As a result,our results of operations for the first and fourth calendar quarters aregenerally lower than for those for the second and third calendar quarters.In addition,unseaso

168、nably coolweather in the summer months and/or unseasonably warm weather in the winter months in the markets inwhich we sell our petroleum products can vary demand for gasoline and diesel fuel.Nitrogen Fertilizer BusinessThe nitrogen fertilizer business operates the only nitrogen fertilizer plant in

169、North America that utilizes apet coke gasification process to generate hydrogen feedstock that is further converted to ammonia for theproduction of nitrogen fertilizers.The nitrogen fertilizer business has indefinitely suspended any furtherdevelopment related to the previously announced UAN fertiliz

170、er plant expansion.Raw Material SupplyThe nitrogen fertilizer facilitys primary input is pet coke.During the past five years,more than 77%ofthe nitrogen fertilizer business pet coke requirements on average were supplied by our adjacent oil refinery.Historically the nitrogen fertilizer business has o

171、btained the remainder of its pet coke needs from third partiessuch as other Midwestern refineries or pet coke brokers at spot prices.If necessary,the gasifier can alsooperate on low grade coal as an alternative,which provides an additional raw material source.There aresignificant supplies of low gra

172、de coal within a 60-mile radius of the nitrogen fertilizer plant.Pet coke is produced as a by-product of the refinerys coker unit process,which is one step in refiningcrude oil into gasoline,diesel and jet fuel.In order to refine heavy crude oils,which are lower in cost andmore prevalent than higher

173、 quality crude,refiners use coker units,which help to reduce the sulfur content infuels refined from heavy or sour crude oil.In North America,the shift from refining dwindling reserves ofsweet crude oil to more readily available heavy and sour crude(which can be obtained from,among otherplaces,the C

174、anadian oil sands)will result in increased pet coke production.The nitrogen fertilizer business fertilizer plant is located in Coffeyville,Kansas,which is part of theMidwest coke market.The Midwest coke market is not subject to the same level of pet coke price variabilityas is the Gulf Coast coke ma

175、rket,due mainly to more stable transportation costs.Pet coke transportation costshave gone up substantially in both the Atlantic and Pacific sectors.Given the fact that the majority of thenitrogen fertilizer business coke suppliers are located in the Midwest,the nitrogen fertilizer businessgeographi

176、c location gives it a significant freight cost advantage over its Gulf Coast coke market competitors.The Midwest Green Coke(Chicago Area,FOB Source)annual average price over the last three years hasranged from$25.50 to$34.33 per ton.The U.S.Gulf Coast market annual average price during the sameperio

177、d has ranged from$41.50 to$79.18 per ton.Linde,Inc.(“Linde”)owns,operates,and maintains the air separation plant that provides contractvolumes of oxygen,nitrogen,and compressed dry air to the gasifier for a monthly fee.The nitrogen fertilizerbusiness provides and pays for all utilities required for

178、operation of the air separation plant.The air separationplant has not experienced any long-term operating problems.The nitrogen fertilizer plant has businessinterruption insurance for up to$50 million in case of any interruption in the supply of oxygen from Lindefrom a covered peril.The agreement wi

179、th Linde expires in 2020.The agreement also provides that if thenitrogen fertilizer business requirements for liquid or gaseous oxygen,liquid or gaseous nitrogen or clean dryair exceed specified instantaneous flow rates by at least 10%,the nitrogen fertilizer business can solicit bids4from Linde and

180、 third parties to supply its incremental product needs.The nitrogen fertilizer business isrequired to provide notice to Linde of the approximate quantity of excess product that it will need and theapproximate date by which it will need it;the nitrogen fertilizer business and Linde will then jointly

181、develop arequest for proposal for soliciting bids from third parties and Linde.The bidding procedures may be limitedunder specified circumstances.The nitrogen fertilizer business imports start-up steam for the nitrogen fertilizer plant from our oilrefinery,and then exports steam back to the oil refi

182、nery once all units in the nitrogen fertilizer plant are inservice.Monthly charges and credits are recorded with steam valued at the natural gas price for the month.Nitrogen Production and Plant ReliabilityThe nitrogen fertilizer plant was built in 2000 with two separate gasifiers to provide reliabi

183、lity.The plantuses a gasification process to convert pet coke to high purity hydrogen for subsequent conversion to ammonia.The nitrogen fertilizer plant is capable of processing approximately 1,300 tons per day of pet coke from ouroil refinery and third-party sources and converting it into approxima

184、tely 1,200 tons per day of ammonia.Amajority of the ammonia is converted to approximately 2,000 tons per day of UAN.Typically 0.41 tons ofammonia is required to produce one ton of UAN.In order to maintain high on-stream factors,the nitrogen fertilizer business schedules and provides routinemaintenan

185、ce to its critical equipment using its own maintenance technicians.Pursuant to a Technical ServicesAgreement with General Electric,which licenses the gasification technology to the nitrogen fertilizer business,General Electric experts provide technical advice and technological updates from their ong

186、oing research aswell as other licensees operating experiences.The pet coke gasification process is licensed from GeneralElectric pursuant to a license agreement that was fully paid up as of June 1,2007.The license grants thenitrogen fertilizer business perpetual rights to use the pet coke gasificati

187、on process on specified terms andconditions.The license is important because it allows the nitrogen fertilizer facility to operate at a low costcompared to facilities which rely on natural gas.Distribution,Sales and MarketingThe primary geographic markets for the nitrogen fertilizer business fertili

