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Item 7. Management’s Discussion and Analysis

2023-02-22 compared with 2022-02-23 · 390 added, 357 removed, 423 unchanged (64% of the section changed)

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The following discussion and analysis of our financial condition, results of operations and cash flow should be read in conjunction with our consolidated financial statements and related notes and with the statistical information and financial data included elsewhere in this Report.

References to CVR Energy, the Company, “we,” “us,” and “our” may refer to consolidated subsidiaries of CVR Energy, including CVR Refining or CVR Partners, as the context may require.

References to “CVR Energy”, “CVR”, the “Company”, “we”, “us”, and “our” may refer to consolidated subsidiaries of CVR Energy, including CVR Partners, as the context may require.

This discussion and analysis covers the years ended December 31, 2022 and 2021 and discusses year-to-year comparisons between such periods.

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Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Report.

Company Overview

CVR Energy is a diversified holding company primarily engaged in the petroleum refining and marketing industry (the “Petroleum Segment”) and the nitrogen fertilizer manufacturing industry through its interest in CVR Partners, LP, a publicly traded limited partnership (the “Nitrogen Fertilizer Segment” or “CVR Partners”).

The Petroleum Segment does not have crude oil exploration or production operations (an “independent petroleum refiner”) and is a marketer of high value transportation fuels primarily in the form of gasoline and diesel fuels.

CVR Partners produces and markets nitrogen fertilizers primarily in the form of urea ammonium nitrate (“UAN”) and ammonia.

We also produce and market renewable diesel.

Our renewable diesel operations are not part of our reportable segments discussed below.

We operate under two reportable segments:

petroleum and nitrogen fertilizer, which are referred to in this document as our “Petroleum Segment” and our “Nitrogen Fertilizer Segment,” respectively.

Renewables Business

Effective February 1, 2023, in connection with our growing focus on decarbonization, we transformed our business to segregate our renewables business.

As part of this transformation, in the first quarter of 2022, we formed 16 new indirect, wholly-owned subsidiaries (“NewCos”) of CVR Energy.

In addition, in April 2022, in connection with our Corporate Master Service Agreement effective January 1, 2020, by and among our wholly-owned subsidiary, CVR Services, LLC (“CVR Services”), and certain other of our subsidiaries, including but not limited to CVR Partners and its subsidiaries, pursuant to which CVR Services provides the service recipients thereunder with management and other professional services (the “Corporate MSA”), the NewCos were joined as service recipients under the Corporate MSA.

The Company also transferred certain assets to these NewCos to, among other purposes, better align our organizational structure with management, financial reporting, and our goal to maximize our renewables focus.

Potential Spin-Off of Nitrogen Fertilizer Business

On November 21, 2022, we announced that CVR Energy’s board of directors (the “Board”) had authorized management to explore a potential spin-off of our interest in the nitrogen fertilizer business into a newly created and separately traded public

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If completed, upon effectiveness of the potential spin-off transaction, CVR Energy stockholders would own shares of both CVR Energy, holding the refinery and renewables businesses, and a holding company, holding CVR Energy’s current ownership of the general partner interest in, and approximately 37% of the common units (representing limited partner interests) of CVR Partners.

If we proceed with the spin-off, it would be intended to be structured as a tax-free, pro-rata distribution to all of CVR Energy’s stockholders as of a record date to be determined by the Board.

Completion of any potential spin-off would be subject to various conditions, including final approval of our Board, and there can be no assurance that the potential spin-off will be completed in the manner described above, or at all.

We expect to incur significant costs in connection with exploring the potential spin-off transaction of our nitrogen fertilizer business into a newly created and separately traded public company.

Spin-off exploration costs include legal, accounting, and advisory fees, implementation and integration costs, duplicative costs for subscriptions and information technology systems, employee and contractor costs, and other incremental separation costs related to the potential spin-off of the nitrogen fertilizer business.

The potential spin-off transaction results in operating expenses that would not otherwise have been incurred by us in the normal course of our organic business operations, and we expect to incur additional spin-off exploration costs in future periods.

Strategy and Goals

The Company has adopted Mission and Values, which articulate the Company’s expectations for how it and its employees do business each and every day.

Mission and Core Values

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We use defined work practices for consistency, efficiency and to create value across the organization.

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Our core Values are driven by our people, inform the way we do business each and every day and enhance our ability to accomplish our mission and related strategic objectives.

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We have outlined the following strategic objectives to drive the accomplishment of our mission:

Safety - We aim to achieve continuous improvement in all environmental, health and safety areas through ensuring our people’s commitment to environmental, health and safety comes first, the refinement of existing policies, continuous training, and enhanced monitoring procedures.

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Environmental, Health & Safety (“EH&S”) - We aim to achieve continuous improvement in all EH&S areas through ensuring our people’s commitment to environmental, health and safety comes first, the refinement of existing policies, continuous training, and enhanced monitoring procedures.

Reliability - Our goal is to achieve industry-leading utilization rates at our facilities through safe and reliable operations.

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Financial Discipline - We strive to be as efficient as possible by maintaining low operating costs and disciplined deployment of capital.

We successfully executed a number of achievements in support of our strategic objectives shown below through the date of this filing despite the challenges experienced by the industry during 2021 as a result of the continuing COVID-19 pandemic:

From the beginning of the fiscal year through the date of filing, we successfully executed a number of achievements in support of our strategic objectives shown below:

Safety Reliability Market Capture Financial Discipline

Achieved reductions in environmental events, process safety management tier 1 incidents and total recordable incident rate of 44%, 50% and 20%, respectively, compared to 2020 ü

Announced and paid a special dividend equivalent to $4.89 per share, including a distribution to our stockholders of substantially all of our investment in Delek US Holdings, Inc.

(“Delek”) from which we recognized gains of over $100 million from our initial investment ü

Achieved reduction in total recordable incident rate of 63% compared to 2021

Declared a quarterly cash dividend of $0.50 per share for the fourth quarter of 2022, bringing total dividends declared, including special dividends, to date of $5.30 per share related to 2022

Completed plan to transform our business to segregate our renewables operations ü ü

Safely completed the conversion of the Wynnewood hydrocracker to renewable diesel service ü ü ü

Began the exploration of a potential spin-off of our Nitrogen Fertilizer business ü ü

Published our first external ESG Report for 2021 ü ü

Petroleum Segment:

Operated our refineries safely and reliably and at high utilization rates ü ü ü

Achieved reductions in environmental events and total recordable incident rate of 31% and 44%, respectively, compared to 2020 ü

Received Board approval to construct a pretreater at Wynnewood and to complete process design for a potential Renewable Diesel project at Coffeyville

Completed the acquisition of Oklahoma crude oil pipeline in February 2021 ü ü

Nitrogen Fertilizer:

Operated both facilities safely and reliably and at high utilization rates ü ü ü

Achieved reductions in environmental events and process safety management tier 1 incidents of 67% and 73%, respectively, compared to 2020 ü

Achieved record truck shipments from the Coffeyville Fertilizer Facility in March 2021 ü ü

Achieved a reduction in total recordable incident rate of 20% and maintained a level number of environmental events compared to 2021

Operated our refineries safely and reliably ü ü

Safely completed the planned turnaround at the refinery in Wynnewood, Oklahoma (the “Wynnewood Refinery”) on time and on budget

Completed an amendment and extension of the CVR Refining, LP (“CVR Refining”) Asset Based Credit Agreement in June 2022 ü

Achieved record truck-gathered crude oil volumes in the third quarter of 2022

Nitrogen Fertilizer Segment:

Achieved reductions in process safety management tier 1 incidents and total recordable incident rate of 37% and 86%, respectively, compared 2021

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Safety Reliability Market Capture Financial Discipline

Achieved record ammonia production at the Coffeyville Fertilizer Facility in September 2021 and at the East Dubuque Fertilizer Facility in November 2021 ü ü

Utilized downtime throughout the year to proactively complete maintenance work at the Coffeyville Fertilizer Facility, enabling the deferral of the planned turnaround from Fall 2021 to Summer 2022 ü ü ü

Increased UAN production capacity at Coffeyville by 100 tons per day through the installation of a CO2 compressor and ammonia pump ü

Reduced CVR Partners’ annual cash interest expense by over 33% through refinancing a substantial portion of the 2023 UAN Notes and subsequently redeeming $30 million of the remaining balance of the 2023 UAN Notes

Declared total cash distributions of $9.89 per common unit related to 2021 results

Safely completed the planned turnarounds at both fertilizer facilities on time and on budget, as well as inspected, repaired and replaced major equipment as necessary during this downtime ü ü ü ü

Achieved record UAN production volumes at the Coffeyville Fertilizer Facility in March 2022

Achieved record ammonia production at the East Dubuque Fertilizer Facility in December 2022

Completed transaction intended to monetize 45Q tax credits and received an initial upfront payment, net of expenses, of $18 million in January 2023

Declared cash distribution of $10.50 per common unit for the fourth quarter of 2022, bringing cumulative distributions declared to date of $24.58 per common unit related to 2022

Achieved average reduction in CO 2 e emissions of over 1 million metric tons per year since 2020 for CVR Partners

Completed CVR Partners’ targeted $95 million debt reduction plan with the repayment of the remaining $65 million balance of its 9.25% Senior Secured Notes, due 2023 (the “2023 UAN Notes”) in the first quarter of 2022 for a total reduction in annual cash interest expense of approximately $9 million

Repurchased over 111,000 CVR Partners common units for $12 million

Environmental, Social & Governance (“ESG”) Highlights

In the past year, we achieved numerous milestones through our commitment to sustainability, including environmental and safety stewardship, diversity and inclusion, community outreach and sound corporate governance.

We have also established our ESG Priorities, which will serve as a guide to the development of our ESG strategy and our first ESG Report, which we target for publication in 2022 based on Sustainability Accounting Standards Board standards.

The following highlights some key achievements of 2021:

Environmental, Health & Safety Stewardship In our Petroleum Segment In our Nitrogen Fertilizer Segment

ü Renewable diesel unit conversion expected to occur in mid-April at the Wynnewood Refinery

ü Wynnewood Refinery Feedstock pretreater construction & installation expected to be completed by end of 2022

ü Board approved process design study for the conversion of an existing hydrotreater at Coffeyville Refinery to renewable diesel and sustainable aviation fuel services

ü Reduced total recordable incident rate by 44%

ü Mitigated >1mm metric tons of carbon dioxide equivalents (CO 2 e)/year

ü Manufactured hydrogen and ammonia that qualifies as “blue” with carbon capture and sequestration through enhanced oil recovery

ü Reduced process safety Tier 1 incident rate by 73%

Supporting Our Employees & Contributing to Our Communities ü Diversity is key component of our Mission & Values

ü Site-Level Community Impact Committees steer local contributions, sponsorships and volunteer activities

ü Paid time off pursuant to Volunteerism Policy

ü Launched Company-wide Diversity & Inclusion training

ü Implemented Remote Work Policy supporting employee engagement and retention

Accountability ü Board-level ESG oversight

ü Average tenure of CVR Energy and CVR Partners’ Directors is less than 8 years

ü Standing EH&S Committee chaired by independent Director, former Assistant Administrator for Enforcement of the EPA

ü Annual Code of Ethics & Business Conduct Acknowledgement for all employees and directors

ü More than 75% of CEO Compensation is variable and tied to Company performance

We make modern life possible through the products we manufacture while contributing to the economic well-being of our employees and the communities where we operate.

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Industry Factors and Market Conditions

In December 2022, we published our first public report based on the Sustainability Accounting Standards Board standards.

Our 2021 Environmental, Social & Governance Report (“2021 ESG Report”) is available at CVR Energy’s website at www.CVREnergy.com.

Our 2021 ESG Report does not constitute a part of, and is not incorporated by reference into, this Annual Report on Form 10-K or any other report we file with (or furnish to) the SEC, whether made before or after the date of this Annual Report on Form 10-K.

Industry Factors and Market Indicators

General Business Environment

Throughout 2020 and 2021, the COVID-19 pandemic and actions taken by governments and others in response thereto negatively impacted the worldwide economy, financial markets, and the energy and fertilizer industries.

The COVID-19 pandemic also resulted in significant business and operational disruptions, including business closures, liquidity strains, destruction of non-essential demand, as well as supply chain challenges, travel restrictions, stay-at-home orders, and limitations on the availability of the workforce.

Vaccination efforts underway domestically and internationally provide promise for a sustained, near-term economic recovery with approximately 76% of the total U.S.

population receiving at least one dose of the vaccine and 64% considered fully vaccinated, as of February 10, 2022, according to the U.S.

Centers for Disease Control and Prevention.

As more businesses resume operations and governmental restrictions are being lifted, there is cautious optimism that the economy will continue to recover into 2022, but it is unknown if or when the economy will return to pre-COVID-19 levels.

In addition, the spread of variants of COVID-19 could cause restrictions to continue or be reinstated, which could reverse any recent improvements.

Russia-Ukraine Conflict and Global Market Conditions - In February 2022, Russia invaded Ukraine, disrupting the global oil, fertilizer, and agriculture markets, and leading to heightened uncertainty in the worldwide economy recovering from the COVID-19 pandemic.

In response, many countries have formally or informally adopted sanctions on a number of Russian exports, including Russian oil and natural gas, and individuals affiliated with Russian government leadership.

These sanctions resulted in oil price volatility and elevated natural gas prices during 2022, and should continue to impact commodity prices in the near-term, which could have a material effect on our financial condition, cash flows, or results of operations.

