CVR Energy Inc.

Keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Richard Roberts, Vice President, Financial Planning and Analysis at Investor Relations. Thank you, sir. You may begin.

Thank you, Christine. Good afternoon, everyone. We very much appreciate you joining us this afternoon for our CBR Energy First Quarter 2025 Earnings Call. With me today are Dave Lamp, our Chief Executive Officer, Dane Newman, our Chief Financial Officer, and other members of management. Prior to discussing our 2025 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. You are cautioned that these statements may be affected by important factors set forth in our filing to 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 obligation 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 disclosures related to such non-GAAP measures, including reconciliation to the most directly comparable GAAP financial measures, are included in our 2025 first quarter earnings release that we filed with the SEC in Form 10-Q for the period and will be discussed during the call. With that said, I'll turn the call over to Dave.

Thank you, Richard. Good afternoon, everyone, and thank you for joining our earnings call. Yesterday, we reported a first quarter consolidated net loss of $105 million and a loss per share of $1.22. EBITDA was a loss of $61 million. Our results were impacted by the planned turnaround at Coffeyville, the Coffeyville refinery. unplanned events in January, and an unfavorable mark-to-market impact of our outstanding RFS obligation. In our petroleum segment, combined total throughput for the first quarter of 2025 was approximately 125,000 barrels per day, and light product yield was 95% on crude oil processed The planned turnaround at Coffeyville began in late January following an incident at our naphtha hydrotreater during freezing weather conditions. Inefficiencies resulting from the incident, including mobilizing contractors earlier than planned, among other factors, impacted the duration of the turnaround by approximately four weeks. Startup of the refinery is underway, and we currently expect to ramp to full rates over the course of the second quarter as we draw down crude and intermediate inventories. For the duration of 2025 and 26, we do not currently have any additional turnarounds planned in the refining segment, with the next planned turnaround at Winnie Wood scheduled for 2027. Group 3-211 benchmark cracks at average $17.65 per barrel for the first quarter of 2025, compared to $19.55 per barrel for the first quarter of last year. Average RIN prices in the first quarter of 2025 were approximately $0.84 on an RVO-weighted basis, an increase of over 25% from the previous year period. On a per barrel basis, RINs were approximately $4.75 per barrel or more than 25% of the Group 3 2-1-1 crack spread for the quarter. Regarding the RFS, we were pleased with the First Circuit granting the Winningwood Refining Company's unopposed motion to stay its 2023 compliance obligations in March. Also in March, the Supreme Court heard oral arguments on whether the venue whether venue for challenges to the EPA's denial of small refinery exemptions lies exclusively within the D.C. Circuit. Recurrent expect of ruling on the venue case in the second quarter, although the ruling should make little difference in this case since the D.C. Circuit, like the Fifth Circuit before it, also held EPA's denial of small refinery exemptions were arbitrary, capricious, and contrary to the law. The Woody Wood Refinery Company filed its 2024 petition for small refinery exemptions last year, but EPA once again missed its deadline to rule. We urge EPA to meet with us as soon as possible or would be forced to file suit again. At this point, EPA is sitting on Woody Wood's small refinery exemption petitions for 2019, 20, 21, 22, and 23. The prior administration only acted on our 23 petition when it denied it in January for ridiculous and, we think, illegal reasons. The RIN market causes higher prices at the pump for all Americans, which EPA has omitted. As a reminder, we currently estimate the cost of RINs at 10 cents to 15 cents per gallon on all transportation fuels. We believe that EPA should be doing everything it can to keep fuel prices low. At a minimum, EPA should immediately hit the easy button and apply the same alternative compliance strategy it used in 2017 and 2018 for all historical SREs from 2019 to 2024. All these compliance periods are in the past. This harms no one. and could save small refineries from the risk of closure due to the crushing weight of RFS. Despite EPA's continued lack of action, we are encouraged by the administration's statement that they are reassessing their position on SREs. I'm confident that under President Trump's leadership, the EPA will see the critical role small refineries like ours play in supporting rural communities communities across America, exactly why Congress included the small refinery exemptions in the renewable fuels legislation. For the first quarter of 2025, we processed approximately 14 million gallons of vegetable fuel oil in our renewable diesel unit at Winneywood. Gross margin was approximately $1.13 per gallon for the first quarter of 2025, compared to $0.65 per gallon for the first quarter of 2024. The blender's tax credit expired at the end of 2024, and we did not recognize any clean fuel production credits in the quarter as the final rules have not been issued. Despite the loss of the BTC, we generated positive adjusted EBITDA in the renewable section, primarily driven by increased RIN prices and reduced feedstock basis. In the fertilizer segment, Both facilities ran well during the quarter with a consolidated ammonia utilization rate of 101%. Nitrogen fertilizer prices in the first quarter of 2025 were higher for ammonia and slightly lower for UAN compared to the first quarter of 2024. And we continue to see strong demand for both products as we head into the spring planting season. Now let me turn the call over to Dane to discuss our financial highlights.

