CVR Energy, Inc. (CVI) Q1 2019 Earnings Report, Transcript and Summary

Greetings and welcome to the CVR Energy Inc's First Quarter 2019 Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Jay Finks, Vice President of Finance and Treasurer. Thank you. You may begin.

Thank you, Michelle. Good afternoon, everyone. We very much appreciate you joining us this afternoon for our CVR Energy's first quarter 2019 earnings call. With me today are Dave Lamp, our Chief Executive Officer; Tracy Jackson our Chief Financial Officer, and the other members of management. Prior to discussing our 2019 first quarter results, let me remind you that this conference call may contain forward-looking statements as that term is defined under Federal Securities Laws. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements. Without limiting the foregoing the words outlook, believes, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results may differ materially from the results discussed in the forward-looking statements. We undertake no obligations to publicly update any forward-looking statements whether as a result of new information, future events or otherwise except to the extent required by law. This call also includes various non-GAAP financial measures. The disclosure is related to two such non-GAAP measures including reconciliations of the most directly comparable GAAP financial measures are included in our 2019 first quarter earnings release that we filed with the SEC. With that said, I'll turn the call over to Dave.

Thank you, Jay, and good afternoon everyone, and thank you for joining us on our earnings call. Hopefully, you had the opportunity to listen to the CVR Partners earnings call earlier today. Yesterday, we reported the first quarter consolidated net income of $102 million, as compared to $93 million in the first quarter of '18. EBITDA for the first quarter of '19 was $230 million, compared to $205 million for the previous year, driven by safe reliable operations wide Brent TI differentials, rising crude prices, hedging gains, lagging crude oil differentials, and improved fertilizer pricing. We also announced the first quarter dividend of $0.75 per share, which will be paid on March 13 to stockholders of record on May 6th. On an annualized basis, our current dividend yield of $3 per share represents an industry-leading dividend yield of approximately 7% based on yesterday's closing price. Now I'll speak to some of the first quarter highlights from each of our business segments. For the Petroleum segment, both plants ran well, and we safely completed the planned turnaround at Wynnewood on time and under budget. Combined total throughput for the first quarter of 2019 was approximately 213,000 barrels per day, as compared to 190,000 barrels per day in the first quarter of 2018. As a reminder, the first quarter of '18 was impacted by downtime associated with the cat cracker at Coffeeville, while the Wynnewood turnaround affected the current quarter. Total liquid yield for the quarter was 98% consistent with prior year period. Our distillate yield as a percentage of total crude oil throughputs was 44% in the first quarter of 2019, also consistent with the prior year period. Our distillate yield consistently ranks in the top quartile among the U.S. independent refiners. In total, we gathered approximately 119,000 barrels per day of crude oil during the first quarter of 2019 as compared to 113,000 barrels per day for the same period last year. As we continue to shift our slate to crude oils gathered in our own backyard, we have increased our SCOOP gathering by approximately 40% relative to the first quarter of 2018, while decreasing our gathering activities in other regions. Now, turning to the fertilizer business, during the first quarter, CVR Partners had strong reliable operations at both facilities. Coffeyville's ammonia unit operated at 96% utilization for the first quarter, consistent with the utilization for the first quarter of 2018. At East Dubuque, the ammonia plant operated at 69% utilization, compared to 90% in the prior year adjusted for turnarounds. We lowered the ammonia rate at East Dubuque during the first quarter to manage storage capacity levels at the plant due poor fall weather. The Board of Directors of CVR Partners' general partner declared a first quarter 2019 distribution of $0.07 per common unit, which we've paid on May 13 to unitholders of record of May 6. As CVR Energy owns approximately 34% of the common units of CVR Partners, we will receive a proportionate cash distribution of approximately $3 million. Now, let me turn the call over to Tracy to discuss some of our financial highlights.