A global recession stemming from market volatility and higher price levels could result in demand destruction.

The ultimate outcome of the Russia-Ukraine conflict and any associated market disruptions, as well as the potential for high inflation and/or economic recession, are difficult to predict and may materially affect our business, operations, and cash flows in unforeseen ways.

COVID-19 - The economic effects from the COVID-19 pandemic on our business were and may again be significant.

Although our business has recovered since the onset of the pandemic in March 2020, there continues to be uncertainty and unpredictability about the lingering impacts to the worldwide economy, including in connection with the spread of variants of COVID-19 and resulting restrictions, that could negatively affect our business, financial condition, results of operations , and liquidity in future periods.

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Petroleum Segment

The earnings and cash flows of the Petroleum Segment are primarily affected by the relationship between refined product prices and the prices for crude oil and other feedstocks that are processed and blended into refined products.

The cost to acquire crude oil and other feedstocks and the price for which refined products are ultimately sold depend on factors beyond the Petroleum Segment’s control, including the supply of and demand for crude oil, as well as gasoline and other refined products which, in turn, depend on, among other factors, changes in domestic and foreign economies, driving habits, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and the extent of government regulation.

Because the Petroleum Segment applies first-in first-out accounting to value its inventory, crude oil price movements may impact net income in the short term because of changes in the value of its unhedged inventory.

The effect of changes in crude oil prices on the Petroleum Segment results of operations is partially influenced by the rate at which the prices of refined products adjust to reflect these changes.

The prices of crude oil and other feedstocks and refined products are also affected by other factors, such as product pipeline capacity, system inventory, local market conditions, and the operating levels of other refineries.

The cost to acquire crude oil and other feedstocks and the price for which refined products are ultimately sold depends on factors beyond the Petroleum Segment’s control, including the supply of and demand for crude oil, as well as gasoline and other refined products which, in turn, depend on, among other factors, changes in domestic and foreign economies, driving habits, weather conditions, domestic and foreign political affairs, production levels, the availability or permissibly of imports and exports, the marketing of competitive fuels and the extent of government regulation.

Because the Petroleum Segment applies first-in first-out accounting to value its inventory, crude oil price movements may impact net income because of changes in the value of its unhedged inventory.

The effect of changes in crude oil prices on the Petroleum Segment’s results of operations is partially influenced by the rate at which the processing of refined products adjusts to reflect these changes.

The prices of crude oil and other feedstocks and refined products are also affected by other factors, such as product pipeline capacity, system inventory, local and regional market conditions, inflation, and the operating levels of other refineries.

Crude oil costs and the prices of refined products have historically been subject to wide fluctuations.

Widespread expansion or upgrades of competitors’ facilities, price volatility, international political and economic developments, and other factors are likely to continue to play an important role in refining industry economics.

Widespread expansion or upgrades of third-party facilities, price volatility, international political and economic developments, and other factors are likely to continue to play an important role in refining industry economics.

These factors can impact, among other things, the level of inventories in the market, resulting in price volatility and a reduction in product margins.

Moreover, the refining industry typically experiences seasonal fluctuations in demand for refined products, such as increases in the demand for gasoline during the summer driving season and for volatile seasonal exports of diesel from the United States Gulf Coast markets.

As a result of government actions taken to curb the spread of COVID-19 and significant business interruptions, the demand for gasoline and diesel in the regions in which our Petroleum Segment operates declined substantially beginning at the end of the first quarter of 2020.

However, building on recovery signs observed in late 2020, the U.S.

market for refined products continued to show signs of recovery throughout 2021.

Gasoline demand increased due to increased mobility, which is the main driver for highway travel, while the increase in diesel demand is generally a result of the opening of coastal states such as California, New York, New Jersey, and Florida to global shipping and commerce.

The combination of improving demand and declining inventories led to an increase in refined products prices and crack spreads during 2021.

Additionally, the U.S.

demand for jet fuels has begun to recover, albeit at a slower pace than gasoline and diesel, as international and domestic business and leisure air travel increases.

Jet fuel demand is approximately 85% of pre-2020 demand levels.

From a global perspective, the U.S.

Energy Information Administration (“EIA”) currently expects oil production will increase by more than global oil consumption, resulting in a rise of approximately 182 million barrels in 2022.

However, these projections depend on the production decisions of OPEC, U.S.

oil production, and the pace of oil demand growth.

While the refining market is showing signs of recovery, refinery fleet utilization is still operating at lower rates, and there remains uncertainty as to whether another wave of COVID-19 cases may spur additional governmental restrictions and lock-downs in the future which could decrease the recovery efforts seen thus far in 2021.

In addition to current market conditions discussed above, we continue to be impacted by significant volatility related to compliance requirements under the Renewable Fuel Standard (“RFS”), proposed climate change laws, and regulations.

Specific factors impacting the Company’s operations are outlined below:

Current Market Outlook

• After substantial declines in demand for gasoline and diesel due to the COVID-19 pandemic in 2020, the combination of improving demand, declining inventories, loss of domestic and foreign operating refining capacities, and conversions to renewable diesel facilities led to an increase in refined products prices and crack spreads during 2021 and 2022.

While the refining market has largely recovered, refined product demand declined 5% nationwide in January 2023 from the 2022 average.

However, distillate crack spreads have remained elevated to date in 2023.

• Warmer winter weather in Europe has significantly reduced natural gas prices in the region from December 2022 to January 2023, which has flattened the global cost curve and has hurt U.S.

refiners’ advantage.

• Contributing to the ultra-low sulfur diesel (“ULSD”) supply constraints is the International Maritime Organization’s new limit on the sulfur content in the fuel oil used on board ships (“bunker fuel”) effective January 1, 2020, which lowered the sulfur limit of bunker fuel from 3.5% to 0.5% (the “IMO 2020 Regulations”), which necessitated blending ULSD into bunker fuel to meet the new specifications.

The resulting reduction of supply for traditional ULSD demand was initially muted by the pandemic-induced demand contraction.

• Due to the IMO 2020 Regulations, heavy crude differentials have widened, particularly for WCS.

However, the expansion of the Trans Mountain Pipeline currently expected to be completed in 2023 should potentially narrow this differential going forward.

• Shale oil production continues to increase in the shale oil basins, including the Anadarko Basin.

Crude oil exports peaked in the fourth quarter of 2022 at over 5 million bpd, and we believe the Petroleum Segment benefits from these exports through the Brent crude differential to WTI, as well as all refineries in PADD II.

• Drilled but uncompleted wells inventory in the United States has decreased significantly as a result of decreased drilling activity in 2022.

• Significant capacity additions are expected in 2023, headlined by major projects scheduled to start up in the Middle East, Asia, and Africa.

Some of the capacity additions could be offset with a likely economic rebound in China amid easing COVID-19 restrictions but refined product consumption is slowing in the United States and remains weak in Europe.

• The Russia-Ukraine conflict creates additional uncertainty, as sanctions on Russian oil exports, specifically diesel exports, have significantly influenced commodity markets in 2022 and into 2023.

Resolution of this conflict could continue to affect markets going forward.

Based on these factors, current inventory levels have remained low, particularly for distillate, with the days of supply for distillate and jet fuel at approximately 3.8 and 6.1 days,

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petroleum business is subject to the RFS, which, each year, requires blending “renewable fuels” with transportation fuels or purchasing renewable identification numbers (“RINs”), in lieu of blending, or otherwise be subject to penalties.

Our cost to comply with the RFS is dependent upon a variety of factors, which include the availability of ethanol and biodiesel for blending at our refineries and downstream terminals or RINs for purchase, the price at which RINs can be purchased, transportation fuel production levels, and the mix of our products, all of which can vary significantly from period to period, as well as certain waivers or exemptions to which we may be entitled.

Additionally, our costs to comply with the RFS depend on the consistent and timely application of the program by the Environmental Protection Agency (“EPA”), such as timely establishment of the annual renewable volume obligation (“RVO”).

Due to the EPA’s unlawful failure to establish the 2021 and 2022 RVOs by the November 30, 2020 and 2021 statutory deadlines, respectively, the EPA’s delay in issuing decisions on pending small refinery hardship petitions, and the influence exerted and climate change initiatives announced by the Biden administration, among other factors, the price of RINs has been highly volatile and remains high.

The price of RINs has also been impacted by the depletion of the carryover RIN bank, as demand destruction during the COVID-19 pandemic resulted in reduced ethanol blending and RIN generation did not keep pace with mandated volumes, requiring carryover RINs from the RIN bank to be used to settle blending obligations.

As a result, our costs to comply with RFS (based on the 2020 RVO and proposed preliminary 2021 RVO range, for the respective periods, excluding the impacts of any exemptions or waivers to which the Petroleum Segment may be entitled) increased significantly throughout 2020 and remain significant through 2021.

Additionally, the EPA’s unlawful failure to establish the 2021 and 2022 RVOs has made it difficult for regulators to forecast the demand for gasoline, diesel, and jet fuel consumption, which may drive a decrease in the availability and increase the cost of RINs.

On December 7, 2021, the EPA proposed revised 2020, preliminary 2021, and 2022 RVO ranges.

In addition, a proposal to deny substantially all pending petitions for SREs was released.

Although both of the previously mentioned proposals are not yet final and are pending public comments, these proposals have kept the price of RINs elevated.

The EPA’s actions, and unlawful failure to act, as well as the outcome of numerous pending lawsuits relating to the RFS, could materially impact the price of RINs and existing waiver applications.

As a result, we continue to expect significant volatility in the price of RINs during 2022 and such volatility could have material impacts on the Company’s results of operations, financial condition and cash flows.

In December 2020, CVR Energy’s board of directors (the “Board”) approved the renewable diesel project at our Wynnewood Refinery, which would convert the Wynnewood Refinery’s hydrocracker to a RDU expected to be capable of producing up to 100 million gallons of renewable diesel per year and approximately 170 to 180 million RINs annually.

Currently, total estimated cost for the project is $170 million.

Mechanical completion and startup of the RDU is expected to occur in the second quarter of 2022.

The production of renewable diesel is expected to significantly reduce our net exposure to the RFS.

Further, the RDU should enable us to capture additional benefits associated with the existing blenders’ tax credit currently set to expire at the end of 2022 and growing low carbon fuel standard programs across the country, with programs in place in California and Oregon and new programs anticipated to be implemented over the next few years.

In May 2021, the Board approved a $10 million capital expenditure for the completion of the design and ordering of certain long-lead equipment relating to a potential project to add pretreating capabilities for the RDU at Wynnewood and for the completion of the design for a potential conversion of an existing hydrotreater at our refinery in Coffeyville, Kansas (the “Coffeyville Refinery”) to renewable diesel service.

In November 2021, the Board approved the pretreater project at the Wynnewood Refinery, which is expected to be completed in the fourth quarter of 2022 at an estimated cost of $60 million.

The pretreatment unit should enable us to process a wider variety of renewable diesel feedstocks and untreated soybean and corn oil at the Wynnewood Refinery, most of which have a lower carbon intensity than soybean oil and generate additional low carbon fuel standard credits.

When completed, these collective renewable diesel efforts could effectively mitigate a substantial majority, if not all, of our RFS exposure.

However, impacts from recent climate change initiatives under the Biden administration, actions taken by the Supreme Court, resulting administration actions under the RFS, and market conditions could significantly impact the amount by which our renewable diesel business mitigates our costs to comply with the RFS, if at all.

Current plans are to convert the hydrocracker to renewable diesel service beginning in late February 2022, with expectations for the conversion to be complete in mid-April 2022.

The Company anticipates the unit to be at full capacity in the second quarter of 2022, processing mainly treated soybean and corn oil.

As of December 31, 2021 and based on the 2020 RVO and proposed preliminary 2021 RVO range, we have an estimated open position (excluding the impacts of any exemptions or waivers to which we may be entitled) under the RFS for both 2020 and 2021 of approximately 370 million RINs, excluding approximately 2 million of net open, fixed-price commitments to purchase RINs, resulting in a potential liability of $494 million.

The Company’s open RFS position, which does not consider open commitments expected to settle in future periods, is marked-to-market each period and thus significant market volatility, as experienced in late 2020 and in 2021, results in significant volatility in our RFS expense from period to period.

respectively, below the seasonally adjusted five-year averages.

Furthermore, planned and unplanned outages at domestic refineries are continuing to contribute to further inventory tightening and volatility.

Regulatory Environment

• We continue to be impacted by significant volatility and excessive RIN prices related to compliance requirements under the Renewable Fuel Standard (“RFS”), proposed climate change laws, and regulations.

Coffeyville Resources & Marketing, LLC (“CRRM”) and Wynnewood Refining Company, LLC (“WRC” and, together with CRRM, the “obligated-party subsidiaries”), are subject to the RFS, which, each year, absent exemptions or waivers, requires blending “renewable fuels” with transportation fuels or purchasing renewable identification numbers (“RINs”), in lieu of blending, or otherwise be subject to penalties.

Our cost to comply with the RFS is dependent upon a variety of factors, which include the availability of ethanol and biodiesel for blending at our refineries and downstream terminals or RINs for purchase, the price at which RINs can be purchased, transportation fuel and renewable diesel production levels, and the mix of our products, all of which can vary significantly from period to period, as well as certain waivers or exemptions to which we may be entitled.

Our costs to comply with the RFS depend on the consistent and timely application of the program by the Environmental Protection Agency (“EPA”), such as timely establishment of the annual renewable volume obligation (“RVO”).