Thank you, Dave, and good afternoon, everyone. For the first quarter of 2025, our consolidated net loss was $105 million, losses per share were $1.22, and EBITDA was a loss of $61 million. Our first quarter results include a negative mark-to-market impact on our outstanding RFS obligation of $112 million, a favorable inventory valuation impact of $24 million, and unrealized derivative gains of $3 million. Excluding the above-mentioned items, adjusted EBITDA for the quarter was $24 million, and adjusted loss per share was $0.58. Adjusted EBITDA on the petroleum segment was a loss of $30 million for the first quarter, with the decline from the prior year period driven by reduced throughput volumes due to the planned and unplanned downtime at Coffeyville, along with lower product cracks in Group 3. Our first quarter realized margin adjusted for in-market market impacts, inventory valuation, and unrealized derivative gains was $7.72 per barrel, representing a 44% capture rate on the Group 3 2-1-1 benchmark. Net RINs expense for the quarter, excluding the mark-to-market impact, was $27 million, or $2.47 per barrel, which negatively impacted our capture rate for the quarter by approximately 14%. The estimated accrued RFS obligation on the balance sheet was $438 million at March 31st, representing 488 million RINs mark-to-market at an average price of $0.90. A reminder, our estimated outstanding RIN obligation excludes the impact of any small refinery exemptions. Direct operating expenses in the petroleum segment were $8.58 per barrel for the first quarter compared to $5.78 per barrel in the first quarter of 2024. The increase in direct operating expense per barrel was primarily driven by lower throughput volumes. Adjusted EBITDA on the renewable segment was $3 million for the first quarter, an improvement from the first quarter of 2024 adjusted EBITDA of negative $5 million. The increase in adjusted EBITDA was driven by a combination of higher throughput volumes increased rinse prices, and reduced feedstock basis, partially offset by the expiration of the BTC. Adjusted EBITDA on the fertilizer segment was $53 million for the first quarter, with higher UAN sales volumes and higher ammonia sales prices driving the increase relative to the prior year period. The partnership declared a distribution of $2.26 per common unit for the first quarter of 2025. As CVR Energy owns approximately 37% of CVR Partners' common units, we will receive a proportionate cash distribution of approximately $9 million. Cash consumed by operations for the first quarter of 2025 was $195 million, and free cash flow was a use of $285 million. Significant uses of cash in the quarter include $94 million of capital and turnaround spending, $47 million for cash interest, $12 million paid for the non-controlling interest portion of the CVR partner's fourth quarter 2024 distribution, and a cash use from working capital of approximately $113 million. partially associated with inventories being built during the Cofferville turnaround. Total consolidated capital spending on an accrual basis was $55 million, which included $49 million in the petroleum segment, $6 million in the fertilizer segment, and less than $1 million in the renewable segment. Turnaround spending on an accrual basis in the first quarter was approximately $166 million. For the full year of 2025, we estimate total consolidated capital spending to be approximately $180 to $210 million, and turnaround spending would be approximately $180 to $200 million. Turning to the balance sheet, we ended the quarter with a consolidated cash balance of $695 million, which includes $122 million of cash in the fertilizer segment. Total liquidity as of March 31, excluding CBR partners, was approximately $894 million, which was comprised primarily of $573 million of cash and availability under the ABL facility of $321 million. While we ended the quarter above our targeted minimum cash balances, I want to highlight that the majority of the cash spend associated with the Coffeyville turnaround will be incurred in the second quarter, which should be partially offset by a drawdown of inventories built during the turnaround. Looking ahead to the second quarter of 2025, for our petroleum segment, we estimate total throughputs to be approximately 160,000 to 180,000 barrels per day, direct operating expenses to range between $105 million and $115 million, and total capital spending to be between $35 million and $40 million. For the fertilizer segment, we estimate our ammonia utilization rate to be between 93 and 97%, with some downtime planned at East Dubuque in the quarter. We expect direct operating expenses, excluding inventory impacts, to be between 57 and 62 million, and total capital spending to be between 18 and 22 million. For the renewable segment, we estimate the second quarter 2025 total throughput to be approximately 16 to 20 million gallons, direct operating expenses to range between eight and 10 million, and total capital spending to be between $2 and $4 million. With that, Dave, I'll turn it back over to you.