188、zer products are Kansas,Missouri,Nebraska,Iowa,Illinois,Colorado and Texas.The nitrogen fertilizer business markets its ammoniaproducts to industrial and agricultural customers and the UAN products to agricultural customers.The demandfor nitrogen fertilizer occurs during three key periods.The summer

189、 wheat pre-plant occurs in August andSeptember.The fall pre-plant occurs in late October and in November.The highest level of ammonia demandis traditionally in the spring pre-plant period,from March through May.There are also small fill volumes thatmove in the off-season to fill available storage at

190、 the dealer level.Ammonia and UAN are distributed by truck or by railcar.If delivered by truck,products are sold on afreight-on-board basis,and freight is normally arranged by the customer.The nitrogen fertilizer business leasesa fleet of railcars for use in product delivery.The nitrogen fertilizer

191、business also negotiates with distributorsthat have their own leased railcars to utilize these assets to deliver products.The nitrogen fertilizer businessowns all of the truck and rail loading equipment at our nitrogen fertilizer facility.The nitrogen fertilizerbusiness operates two truck loading an

192、d eight rail loading racks for each of ammonia and UAN.The nitrogen fertilizer business markets agricultural products to destinations that produce the best marginsfor the business.These markets are primarily located near the Union Pacific Railroad lines or destinations thatcan be supplied by truck.B

193、y securing this business directly,the nitrogen fertilizer business reduces itsdependence on distributors serving the same customer base,which enables the nitrogen fertilizer business tocapture a larger margin and allows it to better control its product distribution.Most of the agricultural salesare

194、made on a competitive spot basis.The nitrogen fertilizer business also offers products on a prepay basisfor in-season demand.The heavy in-season demand periods are spring and fall in the corn belt and summer inthe wheat belt.Some of the industrial sales are spot sales,but most are on annual or multi

195、year contracts.Industrial demand for ammonia provides consistent sales and allows the nitrogen fertilizer business to bettermanage inventory control and generate consistent cash flow.5CustomersThe nitrogen fertilizer business sells ammonia to agricultural and industrial customers.The nitrogenfertili

196、zer business sells approximately 80%of the ammonia it produces to agricultural customers in the mid-continent area between North Texas and Canada,and approximately 20%to industrial customers.Agriculturalcustomers include distributors such as MFA,United Suppliers,Inc.,Brandt Consolidated Inc.,Gavilon

197、Fertilizers LLC,Interchem,and CHS Inc.Industrial customers include Tessenderlo Kerley,Inc.,NationalCooperative Refinery Association,and Dyno Nobel,Inc.The nitrogen fertilizer business sells UAN productsto retailers and distributors.Given the nature of its business,and consistent with industry practi

198、ce,the nitrogenfertilizer business does not have long-term minimum purchase contracts with any of its customers.For the years ended December 31,2008,2007 and 2006,the top five ammonia customers in the aggregaterepresented 54.7%,62.1%and 51.9%of the nitrogen fertilizer business ammonia sales,respecti

199、vely,and thetop five UAN customers in the aggregate represented 37.2%,38.7%and 30.0%of the nitrogen fertilizerbusiness UAN sales,respectively.During the year ended December 31,2008,Brandt Consolidated Inc.accounted for 26.1%of the nitrogen fertilizer business ammonia sales,and Gavilon Fertilizers LL

200、C accountedfor 14.5%of the nitrogen fertilizer business UAN sales.During the year ended December 31,2007,BrandtConsolidated Inc.,MFA and Gavilon Fertilizers LLC accounted for 17.4%,15.0%and 14.4%of the nitrogenfertilizer business ammonia sales,respectively,and Gavilon Fertilizers LLC accounted for 1

201、8.7%of its UANsales.During the year ended December 31,2006,Brandt Consolidated Inc.and MFA accounted for 22.2%and13.1%of its ammonia sales,respectively,and Gavilon Fertilizers LLC and CHS Inc.accounted for 8.4%and6.8%of its UAN sales,respectively.CompetitionCompetition in the nitrogen fertilizer ind

202、ustry is dominated by price considerations.However,during thespring and fall application seasons,farming activities intensify and delivery capacity is a significantcompetitive factor.The nitrogen fertilizer business maintains a large fleet of leased rail cars and seasonallyadjusts inventory to enhan

203、ce its manufacturing and distribution operations.Domestic competition,mainly from regional cooperatives and integrated multinational fertilizer compa-nies,is intense due to customers sophisticated buying tendencies and production strategies that focus on costand service.Also,foreign competition exis

204、ts from producers of fertilizer products manufactured in countrieswith lower cost natural gas supplies.In certain cases,foreign producers of fertilizer who export to the UnitedStates may be subsidized by their respective governments.The nitrogen fertilizer business major competitorsinclude Koch Nitr

205、ogen,PCS,Terra and CF Industries.Based on Blue Johnson data regarding total U.S.demand for UAN and ammonia,we estimate that thenitrogen fertilizer plants UAN production in 2008 represented approximately 4.6%of the total U.S.demandand that the net ammonia produced and marketed at Coffeyville represen

206、ted less than 1.0%of the totalU.S.demand.SeasonalityBecause the nitrogen fertilizer business primarily sells agricultural commodity products,its business isexposed to seasonal fluctuations in demand for nitrogen fertilizer products in the agricultural industry.As aresult,the nitrogen fertilizer busi