RIN prices have been highly volatile and remain high due in large part to the EPA’s unlawful failure to establish the 2021, 2022, and 2023 RVOs by their respective statutory deadlines, the EPA’s delay in issuing decisions on pending small refinery hardship petitions, and subsequent denial thereof.

The price of RINs has also been impacted by market factors and the depletion of the carryover RIN bank, as demand destruction during the COVID-19 pandemic resulted in reduced ethanol blending and RIN generation that did not keep pace with mandated volumes, requiring carryover RINs from the RIN bank to be used to settle blending obligations.

As a result, our costs to comply with RFS (excluding the impacts of any exemptions or waivers to which the Petroleum Segment’s obligated-party subsidiaries may be entitled) increased significantly throughout 2021 and remained significant in 2022.

• In April 2022, the EPA denied 36 small refinery exemptions (“SRE”) for the 2018 compliance year, many of which had been previously granted by the EPA, and also issued an alternative compliance demonstration approach for certain small refineries (the “Alternate Compliance Ruling”) under which they would not be required to purchase or redeem additional RINs as a result of the EPA’s denial.

On June 3, 2022, the EPA revised the 2020 RVO and finalized the 2021 and 2022 RVOs.

The EPA also denied 69 petitions from small refineries seeking SREs, including those submitted by WRC for 2017 through 2021, and applied the Alternate Compliance Ruling to three such petitions.

The price of RINs did not respond to the EPA announcement and continues to remain elevated, and as a result, we continue to expect significant volatility in the price of RINs during 2023 and such volatility could have material impacts on the Company’s results of operations, financial condition and cash flows.

• In December 2022, the EPA announced proposed RVO’s for 2023, 2024, and 2025 which mandated biodiesel RINs production to comply with ethanol RINs mandates.

Company Initiatives

• In April 2022, we completed the renewable diesel project at our Wynnewood Refinery by converting the Wynnewood Refinery’s hydrocracker to a RDU, at a total cost of $179 million, which is capable of producing approximately 100 million gallons of renewable diesel per year and generating approximately 170 to 180 million RINs annually.

The production of renewable diesel is expected to significantly reduce our future net exposure to the RFS.

Further, the RDU has enabled us to capture additional benefits associated with the existing blenders’ tax credit, which has been extended to the end of 2024, and growing Low Carbon Fuel Standard (“LCFS”) programs across the country, with programs in place in California and Oregon and new programs anticipated to be implemented over the coming years.

• In November 2021, the Board approved the pretreater project at the Wynnewood Refinery, which is currently expected to be completed in the third quarter of 2023 at an estimated cost of $95 million.

The pretreatment unit should enable us to process a wider variety of renewable diesel feedstocks at the Wynnewood Refinery, most of which have a lower carbon intensity than soybean oil and generate additional LCFS credits.

When completed, the collective renewable diesel efforts could effectively mitigate a substantial majority, if not all, of our future RFS exposure, assuming we receive SREs for our Wynnewood Refinery which we believe we are legally entitled to and are pursuing in the courts.

However, impacts from recent climate change initiatives under the Biden Administration, actions taken by the courts, resulting administration actions under the RFS, and market conditions, could significantly impact the amount by which our renewable diesel business mitigates our costs to comply with the RFS, if at all.

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recognized an expense of $435 million and $190 million for the years ended December 31, 2021 and 2020, respectively, for the Petroleum Segment’s compliance with the RFS.

The increase in 2021 compared to 2020 was driven by the significant increases in RINs pricing through the fourth quarter of 2021 and our open position with respect to both the 2020 and 2021 obligations (excluding the impacts of any exemptions or waivers to which we may be entitled).

Of the expense recognized during the years ended December 31, 2021 and 2020, an expense of $63 million and $59 million relates to the revaluation of our net RVO position as of December 31, 2021, respectively.

As of December 31, 2022, we have an estimated open position (excluding the impacts of any exemptions or waivers to which we may be entitled) under the RFS for 2020, 2021 and 2022 of approximately 397 million RINs, excluding approximately 34 million of net open, fixed-price commitments to purchase RINs, resulting in a potential liability of $692 million.

The Company’s open RFS position, which does not consider open commitments expected to settle in future periods, is marked-to-market each period and thus significant market volatility, as experienced in late 2021 and 2022, could impact our RFS expense from period to period.

We recognized expense of approximately $435 million, net of the RINs generated from our renewable diesel operations of $103 million, and $435 million for the years ended December 31, 2022 and 2021, respectively, for the Company’s obligated-party subsidiaries compliance with the RFS.

The increase in 2022 compared to 2021 was driven by an increase in RINs pricing through the fourth quarter of 2022.

Of the expense recognized during the years ended December 31, 2022 and 2021, an expense of $135 million and $63 million relates to the revaluation of our net RVO position as of December 31, 2022 and 2021, respectively.

The revaluation represents the summation of the prior period obligation and current period commercial activities, marked at the period end market price.

Based upon recent market prices of RINs in January 2022, current estimates related to other variable factors, including our anticipated blending and purchasing activities, and the impact of the open RFS positions and resolution thereof, and credits generated by the RDU, our estimated consolidated cost to comply with the RFS (without regard to any SREs we may receive) is $200 to $210 million for 2022.

Based upon recent market prices of RINs in January 2023, current estimates related to other variable factors, including our anticipated blending and purchasing activities, and the impact of the open RFS positions and resolution thereof, our estimated consolidated cost to comply with the RFS (without regard to any SREs the obligated-party subsidiaries may receive) is $230 to $240 million for 2023, net of the estimated RINs generation from our renewable diesel operations of $240 to $250 million.

Market Indicators

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The pricing differences between other crudes and WTI, known as differentials, show how the market for other crude oils such as WCS, White Cliffs (“Condensate”), Brent Crude (“Brent”), and Midland WTI (“Midland”) are trending.

Due to the COVID-19 pandemic, actions taken by governments and others in response thereto, refined product prices have experienced extreme volatility.

As a result of the current environment, refining margins have been and could continue to be significantly reduced.

Due to the COVID-19 pandemic, the Russia-Ukraine conflict, and, in each case, actions taken by governments and others in response thereto, refined product prices have experienced extreme volatility.

As a result of the current environment, refining margins have been and will continue to be volatile.

As a performance benchmark and a comparison with other industry participants, we utilize NYMEX and Group 3 crack spreads.

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The Group 3 2-1-1 crack spread averaged $38.18 per barrel in 2022 compared to $18.14 per barrel in 2021.

The benefit realized from increased cracks was partially offset by a substantial increase in RINs prices.

Average monthly prices for RINs increased 12.4% during 2022 compared to 2021.

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The tables below are presented, on a per barrel basis, by month through December 31, 2022:

Crude Oil Differentials against WTI (1)(2)

NYMEX Crack Spreads (2)

December 31, 2022 | 50

PADD II Group 3 Product Crack

Spread and RIN Pricing (2)(3) ( $/bbl )

Group 3 Differential against NYMEX

WTI (1)(2) ( $/bbl )

(1) The change over time in NYMEX - WTI, as reflected in the charts above, is illustrated below.

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(2) Information used within these charts was obtained from reputable market sources, including the New York Mercantile Exchange (“NYMEX”), Intercontinental Exchange, and Argus Media, among others.

(3) PADD II is the Midwest Petroleum Area for Defense District (“PADD”), which includes Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, and Wisconsin.

Nitrogen Fertilizer Segment

Within the Nitrogen Fertilizer Segment, earnings and cash flows from operations are primarily affected by the relationship between nitrogen fertilizer product prices, utilization, and operating costs and expenses, including pet coke and natural gas feedstock costs.

The price at which nitrogen fertilizer products are ultimately sold depends on numerous factors, including the global supply and demand for nitrogen fertilizer products, world grain demand and production levels, changes in world population, the cost and availability of fertilizer transportation infrastructure, local market conditions, operating levels of competing facilities, weather conditions, the availability of imports, impacts of foreign imports and foreign subsidies thereof, and the extent of government intervention in agriculture markets.

The price at which nitrogen fertilizer products are ultimately sold depends on numerous factors, including the global supply and demand for nitrogen fertilizer products which, in turn, depends on, among other factors, world grain demand and production levels, inflation, global supply disruptions, changes in world population, the cost and availability of fertilizer transportation infrastructure, local market conditions, operating levels of competing facilities, weather conditions, the availability of imports, the availability and price of feedstocks to produce nitrogen fertilizer, impacts of foreign imports and foreign subsidies thereof, and the extent of government intervention in agriculture markets.

These factors can impact, among other things, the level of inventories in the market, resulting in price volatility and a reduction in product margins.

Moreover, the industry typically experiences seasonal fluctuations in demand for nitrogen fertilizer products.

As a result of the overall decline in global demand for liquid transportation fuels driven by the broader impacts of the COVID-19 pandemic and actions taken by the government to mitigate its spread, ethanol production, which is a significant driver of demand for corn and therefore fertilizer, declined during 2020.

However, as restrictions eased during 2021, demand for ethanol for fuels blending has largely recovered to pre-COVID-19 levels, although an increase in outbreaks of any variant of COVID-19 could reverse this recovery .

As a result of the Russian invasion of Ukraine, the Black Sea, a major export point for nitrogen fertilizer and grains from these countries, has been closed to exports, which prompted tightening global supply conditions for nitrogen fertilizer in advance of spring planting and wheat and corn availability, two major exports from this region.

Further, while fertilizers have not been formally sanctioned by countries, many customers are either unwilling to purchase Russian fertilizers or logistics make it too costly to import these fertilizers.

Additionally, natural gas supplied from Russia to Western Europe has been constrained, and natural gas prices have remained elevated since September 2021, causing a significant portion of European nitrogen fertilizer production capacity to be curtailed or costs to be elevated compared to competitors in other regions of the world.

Overall, these events have caused grain and fertilizer prices to rise, and we currently expect these conditions to persist through the spring of 2023.

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Market Indicators

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nitrogen fertilizer industry remain intact.

The Nitrogen Fertilizer Segment views the anticipated combination of (i) increasing global population, (ii) decreasing arable land per capita, (iii) continued evolution to more protein-based diets in developing countries, (iv) sustained use of corn and soybeans as feedstock for the domestic production of ethanol and other renewable fuels, and (v) positioning at the lower end of the global cost curve should provide a solid foundation for nitrogen fertilizer producers in the U.S.

over the longer term.

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Corn and soybeans are two major crops planted by farmers in North America.

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Unlike corn, soybeans are able to obtain most of their own nitrogen through a process known as “N fixation.” As such, upon harvesting of soybeans, the soil retains a certain amount of nitrogen which results in lower demand for nitrogen fertilizer for the following corn planting cycle.

Due to these factors, nitrogen fertilizer consumers generally operate a balanced corn-soybean rotational planting cycle as evident through the chart presented below for 2021, 2020, and 2019.

The relationship between the total acres planted for both corn and soybean has a direct impact on the overall demand for nitrogen products, as the market and demand for nitrogen increases with increased corn acres and decreases with increased soybean acres.

Additionally, an estimated 11 billion pounds of soybean oil is expected to be used in producing cleaner biodiesel in marketing year 2021/2022.

Due to these factors, nitrogen fertilizer consumers generally operate a balanced corn-soybean rotational planting cycle as evident by the chart presented below for 2022, 2021, and 2020.

The relationship between the total acres planted for both corn and soybeans has a direct impact on the overall demand for nitrogen products, as the market and demand for nitrogen increases with increased corn acres and decreases with increased soybean acres.

Additionally, an estimated 11.6 billion pounds of soybean oil is expected to be used in producing cleaner renewables in marketing year 2022/2023.

Multiple refiners have announced renewable diesel expansion projects for 2023 and beyond, which will only increase the demand for soybeans and potentially for corn and canola.

Due to the uncertainty of how these factors will truly affect the grain markets, it is not yet known how the nitrogen business will be impacted.

The 2021 United States Department of Agriculture (“USDA”) reports on corn and soybean acres planted indicated farmers planted 93.4 million acres of corn, representing a slight increase of 3.0% in corn acres planted as compared to 90.7 million corn acres in 2020.

Planted soybean acres are estimated to be 87.2 million acres, representing a 4.6% increase in soybean acres planted as compared to 83.4 million soybean acres in 2020.

The combined corn and soybean planted acres of 180.6 million is the highest in history.

Based on current grain inventories and crop prices, farm economics are expected to continue to be very attractive in 2022.

Further, while natural gas prices, the primary input for nitrogen fertilizer production, were at historical lows across the world in 2020, they have escalated significantly since the summer of 2021, reducing the incentive to maximize production at nitrogen fertilizer production facilities.

The United States Department of Agriculture (“USDA”) estimates that in spring 2022 farmers planted 88.6 million acres of corn, representing a decrease of 5.1% in corn acres planted as compared to 93.4 million corn acres in 2021.

Planted soybean acres were estimated to be 87.5 million acres, representing a 0.3% increase in soybean acres planted as compared to 87.2 million soybean acres in 2021.

The estimated combined corn and soybean planted acres of 176.1 million in 2022 is a 2.5% decrease from the total acreage planted in 2021, which was the highest in history.

Due to higher input costs for corn planting and increased demand for soybeans, particularly for renewable diesel production, it was more favorable for farmers to plant soybeans compared to corn.

The lower planted corn acres in 2022 and lower corn production are expected to be supportive of corn prices for 2023.

Ethanol is blended with gasoline to meet renewable fuel standard requirements and for its octane value.