Thank you, Dave, and good afternoon everyone. Before I get into our result, I'd like to outline that during the first quarter of 2019 we revised our accounting for turnarounds and presentation of EBITDA. We now will be capitalizing all of our planned turnaround costs in our Petroleum segment, and as a result we will no longer be using adjusted EBITDA. Prior year amounts have been conformed to align with this new presentation. Management believes this presentation better aligns our financial results to how we evaluate our operations internally and better aligns with industry peers. We reported consolidated net income of $102 million in the first quarter of 2019, as compared to $93 million in the prior year period. Diluted EPS was $1 for the first quarter 2019 compared to $0.69 for the prior year period. The effective tax rate for the first quarter of 2019 was 25.5% compared to 16.2% for the prior year period. The increase in income tax rate was due primarily to the decrease in non-controlling interest, as a result of the first quarter equity transaction. We continue to expect that our full-year 2019 effective tax rate will be between 20% and 25%. I will now turn to the specific performance of our two business segments impacting our overall quarterly results. The Petroleum segment's EBITDA for the first quarter 2019 was $209 million compared to $192 million in the same period in 2018. The increase in EBITDA year-over-year was driven by safe and reliable operations wide Brent-WTI differentials rising crude prices, hedging gains, and lagging crude oil differentials. In the first quarter 2019 our petroleum segment's refining margin excluding inventory valuation impacts was $14.88 per total throughput barrel compared to $16.41 in the same quarter of 2018. The increasing crude oil flat price through the quarter generated a positive inventory valuation impact of a dollar 67 per barrel during the first quarter of 2019 this compares with $0.17 per barrel positive impact during the same period last year. The capture rate excluding the inventory valuation impacts was 86% in the first quarter of 2019 compared to 98% in the first quarter of 2018. Capture rate in the first quarter 2018 was benefited by approximately 20% related to the reduction in our renewable volume obligation. The Group 3211 crack spread averaged $17.26 per barrel in the first quarter 2019 as compared to $16.67 in the first quarter of 2018. Crude differentials remained favorable during the quarter with the average differential between WTI and Brent remaining nearly $9 per barrel or over $4.50 per barrel wider than the first quarter 2018. The WCS differential to WTI tightened in the quarter to $10.51 per barrel largely as a result of production curtailments imposed by the Alberta government. This compares to an average WCS to WTI differential of $25.74 per barrel in the first quarter of 2018. With our capacity on multiple pipelines bringing Canadian crude oil into Cushing, we were able to capitalize on the WCS differentials during the quarter by selling those barrels to third parties for a higher margin than we would have earned running through our system. Although WCS differentials have tightened recently, pipeline capacity out of Canada remains constrained and we currently expect to see differentials begin to widen out again in the second-half of 2019. Gains on Canadian crude oil positions for the first quarter of 2019 totaled $16 million, which includes unrealized losses of $7 million associated with open purchases that are scheduled for delivery in the second quarter of 2019. In the first quarter 2018, we had total derivative gains of $59 million of which $46 million was unrealized at the end of the prior year period. RINs expense in the first quarter of 2019 was $13 million or $0.68 per barrel of total throughput as compared to the benefit of $23 million or $1.35 per barrel of total throughput in the same period last year. Based upon recent market prices of RINs and current estimates of production rates, we currently estimate that our RINs expense will be approximately $60 million to $70 million in 2019 excluding any potential reductions and renewable volume obligations. The Petroleum segment's direct operating expenses were $4.75 per barrel of total throughput in the fourth quarter of 2019 as compared to $5.39 per barrel in the prior year period. The decrease was primarily associated with lower personnel expenses and higher total throughput volumes as the first quarter of 2018 was impacted by downtime at Coffeyville. Now, turning to our Fertilizer segment, for the first quarter of 2019, CVR Partners reported operating income of $9 million, a net loss of $6 million or $0.05 per common unit, and EBITDA of $26 million. This is compared to operating losses of $3 million and net loss of $19 million or $0.17 per common unit, and EBITDA of $13 million for the full quarter of 2018. The approximate 100% increase year-over-year in EBITDA was primarily due to the improved pricing of 14% and 45% for ammonia and UAN respectively. Turning to the consolidated balance sheet, total consolidated capital spending for the first quarter of 2019 was $29 million, which included $26 million from the petroleum segment and $3 million from CVR Partners. Of this total, environmental and maintenance capital spending comprised $26 million including $23 million in the petroleum segment and $3 million at CVR Partners. We currently estimate the total consolidating capital spending for 2019 to be approximately $210 million to $240 million of which approximate $150 million to $175 million is environmental and maintenance capital. This includes planned turnaround spending. This excludes planned turnaround funding for the year, which we estimate will be approximately $48 million. Our cash position remains strong as we ended the quarter with cash of approximately $467 million on a consolidated basis, which includes $97 million at CVR Partners. As a reminder, the equity transaction that we completed in January resulted in the use of cash during the quarter of approximately $300 million. We feel confident in our strong balance sheet and liquidity position. Looking ahead, we estimate our total throughput for the second quarter of 2019 to be approximately 217,000 to 227,000 barrels per day. We expect total direct operating expenses for the second quarter to be approximately $85 million to $95 million and total capital spending to range between $35 million and $40 million. With that, Dave, I will turn the call back to you.