Thanks, Dane. Refining market conditions began to improve in the first quarter due, in part, to a heavy spring maintenance season and the closure of one U.S. refinery. Several more closures have been announced in the U.S. and in Europe for 2025 and 2026. Recent data from EIA indicates days of gasoline supply are 12% below the five-year average, while diesel is currently 17% below. Within the MEDCON where we operate, days of supply for gasoline supply are currently 8% below the five-year average, and diesel is nearly 13% below. Given the improvement in supply and demand fundamentals and the increase in rent prices, we are surprised that cracks are not higher. In the near term, the evolving tariff environment and associated concerns in the market around potential demand impacts will likely weigh on the market to some degree. As it relates to tariffs and our refining assets, we are relatively well positioned given our location at MidCon and our limited exposure to Canadian crude oil. Unlike other refiners in Pad 2 that are more dependent on heavy Canadian crude oil, we typically only run a few thousand barrels per day of WCS at Coffeeville and sell the remainder at Cushing. If those barrels are ultimately not economic, we can run the Coffeeville refinery at full rates with no Canadian crude oil at all. During the turnaround at Coffeeville, we completed tie-ins for the initial phase of the distillate recovery project. This project should give us the ability to increase Coffeeville's distillate yield by approximately 2%. And we have a similar project planned at Winnie Wood that has already received board approval. Over the next few months, we plan to install some additional piping and revamp some of our tankage at Coffeyville, which should enable us to make up to 9,000 barrels a day of jet by the end of the third quarter. We also have the potential to increase capacity further with additional investment. We believe the opportunity to ship barrels to the west will continue to grow over the next several years. and with jet fuel being a likely important part of the mix. As a reminder, jet fuel production is not subject to an RVO, and shifting production from diesel to jet fuel would reduce our annual RIN obligations. We also continue to make progress on the Winnie Wood Alkalation Project that, when completed, would eliminate usage of HF acid and provide a margin capture improvement opportunities through increased production of premium gasoline. In the renewable segment, we completed a catalyst change in January, and we continue to run the unit at 5,000 barrels per day in an effort to optimize yield and catalyst life. RIN prices have increased over the past few months, due in part to the significant decline in D4 RIN generation after the expiration of the blender's tax credit at the end of 2024. As we continue to evaluate whether the renewable business makes sense, we currently intend to operate the renewable diesel unit at similar rates while we wait for clarity on the BTC and or see the final rules on the PTC. As we stated in our last earnings call, we remain fully willing to participate in the renewable space but cannot invest additional time and capital without further assurance the government will support the businesses it created. In the fertilizer segment, recent USDA estimates are calling for an inventory carryout levels for corn and soybeans at 10% or less. The spring planting season is well underway, and the weather has been favorable. With the USDA estimating 95 million acres of corn planted this year, we expect to see strong fertilizer demand. for the spring, and prices have been increasing over the past few months. Looking at the second quarter of 2025, quarter-to-date metrics are as follows. Group 211 cracks have averaged $24.67 per barrel, with the Brent TI spread at $3.39 per barrel, and the WCS differential at $9.55 per barrel under WTI. The hobo spread is averaged a negative $1.47 per gallon. As of yesterday, Group 3 2-1-1 cracks were $27.15, Brent TI was $3.65, and WCS was $9.60 under WTI. The hobo spread was a negative $1.62 per gallon, and RINs were approximately $6.42 per barrel. Prompt fertilizer prices are approximately $600 a ton for ammonia and $380 per ton for UAN. With the large turnaround at Coffeyville behind us, we are well positioned to capitalize on any and all continued improvements in the refining sector as we approach the summer driving season. And we look forward to the remainder of 2025 and 26 with no additional plant refinery turnarounds. In addition to our constant focus on safe, reliable operations at our facilities, we will prioritize efforts to reduce debt and restore our balance sheet to targeted leverage ratios as soon as we can, subject to market and other conditions. We also continue to look for ways to improve capture, reduce costs, and ultimately grow our business profitably. With that, we're ready for questions, Operator.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your lines in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Manav Gupta with UBS. Please proceed with your question.