Ethanol production has historically consumed approximately 35% of the U.S.

corn crop, so demand for corn generally rises and falls with ethanol demand.

There was a decline in ethanol demand that began in 2020 and continued through 2021 due to decreased demand for transportation fuels as a result of the COVID-19 pandemic.

However, the lower ethanol demand did not alter the spring 2021 planting decisions by farmers, as evidenced through the charts below.

(1) Information used within this chart was obtained from the EIA.

(2) Information used within this chart was obtained from the USDA, National Agricultural Statistics Services.

Weather continues to be a critical variable for crop production.

Grain prices rose significantly from the summer of 2020 into the spring of 2021, leading to higher planted acreage for corn and soybeans.

Even with higher planted acres and trendline yields per acre, inventory levels for corn and soybeans remain below historical levels and prices have remained elevated.

The higher grain prices and historically low crop inventories are leading to strong farm economics in advance of spring 2022.

These conditions are expected to drive strong demand for nitrogen fertilizer, as well as other crop inputs.

Fertilizer prices have risen significantly since January 1, 2021 due to strong grain prices, the strong spring 2021 planting season, lower fertilizer supply due to nitrogen fertilizer production outages during Winter Storm Uri and Hurricane Ida and significant escalation in global feedstock costs for nitrogen fertilizer production, and other factors discussed above.

Since 2006, ethanol production has consumed approximately 36% of the U.S.

corn crop, so demand for corn generally rises and falls with ethanol demand, as evidenced in the charts below.

Plant Production of Fuel Ethanol (1)

Corn and Soybean Planted Acres (2)

(1) Information used within this chart was obtained from the EIA through December 31, 2022.

(2) Information used within this chart was obtained from the USDA, National Agricultural Statistics Services, as of December 31, 2022.

December 31, 2022 | 52

Weather continues to be a critical variable for crop production.

Even with high planted acres and trendline yields per acre in the United States, inventory levels for corn and soybeans remain below historical levels and prices have remained elevated.

With tight grain and fertilizer inventory levels driven by the Russia-Ukraine conflict, prices for grains and fertilizers are expected to remain elevated through the spring of 2023.

While the weather conditions were difficult early in spring 2022, farmers were able to complete the crop planting later than normal.

Demand for nitrogen fertilizer, as well as other crop inputs, was strong for the spring 2022 planting season.

During the summer 2022 growing season, severe drought conditions were experienced in Asia, Europe, and parts of the U.S.

As a result, crop yields are projected to be below expectations and grain inventories are projected to be at the low end of historical levels, causing grain prices to rise.

We expect tight grain inventories to positively impact planted acreage for the spring of 2023 and boost the demand for nitrogen fertilizer.

On June 30, 2021, CF Industries Nitrogen, L.L.C., Terra Nitrogen, Limited Partnership, and Terra International (Oklahoma) LLC filed petitions with the U.S.

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International Trade Commission (the “ITC”) requesting the initiation of antidumping and countervailing duty investigations on imports of UAN from Russia and Trinidad and Tobago (“Trinidad”).

In August 2021, the U.S.

Department of Commerce decided to pursue an investigation to determine the extent of dumping and unfair subsidies associated with imports from Russia and Trinidad, and the ITC initiated a concurrent investigation to determine whether such imports materially injure the U.S.

On November 30, 2021, USDOC determined that UAN imports from Russia are unfairly subsidized at rates ranging from 9.66% to 9.84% and UAN imports from Trinidad are unfairly subsidized at a rate of 1.83%.

On January 27, 2022, USDOC found that Russian UAN imports are sold at less than fair value into the U.S.

market at rates ranging from 9.15% to 127.19%, and that Trinidadian UAN imports at a rate of 63.08%.

As a result of these determinations, USDOC will impose cash deposit requirements on imports of UAN from Russia and Trinidad, based on the preliminary rates of antidumping duties.

We believe that if the antidumping and countervailing duty preliminary determinations are confirmed by USDOC, there will likely be lower amounts of imported UAN from Russia and Trinidad.

The tables below show relevant market indicators for the Nitrogen Fertilizer Segment by month through December 31, 2021:

On July 18, 2022, the ITC made a negative final injury determination concerning its investigation of imports from Russia and Trinidad despite USDOC’s final determination in June that UAN is subsidized and dumped in the U.S.

market by producers in both countries.

Since the decision in July 2022, we have observed minimal impact on the supply or demand for nitrogen fertilizer as a result of these actions.

The charts below show relevant market indicators for the Nitrogen Fertilizer Segment by month through December 31, 2022:

Ammonia and UAN Market Pricing (1)

Natural Gas and Pet Coke Market Pricing (1)

(1) Information used within these charts was obtained from various third-party sources including Green Markets (a Bloomberg Company), Pace Petroleum Coke Quarterly, and the EIA, amongst others.

December 31, 2021 | 47

Results of Operations

The following sections should be read in conjunction with the information outlined within the previous sections of this Part II, Item 7 and the consolidated financial statements and related notes thereto in Part II, Item 8 of this Report.

Our consolidated results of operations include certain other unallocated corporate activities and the elimination of intercompany transactions and therefore do not equal the sum of the operating results of the Petroleum and Nitrogen Fertilizer Segments.

Our consolidated results of operations include renewable fuels, certain other unallocated corporate activities, and the elimination of intercompany transactions and therefore do not equal the sum of the operating results of the Petroleum and Nitrogen Fertilizer Segments.

December 31, 2022 | 53

Consolidated Financial Highlights

Operating Income (Loss)

Net Income (Loss) Attributable to CVR Energy Stockholders

Earnings (Loss) per Share

(1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measure shown above.

Overview - The Company’s operating income and net income were $87 million and $74 million, respectively, for the year ended December 31, 2021, increases of $420 million and $394 million, respectively, compared to an operating loss and net loss of $333 million and $320 million, respectively, for the year ended December 31, 2020.

These increases were driven by an improvement in operating loss of $254 million within the Petroleum Segment and $169 million within the Nitrogen Fertilizer Segment for the year ended December 31, 2021 compared to December 31, 2020.

Overview - The Company’s operating income and net income were $963 million and $644 million, respectively, for the year ended December 31, 2022, increases of $876 million and $570 million, respectively, compared to operating income and net income of $87 million and $74 million, respectively, for the year ended December 31, 2021.

These increases were driven by an improvement in operating income of $746 million within the Petroleum Segment and $186 million within the Nitrogen Fertilizer Segment for the year ended December 31, 2022 compared to December 31, 2021.

Refer to our discussion of each segment’s results of operations below for further information.

Investment Income from Marketable Securities - During the first quarter of 2020, we acquired a 14.9% ownership interest in Delek US Holdings, Inc.

Investment Income on Marketable Securities - On June 10, 2021, the Company distributed substantially all of its holdings in Delek US Holdings, Inc.

(“Delek”) (NYSE:

On June 10, 2021, the Company distributed substantially all of its holdings in Delek, of which the Company was the largest stockholder holding approximately 14.3% of Delek’s outstanding common stock, as part of a special dividend.

As of December 31, 2021, the Company continued to hold other marketable securities of

DK), of which the Company was the largest stockholder holding approximately 14.3% of Delek’s outstanding common stock, as part of a special dividend.

On January 18, 2022, the Company divested its remaining nominal holdings in Delek, and as of December 31, 2022, the Company did not hold an investment in other marketable securities of Delek.

There was no dividend income received during the years ended December 31, 2022 and 2021.

The Company did not recognize a gain or loss on the investment during the year ended December 31, 2022 compared to a recognized gain of $81 million for the year ended December 31, 2021.

December 31, 2022 | 54

Delek, but divested these remaining interests in January 2022.

Prior to the special dividend in 2021, we received no dividend income compared to $7 million of dividend income received for the year ended December 31, 2020.

The Company recognized a gain of $81 million for the year ended December 31, 2021, compared to an unrealized gain based on market pricing on December 31, 2020 of $34 million for the year ended December 31, 2020.

Income Tax Expense - The income tax benefit for the year ended December 31, 2021 was $8 million, or (12.4)% of income before income taxes, as compared to income tax benefit for the year ended December 31, 2020 of $95 million, or 23.0% of loss before income taxes.

The fluctuation in income tax benefit was due primarily to changes in pretax earnings and pretax earnings attributable to noncontrolling interests between all periods presented.

In addition, the change in the effective tax rate was due primarily to reductions in state income tax rates enacted during 2021, changes in pretax earnings attributable to noncontrolling interests and impacts of state income tax credits generated between all periods presented.

Segment Financial Highlights and Results of Operations

Other Income (Expense), Net - The Company’s Other (expense) income, net, was an expense of $77 million for the year ended December 31, 2022 compared to income of $15 million for the year ended December 31, 2021.

The change was primarily attributable to the settlement of litigation.

Refer to Part II, Item 8, Note 11 (“Commitments and Contingencies”) of this Report for further discussion of this settlement.

Income Tax Expense (Benefit) - The income tax expense for the year ended December 31, 2022 was $157 million, or 19.6% of income before income taxes, as compared to income tax benefit for the year ended December 31, 2021 of $8 million, or (12.4)% of income before income taxes.

The fluctuation in income tax expense was due primarily to an increase in overall pretax earnings and state income tax expense.

In addition, the change in the effective tax rate was due primarily to the changes in pretax earnings attributable to noncontrolling interests and an increase in state income tax expense.

Petroleum Segment

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Heavy Canadian 6,847 3,695 1,020

Other Crude Oil 19,129 5,151 —

DJ Basin 15,607 17,980 5,151

Other feedstocks and blendstocks 11,556 10,788 8,321

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WTL 2,323 3,430 6,235

WTS 143 202 —

Midland WTI 1,073 2,107 1,262

Condensate 13,283 7,360 6,207

Other Crude Oil 202 — —

Other feedstocks and blendstocks 3,125 3,396 3,616

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42.9 % 43.7 % 43.1 %

(1) Total Gasoline and Distillate divided by total Regional crude, WTI, WTL, Midland WTI, Condensate, and Heavy Canadian throughput.

(1) Total Gasoline and Distillate divided by total Regional crude, WTI, WTL, Midland WTI, WTS, Condensate, Heavy Canadian and DJ Basin throughput.

(2) Total Gasoline, Distillate, and Other liquid products divided by total throughput.

(3) Total Distillate divided by total Regional crude, WTI, WTL, Midland WTI, Condensate, and Heavy Canadian throughput.

Financial Highlights

Overview - Petroleum Segment operating loss and net income for the year ended December 31, 2021 were $27 million and $4 million, respectively, an improvement of $254 million and $275 million, respectively, compared to an operating loss and net loss of $281 million and $271 million, respectively, for the year ended December 31, 2020.

The improvement in both operating loss and net income compared to the prior period was primarily a result of favorable refining margins resulting from improved crack spreads and inventory pricing in the current period, partially offset by increased RFS compliance costs.

(3) Total Distillate divided by total Regional crude, WTI, WTL, Midland WTI, WTS, Condensate, Heavy Canadian and DJ Basin throughput.

Petroleum Segment Financial Highlights

Overview - Petroleum Segment operating income and net income for the year ended December 31, 2022 were $719 million and $759 million, respectively, an improvement of $746 million and $755 million, respectively, compared to an operating loss and net income of $27 million and $4 million, respectively, for the year ended December 31, 2021.

The improvement in both operating income and net income compared to the prior period was primarily a result of favorable refining margins resulting from improved crack spreads pricing in the current period, partially offset by increased RFS compliance costs.

Net Sales Operating Income (Loss)

December 31, 2022 | 56

Net Income (Loss)

(1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measure shown above.

Net Sales - For the year ended December 31, 2022, net sales for the Petroleum Segment increased by $3.2 billion when compared to the year ended December 31, 2021.

This improvement was primarily related to regional inventory draws, which are driven by increased demand and, as a result, increased market pricing, as Group 3 2-1-1 crack spreads improved $8.73 for the year ended December 31, 2021 compared to the year ended December 31, 2020.

Further, 2020 was impacted by a full planned turnaround at the Coffeyville Refinery, which began in February 2020, as well as reduced utilization of the Wynnewood Refinery during the same quarter given the significant gasoline demand reductions experienced late in the first quarter of 2020 as a result of the COVID-19 pandemic.

The increase in net sales was due to increased prices resulting from tight inventory levels and the ongoing Russia-Ukraine conflict for the year ended December 31, 2022 compared to the year ended December 31, 2021.

Further, net sales in 2021 were impacted by Winter Storm Uri, resulting in reduced production rates at both refineries.

Refining Margin (1)

Refining Margin (excluding Inventory Valuation Impacts (1)

(1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measures shown above.

Refining Margin - For the year ended December 31, 2021, refining margin was $621 million, or $8.14 per throughput barrel, as compared to $298 million, or $4.44 per throughput barrel, for the year ended December 31, 2020.

The increase in refining margin of $323 million was primarily driven by the 93% increase in the Group 3 2-1-1 crack spread caused by market improvements in 2021 as market demand for refined products improved compared to the economic downturn and demand destruction observed in 2020.

This was combined with favorable inventory valuation impacts totaling $127 million, or $1.66 per total throughput barrel driven by increased prices for crude oil and refined products in 2021 compared to 2020.

The unfavorable inventory valuation impacts of $58 million in 2020 were driven by lower crude oil prices in the first half of 2020 with some offsetting increases observed through the end of 2020.

Offsetting these improvements to refining margin, the Company recognized RINs expense of $435 million, or $5.70 per throughput barrel, and $190 million, or $2.84 per throughput barrel, for the years ended December 31, 2021 and 2020, respectively, reflecting our costs to comply with RFS.