Thank you, Tracy. In summary, we are proud of our strong results for the first quarter of 2019. Our mission continues to be a top tier North American petroleum refinery and fertilizer company as measured by safe reliable operations, superior financial performance and profitable growth. Looking at 2019 and beyond, we currently see a host of market themes that drive our constructive outlook. First, global oil demand is strong and new worldwide refining capacity is being delayed. In the United States, gross domestic product growth is healthy and gasoline demand is steady driven by low unemployment. IMO 2020 is currently on track for January implementation and we view the new regulations as positive for both gasoline and diesel. The Brent TI differential remains healthy, driven by ever growing domestic shale oil production and decline in crude oil -- in corn inventories frame and improving the outlook of our fertilizer businesses. Nitrogen fertilizer represents about 15% of a farmer's cost structure and significantly improves their yields. We believe CVR Energy is well-positioned for 2019 and beyond. On our last call, I outlined our strategic objectives for 2019. A recap of those objectives are continued improvement in all environmental health and safety matters, safety is our number one priority and safe operations result in reliable operations; profitable growth of our crude gathering and logistic systems by purchasing local crudes in our backyard and building out our pipeline system to supply our refinery operations; continue to increase our internally generated RINs and reduce our RIN exposure, this includes increasing biodiesel blending as well as continuing to explore building a wholesale and retail business; increase the liquid yield at our refineries, execute our turnarounds on time and on or under budget; and prudently manage or costs. In support of these objectives, we have a number of initiatives that we are progressing as previously discussed on our fourth quarter 2018 earnings call. A recap of those initiatives are increased liquid yield at Wynnewood by completing the design and evaluation of a new isomerization unit and which will increase our production of premium gasoline and improve capture rate. We have also started to schedule a process design to replace our hydrofluoric acid catalyst and our Wynnewood operation with solid catalyst. This project is also expected to increase production of premium gasoline at Wynnewood. Increase our natural gasoline processing and WCS capacity to 40,000 barrels per day through phase projects at Coffeeville refinery. If approved, all these projects that I listed above by our board will have expected returns of 30% or higher. Complete the sale of our Cushing, Oklahoma tank farm as it is an underutilized asset as it is an underutilized asset for us and install an oxygen surge system at the Coffeeville fertilizer plant. As a reminder, we have approximately $50 million to $60 million of profit improvement projects in our capital budget that require additional approvals by our board. We continue to develop these initiatives and as I move forward I'll provide updates. As we look at the second quarter of 2019 Group 4 cracks have averaged approximately $21.34 and the Brent TI spread has averaged $7.37 quarter to-date. These market drivers remained strong and yesterday there were approximately $21 per barrel on the Group 3 cracks and $8 per barrel on the Brent TI spread. Brent prices has continued to decline with ethanol averaging $16.16 per quarter to date, down from $0.20 in the first quarter and the biodiesel [indiscernible] averaging $0.37 quarter to date down from $0.051 last quarter. With that operator, we're ready to take questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Prashant Rao with Citigroup. Please proceed with your question.

Hi, good afternoon. Thanks for taking the question. I wanted to start on the crude side. I had a couple of questions about Canadian Heavy, and then also on Midland, but maybe starting with the Canadian heavy, if you can remind us your total -- what is your total access [ph] stand and -- versus what you ran in the quarter? I'm trying to get a sense of how strategic you are able to be in terms of selling barrels into the market in the quarter, and maybe kind of the magnitude of how much the margin was or the profit was on those barrels? And then secondly, how much might be left given that this was a 60-day lag, what's your inventory sort of right now, or is that pretty much done even the differentials have tightened up, so some color there, and then I'll repeat on that -- I think I just missed it, and I'm sorry about that, but the $16 million number that Tracy recalled out, related to this, just wanted to sort of get those numbers again.