207、ness typically generates greater net sales and operating income in the spring.In addition,the demand for fertilizers is affected by the aggregate crop planting decisions and fertilizerapplication rate decisions of individual farmers who make planting decisions based largely on the prospectiveprofita

208、bility of a harvest.The specific varieties and amounts of fertilizer they apply depend on factors likecrop prices,farmers current liquidity,soil conditions,weather patterns and the types of crops planted.Environmental MattersThe petroleum and nitrogen fertilizer businesses are subject to extensive a

209、nd frequently changing federal,state and local,environmental and health and safety regulations governing the emission and release of6hazardous substances into the environment,the treatment and discharge of waste water,the storage,handling,use and transportation of petroleum and nitrogen products,and

210、 the characteristics and composition of gasolineand diesel fuels.These laws,their underlying regulatory requirements and the enforcement thereof impact ourpetroleum business and operations and the nitrogen fertilizer business and operations by imposing:restrictions on operations and/or the need to i

211、nstall enhanced or additional controls;the need to obtain and comply with permits and authorizations;liability for the investigation and remediation of contaminated soil and groundwater at current andformer facilities and off-site waste disposal locations;and specifications for the products marketed

212、 by our petroleum business and the nitrogen fertilizer business,primarily gasoline,diesel fuel,UAN and ammonia.Our operations require numerous permits and authorizations.Failure to comply with these permits orenvironmental laws generally could result in fines,penalties or other sanctions or a revoca

213、tion of our permits.In addition,environmental laws and regulations are often evolving and many of them have become morestringent or have become subject to more stringent interpretation or enforcement by federal or state agencies.Future environmental laws and regulations or more stringent interpretat

214、ions of existing laws and regulationscould result in increased capital,operating and compliance costs.The Federal Clean Air ActThe federal Clean Air Act and its implementing regulations as well as the corresponding state laws andregulations that regulate emissions of pollutants into the air affect o

215、ur petroleum operations and the nitrogenfertilizer business both directly and indirectly.Direct impacts may occur through the federal Clean Air Actspermitting requirements and/or emission control requirements relating to specific air pollutants.The federalClean Air Act indirectly affects our petrole

216、um operations and the nitrogen fertilizer business by extensivelyregulating the air emissions of sulfur dioxide(“SO2”),volatile organic compounds,nitrogen oxides and othercompounds including those emitted by mobile sources,which are direct or indirect users of our products.Some or all of the standar

217、ds promulgated pursuant to the federal Clean Air Act,or any futurepromulgations of standards,may require the installation of controls or changes to our petroleum operations orthe nitrogen fertilizer facilities in order to comply.If new controls or changes to operations are needed,thecosts could be s

218、ignificant.These new requirements,other requirements of the federal Clean Air Act,or otherpresently existing or future environmental regulations could cause us to expend substantial amounts to complyand/or permit our facilities to produce products that meet applicable requirements.Air Emissions.The

219、regulation of air emissions under the federal Clean Air Act requires us to obtainvarious construction and operating permits and to incur capital expenditures for the installation of certain airpollution control devices at our petroleum and nitrogen fertilizer operations.Various regulations specific

220、to ouroperations have been implemented,such as National Emission Standard for Hazardous Air Pollutants,NewSource Performance Standards,New Source Review,and Leak Detection and Repair.We have incurred,andexpect to continue to incur,substantial capital expenditures to maintain compliance with these an

221、d other airemission regulations that have been promulgated or may be promulgated or revised in the future.In March 2004,we entered into a Consent Decree(the“Consent Decree”)with the U.S.EnvironmentalProtection Agency(the“EPA”)and the Kansas Department of Health and Environment(the“KDHE”)toresolve ai

222、r compliance concerns raised by the EPA and KDHE related to Farmlands prior ownership andoperation of our oil refinery.Under the Consent Decree,we agreed to install controls on certain processequipment and make certain operational changes at our refinery.As a result of our agreement to install certa

223、incontrols and implement certain operational changes,the EPA and KDHE agreed not to impose civil penalties,and provided a release from liability for Farmlands alleged noncompliance with the issues addressed by theConsent Decree.Among other control measures and operational changes,the Consent Decree

224、requires us toinstall controls to minimize both SO2and nitrogen oxides(“NOx”)emissions by January 1,2011.In addition,pursuant to the Consent Decree,we assumed certain cleanup obligations at the Coffeyville refinery and the7Phillipsburg terminal.The cost of complying with the Consent Decree is expect

225、ed to be approximately$53 million,of which approximately$47 million is expected to be capital expenditures which does not includethe cleanup obligations for historic contamination at the site that are being addressed pursuant to administra-tive orders issued under the Resource Conservation and Recov

226、ery Act(“RCRA”),and described in“Impactsof Past Manufacturing.”Over the course of the last several years,the EPA embarked on a national Petroleum Refining Initiativealleging industry-wide noncompliance with four“marquee”issues under the Clean Air Act:New SourceReview,Flaring,Leak Detection and Repai

227、r,and Benzene Waste Operations NESHAP.The PetroleumRefining Initiative has resulted in many refiners entering into consent decrees imposing civil penalties andrequiring substantial expenditures for pollution control and enhanced operating procedures.The EPA hasindicated that it will seek all refiner