Good morning, guys. I wanted to understand a little bit more on the refining macro. On one hand, you are indicating that you actually believe that market conditions did improve, and if it was not for the tariffs, you believe the cracks would be higher. So I'm just trying to understand, do you see a pretty strong demand or at least resilient demand in the regions in which you are operating versus a possibility of a recession, which could actually mean significantly lower demand. So help us understand what you're seeing in terms of refined product demand out there in the markets you operate.

Well, Manav, I think as I mentioned in the prepared remarks, the days of supply have shrunk quite a bit compared to the five-year average. which indicates to us that the supply-demand balance is correcting itself. And some of that may be due to the heavy turnaround season for the spring. But in general, I think it shows a little bit more discipline in the market. And as that wears off, it would be interesting to see what demand does in the summer season and how much of an uptick we get in gasoline. Diesel is still a little bit slow, but inventories are telling me that the crack's probably a little bit low from where it should be. Of course, offsetting it all is this increase in the RVO and the rent price that accelerated almost $2 in the quarter.

Perfect, guys. A quick question here on the rvo and sre side i mean trump administration last time in office understood the importance of sres so that's one the other that we are hearing out there is they actually want to raise the rvo on the d4 side uh with the you know multiple participants being involved in the discussion so how do you see this playing out and in your opinion is the right way to decouple D4 and D6 and let them operate separately, help us understand what would be the best solution in your opinion. Thank you.

Well, this is, as you know, is a highly controversial issue. But, you know, we do believe decoupling fours from sixes is an important move. And the only way it can really happen is if the D6 mandate is lowered or is something below an E10 that is really adjusted for volume because having it fixed at $15 billion, which, by the way, is the majority of the $22 billion, $23 billion mandate, really just drives D4s into having to make it up because the volumes are not there. All that said, again, the government created these businesses And, you know, what they did with the RVO that was issued three years ago was just cut the legs out from under it and generate a lot of excess D4s and just kind of messed the whole thing up. And then the BTC expired, which automatically increases the rent price. So, you know, who suffers out of all this? Well, it's the driving public, the American citizen that is the hardworking driver men and women who really depend on low-cost fuel to really drive the economy. So, you know, I think the government's got a lot of thinking to do. And in our minds, what they should do is do everything they can to minimize rent prices just because it affects the driving public. That said, on the other hand, they should set production on the on renewable diesel and biodiesel to what the production capabilities are, which they have not done. And the law kind of implies that's what should be done. So as I've said many times, this RFS was poorly conceived, poorly written, poorly implemented, and poorly managed. And I don't see that changing.

Thank you, sir.

You're welcome. Our next question comes from the line of Matthew Blair with Tudor Pickering. Please proceed with your question.