The increase in 2021 is primarily related to significantly higher RIN prices during the year ended December 31, 2021 caused by price volatility

Refining Margin - For the year ended December 31, 2022, refining margin was $1.4 billion, or $19.09 per throughput barrel, as compared to $621 million, or $8.14 per throughput barrel, for the year ended December 31, 2021.

The increase in refining margin of $810 million was primarily due to an increase in product crack spreads.

The Group 3 2-1-1 crack spread increased by $20.04 per barrel relative to the year ended December 31, 2021 driven by tight inventory levels, increased European demand for diesel, and supply concerns due to the ongoing Russia-Ukraine conflict.

Offsetting these impacts for the year ended December 31, 2022, throughput volumes declined by 3,796 bpd due to the Wynnewood turnaround in the first quarter of 2022, the startup of the RDU limiting crude unit capacity, and minor plant outages during 2022.

This was combined

December 31, 2022 | 57

for RINs and our open mark-to-market position for the 2020 compliance year of approximately 130 million RINs as of December 31, 2021.

This was combined with derivative losses of $44 million recognized during the year ended December 31, 2021, a result of unfavorable crack spread swaps, partially offset by gains on WCS sales, compared to derivative gains of $55 million recognized during the year ended December 31, 2020, primarily resulting from WCS sales.

with favorable inventory valuation impacts totaling $22 million, or $0.29 per total throughput barrel, compared to favorable inventory valuation impacts of $127 million, or $1.66 per total throughput barrel, in 2021.

While impacts were favorable, the decline in inventory valuation impacts year over year was a result of crude oil price increases in the prior year exceeding crude oil price increases in 2022.

The Petroleum Segment’s obligated-party subsidiaries recognized costs to comply with RFS of $403 million, or $5.38 per throughput barrel, which excludes the RINs revaluation expense impact of $135 million, or $1.80 per total throughput barrel, for the year ended December 31, 2022.

This is compared to RFS compliance costs of $372 million, or $4.87 per throughput barrel, which excludes the RINs revaluation expense impact of $63 million, or $0.83 per total throughput barrel, for the year ended December 31, 2021.

For the year ended December 31, 2022, the Petroleum Segment’s RFS compliance costs included $103 million of RINs purchased from our renewable diesel operations.

The increase in both RFS compliance costs and RINs revaluation in 2022 was primarily related to increased RINs prices for the year ended December 31, 2022 compared to the prior period.

This was combined with derivative losses of $47 million recognized during the year ended December 31, 2022, a result of unfavorable crack spread swaps, partially offset by gains on WCS sales, compared to derivative losses of $45 million recognized during the year ended December 31, 2021, also a result of unfavorable crack spread swaps, partially offset by gains on WCS sales.

Direct Operating Expenses (1)

(1) Exclusive of depreciation and amortization expense.

Direct Operating Expenses (Exclusive of Depreciation and Amortization) - For the year ended December 31, 2021, direct operating expenses (exclusive of depreciation and amortization) were $369 million and $319 million for the years ended December 31, 2021 and 2020, respectively.

The increase in the current period was primarily due to increased natural gas costs and share-based compensation.

On a total throughput barrel basis, direct operating expenses increased to $4.83 per barrel from $4.76 per barrel, as a function of the increased expense in 2021, partially offset by the increase in total throughput in 2021 compared to 2020.

Impacts of COVID-19 related factors and the Coffeyville Refinery’s full, planned turnaround, which began the last week of February 2020 and extended into mid-April 2020, significantly decreased throughput in 2020.

Direct Operating Expenses (Exclusive of Depreciation and Amortization) - For the year ended December 31, 2022, direct operating expenses (exclusive of depreciation and amortization) were $426 million compared to $369 million for the year ended December 31, 2021.

The increase in the current period was primarily due to personnel costs, repairs and maintenance expense, electricity costs, and natural gas costs.

On a total throughput barrel basis, direct operating expenses increased to $5.68 per barrel from $4.83 per barrel, as a function of the increased expense in 2022, compounded by the decrease in total throughput in 2022 compared to 2021 caused by the Wynnewood turnaround in the first quarter of 2022, the startup of the RDU in the second quarter of 2022, and minor plant outages during 2022.

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Depreciation and Amortization Expense Selling, General, and Administrative

Expenses, and Other

Depreciation and Amortization Expense - For the year ended December 31, 2022, depreciation and amortization expense decreased $16 million compared to the year ended December 31, 2021, primarily due to assets being fully depreciated in 2021 and early 2022.

Selling, General, and Administrative Expenses, and Other - For the year ended December 31, 2022, selling, general and administrative expenses and other was $99 million compared to $76 million for the year ended December 31, 2021.

The increase was primarily a result of increased personnel costs driven primarily by increased share-based and incentive-based compensation in 2021 as compared to 2020.

The increase was primarily a result of increased personnel costs, driven primarily by increased share-based and incentive-based compensation, and loss on asset disposals in 2022 as compared to 2021.

Nitrogen Fertilizer Segment

Utilization and Production Volumes - The following tables summarize the ammonia utilization at the Nitrogen Fertilizer Segment’s facility in Coffeyville, Kansas (the “Coffeyville Fertilizer Facility”) and East Dubuque, Illinois facility (the “East

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Dubuque Fertilizer Facility”).

Utilization is an important measure used by management to assess operational output at each of the Nitrogen Fertilizer Segment’s facilities.

Utilization is calculated as actual tons of ammonia produced divided by capacity adjusted for planned maintenance and turnarounds.

Utilization is calculated as actual tons of ammonia produced divided by capacity.

Utilization is presented solely on ammonia production, rather than each nitrogen product, as it provides a comparative baseline against industry peers and eliminates the disparity of facility configurations for upgrade of ammonia into other nitrogen products.

With efforts primarily focused on ammonia upgrade capabilities, we believe this measure provides a meaningful view of how well we operate.

With production primarily focused on ammonia upgrade capabilities, we believe this measure provides a meaningful view of how we operate.

Gross tons produced for ammonia represent the total ammonia produced, including ammonia produced that was upgraded into other fertilizer products.

Net tons available for sale represent the ammonia available for sale that was not upgraded into other fertilizer products.

Production for the year ended December 31, 2021 was impacted by downtime associated with the Messer air separation plant at the Coffeyville Fertilizer Facility during the months of January, June, August, October, and November of 2021 (the “Messer Outages”), downtime at the East Dubuque Fertilizer Facility due to Winter Storm Uri in February 2021, downtime at the Coffeyville Fertilizer Facility and East Dubuque Fertilizer Facility in July and September 2021, respectively, due to externally driven power outages (the “Power Outages”), and downtime at the East Dubuque Fertilizer Facility in October 2021 for an R2 repair (the “R2 Outage”).

The table below presents these Nitrogen Fertilizer Segment metrics for the years ended December 31, 2021, 2020, and 2019:

Production for the year ended December 31, 2022 was impacted by unplanned downtime associated with the Messer air separation plant (the “Messer Outages”) at the Coffeyville Fertilizer Facility and various pieces of equipment at the East Dubuque Fertilizer Facility in 2022, along with the completion of the planned turnarounds at both

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fertilizer facilities during the third quarter of 2022.

The table below presents all of these Nitrogen Fertilizer Segment metrics for the years ended December 31, 2022, 2021, and 2020:

Year Ended December 31,

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On a consolidated basis, the Nitrogen Fertilizer Segment’s utilization decreased 11% to 81% for the year ended December 31, 2022 compared to the year ended December 31, 2021.

This decrease was primarily due to the Messer Outages, Winter Storm Uri, the Power Outages, and the R2 Outage.

Sales and Pricing per Ton - Two of the Nitrogen Fertilizer Segment’s key operating metrics are total sales for ammonia and UAN along with the product pricing per ton realized at the gate.

Total product sales volumes were unfavorable, driven by lower production due to the Messer Outages, Winter Storm Uri, the Power Outages, and the R2 Outage.

For the year ended December 31, 2021, the lower sales volumes were more than offset by improved prices of 92% for ammonia and 74% for UAN.

Ammonia and UAN sales prices were favorable primarily due to higher crop pricing coupled with lower fertilizer supply driven by production outages from Winter Storm Uri in February 2021 and Hurricane Ida in August and September 2021, as well as increased industry turnaround activity and lower global fertilizer production due to higher natural gas prices in Europe and Asia.

This decrease was primarily due to the completion of planned turnarounds at both fertilizer facilities in the third quarter of 2022, along with unplanned downtime in 2022 associated with the Messer Outages at the Coffeyville Fertilizer Facility and various pieces of equipment at the East Dubuque Fertilizer Facility, compared to unplanned downtime at the Coffeyville Fertilizer Facility and the East Dubuque Fertilizer Facility in July and September 2021, respectively, due to externally driven power outages and downtime at the East Dubuque Fertilizer Facility in October 2021 for equipment repair.

Sales and Pricing per Ton - Two of the Nitrogen Fertilizer Segment’s key operating metrics are total sales volumes for ammonia and UAN, along with the product pricing per ton realized at the gate.

Product pricing at the gate represents net sales less freight revenue divided by product sales volume in tons and is shown in order to provide a pricing measure comparable across the fertilizer industry.

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UAN 486 264 152

For the year ended December 31, 2022, total product sales volumes were unfavorable, driven by lower production at both facilities due to the planned turnarounds in the third quarter of 2022, as well as increased downtime from the Messer Outages at the Coffeyville Fertilizer Facility and various pieces of equipment at the East Dubuque Fertilizer Facility in 2022, as compared to 2021.

For the year ended December 31, 2022, total product sales were favorable driven by sales price increases of 88% for ammonia and 84% for UAN.

Ammonia and UAN sales prices were favorable primarily due to continued tight market conditions due to lower fertilizer supply driven by ongoing impacts from the Russia-Ukraine conflict, including reduced production from Europe as a result of the high energy price environment, and higher crop pricing.

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2022 2021 2020

Pet coke used in production (thousand tons)

Pet coke (dollars per ton)

Petroleum coke used in production (thousand tons)

Petroleum coke (dollars per ton)

$ 52.88 $ 44.69 $ 35.25

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(1) The feedstock natural gas shown above does not include natural gas used for fuel.

The cost of natural gas used for fuel is included in Direct operating expenses (exclusive of depreciation and amortization).

Financial Highlights

Overview - The Nitrogen Fertilizer Segment’s operating income and net income for the year ended December 31, 2021 were $134 million and $78 million, respectively, improvements of $169 million and $176 million, respectively, compared to an operating loss and net loss of $35 million and $98 million, respectively, for the year ended December 31, 2020.

Beyond the goodwill impairment of $41 million negatively impacting the 2020 period, these improvements were driven primarily by higher ammonia and UAN sales prices in 2021, partially offset by higher feedstock costs and operating expenses.

The cost of fuel natural gas is included in Direct operating expenses (exclusive of depreciation and amortization).

Nitrogen Fertilizer Segment Financial Highlights

Overview - The Nitrogen Fertilizer Segment’s operating income and net income for the year ended December 31, 2022 were $320 million and $287 million, respectively, representing improvements of $186 million and $209 million, respectively, compared to operating income and net income of $134 million and $78 million, respectively, for the year ended December 31, 2021.

These improvements were primarily driven by higher product sales prices for UAN and ammonia in 2022, partially offset by reduced sales volumes, increased costs associated with the two planned turnarounds during the third quarter of 2022, and increased feedstock prices in 2022.

Net Sales Operating Income (Loss)

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(1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measure shown above.

Net Income (Loss)

(1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measures shown above.

Net Sales - The Nitrogen Fertilizer Segment’s net sales increased by $303 million to $836 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.

This increase was primarily due to favorable sales pricing contributing $205 million in higher revenues, offset by decreased sales volumes, resulting in $35 million of lower revenue as compared to the year ended December 31, 2020.

This increase was primarily due to favorable UAN and ammonia pricing conditions which contributed $348 million in higher revenues, partially offset by decreased sales volumes, which reduced revenues by $54 million compared to the year ended December 31, 2021.

For the years ended December 31, 2022 and 2021, net sales included $35 million and $31 million in freight revenue, respectively, and $11 million and $11 million in other revenue, respectively.

The following table demonstrates the impact of changes in sales volumes and pricing for the primary components of net sales, excluding urea products, freight, and other revenue, for the year ended December 31, 2021 as compared to the year ended December 31, 2020.

(in millions) Price

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Ammonia 94 (40)

For the year ended December 31, 2021 compared to the year ended December 31, 2020, ammonia and UAN sales prices were favorable primarily due to higher crop pricing coupled with lower fertilizer supply driven by production outages from Winter Storm Uri in February 2021 and Hurricane Ida in August and September 2021, as well as increased industry turnaround activity and lower global fertilizer production due to higher natural gas prices in Europe and Asia during 2021.

Total product sales volumes were unfavorable driven by lower production due to the Messer Outages, Winter Storm Uri, the Power Outages, and the R2 Outage.

For the year ended December 31, 2022 compared to the year ended December 31, 2021, ammonia and UAN sales prices were favorable primarily due to continued tight market conditions due to lower fertilizer supply driven by ongoing impacts from the Russia-Ukraine conflict, including reduced production from Europe as a result of the high energy price environment, and higher crop pricing.