228、s to enter into“global settlements”pertaining to all“marquee”issues.Ourcurrent Consent Decree covers some,but not all,of the“marquee”issues.The Company has had preliminarydiscussions with EPA Region 7 under the Petroleum Refining Initiative.To date,the EPA has not made anyspecific claims or findings

229、 against us and we have not determined whether we will ultimately enter into asettlement agreement with the EPA.To the extent that we were to agree to enter a“global settlement,”webelieve we would be required to pay a civil penalty,but our incremental capital exposure would be limitedprimarily to th

230、e retrofit and replacement of heaters and boilers over a five to seven year timeframe.Release ReportingThe release of hazardous substances or extremely hazardous substances into the environment is subject torelease reporting of reportable quantities under federal and state environmental laws.Our fac

231、ilities periodicallyexperience releases of hazardous substances and extremely hazardous substances that could cause us tobecome the subject of a government enforcement action or third-party claims.The nitrogen fertilizer facility experienced an ammonia release as a result of a malfunction in August2

232、007 and reported the excess ammonia emissions to the EPA and KDHE.The EPA investigated the releaseand we provided requested data to the EPA pursuant to their request.Our incident investigation related to therelease indicates that the malfunction could not have been reasonably anticipated or avoided

233、and we haveforwarded our results to the EPA.As a result of an inspection by the Occupational Safety and HealthAdministration(“OSHA”)following the August 2007 ammonia release OSHA issued citations against both therefinery and the nitrogen fertilizer facility.These citations were settled for$163,000 a

234、nd none of the citationswere classified as serious.Fuel RegulationsTier II,Low Sulfur Fuels.In February 2000,the EPA promulgated the Tier II Motor Vehicle EmissionStandards Final Rule for all passenger vehicles,establishing standards for sulfur content in gasoline that wererequired to be met by 2006

235、.In addition,in January 2001,the EPA promulgated its on-road diesel regulations,which required a 97%reduction in the sulfur content of diesel sold for highway use by June 1,2006,with fullcompliance by January 1,2010.In February 2004 the EPA granted us approval under a“hardship waiver”that would defe

236、r meeting finalUltra Low Sulfur Gasoline(“ULSG”)standards until January 1,2011 in exchange for our meeting Ultra LowSulfur Diesel(“ULSD”)requirements by January 1,2007.We completed the construction and startup phase ofour ULSD Hydrodesulfurization unit in late 2006 and met the conditions of the hard

237、ship waiver.We arecurrently continuing our project related to meeting our compliance date with ULSG standards.Compliancewith the Tier II gasoline and on-road diesel standards required us to spend approximately$38 million during2008,approximately$103 million during 2007 and$133 million during 2006,an

238、d we estimate that compliancewill require us to spend approximately$52 million between 2009 and 2011.As a result of the 2007 flood,our refinery exceeded the annual average sulfur standard mandated by ourhardship waiver.The EPA agreed to modify certain provisions of our hardship waiver and we agreed

239、to meetthe final ULSG annual average standard in 2010.We met the required sulfur standards under our hardshipwaiver for 2008,and expect to be able to comply with the remaining requirements of our hardship waiver.8Greenhouse Gas EmissionsIt is probable that Congress will adopt some form of federal ma

240、ndatory greenhouse gas emissionreductions legislation or regulation in the near future,although the specific requirements of any suchlegislation are uncertain at this time.In addition,the EPA could begin regulating greenhouse gas emissions asair pollutants under the federal Clean Air Act.In the abse

241、nce of existing federal legislation or regulations,anumber of states have adopted regional greenhouse gas initiatives to reduce CO2and other greenhouse gasemissions.In 2007,a group of Midwest states,including Kansas(where our refinery and the nitrogen fertilizerfacility are located),formed the Midwe

242、stern Greenhouse Gas Accord,which calls for the development of acap-and-trade system to control greenhouse gas emissions and for the inventory of such emissions.However,the individual states that have signed on to the accord must adopt laws or regulations implementing the tradingscheme before it bec

243、omes effective,and the timing and specific requirements of any such laws or regulationsin Kansas are uncertain at this time.Compliance with any future legislation or regulation of greenhouse gas emissions,if it occurs,may resultin increased compliance and operating costs and may have a material adve

244、rse effect on our results ofoperations,financial condition,and the ability of the nitrogen fertilizer business to make distributions.RCRAOur operations are subject to the RCRA requirements for the generation,treatment,storage and disposalof hazardous wastes.When feasible,RCRA materials are recycled

245、instead of being disposed of on-site or off-site.RCRA establishes standards for the management of solid and hazardous wastes.Besides governingcurrent waste disposal practices,RCRA also addresses the environmental effects of certain past waste disposaloperations,the recycling of wastes and the regula

246、tion of underground storage tanks containing regulatedsubstances.Waste Management.There are two closed hazardous waste units at the refinery and eight otherhazardous waste units in the process of being closed pending state agency approval.In addition,one closedinterim status hazardous waste landfarm

247、 located at the Phillipsburg terminal is under long-term post closurecare.We have issued letters of credit of approximately$3.3 million in financial assurance for closure/post-closure care for hazardous waste management units at the Phillipsburg terminal and the Coffeyville refinery.Impacts of Past