Hey, good morning, Dave, and congrats on the positive RD EBITDA result in the first quarter, even without the 45Z. Did you talk about how things are progressing so far in the second quarter? Do you still expect to be EBITDA positive in Q2? And then, you know, some of your peers have been recording the 45Z benefit So could you talk about what you need to see to get more comfortable in recording the 45C for CVI?

Sure. Well, you know, I don't know that we see much changing other than RINs going up in the second quarter, and that obviously is helping our margins in renewable diesel. Bean oil has also gone up, and hobo, as I mentioned, has gone more negative than than ever. So, you know, all those offsets, all depends on what BASIS does, as well as our hedging strategy on the feedstocks and the product. So that's kind of where we sit today. As far as the PTC and recognizing that, Dane, you want to address that? Yeah, Matt.

You know, the notice that the IRS put out in January just left a number of questions as to what specifically counts as a qualifying sale. We just wanted to get a little more comfort and clarity around the qualifying sale provisions that are out before we go ahead and book anything. In addition to that, there's still a lot of talk around what the actual PTC credit value could be. Just for reference, we could ballpark the number we didn't book, around $2 million, and we don't lose the ability to book that going forward. It's just we want more certainty before we take it. So a little bit of a conservative position while things shake out.

Thanks. That's helpful. And then my follow-up is around refiner M&A and the potential for industry consolidation. So if we look back over the past 10 years, which I think covers a range of environments, there's been pretty significant outperformance by the large cap refiners. And if we look forward, you know, futures curves on the product side are a little weaker. Futures curves on crude differentials are relatively tight for inland barrels. it really seems like the benefits of economies of scale would be even greater going forward. And so my question is, you know, do you agree with this assessment? And, you know, do you think that small refiners need to get bigger? And if so, do you think it'll actually happen? Thank you.

Well, a lot in that question, Matt. I think we would definitely agree with you, economies of scale are the only way to survive these days. And some of our problem is that we're highly concentrated in the mid-con only. Anything we can do to diversify that is helpful as long as it's profitable. So I do think there's potential out there for some more consolidation, although it's getting pretty thin. on the counterparties that can even make any sense. But we definitely agree with your approach on that.

Great. Thank you. Thank you.

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

All right, Dave and team. Thanks for taking the time. My first question is on Coffeyville. Congratulations on getting that asset up and running. I know the turnaround took a little bit longer and extended into Q2, but, you know, just talk about, you know, what you achieved during that, you know, the time to the next turnaround and thoughts on the ability to start up, stay up.

Yeah, Neil, I guess I would tell you this is not the way to do a turnaround. Having to come down early like we did, I mean, losing on NAPA 100 meter really, really hurt us. And that was in the dead of winter, of course, which didn't help either. And we had a pretty cool, I'll call it cool, not necessarily cold, winter. And when you get out of sequence, all kinds of things happen. You get a different team that may have been occupied somewhere else on your contractors. Just about anything that can go wrong went wrong for us in this turnaround. And it shows in the duration was extended. You know, whether or not we have an insurance claim to do, we're still contemplating, but it looks like to me that there's a good chance there could be something just because of the delays that hit us and the lack of productivity during the weather events and the other factors that happened that was out of our control. When you hit 45,000 man-hours of pre-turnaround work that you needed to complete before you start the turnaround and shove that into the turnaround, you can see how it is very disruptive. But I think we're through it, largely, and we're going to recover strong. We're looking forward to improved margins. it's been a bit of a drought since we've had the kind of margins we're seeing right now. And, you know, obviously, even despite RINs being elevated, our profitability should be improved.

Yeah, makes sense. And then as assuming margins start to come back a little bit, how do you think about the potential to return the dividend? It's been a a big part of the CVI story for a long time. So I was curious on that. I have a couple other questions. I'll cue back.