Okay. On the WCS capacity, what we have is line space for about 35,000, which we got prorated typically to around 30,000. We typically don't run much or -- if any at all of WCS in our plants because it's more profitable sell it in Cushing, that price has been very strong lately. We do run some just in order to keep our crude rates at higher rates in their Coffeeville facility, and probably averaged around 3% of the slate. With that said, I forgot the rest of your questions.

Sure. Absolutely, so I just wanted to -- so that's helpful in understanding how much was sold in 1Q. I guess, is there -- in terms of barrels that you still have to sell that could be profitable given that it was a 60-day lag on average, is there a more benefit? I think you mentioned that the prepared comments into 2Q, or is that now that the differentials have tightened, is that kind of behind it, and I'm specular how you are going forward into 2Q, what sort of tailwind you could get about WCS, does it make more sense to run it now?

No, it's is still profitable to sell it today, you know as the price is compressed, the price that we get in Cushing has also gone down dramatically. So, today we're trading -- WCS is trading in the 2012, 50 range.

Yes.

With that -- with about a $6 freight to get it to Cushing, we can still sell it a couple of bucks profit in the Cushing market and that…

Yes.

And that [indiscernible] what we could do in the plant.

Okay. That makes sense. And that 60-day lag is that usually, forgive me if you've already mentioned this before, but has it usually been the lag or I mean part of the…

Oh, yes. Yes.

Okay.

The 60 days plus.

Okay.

It can be -- oh, no, that just depends on how the batches come.

Okay. Other question on the light sweet side since you've got more that you're sourcing out of your own backyard and this gets back, your Midland barrels; I think those are on like a 30-day lag. You know we've seen mid-Cush differentials come in and that's just widened back out again. Would you be selling some of those Midland barrels through taking advantage of differentials as we get some volatility here now that you've got more SCOOP/STACK in the system, and it's probably not as big as the WCS tactical opportunity you have, but curious if you're seeing some opportunity there given how the - how this have been moving over the last couple of months?

Well, of course the way we run our gathering business is such that we use as an option to supply the refineries. We're buying on a Cushing basis on most of that gathering system that we do have about 30,000 barrels of space on the -- historical space on basin pipeline, which does give us a modest amount of exposure to the Midland differential, but generally we use it as an option and we will either resell those barrels that we gather in Cushing or run them depending on what the best mixes. Our overall strategy in our overall gathering system is to buy barrels in our backyard exclusively, but also buy them at the wellhead and be very picky about what we buy and we want to deliver - be able to deliver need to Cushing and get into our system either to Coffeeville or to Wynnewood.

Okay. Has there been related to that speaking of neat barrels, we've gotten some questions over the last month, month-and-a-half from investors in the market about the need to see West Texas light. I guess what you think of the condensate barrel and that being a marker for that and what kind of discount that goes through. I'm curious your thoughts about the dynamics of what that's doing for the Midland pricing, what that could mean going forward as we get some maybe some price discovery between Permian grades. There's a sort of a view that all of this has to go to the water and ends up maybe in ages being used as feedstock there, but given where you said curious to hear your - curious to hear what you guys are seeing in the market and how you think that develops.

Well, it's starting to shape up as a three-tier system out there. You've got that 38 to 42 API gravity crudes, which are kind of the what I'll call the WTI regular. And then you have another class as to 43 to up to 48, 50 that's kind of the light and then you've got the ultra-light that's 50 plus. And those are -- those historically had not traded with a large discount between them because a lot of them are getting blended off in various ways. But that is all starting to come to an end and you're starting to see just a good indicators that WTI light but also as white class what's happening with that is that widened out to a $1.75 and that's as far as I can remember is one of the higher numbers in the market at least in the last three years. So I think ultimately these continue to spread as more and more lights are produced and they have less and less places to go. And that we're trying to capitalize on that strategy also because our sweet spots are a little different than others and we're able to make that same amount of diesel out of some of these crudes that others cannot. So we don't really have to have the heavy barrel, we don't have to have the light barrel.

Okay. Make sense. Last question, now turn it over M&A environment, obviously we're still pretty IMO. So I would imagine that we don't, the opportunities are not quite there yet, but we wanted to check with you on that and also sort of in the context of how we're seeing some upstream consolidation, let's say integrators are getting involved and there's some questions about will they need more downstream capacity to help with their integrated model. Does that change the picture at all, it seems obviously what's going on with Chevron and [indiscernible], but there's an expectation of that shale value or will create more upstream consolidation majors versus the key players. Is there sort of a knock on effect and what that means for the M&A environment for you guys?