Total product sales volumes were unfavorable driven by lower production due to unplanned downtime associated with the Messer Outages at the Coffeyville Fertilizer Facility and various pieces of equipment at the East Dubuque Fertilizer Facility in 2022, along with the completion of the planned turnarounds at both fertilizer facilities during the third quarter of 2022.

Cost of Materials and Other - Cost of materials and other for the year ended December 31, 2022 was $131 million, compared to $98 million for the year ended December 31, 2021.

The $7 million increase was comprised primarily of a $12 million increase in natural gas costs at our East Dubuque Fertilizer Facility due to higher natural gas prices, a $5 million increase in pet coke costs at our Coffeyville Fertilizer Facility related to higher third-party coke pricing caused by higher crude oil prices and higher pet coke pricing with Coffeyville Resources Refining & Marketing, LLC due to the UAN-indexed pricing formula, and a $2 million increase in purchases of hydrogen.

These increases were offset by a decrease in freight expenses and distribution costs of $4 million due to downtime in October and November 2021 and a discontinuation of the Gavilon Railcar Lease in April 2021, a decrease related to a build in our ammonia and UAN inventories contributing $4 million, and a decrease in ammonia purchases of $3 million.

The $33 million increase was driven primarily by increases in purchases of nitrogen and ammonia of $17 million, increased natural gas costs of $14 million, and higher distribution costs of $4 million.

These increases were partially offset by an inventory build contributing $2 million.

Direct Operating Expenses (exclusive of depreciation and amortization) - For the year ended December 31, 2022, direct operating expenses (exclusive of depreciation and amortization) were $270 million compared to $199 million for the year ended December 31, 2021.

The $72 million variance was primarily due to higher turnaround costs incurred during the planned turnarounds at both fertilizer facilities during 2022, which increased turnaround expenses by $31 million, increased repair and maintenance expenses by $15 million, and increased personnel costs by $3 million.

In addition to these turnaround related increases, there were $14 million of higher prices for natural gas for fuel purposes, $4 million of increased operating materials

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and office costs, $4 million related to higher electricity pricing, and $3 million of higher insurance costs.

These increases were partially offset by an inventory build contributing $3 million.

Non-GAAP Measures

Our management uses certain non-GAAP performance measures, and reconciliations to those measures, to evaluate current and past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S.

Our management uses certain non-GAAP performance measures, and reconciliations to those measures, to evaluate current and past performance and prospects for the future to supplement our financial information presented in accordance with accounting principles generally accepted in the United States (“GAAP”).

These non-GAAP financial measures are important factors in assessing our operating results and profitability and include the performance and liquidity measures defined below.

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As a result of volatile market conditions related to the RFS during the first half of 2021 and the impacts certain significant non-cash items have on the evaluation of our operations, the Company began disclosing Adjusted EBITDA, as defined below, in the second quarter of 2021.

We believe the presentation of this non-GAAP measure is meaningful to compare our operating results between periods and peer companies.

All prior periods presented have been conformed to the definition below.

The following are non-GAAP measures we present for the year ended December 31, 2022:

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We present these measures because we believe they may help investors, analysts, lenders and ratings agencies analyze our results of operations and liquidity in conjunction with our U.S.

GAAP results, including but not limited to our operating performance as compared to other publicly-traded companies in the refining and fertilizer industries, without regard to historical cost basis or financing methods and our ability to incur and service debt and fund capital expenditures.

GAAP results, including but not limited to our operating performance as compared to other publicly-traded companies in the refining and fertilizer industries, without regard to historical

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cost basis or financing methods and our ability to incur and service debt and fund capital expenditures.

Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net earnings and operating income.

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Due to rounding, numbers presented within this section may not add or equal to numbers or totals presented elsewhere within this document.

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Factors Affecting Comparability of Our Financial Results

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Petroleum Segment

Major Scheduled Turnaround Activities

Coffeyville Refinery - The Coffeyville Refinery’s next planned turnaround is expected to start in the spring of 2023, with pre-planning expenditures of $5 million expected to be incurred during 2022.

During the year ended December 31, 2020, we capitalized costs of $155 million related to the planned turnaround which began in February 2020 and was completed in April 2020.

During the fourth quarter of 2019, our Coffeyville Refinery capitalized costs of $15 million related to preparations for the same planned turnaround.

Wynnewood Refinery - The next planned turnaround for the Wynnewood Refinery is in the spring of 2022.

During the years ended December 31, 2021, we capitalized $7 million related to pre-planning activities at the Wynnewood Refinery.

During the first quarter of 2019, the second phase of the fourth quarter 2017 turnaround on the Wynnewood Refinery hydrocracking unit was completed and $24 million was capitalized.

Coffeyville Refinery - The next planned turnaround of the refinery in Coffeyville, Kansas (the “Coffeyville Refinery”) is expected to start in the spring of 2023, with pre-planning expenditures of $14 million capitalized for the year ended December 31, 2022.

Wynnewood Refinery - The Wynnewood Refinery began a major scheduled turnaround in late February 2022 that was completed in early April 2022.

We capitalized expenditures of $67 million and $7 million related to turnaround activities for the years ended December 31, 2022 and 2021, respectively.

Nitrogen Fertilizer Segment

Major Scheduled Turnaround Activities

Coffeyville Fertilizer Facility - The next planned turnaround at the Coffeyville Fertilizer Facility is expected to occur in the summer of 2022.

Additionally, the Coffeyville Fertilizer Facility had planned downtime for certain maintenance activities, which was completed in the fourth quarter of 2021 at a cost of $2 million.

For the year ended December 31, 2021, we also incurred less than $1 million for the Coffeyville Fertilizer Facility expected turnaround in the summer of 2022.

East Dubuque Fertilizer Facility - The next planned turnaround at the East Dubuque Fertilizer Facility is expected to occur in the summer of 2022.

For the year ended December 31, 2021, we incurred approximately $1 million in turnaround expense related to planning for the East Dubuque Fertilizer Facility’s expected turnaround in the summer of 2022.

Goodwill Impairment

As a result of lower expectations for market conditions in the fertilizer industry during 2020, the market performance of CVR Partners’ common units, a qualitative analysis, and additional risks associated with the business, CVR Partners performed an interim quantitative impairment assessment of goodwill for the Coffeyville Facility reporting unit as of June 30, 2020.

The results of the impairment test indicated the carrying amount of this reporting unit exceeded the estimated fair value, and a full, non-cash impairment charge of $41.0 million was required.

Coffeyville Fertilizer Facility - A planned turnaround at the Coffeyville Fertilizer Facility commenced in July 2022 and was completed in mid-August 2022.

For the year ended December 31, 2022, we incurred turnaround expense of $12 million.

For the year ended December 31, 2021, we incurred turnaround expense of less than $1 million related to planning for the Coffeyville Fertilizer Facility’s turnaround completed during the third quarter of 2022.

During the planning and execution of this turnaround, we updated the estimated useful lives of certain assets, which resulted in additional depreciation expense of $6 million during the year ended December 31, 2022.

Additionally, the Coffeyville Fertilizer Facility had planned downtime during the fourth quarter of 2021 at a cost of $2 million.

East Dubuque Fertilizer Facility - A planned turnaround at the East Dubuque Fertilizer Facility commenced in August 2022 and was completed in mid-September 2022.

For the year ended December 31, 2022, we incurred turnaround expense of $21 million.

For the year ended December 31, 2021, we incurred turnaround expense of $1 million related to planning for the East Dubuque Fertilizer Facility’s turnaround completed during the third quarter of 2022.

During the planning and execution of this turnaround, we updated the estimated useful lives of certain assets, which resulted in additional depreciation expense of $6 million and $5 million during the years ended December 31, 2022 and 2021, respectively.

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Interest expense, net

Income tax (benefit) expense (8) (95) 129

Income tax expense (benefit) 157 (8) (95)

Depreciation and amortization

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Gain on marketable securities — (81) (34)

Unrealized (gain) loss on derivatives (16) 9 (14)

Inventory valuation impact, (favorable) unfavorable

Unrealized loss (gain) on derivatives, net 5 (16) 9

Inventory valuation impacts, (favorable) unfavorable

(24) (127) 58

Goodwill impairment — — 41

Call Option Lawsuits settlement (1)

Adjusted EBITDA $ 1,369 $ 301 $ 126

Reconciliation of Basic and Diluted Earnings (Loss) per Share to Adjusted (Loss) Earnings per Share

Reconciliation of Basic and Diluted Earnings (Loss) per Share to Adjusted Earnings (Loss) per Share

Year Ended December 31,

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Gain on marketable securities — (0.59) (0.25)

Unrealized (gain) loss on derivatives (0.12) 0.07 (0.10)

Inventory valuation impact, (favorable) unfavorable

Unrealized loss (gain) on derivatives, net 0.04 (0.12) 0.07

Inventory valuation impacts, (favorable) unfavorable

(0.18) (0.93) 0.43

Goodwill impairment (3)

Adjusted (loss) earnings per share $ (0.93) $ (1.79) $ 3.48

Call Option Lawsuits settlement (1)

Adjusted earnings (loss) per share $ 6.04 $ (0.93) $ (1.79)

(1) Refer to Part II, Item 8, Note 11 (“Commitments and Contingencies”) of this Report for further discussion of this settlement.

(2) Amounts are shown after-tax, using the Company’s marginal tax rate, and are presented on a per share basis using the weighted average shares outstanding for each period.

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Petroleum net income (loss) $ 759 $ 4 $ (271)

Interest (income) expense, net (21) (5) 27

Interest income, net (41) (21) (5)

Depreciation and amortization 187 203 202

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Revaluation of RFS liability 135 63 59

Unrealized (gain) loss on derivatives (16) 9 14

Inventory valuation impact, (favorable) unfavorable (1) (2)

Unrealized loss (gain) on derivatives, net 3 (16) 9

Inventory valuation impacts, (favorable) unfavorable (1) (2)

(22) (127) 58

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Refining Margin 1,431 621 298

Inventory valuation impact, (favorable) unfavorable (1) (2)

Inventory valuation impacts, (favorable) unfavorable (1) (2)

(22) (127) 58

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(2) Includes an inventory valuation charge of $58 million recorded in the first quarter of 2020, as inventories were reflected at the lower of cost or net realizable value.

No adjustment was necessary the years ended December 31, 2021 or 2019 or any other period in 2020.

No adjustment was necessary during the years ended December 31, 2022 or December 31, 2021 or any other period in 2020.

Reconciliation of Petroleum Segment Total Throughput Barrels

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Goodwill impairment — — 41

Adjusted Nitrogen Fertilizer EBITDA $ 213 $ 82 $ 107

Nitrogen Fertilizer Adjusted EBITDA $ 403 $ 213 $ 82

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Reconciliation of Total Debt and Net Debt and Finance Lease Obligations to EBITDA Exclusive of Nitrogen Fertilizer

(in millions) Twelve Months Ended

(in millions) Year Ended

December 31, 2022

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(2) Net debt represents total debt and finance lease obligations exclusive of cash and cash equivalents.

Three Months Ended Twelve Months Ended December 31, 2021 (1)

(in millions) March 31,

2021 June 30,

2021 September 30, 2021 December 31, 2021

Net (loss) income $ (55) $ (2) $ 106 $ 25 $ 74

Three Months Ended Year Ended December 31, 2022 (1)

(in millions) March 31, 2022 June 30, 2022 September 30, 2022 December 31,

Net income $ 153 $ 239 $ 80 $ 172 $ 644

Interest expense, net 24 23 19 18 85

Income tax benefit (42) (6) 47 (7) (8)

Income tax expense 34 66 7 50 157

Depreciation and amortization 67 73 75 73 288

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Nitrogen Fertilizer

Net (loss) income $ (25) $ 7 $ 35 $ 61 78

Net income (loss) $ 94 $ 118 $ (20) $ 95 287

Interest expense, net 10 8 8 8 34

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Our principal uses of cash are for working capital, capital expenditures, funding our debt service obligations, and paying dividends to our stockholders, as further discussed below.

The effects of the COVID-19 pandemic resulted in a reduction in U.S.

economic activity during 2020 and into 2021 and, for our industry, resulted in significant changes in crude oil supply and a decline in prices, as well as decreases in refined product pricing due to reductions in demand for crude oil and our refined products, primarily gasoline and jet fuel.

In February 2021, Winter Storm Uri caused unprecedented disruptions to natural gas, electricity supply and refinery operations throughout the Midwest and Gulf Coast regions.

In August 2021, Hurricane Ida made landfall in Louisiana which also resulted in refinery shut-ins and upstream production disruptions in the Gulf Coast.

These weather events and the related limitations to refining operations helped reduce refined product inventories and balance supply and demand throughout the region.

This period of extreme economic disruption, low crude oil and refined product prices, and reduced demand has and is likely to continue to have an impact on our business, results of operations, and access to sources of liquidity.

While we believe demand for crude oil and refined products has nearly returned to pre-COVID-19 levels and commodity prices have rebounded, there is still uncertainty on the horizon as the COVID-19 vaccines are distributed and countries and states continue to monitor their efforts against the virus and virus variants.

We continue to maintain our focus on safe and reliable operations, maintaining an appropriate level of cash to fund ongoing operations, and protecting the balance sheet.

As a result of these factors, and in light of management’s decision to cease actively pursuing petroleum refinery acquisitions given, among other factors, the uncertainty of the current environment and other potential future cash requirements of the Company and in light of the upcoming expiration of its right to use excess proceeds pursuant to the Indenture governing the 5.25% Senior Notes due 2025 and 5.75% Senior Notes due 2028 (the “Senior Notes”), the Board elected to declare a special dividend equal to $492 million during the second quarter of 2021 comprised of cash and substantially all of its investment in Delek common stock.