248、Manufacturing.We are subject to a 1994 EPA administrative order related toinvestigation of possible past releases of hazardous materials to the environment at the Coffeyville refinery.Inaccordance with the order,we have documented existing soil and ground water conditions,which requireinvestigation

249、or remediation projects.The Phillipsburg terminal is subject to a 1996 EPA administrative orderrelated to investigation of possible past releases of hazardous materials to the environment at the Phillipsburgterminal,which operated as a refinery until 1991.The Consent Decree that we signed with the E

250、PA andKDHE requires us to complete all activities in accordance with federal and state rules.The anticipated remediation costs through 2012 were estimated,as of December 31,2008,to be asfollows(in millions):FacilitySiteInvestigationCostsCapitalCostsTotal O&MCostsThrough 2012TotalEstimatedCostsThroug

251、h 2012Coffeyville Oil Refinery.$0.2$1.0$1.2Phillipsburg Terminal.0.41.72.1Total Estimated Costs.$0.6$2.7$3.3These estimates are based on current information and could go up or down as additional informationbecomes available through our ongoing remediation and investigation activities.At this point,w

252、e haveestimated that,over ten years starting in 2009,we will spend$5.0 million to remedy impacts from past9manufacturing activity at the Coffeyville refinery and to address existing soil and groundwater contaminationat the Phillipsburg terminal.It is possible that additional costs will be required a

253、fter this ten year period.Wespent approximately$1.2 million in 2008 associated with related remediation.Financial Assurance.We were required in the Consent Decree to establish financial assurance to coverthe projected cleanup costs posed by the Coffeyville and Phillipsburg facilities in the event we

254、 failed to fulfillour clean-up obligations.In accordance with the Consent Decree,this financial assurance is currently providedby a bond in the amount of$9.0 million.Environmental RemediationUnder the Comprehensive Environmental Response,Compensation,and Liability Act(“CERCLA”),RCRA,and related stat

255、e laws,certain persons may be liable for the release or threatened release of hazardoussubstances.These persons include the current owner or operator of property where a release or threatenedrelease occurred,any persons who owned or operated the property when the release occurred,and any personswho

256、disposed of,or arranged for the transportation or disposal of,hazardous substances at a contaminatedproperty.Liability under CERCLA is strict,retroactive and joint and several,so that any responsible party maybe held liable for the entire cost of investigating and remediating the release of hazardou

257、s substances.As isthe case with all companies engaged in similar industries,depending on the underlying facts and circumstanceswe face potential exposure from future claims and lawsuits involving environmental matters,including soiland water contamination,personal injury or property damage allegedly

258、 caused by hazardous substances thatwe,or potentially Farmland,manufactured,handled,used,stored,transported,spilled,disposed of or released.We cannot assure you that we will not become involved in future proceedings related to our release ofhazardous or extremely hazardous substances or that,if we w

259、ere held responsible for damages in any existingor future proceedings,such costs would be covered by insurance or would not be material.Safety and Health MattersWe operate a comprehensive safety,health and security program,involving active participation ofemployees at all levels of the organization.

260、We measure our success in the personal safety and health areaprimarily through the use of injury frequency rates administered by OSHA.In 2008,our oil refineryexperienced a 14%increase in injury frequency rates and the nitrogen fertilizer plant experienced a 22%reduction in such rate as compared to t

261、he average of the previous three years.The recordable injury ratereflects the number of recordable incidents(injuries as defined by OSHA)per 200,000 hours worked.For theyear ended December 31,2008,we had a recordable injury rate of 1.30 in our petroleum business and 2.53 inthe nitrogen fertilizer bu

262、siness.Our recordable injury rate for all business units was 1.12 for 2008.InNovember 2008,refinery employees reached a company record by working more than 1 million hours withouta lost-time accident.Our transportation group has worked three years without a lost time accident.Despite ourefforts to a

263、chieve excellence in our safety and health performance,there can be no assurances that there willnot be accidents resulting in injuries or even fatalities.Process Safety Management.We maintain a Process Safety Management(“PSM”)program.Thisprogram is designed to address all facets associated with OSH

264、A guidelines for developing and maintaining aPSM program.We will continue to audit our programs and consider improvements in our management systemsand equipment.In 2007,OSHA began PSM inspections of all refineries under its jurisdiction as part of its NationalEmphasis Program(the“NEP”)following OSHA

265、s investigation of PSM issues relating to the multiple fatalityexplosion and fire at the BP Texas City facility in 2005.Completed NEP inspections have resulted in OSHAlevying significant fines and penalties against most of the refineries inspected to date.Our refinery wasinspected in connection with

266、 OSHAs NEP program during the fourth quarter of 2008.We do not believe anyfines or penalties that could be imposed as a result of the inspections would be material to our results ofoperation.Additionally,we are not currently aware of any significant capital expenditures that we will berequired to ma

267、ke as a result of the inspection.10EmployeesAs of December 31,2008,475 employees were employed in our petroleum business,120 were employedby the nitrogen fertilizer business and 59 employees were employed at our offices in Sugar Land,Texas andKansas City,Kansas.We entered into collective bargaining

268、agreements which as of December 31,2008 cover approximately38%of our employees(all of whom work in our petroleum business)with six unions of the Metal TradesDepartment of the AFL-CIO(“Metal Trade Unions”)and the United Steel,Paper and Forestry,Rubber,Manufacturing,Energy,Allied Industrial and Servic