Well, I think we've stated before that we are probably not a consolidator, but a consolidatee, and I think we are a classic case of refining system that has 100% exposure to Brent-WTI and we would be an excellent fit for somebody that needs to manage that risk and I think that there in the lies the attraction to these assets that and commands a premium that we get today in the marketplace. Nothing's changed on that front or we have not started a process yet or don't know if we will, but we'll see what happens here in the future.

Okay. And just a very last thing just wanted to catch the number Tracy you went over it, but you called out on the WCS I think $16 million and again could you just repeat those please?

Sure. We had gains on the Canadian crude oil positions in the first quarter of $16 million and that included unrealized losses of $7 million for open purchases that will have delivered here in the second quarter.

Right. And that includes…

Did you want the prior year numbers as well?

Yes. Just to compare. Thanks.

Sure. The first quarter 2018 we had total derivative gains of $59 million of which $46 million was unrealized at the end of the prior year period.

Perfect. Thank you very much. I appreciate all the color and thanks. I'll turn it over.

Sure.

Thank you. Our next question comes from the line of Neil Mehta with Goldman Sachs. Please proceed with your question.

Thanks. Thanks for taking the time. Really good quarter here, and just want to build on your remarks Dave, as you look to Q2, so when we clean out your 1Q results for one timers, we kind of get to $0.80 something cents in EPS and as you look at 2Q versus 1Q, obviously we're early in the quarter. Anything you would say that we should think about is incrementals or decrements because with the crack spread environment, one would think to keep set up pretty well.

Well, I think the comment I'd make Neil is that there were a lot of interruptions in the first quarter by others not us other than our turnaround that we - I think we benefit from. If you look at the basis between the NYMEX and the group, it was about as narrow as it's ever been in the first quarter. And I think we've benefited strongly from that. Will that repeat, I mean the basis is already spread out a bit, just running -- kind of running right now you them the NYMEX is almost $23 and with the group is $21. Where that will go, I mean I think everybody is back up and running and making lots of gasoline if demand doesn't pick up some more, there's probably some of that basis comes out. But also we're running into the driving season so I'm pretty optimistic that will turn around and the supply from the Gulf will come up into our markets like it usually does in the second and third quarter.

That's helpful. I want to talk about the dividend here, you guys again trading at a 7% dividend yields. Is the view that there's the potential over time for dividend growth as well or as long as you trade at this type of yield, we should just hold the sort of $3 dividend flat for the foreseeable future?

Well, I think we're very comfortable with the $3 yield -- $3 dividend. I think we generate enough cash to support it for a long time as well as grow our business in some of these profit improvement projects that I think is a good way to reward our shareholders as it is for the increase in the dividend. So I think depending on how we do and what the Board approves that will determine what happens I think with the dividend going forward.

The last question for me, Brent-WTI, I think debate about where it's going to evolve when all these Permian pipes come online and Centurion basin and crude slow and sort of go into crushing some of that crude get diverted down to the Gulf Coast. As you think about the outlook for Brent-WTI on a normalized basis in transportation economics, post the onsite of all these Permian pipelines, what do you think, what do you think the new normal is?

Well, I think I said in my comments, my preferred comments that the ever increasing shale oil production, I don't think I see that change in particularly with $65 crude that's going to continue to grow and probably accelerate, although the EMP companies have seemed to get a lot of capital discipline here lately. But that generally in my experience they're drillers and they like to drill, so that tells me that more shale oil will come on. As far as it manifests itself in the Brent TI, I think Neal what you really have here is that as you continue to increase I think the takeaway capacity of the Gulf Coast is somewhere around 5 million, 5.5 million barrels a day, perhaps 3 million, 2.5 million, 3 million. You will see the Brent TI probably have to widen, maybe not widen, but maintain where it is just to keep that flow growing. And frankly, all the Gulf Coast refineries are saturated with light crude, short of them building some new splitters or something, I don't see how that barrel will clear without reaching farther into the world and further away, which to me tells me that the Brent TI stays pretty close to where it is or some even better, have some upside to it.

Okay. Let me speak in last one, I'm sorry, you talked about how you view yourself as a consolidatee and not a consolidator given the fact that you do trade at a premium relative to other refiners as you said, why is CVI not a logical consolidator there?