No quarterly dividends were declared for the fourth quarter of 2020 or the first, second and third quarters of 2021.

These decisions support the Company’s continued focus on financial discipline through a balanced approach of evaluation of strategic investment opportunities and stockholder distributions while maintaining adequate capital requirements for ongoing operations throughout the uncertain environment.

Following the significant declines in demand and pricing for crude oil and refined products in 2020 due to the COVID-19 pandemic, market conditions improved steadily throughout 2021 and into 2022.

In the first quarter of 2022, following the Russian invasion of Ukraine, crude oil and refined product prices increased and have been volatile over concerns of a reduction in global supply of these products due to sanctions placed on Russian exports by the U.S.

and numerous other countries.

Despite the extreme volatility in commodity pricing, the increase in refined product pricing during 2021 and 2022 has had a favorable impact on our business and has not significantly impacted our primary source of liquidity.

While we believe demand for crude oil and refined products has stabilized, there is still uncertainty on the horizon due to the potential for recession driven demand destruction and any potential resolution of the Russia-Ukraine conflict.

We continue to maintain our focus on safe and reliable operations, maintain an appropriate level of cash to fund ongoing operations, and protect our balance sheet.

As a result of these factors, the Board elected to declare cash dividends of $0.40 for the first, second, and third quarters of 2022 and $0.50 for the fourth quarter of 2022.

The Board also elected to declare special dividends equal to $2.60 and $1.00 during the second and third quarters of 2022, respectively.

No quarterly dividends were declared for the fourth quarter of 2021.

These decisions support the Company’s continued focus on financial discipline through a balanced approach of evaluation of strategic investment opportunities and stockholder dividends while maintaining adequate capital requirements for ongoing operations throughout the environment of uncertainty.

The Board will continue to evaluate the economic environment, the Company’s cash needs, optimal uses of cash, and other applicable factors, and may elect to make additional changes to the Company’s dividend (if any) in future periods.

Additionally, in executing financial discipline, we have successfully implemented and are maintaining the following measures:

• Deferring the majority of our growth capital spending, with the exception of the RDU Project at the Wynnewood Refinery;

• Reducing the amount of refining maintenance capital expenditures to only include those projects which are a priority to support continuing safe and reliable operations, or which we consider are required to support future activities;

• Focusing future capital allocation to high-return assets and opportunities that advance participation in the energy industry transformation;

• Continuing to focus on discipled management of operational and general and administrative cost reductions;

• For the Petroleum Segment, deferring the Wynnewood Refinery turnaround from the spring of 2021 to the spring of 2022 and deferring the Coffeyville Refinery turnaround from fall of 2021 to spring of 2023;

• For the Nitrogen Fertilizer Segment, taking advantage of downtime to perform maintenance activities which enabled us to defer the Coffeyville Fertilizer Facility turnaround from 2021 to 2022.

When paired with the actions outlined above, we believe that our cash from operations and existing cash and cash equivalents, along with borrowings, as necessary, will be sufficient to satisfy anticipated cash requirements associated with our existing operations for at least the next 12 months.

• Deferred the majority of our growth capital spending, with the exception of the RDU project and construction of the renewables feedstock pretreater project at the Wynnewood Refinery;

• Focused refining maintenance capital expenditures to only include those projects which are a priority to support continuing safe and reliable operations, or which we consider required to support future activities;

• Focused future capital allocation to high-return assets and opportunities that advance participation in the energy industry transformation;

• Continued to focus on disciplined management of operational and general and administrative cost reductions;

• For the Petroleum Segment, deferred the turnaround at the refinery in Coffeyville, Kansas (the “Coffeyville Refinery”) from fall of 2021 to spring of 2023.

When considering the market conditions and actions outlined above, we currently believe that our cash from operations and existing cash and cash equivalents, along with borrowings, as necessary, will be sufficient to satisfy anticipated cash requirements associated with our existing operations for at least the next 12 months.

However, our future capital expenditures and other cash requirements could be higher than we currently expect as a result of various factors including, but not limited to, rising material and labor costs, the costs associated with complying with the Renewable Fuel Standard’s outcome of litigation and other factors.

Additionally, our ability to generate sufficient cash from our operating activities and secure additional financing depends on our future operational performance, which is subject to general economic, political, financial, competitive, and other factors, some of which may be beyond our control.

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Depending on the needs of our business, contractual limitations and market conditions, we may from time to time seek to issue equity securities, incur additional debt, issue debt securities, or redeem, repurchase, refinance, or otherwise retire our existing debt through, among other things, privately negotiated transactions, redemptions, exchange offers, or tender offers.

Depending on the needs of our business, contractual limitations and market conditions, we may from time to time seek to issue equity securities, incur additional debt, issue debt securities, or redeem, repurchase, refinance, or retire our outstanding debt through privately negotiated transactions, open market repurchases, redemptions, exchanges, tender offers or otherwise, but we are under no obligation to do so.

There can be no assurance that we will seek to do any of the foregoing or that we will be able to do any of the foregoing on terms acceptable to us or at all.

On June 23, 2021, CVR Partners and certain of its subsidiaries completed a private offering of $550 million aggregate principal amount of 6.125% Senior Unsecured Notes due June 2028 (the “2028 UAN Notes”), which mature on June 15, 2028, and partially redeemed CVR Partners’ 9.25% Senior Notes due June 2023 (the “2023 UAN Notes”) in the amount of $550 million.

On September 23, 2021 and December 22, 2021, CVR Partners redeemed an additional $15 million and $15 million, respectively, in aggregate principal of the 2023 UAN Notes.

On February 22, 2022, CVR Partners redeemed the remaining $65 million in aggregate principal amount of the 2023 UAN Notes.

Collectively, these transactions represent a significant and favorable change in CVR Partners’s cash flow and liquidity position, with annual savings of approximately $26 million in future interest expense, as compared to our 2020 Form 10-K.

Additionally, on September 30, 2021, CVR Partners entered into a new credit agreement with an aggregate principal amount of up to $35 million with a maturity date of September 30, 2024 (the “Nitrogen Fertilizer ABL”) and terminated its $35 million ABL Credit Agreement, dated as of September 30, 2016, as amended (the “UAN 2016 ABL Credit Agreement”).

On February 22, 2022, CVR Partners redeemed the remaining $65 million in aggregate principal amount of its 2023 UAN Notes at par, plus accrued and unpaid interest.

This transaction represents a significant and favorable change in CVR Partners’ cash flow and liquidity position, with annual savings of approximately $6 million in future interest expense.

On June 30, 2022, CVR Refining and certain of its subsidiaries entered into Amendment No.

3 to the Amended and Restated ABL Credit

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Agreement (as amended, the “Petroleum ABL”).

The Petroleum ABL is a senior secured asset based revolving credit facility in an aggregate principal amount of up to $275 million and a maturity date of June 30, 2027.

Refer to Part II, Item 8, Note 6 (“Long-Term Debt and Finance Lease Obligations”) of this Report for further discussion.

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Cash and Other Liquidity

As of December 31, 2021, we had total liquidity of approximately $906 million which consisted of consolidated cash and cash equivalents of $510 million, $361 million available under the Petroleum ABL and $35 million available under the Nitrogen Fertilizer ABL.

As of December 31, 2022, we had total liquidity of approximately $797 million which consisted of consolidated cash and cash equivalents of $510 million, $252 million available under the Petroleum ABL, and $35 million available under the Asset Based Credit Agreement (“Nitrogen Fertilizer ABL”).

As of December 31, 2021, we had $510 million in cash and cash equivalents.

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5.75% Senior Notes, due February 2028

Unamortized debt issuance cost (5) (6)

Unamortized debt issuance costs (4) (5)

Total CVR Energy debt $ 996 $ 995

Total long-term debt 1,543 1,606

Current portion of long-term debt (2)

Total long-term debt, including current portion $ 1,606 $ 1,630

(1) The call price of the 2023 UAN Notes decreased to par on June 15, 2021.

On June 23, 2021, September 23, 2021, and December 22, 2021, CVR Partners redeemed $550 million, $15 million, and $15 million, respectively, of the 2023 UAN Notes, at par, plus accrued and unpaid interest on the redeemed portion.

The remaining balance of $65 million is outstanding as of December 31, 2021.

(1) The $65 million outstanding balance of the 2023 UAN Notes was paid in full on February 22, 2022 at par, plus accrued and unpaid interest.

(2) The $2 million outstanding balance of the 6.50% Notes, due April 2021, was paid in full on April 15, 2021.

On June 23, 2021, CVR Partners and its subsidiary, CVR Nitrogen Finance Corporation (“Finance Co.” and, together with CVR Partners, the “Issuers”), completed a private offering of $550 million aggregate principal amount of the 2028 UAN Notes.

The net proceeds from the 2028 UAN Notes, plus cash on hand, were used to redeem $550 million aggregate principal amount

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of the 2023 UAN Notes.

On September 23, 2021 and December 22, 2021, CVR Partners redeemed $15 million and $15 million aggregate principal amount of the outstanding 2023 UAN Notes, respectively.

On September 30, 2021, CVR Partners entered into the Nitrogen Fertilizer ABL and terminated its UAN 2016 ABL Credit Agreement.

As of December 31, 2021, the Nitrogen Fertilizer Segment had the remaining portion of the 2023 UAN Notes, the 2028 UAN Notes, and the Nitrogen Fertilizer ABL, the proceeds of which may be used to fund working capital, capital expenditures, and for other general corporate purposes.

On February 22, 2022, CVR Partners redeemed the remaining $65 million in aggregate principal amount of the 2023 UAN Notes.

As of December 31, 2022, the Nitrogen Fertilizer Segment has the 6.125% Senior Secured Notes, due June 2028 (the “2028 UAN Notes”) and the Nitrogen Fertilizer ABL, the proceeds of which may be used to fund working capital, capital expenditures, and for other general corporate purposes.

Refer to Part II, Item 8, Note 6 (“Long-Term Debt and Finance Lease Obligations”) of this Report for further discussion.

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Refer to Part II, Item 8, Note 6 (“Long-Term Debt and Finance Lease Obligations”) of this Report for further discussion.

As of December 31, 2021, CVR Energy has the Senior Notes, the net proceeds of which may be used for general corporate purposes, which may include funding acquisitions, capital projects, and/or share repurchases or other distributions to our stockholders.

As of December 31, 2022, CVR Energy has the 5.25% Senior Notes, due 2025 (the “2025 Notes”) and the 5.75% Senior Notes, due 2028 (the “2028 Notes” and together with the 2025 Notes, the “Notes”), the net proceeds of which may be used for general corporate purposes, which may include funding acquisitions, capital projects, and/or share repurchases or other distributions to our stockholders.

Refer to Part II, Item 8, Note 6 (“Long-Term Debt and Finance Lease Obligations”) of this Report for further discussion.

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Capital Spending

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We undertake growth capital spending based on the expected return on incremental capital employed.

In December 2020, our Board approved the renewable diesel project at our Wynnewood Refinery, which would convert the refinery’s hydrocracker to a RDU capable of producing 100 million gallons of renewable diesel per year.

Currently, total estimated cost for the project is $170 million.

Mechanical completion and startup of the RDU is expected to occur in the second quarter of 2022.

In May 2021, the Board approved a $10 million capital expenditure for the completion of the design and ordering of certain long-lead equipment relating to a potential project to add pretreating capabilities for the RDU at the Wynnewood Refinery and for the completion of the design for a potential conversion of an existing hydrotreater at the Coffeyville Refinery to renewable diesel and sustainable aviation fuel services.

In November 2021, the Board approved the pretreater project at the Wynnewood Refinery, which is expected to be completed in the fourth quarter of 2022 at an estimated cost of $60 million.

In April 2022, we completed the renewable diesel project at our Wynnewood Refinery by converting the refinery’s hydrocracker to a RDU capable of producing approximately 100 million gallons of renewable diesel per year at a total cost of $179 million.

In November 2021, the Board approved the renewable feedstock pretreater project at the Wynnewood Refinery, which is expected to be completed in the third quarter of 2023 at an estimated cost of $95 million.

Our total capital expenditures for the year ended December 31, 2022, along with our estimated expenditures for 2023, by segment, are as follows:

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(1) Total 2023 estimated capitalized costs include approximately $6 million of growth related projects that will require additional approvals before commencement.

(2) Renewables reflects spending on the Wynnewood Refinery RDU project.

Amounts spent in 2020 were previously reported under Other.

Upon completion and meeting of certain criteria under accounting rules, Renewables is expected to be a new reportable segment.

As of December 31, 2021, Renewables does not the meet the definition of a reportable segment as defined under ASC 280.

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(2) Renewables reflects spending on the Wynnewood Refinery’s RDU and renewable feedstock pretreater projects.

As of December 31, 2022, Renewables does not meet the definition of a reportable segment as defined under Accounting Standards Codification Topic 280.

Our estimated capital expenditures are subject to change due to unanticipated changes in the cost, scope, and completion time for capital projects.

For example, we may experience unexpected changes in labor or equipment costs necessary to comply with government regulations or to complete projects that sustain or improve the profitability of the refineries or nitrogen fertilizer facilities.

We may also accelerate or defer some capital expenditures from time to time.

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We will continue to monitor market conditions and make adjustments, if needed, to our current capital spending or turnaround plans.

The Petroleum Segment completed its scheduled turnaround at the Coffeyville Refinery in April 2020 with total capitalized expenditures of $155 million.