269、e Workers International Union,AFL-CIO-CLC(“UnitedSteelworkers”).A new agreement was reached with the Metal Trade Unions effective August 31,2008.Nosubstantial changes were made to the agreement.The new agreement will now expire in March 2013.A newagreement was reached with the United Steelworkers on

270、 March 3,2009.There were no substantial changes tothe agreement which will now expire in March 2012.We believe that our relationship with our employees isgood.Available InformationOur website address is .Our annual reports on Form 10-K,quarterly reports onForm 10-Q,current reports on Form 8-K,Forms

271、3,4 and 5 filed by our executive officers,directors and 10%stockholders,and all amendments to those reports,are available free of charge through our website,as soon asreasonably practicable after the electronic filing of these reports is made with the Securities and ExchangeCommission(“SEC”).In addi

272、tion,our Corporate Governance Guidelines,Codes of Ethics and Charters of theAudit Committee,the Nominating and Corporate Governance Committee and the Compensation Committee ofthe Board of Directors are available on our website.These guidelines,policies and charters are available inprint without char

273、ge to any stockholder requesting them.Trademarks,Trade Names and Service MarksThis Annual Report on Form 10-K for the year ended December 31,2008(the“Report”)may include ourtrademarks,including CVR Energy,the CVR Energy logo,Coffeyville Resources,the Coffeyville Resourceslogo,and the CVR Partners LP

274、 logo,each of which is either registered or for which we have applied forfederal registration.This Report may also contain trademarks,service marks,copyrights and trade names ofother companies.Item 1A.Risk FactorsYou should carefully consider each of the following risks together with the other infor

275、mation contained inthis Report and all of the information set forth in our filings with the SEC.If any of the following risks anduncertainties develops into actual events,our business,financial condition or results of operations could bematerially adversely affected.Risks Related to Our Petroleum Bu

276、sinessVolatile margins in the refining industry may cause volatility or a decline in our future results of opera-tions and decrease our cash flow.Our petroleum business financial results are primarily affected by the relationship,or margin,betweenrefined product prices and the prices for crude oil a

277、nd other feedstocks.Future volatility in refining industrymargins may cause a decline in our results of operations,since the margin between refined product prices andfeedstock prices may decrease below the amount needed for us to generate net cash flow sufficient for ourneeds.Although an increase or

278、 decrease in the price for crude oil generally results in a similar increase ordecrease in prices for refined products,there is normally a time lag in the realization of the similar increase ordecrease in prices for refined products.The effect of changes in crude oil prices on our results of operati

279、onstherefore depends in part on how quickly and how fully refined product prices adjust to reflect these changes.11A substantial or prolonged increase in crude oil prices without a corresponding increase in refined productprices,or a substantial or prolonged decrease in refined product prices withou

280、t a corresponding decrease incrude oil prices,could have a significant negative impact on our earnings,results of operations and cash flows.Our internally generated cash flows and other sources of liquidity may not be adequate for our capitalneeds.If we cannot generate adequate cash flow or otherwis

281、e secure sufficient liquidity to meet our workingcapital needs or support our short-term and long-term capital requirements,we may be unable to meet ourdebt obligations,pursue our business strategies or comply with certain environmental standards,which wouldhave a material adverse effect on our busi

282、ness and results of operations.As of December 31,2008,we hadcash and cash equivalents of$8.9 million and$100.1 million available under our revolving credit facility.Inthe current volatile crude oil environment,working capital is subject to substantial variability from week-to-week and month-to-month

283、.We have short-term and long-term capital needs.Our short-term working capital needs are primarilycrude oil purchase requirements,which fluctuate with the pricing and sourcing of crude oil.In the first threequarters of 2008 we experienced extremely high oil prices which substantially increased our s

284、hort-termworking capital needs.Our long-term capital needs include capital expenditures we are required to make tocomply with Tier II gasoline standards and the Consent Decree.Compliance with Tier II gasoline standardswill require us to spend approximately$52 million between 2009 and 2011.The overal

285、l costs of complyingwith the Consent Decree are expected to be approximately$53 million,of which approximately$47 million isexpected to be capital expenditures.We also have budgeted capital expenditures for turnarounds at each of ourfacilities,and from time to time we are required to spend significa

286、nt amounts for repairs when one or morefacilities experiences temporary shutdowns.Our liquidity position will affect our ability to satisfy any of theseneeds.If we are required to obtain our crude oil supply without the benefit of a crude oil intermediation agree-ment,our exposure to the risks assoc

287、iated with volatile crude oil prices may increase and our liquiditymay be reduced.We currently obtain the majority of our crude oil supply through a crude oil intermediation agreementwith Vitol,which became effective on December 31,2008 for an initial term of two years.The crude oilintermediation ag

288、reement minimizes the amount of in transit inventory and mitigates crude pricing risks byensuring pricing takes place extremely close to the time when the crude is refined and the yielded products aresold.If we were required to obtain our crude supply without the benefit of an intermediation agreeme

289、nt,ourexposure to crude pricing risks may increase,despite any hedging activity in which we may engage,and ourliquidity would be negatively impacted due to the increased inventory and the negative impact of marketvolatility.Disruption of our ability to obtain an adequate supply of crude oil could re

290、duce our liquidity and increaseour costs.Our refinery requires approximately 85,000 to 100,000 bpd of crude oil in addition to the crude oil wegather locally in Kansas,Oklahoma,Colorado,Missouri,and Nebraska.We obtain a portion of our non-gathered crude oil,approximately 18%in 2008,from foreign sour