You've heard me say many times we're a dividend machine. We have taken a siesta on that a little bit here just because of where margins were for most of 24. But our goal, as I mentioned in our prepared remarks, is to pay down this additional debt that we took on get back to normal and start dividend at that time. Of course, the board looks at it every month or every quarter, and I think they'll continue to do that. If margins stay where they're at, we'll be looking at a dividend in the future.

Okay. I'll cue back in. Thanks, Dave.

Our next question comes from the line of John Royal with J.P. Morgan.

Please proceed with your question.

Hi, good afternoon. Thanks for taking my question. So my first question is on the jet expansion at Coffeyville. When you spoke about that in 4Q, you mentioned at the time, you know, one big constraint to think about or one big challenge to think about was building a book of customers to buy jet. Is there any update you can give on those efforts? Do you think that the demand will be there by the time you're ready to start producing?

Well, I think it will be, John. I mean, where we're at right now is, you know, a lot of the major airlines are on three-year bid contracts, and those are coming up for at least two of them in 25. So we're anticipating that we'll achieve some of that business. So that's probably our greatest look. We also have our fuel-by-rail, you know, that – that we have that if the ARB's open to the west, we can move JET that way. I don't think it's going to be a big problem, but it is going to take a little time to build a book of business. If you look at what we've done at Winniewood, we've made JET there for years, and most of it was through a military contract. We lost that last year, and we've still been successful in moving JET out of the plant. I don't think it is going to be a big problem.

Great. Thank you. And then my follow-up is on the renewable side. You talked about needing further assurance to get to a positive investment decision on a project within renewables today. Can you talk about what would give you that type of assurance? Is it just finalizing the PTC rules and the LCFS plan and getting the RFS complete? Or would you need some sort of longer-term assurance? Is it more than just the near-term rules?

Well, there's one thing we've learned in the renewable diesel business is that you can't count on credits. They change. The government, you know, administrations change. You get different philosophies. And the approach we've taken is largely we're willing to do SAF if somebody is willing to take the credit risk. We'll give them the credits that are there, but we're not going to take it ourselves. And that just kind of summarizes renewable diesel and SAF to me. across the board. We have a larger project at Coffeyville that we've put together and designed and have a cost estimate done on it. But it's a 500 million gallon a year plant and it's costly. But if SAF is really needed and renewable diesel, we could design that for 100% SAF if we wanted to. We sit in the middle of the ag area. Certainly for corn oil, we're advantaged. And that's a low CI feedstock. So, you know, there's a lot we can do. But we're not going to do it if we can't trust the government to provide a steady stream of credits that when you're taking a $4 or $5 oil and trying to shove it into a $2 market, it just doesn't work.

Thank you. You're welcome.

Our next question comes from the line of Paul Cheng with Scotiabank. Please proceed with your question.

Hey, guys. Good morning. Good afternoon. Dan, maybe you can help me. I still couldn't understand why the renewable result is so good. In the fourth quarter, your gross margin is $1.13, and in the first quarter, you're $1.15 and In the first quarter, you are doing about 93 cents, but you lost BTC, that's a dollar per gallon. So, I mean, what else is in there? In other words, is the first quarter really is a good baseline or that there's something related to your hedging program or that the way how you count the inventory, and as a result, that's not a totally good baseline.

Yeah, well, I think you hit one of them on the head. There was about a 14 cent per gallon favorable realized hedge in place just associated with the inventory. In addition to that, the elevated rinse price picked up another, call it dime 15 cents a gallon. So those two just gave us a lift right away. There were some inventory impacts, maybe another dime to 15 cents, something like that. So to say To say it's a good baseline, there were some items that were, you call it maybe exceptional for the period. We'll, of course, keep deploying the same strategy we have and see what results come out of it in the volatile market of renewable diesel. The one thing that was different that is probably more baseline is just our feedstock basis was much improved. Really, one of our highest cost feedstocks was lower than our lowest cost feedstock in the prior period. which is really a testament to having the pre-treater on, getting into that feed, getting better yields, and running more reliably. So from that component, I would say you could baseline there that we've improved that. But as far as some of the other items go, I wouldn't want to say that's a permanent fixture in the volatile market that RD is.