Well, I don't know -- I'd just I don't know that I have a great answer for that. I think our shareholder structure is such that there is some interest in moving on. Although one of our primary shareholders is own this business for seven years and is very happy with it and maybe very happy with living with it for another seven years. I don't know. I think a little bit as it just seems like the market is at a point where if you wanted to exit the business, it's not a bad place to be. So I think that's where the logic is thinking.

Yes. Thanks guys. Thanks, Dave.

You're welcome.

Thank you. Our next question comes from the line of Matthew Blair with Tudor, Pickering, Holt & Company. Please proceed with your question.

Good morning, Dave.

Good morning.

Circling back to this $60 million derivative gain in the first quarter relating to WCS, I was under the impression that a lot of your WCS hedges were set to roll off at the end of 2018. So I was curious did you extend any of these hedges and can you provide any sort of details on I guess future volumes, the strike price and just the overall duration like it's going to be a continuing event throughout 2019.

No. We're completely hedged on no, but we did have 10,000 barrels a day believe at $10.50 -- that expired at the end of 2018 was somewhere in that neighborhood, $10 I think. That was off now, but just by the nature of how we buy there's a two-month lag, so you do have some exposure there and I think we believe that's where a lot of this is coming from. Tracy, you can…

I would just remind you that we have the intermediation agreement that helps move a lot of our barrels and the buying and selling of those goods accounted for a little bit differently when we sell that barrel and don't run it through the refinery. So I very carefully use my words when I said the word games on Canadian crude oil purchases in the first quarter of this year and they were hedge games and games last first quarter.

Okay. Okay. That's helpful. And then I was curious if you could offer any sort of a lost profit opportunity from the Wynnewood turnaround, normally it seems like that might have had a big impact just given it fit in the most profitable month of the quarter. But then Dave, I think you said something where you thought it actually might have helped you in the quarter. Could you expand on that?

Well, I said it probably helped the industry because we were cut back at a time when gasoline -- when we started the turnaround, frankly it was the perfect time gas cracks were in the toilet. And as a turnaround progressed that they improved which we didn't anticipate, but we're glad it happened. The fact that we took barrels off the market and where I was saying we contributed to the increase. I don't know that I view it as a lost opportunity, because it is a planned turnaround and it's something that frankly we wouldn't even calculate it that way or our total lost opportunities for the refining sector was less than $9 million for the quarter. So it's a very good from our standpoint that's a pretty low number.

Okay. Thank you. And then last question I guess probably for Tracy, just from the CapEx guidance I think you revised $210 million to $240 million and then now with the new accounting system to capitalize turnarounds should we add in that $48 million of turnaround spending into your CapEx numbers so that the final number looks more like I don't know $260 million to $290 million I guess?

So, there were no revisions to our capital estimates for the year. I believe in your note you didn't include the corporate amount. You were just adding petroleum and fertilizer together. So the capital estimates from year end to first quarter end have not changed. Turnaround being capitalized we are not including that as a component of our capital spend profile. We will talk about that separately.

Remember too, there was a lot of money in there for projects that we don't have final or Board approval on yet, about $50 million to $60 million as we mentioned. So make sure you factor that into your calculation.

Okay. But I guess just to be clear that the $48 million in turnaround spending that's going to flow through the cash flow statement, right?

Yes.

Okay, okay. Thank you very much.

Thank you. [Operator Instructions] Our next question comes from the line of Jay Tobin with Macquarie. Please proceed with your question.

Hi, guys, great quarter, and I think most of my questions have been brought up, I'll throw one. It looks like Coffeeville ramped up its current sales volumes processed just with a lot of excess light moving around, just curious if there's a driver in that [indiscernible]?

Well, you remember we reversed Red River pipeline this last I guess it really started up in the beginning of this first quarter at full rate and with the turnaround at Wynnewood, we have the opportunity to move so that the substantial quantity of the SCOOP type barrels to Coffeeville where they were run. So I think that's what you're seeing in there.

Got you. Great, thanks.

That by the way is our plan going forward. More and more of that is what you're going to see.

Excellent, thanks.

You're welcome.

Thank you. We have reached the end of our Q&A session. I would like to turn the call back over to management for any closing remarks.

Again, we'd like to thank you all for your interest in CVR Energy. Additionally, I'd like to thank our employees for their hard work and commitment towards safe, reliable, environmentally responsible operations. We look forward to reviewing our second quarter results during our next earnings call. Thank you and have a good day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.