291、ces such as Latin America,South America,the Middle East,West Africa,Canada and the North Sea.The actual amount of foreign crude oil we purchaseis dependent on market conditions and will vary from year to year.We are subject to the political,geographic,and economic risks attendant to doing business w

292、ith suppliers located in those regions.Disruption ofproduction in any of such regions for any reason could have a material impact on other regions and ourbusiness.In the event that one or more of our traditional suppliers becomes unavailable to us,we may beunable to obtain an adequate supply of crud

293、e oil,or we may only be able to obtain our crude oil supply atunfavorable prices.As a result,we may experience a reduction in our liquidity and our results of operationscould be materially adversely affected.12Severe weather,including hurricanes along the U.S.Gulf Coast,could interrupt our supply of

294、 crude oil.Supplies of crude oil to our refinery are periodically shipped from U.S.Gulf Coast production or terminalfacilities,including through the Seaway Pipeline from the U.S.Gulf Coast to Cushing,Oklahoma.U.S.GulfCoast facilities could be subject to damage or production interruption from hurrica

295、nes or other severe weatherin the future which could interrupt or materially adversely affect our crude oil supply.If our supply of crudeoil is interrupted,our business,financial condition and results of operations could be materially adverselyimpacted.If our access to the pipelines on which we rely

296、 for the supply of our feedstock and the distribution of ourproducts is interrupted,our inventory and costs may increase and we may be unable to efficiently distrib-ute our products.If one of the pipelines on which we rely for supply of our crude oil becomes inoperative,we would berequired to obtain

297、 crude oil for our refinery through an alternative pipeline or from additional tanker trucks,which could increase our costs and result in lower production levels and profitability.Similarly,if a majorrefined fuels pipeline becomes inoperative,we would be required to keep refined fuels in inventory o

298、r supplyrefined fuels to our customers through an alternative pipeline or by additional tanker trucks from the refinery,which could increase our costs and result in a decline in profitability.We face significant competition,both within and outside of our industry.Competitors who produce theirown sup

299、ply of feedstocks,have extensive retail outlets,make alternative fuels or have greater financialresources than we do may have a competitive advantage over us.The refining industry is highly competitive with respect to both feedstock supply and refined productmarkets.We may be unable to compete effec

300、tively with our competitors within and outside of our industry,which could result in reduced profitability.We compete with numerous other companies for available suppliesof crude oil and other feedstocks and for outlets for our refined products.We are not engaged in the petroleumexploration and prod

301、uction business and therefore we do not produce any of our crude oil feedstocks.We donot have a retail business and therefore are dependent upon others for outlets for our refined products.We donot have any long-term arrangements(those exceeding more than a twelve month period)for much of ouroutput.

302、Many of our competitors in the United States as a whole,and one of our regional competitors,obtainsignificant portions of their feedstocks from company-owned production and have extensive retail outlets.Competitors that have their own production or extensive retail outlets with brand-name recognitio

303、n are at timesable to offset losses from refining operations with profits from producing or retailing operations,and may bebetter positioned to withstand periods of depressed refining margins or feedstock shortages.A number of our competitors also have materially greater financial and other resource

304、s than us.Thesecompetitors may have a greater ability to bear the economic risks inherent in all aspects of the refiningindustry.An expansion or upgrade of our competitors facilities,price volatility,international political andeconomic developments and other factors are likely to continue to play an

305、 important role in refining industryeconomics and may add additional competitive pressure on us.In addition,we compete with other industries that provide alternative means to satisfy the energy and fuelrequirements of our industrial,commercial and individual consumers.The more successful these alter

306、nativesbecome as a result of governmental regulations,technological advances,consumer demand,improved pricingor otherwise,the greater the impact on pricing and demand for our products and our profitability.There arepresently significant governmental and consumer pressures to increase the use of alte

307、rnative fuels in the UnitedStates.Changes in our credit profile may affect our relationship with our suppliers,which could have a materialadverse effect on our liquidity.Changes in our credit profile may affect the way crude oil suppliers view our ability to make paymentsand may induce them to short

308、en the payment terms of their invoices.Given the large dollar amounts and13volume of our feedstock purchases,a change in payment terms may have a material adverse effect on ourliquidity and our ability to make payments to our suppliers.Risks Related to the Nitrogen Fertilizer BusinessNatural gas pri

309、ces affect the price of the nitrogen fertilizers that the nitrogen fertilizer business sells.Anydecline in natural gas prices could have a material adverse effect on our results of operations,financialcondition and the ability of the nitrogen fertilizer business to make cash distributions.Because mo

310、st nitrogen fertilizer manufacturers rely on natural gas as their primary feedstock,and the costof natural gas is a large component(approximately 90%based on historical data)of the total production costof nitrogen fertilizers for natural gas-based nitrogen fertilizer manufacturers,the price of nitro

311、gen fertilizershas historically generally correlated with the price of natural gas.The nitrogen fertilizer business does nothedge against declining natural gas prices.Any decline in natural gas prices could have a material adverseimpact on our results of operations,financial condition and the abilit

312、y of the nitrogen fertilizer business tomake distributions.The nitrogen fertilizer plant has high fixed costs.If nitrogen fertilizer product prices fall below a certainlevel,which could be caused by a reduction in the price of natural gas,the nitrogen fertilizer businessmay not generate sufficient r