And yield was up too, Paul. So, I mean, don't underestimate that. A 5% yield improvement goes a long way.

Well, I'm trying to say, okay, I mean, if you report $0.93 based on what you say about those three items, it's roughly about $0.45. So is that a good baseline that we can use to project forward? It's assuming somewhere in the $0.45, and that's not including PTC at all. That seems like it's a phenomenal number compared to some of your larger competitors, what they report.

So I guess I would say, Paul, if you're referencing like an adjusted margin, you know, it was $0.85 for a queue, $0.93 in one queue. That takes out that inventory benefit that I referenced.

Right.

Yeah. So the $0.08 improvement, I mean, you got $0.15 from hedging. You've got another dime or so. So if you take out that $0.20, you'd be in the $0.70 range. You know, that is excluding PTC, which would be an incremental kicker. But again, I think the market's so volatile that I wouldn't want to set a baseline of expectations for how much these markers move around.

Right, understand. And then the hedging, the $0.14 benefit from the hedging, are we continue going to see that into the second and third quarter, or that the hedging benefit will just disappear, or that reverse?

Paul, that hedging is really around price exposed inventory or excess inventory. So we'll take a protective position, a short position on any excess inventories. So from that perspective, again, subject to what the market does and how our feed performs.

I see. And Dave, I think in the past that, and you say it here again, about the economy of scale, the desire that for uh, diversification, uh, beyond your current, uh, footprint. Um, where are we in that whole exercise at this point? Uh, are we essentially say just waiting for other people that to come to you or that is still being, uh, actively pursue or that is, is there any colors that, uh, you can, you can share?

Well, nothing I can really share, Paul. As we've said before, we look at everything that comes on the market and try to screen it through our picture. Historically, to date, the bid-ask has been too wide for us. And thank goodness, because the market really took a hit in 2024. come off a record year in 23 and go to just a record low year in 24. So, you know, I think we're pretty conservative. We want, you know, I won't say we're bottom fishers, but we're pretty close to that. And, you know, we're not going to overpay for an asset.

And can I just make one clarification? I think, Dane, you earlier said that $2 million for the PTC, if you would be able to fully book it for the quarter, Do I get the number right?

That is correct. And as I mentioned, there's ongoing debate around what the value of the PTC is based on your feed, and there's some questions out there. So that number I wouldn't say is final, but based on some of the rumors we've heard or some of the conversations that are going on, that could be a conservative number. It could be double that.

Okay, will do.

Thank you. You're welcome, Paul.

Our next question is a follow-up from Neil Meadow with Goldman Sachs. Please proceed with your question.

Two quick ones. Dave, you always have great perspective on US shale. I mean, TI is pushing on $60 at this point. What's your perspective on US oil growth, and what are the pricing levels that you think activity changes?

Well, you know, I think I've said many times is, you know, I think we're – We're in a, you know, it depends on the company you're talking about, but, you know, a lot of them are, you know, break-evens are being approached with the numbers we're at, or just slightly, you know, break-even slightly below that. Very much depends on the region you're in. Obviously, Permian's probably the lowest, and the Anarco or DJ Basin or some of those others are probably the higher, or Bakken, too. So it really depends on where you're at. And the rigs are falling. I expect that to continue. And we've had, in our basin, the Antarctic had really probably pretty big growth. But it's really one player. What they're going to go do from here on out, we really don't know. Our gathering volumes are still pretty strong. but I'm anticipating they're going to fall off a little bit.

All right. Well, we'll keep on watching. The other one's a little trickier. I think a lot of the investment community is a little confused about all the insider activity at the company. I don't know if anything you can comment around that. It's just unusual.

We probably can't comment much on that. You'd probably have to ask them themselves. Okay. Thanks, David. You're welcome.

We have reached the end of the question and answer session. I would now like to turn the floor back over to management for closing comments.

Again, I'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 to our safe, reliable, and environmentally responsible operations. We look forward to reviewing our second quarter 2025 results in our next earnings call. Thank you very much.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.