313、evenue to operate profitably or cover its costs.The nitrogen fertilizer plant has high fixed costs compared to natural gas based nitrogen fertilizer plants,as discussed in“Managements Discussion and Analysis of Financial Condition and Results of Operations Major Influences on Results of Operations N

314、itrogen Fertilizer Business.”As a result,downtime or lowproductivity due to reduced demand,interruptions because of adverse weather conditions,equipment failures,low prices for nitrogen fertilizers or other causes can result in significant operating losses.Unlike itscompetitors,whose primary costs a

315、re related to the purchase of natural gas and whose fixed costs are minimal,the nitrogen fertilizer business has high fixed costs not dependent on the price of natural gas.The demand for and pricing of nitrogen fertilizers have increased dramatically in recent years.The nitro-gen fertilizer business

316、 is cyclical and volatile and,historically,periods of high demand and pricing havebeen followed by periods of declining prices and declining capacity utilization.Such cycles expose us topotentially significant fluctuations in our financial condition,cash flows and results of operations,whichcould re

317、sult in volatility in the price of our common stock,or an inability of the nitrogen fertilizer busi-ness to make quarterly distributions.A significant portion of nitrogen fertilizer product sales expose us to fluctuations in supply and demandin the agricultural industry.These fluctuations historical

318、ly have had and could in the future have significanteffects on prices across all nitrogen fertilizer products and,in turn,the nitrogen fertilizer business financialcondition,cash flows and results of operations,which could result in significant volatility in the price of ourcommon stock,or an inabil

319、ity of the nitrogen fertilizer business to make distributions to us.Nitrogen fertilizer products are commodities,the price of which can be volatile.The prices of nitrogenfertilizer products depend on a number of factors,including general economic conditions,cyclical trends inend-user markets,competi

320、tion,supply and demand imbalances,and weather conditions,which have a greaterrelevance because of the seasonal nature of fertilizer application.A major factor underlying the current level of demand for nitrogen-based fertilizer products is theexpanding production of ethanol in the United States and

321、the expanded use of corn in ethanol production.Ethanol production in the United States is highly dependent upon a myriad of federal and state legislation andregulations,and is made significantly more competitive by various federal and state incentives,includingtariffs on imported ethanol.Recent stud

322、ies showing that expanded ethanol production may increase the levelof greenhouse gases in the environment may reduce political support for ethanol production.The eliminationor significant reduction in ethanol incentive programs could have a material adverse effect on our results ofoperations,financi

323、al condition and the ability of the nitrogen fertilizer business to make distributions.14Demand for fertilizer products is dependent,in part,on demand for crop nutrients by the globalagricultural industry.Nitrogen-based fertilizers demand is driven by a growing world population,changes indietary hab

324、its and an expanded use of corn for the production of ethanol.Supply is affected by availablecapacity and operating rates,raw material costs,government policies and global trade.A decrease in nitrogenfertilizer prices would have a material adverse effect on our results of operations,financial condit

325、ion and theability of the nitrogen fertilizer business to make distributions.The nitrogen fertilizer business faces intense competition from other nitrogen fertilizer producers.The nitrogen fertilizer business is subject to price competition from both U.S.and foreign sources,including competitors in

326、 the Persian Gulf,the Asia-Pacific region,the Caribbean and Russia.Fertilizers areglobal commodities,with little or no product differentiation,and customers make their purchasing decisionsprincipally on the basis of delivered price and availability of the product.The nitrogen fertilizer businesscomp

327、etes with a number of U.S.producers and producers in other countries,including state-owned andgovernment-subsidized entities.The nitrogen fertilizer business results of operations,financial condition and ability to make cash distri-butions may be adversely affected by the supply and price levels of

328、pet coke and other essential rawmaterials.Pet coke is a key raw material used by the nitrogen fertilizer business in the manufacture of nitrogenfertilizer products.Increases in the price of pet coke could have a material adverse effect on the nitrogenfertilizer business results of operations,financi

329、al condition and ability to make cash distributions.Moreover,ifpet coke prices increase the nitrogen fertilizer business may not be able to increase its prices to recoverincreased pet coke costs,because market prices for the nitrogen fertilizer business nitrogen fertilizer productsare generally corr

330、elated with natural gas prices,the primary raw material used by competitors of the nitrogenfertilizer business,and not pet coke prices.Based on the nitrogen fertilizer business current output,thenitrogen fertilizer business obtains most(over 77%on average during the last five years)of the pet coke i

331、tneeds from our adjacent oil refinery,and procures the remainder on the open market.The nitrogen fertilizerbusiness competitors are not subject to changes in pet coke prices.The nitrogen fertilizer business is sensitiveto fluctuations in the price of pet coke on the open market.Pet coke prices could

332、 significantly increase in thefuture.The nitrogen fertilizer business might also be unable to find alternative suppliers to make up for anyreduction in the amount of pet coke it obtains from our oil refinery.The nitrogen fertilizer business may not be able to maintain an adequate supply of pet coke

333、and otheressential raw materials.In addition,the nitrogen fertilizer business could experience production delays or costincreases if alternative sources of supply prove to be more expensive or difficult to obtain.If raw materialcosts were to increase,or if the nitrogen fertilizer plant were to experience an extended interruption in thesupply of raw materials,including pet coke,to its production fa