The next planned turnaround for the Wynnewood Refinery is in the spring of 2022.

During the years ended December 31, 2021, we capitalized $7 million related to pre-planning activities at the Wynnewood Refinery.

The Coffeyville Refinery’s next planned turnaround is expected to start in the spring of 2023, with pre-planning expenditures of $5 million expected to be incurred during 2022.

The Nitrogen Fertilizer Segment has planned turnarounds scheduled at our Coffeyville Fertilizer Facility and East Dubuque Fertilizer Facility.

The turnaround at our Coffeyville Fertilizer Facility is expected to occur in the summer of 2022, with an estimated cost of $10 to $13 million, and the turnaround at our East Dubuque Fertilizer Facility is also expected to commence in the summer of 2022, with an estimated cost of $13 to $15 million.

Additionally, the Coffeyville Fertilizer Facility had planned downtime for certain maintenance activities, which was completed in the fourth quarter of 2021 at a cost of $2 million.

For the year ended December 31, 2021, we also incurred less than $1 million and approximately $1 million, in turnaround expense related to planning for the Coffeyville Fertilizer Facility’s and East Dubuque Fertilizer Facility’s expected turnarounds in 2022, respectively.

The Petroleum Segment began a major scheduled turnaround at the Wynnewood Refinery in late February 2022 that was completed in early April 2022.

We capitalized expenditures of $67 million and $7 million for the years ended December 31, 2022 and 2021, respectively.

The Petroleum Segment’s next planned turnaround at the Coffeyville Refinery is currently expected to start in the spring of 2023, with pre-planning expenditures of $14 million capitalized for the year ended December 31, 2022.

The Nitrogen Fertilizer Segment’s planned turnaround at the Coffeyville Fertilizer Facility commenced in July 2022 and was completed in mid-August 2022.

The planned turnaround at the East Dubuque Fertilizer Facility commenced in August 2022 and was completed in mid-September 2022.

For the years ended December 31, 2022 and 2021, we incurred turnaround expense of $12 million and less than $1 million, respectively, at the Coffeyville Fertilizer Facility and $21 million and $1 million, respectively, at the East Dubuque Fertilizer Facility.

Additionally, the Coffeyville Fertilizer Facility had planned downtime for certain maintenance activities during the fourth quarter of 2021 at a cost of $2 million.

Dividends to CVR Energy Stockholders

Dividends, if any, including the payment, amount and timing thereof, are subject to change at the discretion of the Company’s Board of Directors.

IEP, through its ownership of the Company’s common shares, is entitled to receive dividends that are declared and paid by the Company based on the number of shares held at each record date.

No dividends were declared related to the fourth quarter of 2021, and there were no quarterly dividends declared or paid during 2021 related to the first, second, and third quarters of 2021 and fourth quarter of 2020.

During the years ended December 31, 2020 and 2019, the Company paid dividends totaling $1.20 and $3.05 per common share, or $121 million and $306 million, respectively.

Of these dividends, IEP received $85 million and $218 million, respectively, for the same periods.

On May 26, 2021, the Company announced a special dividend of approximately $492 million, or equivalent to $4.89 per share of the Company’s common stock, to be paid in a combination of cash (the “Cash Distribution”) and common stock of Delek held by the Company (the “Stock Distribution”).

Dividends, if any, including the payment, amount and timing thereof, are determined at the discretion of our Board.

IEP, through its ownership of the Company’s common stock, is entitled to receive dividends that are declared and paid by the Company based on the number of shares held at each record date.

The following table presents quarterly dividends, excluding any special dividends, paid to the Company’s stockholders, including IEP, during 2022 (amounts presented in table below may not add to totals presented due to rounding):

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Quarterly Dividends Paid (in millions)

Related Period Date Paid Quarterly Dividends

Per Share Public Stockholders IEP Total

2022 - 1st Quarter

May 23, 2022 $ 0.40 $ 12 $ 28 $ 40

2022 - 2nd Quarter

August 22, 2022 0.40 12 28 40

2022 - 3rd Quarter

November 21, 2022 0.40 12 28 40

Total 2022 quarterly dividends

$ 1.20 $ 35 $ 85 $ 121

No quarterly dividends were paid during the first quarter of 2022 related to the fourth quarter of 2021, and there were no quarterly dividends declared or paid during 2021 related to the first, second, and third quarters of 2021 and fourth quarter of 2020.

During the year ended December 31, 2020, the Company paid quarterly dividends totaling $1.20 per common share, or $121 million.

Of these dividends, IEP received $85 million due to its ownership interest in the Company’s shares.

On August 1, 2022 and October 31, 2022, the Company also declared special dividends of $2.60 and $1.00 per share, or $261 million and $101 million, respectively, which were paid on August 22, 2022 and November 21, 2022, respectively.

Of these amounts, IEP received $185 million and $71 million, respectively, due to its ownership interest in the Company’s shares.

(“Delek”) held by the Company (the “Stock Distribution”).

On June 10, 2021, the Company distributed an aggregate amount of approximately $241 million, or $2.40 per share of the Company’s common stock, pursuant to the Cash Distribution, and approximately 10,539,880 shares of Delek common stock, which represented approximately 14.3% of the outstanding shares of Delek common stock, pursuant to the Stock Distribution.

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The Stock Distribution was recorded as a reduction to equity through a derecognition of our investment in Delek, and the Company recognized a gain of $112 million from the initial investment in Delek through the date of the Stock Distribution.

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For the fourth quarter of 2022, the Company, upon approval by the Company’s Board on February 21, 2023, declared a cash dividend of $0.50 per share, or $50 million, which is payable March 13, 2023 to shareholders of record as of March 6, 2023.

Of this amount, IEP will receive $36 million due to its ownership interest in the Company’s shares.

Distributions to CVR Partners ’ Unitholders

Distributions, if any, including the payment, amount and timing thereof, are subject to change at the discretion of the UAN GP Board.

The following table presents distributions paid by CVR Partners to CVR Partners’ unitholders, including amounts received by the Company, as of December 31, 2021.

Distributions Paid (in millions)

Related Period Date Paid Distribution Per

Common Unit Public Unitholders CVR Energy Total

2021 - 2nd Quarter August 23, 2021 $ 1.72 $ 11 $ 7 $ 18

2021 - 3rd Quarter November 22, 2021 2.93 20 11 31

Total $ 4.65 $ 31 $ 18 $ 49

There were no distributions declared or paid by CVR Partners related to the first quarter of 2021 and fourth quarter of 2020, and no distributions were declared or paid during 2020.

During the year ended December 31, 2019, CVR Partners paid distributions totaling $4.00 per common unit on a split-adjusted basis, or $45 million.

Of these distributions, CVR Energy received $16 million.

The following tables present distributions paid by CVR Partners to CVR Partners’ unitholders, including amounts received by the Company, as of December 31, 2022 and 2021 (amounts presented in tables below may not add to totals presented due to rounding):

Quarterly Distributions Paid (in millions)

Related Period Date Paid Quarterly Distributions

Per Common Unit Public Unitholders CVR Energy Total

2021 - 4th Quarter

March 14, 2022 $ 5.24 $ 35 $ 20 $ 56

2022 - 1st Quarter

May 23, 2022 2.26 15 9 24

2022 - 2nd Quarter

August 22, 2022 10.05 67 39 106

2022 - 3rd Quarter

November 21, 2022 1.77 12 7 19

Total 2022 quarterly distributions

$ 19.32 $ 129 $ 75 $ 205

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Quarterly Distributions Paid (in millions)

Related Period Date Paid Quarterly Distributions

Per Common Unit Public Unitholders CVR Energy Total

2021 - 2nd Quarter

August 23, 2021 $ 1.72 $ 11 $ 7 $ 18

2021 - 3rd Quarter

November 22, 2021 2.93 20 11 31

Total 2021 quarterly distributions

$ 4.65 $ 31 $ 18 $ 50

There were no quarterly distributions declared or paid by CVR Partners related to the first quarter of 2021 and the fourth quarter of 2020.

During the year ended December 31, 2020, there were no quarterly distributions declared or paid by CVR Partners.

For the fourth quarter of 2022, CVR Partners, upon approval by the UAN GP Board on February 21, 2023, declared a distribution of $10.50 per common unit, or $111 million, which is payable March 13, 2023 to unitholders of record as of March 6, 2023.

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As of December 31, 2022, the Company has not repurchased any of the Company’s common stock under the Stock Repurchase Program.

On May 6, 2020, CVR Partners announced that the UAN GP Board, on behalf of CVR Partners, authorized a unit repurchase program (the “Unit Repurchase Program”).

The Unit Repurchase Program enables CVR Partners to repurchase up to $10 million of its common units.

On February 22, 2021, the UAN GP Board authorized an additional $10 million for the Unit Repurchase Program.

During the year ended December 31, 2021, CVR Partners repurchased 24,378 common units on the open market in accordance with a repurchase agreement under Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended, at a cost of $1 million, inclusive of transaction costs, or an average price of $21.70 per common unit.

During the year ended December 31, 2020, as adjusted to reflect the impact of the 1-for-10 reverse unit split of CVR Partners’s common units that was effective as of November 23, 2020, CVR Partners repurchased 623,177 common units, respectively, at a cost of $7 million, inclusive of transaction costs, or an average price of $11.35 per common unit.

As of December 31, 2021, CVR Partners had $12 million in authority remaining under the Unit Repurchase Program.

On May 6, 2020, CVR Partners announced that the UAN GP Board, on behalf of CVR Partners, authorized a unit repurchase program (the “Unit Repurchase Program”), which was increased on February 22, 2021.

The Unit Repurchase Program, as increased, authorized CVR Partners to repurchase up to $20 million of CVR Partners’ common units.

During the years ended December 31, 2022 and 2021, CVR Partners repurchased 111,695 and 24,378 common units, respectively, on the open market in accordance with a repurchase agreement under Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended, at a cost of $12 million and $1 million, respectively, exclusive of transaction costs, or an average price of $110.98 and $21.69 per common unit, respectively.

As of December 31, 2022, CVR Partners had a nominal authorized amount remaining under the Unit Repurchase Program.

This Unit Repurchase Program does not obligate CVR Partners to acquire any common units and may be cancelled or terminated by the UAN GP Board at any time.

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The following table sets forth our consolidated cash flows for the periods indicated below:

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Financing activities (696) (315) 355

Net (decrease) increase in cash and cash equivalents and restricted cash $ (157) $ 22 $ (16)

Net increase (decrease) in cash, cash equivalents and restricted cash $ — $ (157) $ 22

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Operating Activities

The change in operating activities for the year ended December 31, 2021, as compared to the year ended December 31, 2020, was primarily due to a $469 million increase in EBITDA during 2021, which includes a $47 million increase in non-cash earnings on the Company’s investment in Delek in 2021 compared to 2020, as well as favorable changes in working capital of $111 million associated with the increase in crude oil prices and increase in our open RFS position and a $42 million increase in non-cash share based compensation as a result of higher market prices for CVR Partners’ units and CVR Energy’s shares in 2021 compared to 2020.

This is partially offset by an increase in net non-cash deferred tax expense of $68 million, as well as a 2020 lower of cost or market inventory charge of $59 million and a $41 million non-cash impairment of goodwill recognized in 2020.

The change in net cash provided by operating activities for the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily due to a $712 million increase in EBITDA during 2022 as a result of stronger operations during 2022 compared to 2021.

This is partially offset by a decrease in working capital of $209 million primarily associated with lower liability variances in 2022 compared to 2021.

Investing Activities

The change in investing activities for the year ended December 31, 2021, as compared to the year ended December 31, 2020, was primarily due to a reduction in turnaround expenditures of $154 million in 2021 due to the Coffeyville Refinery turnaround completed in April 2020 and the purchase of Delek common stock for $140 million in the first quarter of 2020.

These decreases are partially offset by an increase in capital expenditures of $100 million primarily related to the Wynnewood Refinery’s RDU in 2021 and payments for the acquisition of pipeline assets of $20 million in the first quarter of 2021.

The change in net cash used in investing activities for the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily due to an increase in our turnaround expenditures of $78 million in 2022 compared to 2021 related to the planned turnaround at the Wynnewood Refinery completed in 2022 and a reduction in the proceeds from the sale of assets of $7 million.

These are partially offset by a reduction in capital expenditures of $33 million, as the Wynnewood Refinery’s RDU was completed in April 2022, and a $20 million acquisition of pipeline assets in 2021 with no corresponding asset purchases in 2022.

Financing Activities

The change in net cash used in financing activities for the year ended December 31, 2021, as compared to the net cash provided by financing activities for year ended December 31, 2020 was due to the January 2020 private offering of the 5.25% Senior Notes due 2025 and 5.75% Senior Notes due 2028 totaling $1 billion, netted against the issuance was the redemption of the outstanding CVR Refining 2022 Notes in January 2020 of $500 million and call premium of $5 million.

Additionally, during the second quarter of 2021, CVR Partners completed a private offering of the 2028 UAN Notes totaling $550 million and used the proceeds, plus cash on hand, to redeem a portion of the 2023 UAN Notes in the second, third, and fourth quarters of 2021.

The result of these debt offerings and the respective redemptions of outstanding senior notes is a net reduction in financing activities of approximately $527 million in 2021 as compared to 2020.

Further, CVR Energy paid dividends of $241 million in 2021 compared to $121 million in 2020, and CVR Partners paid cash distributions of $31 million in 2021 compared to no distributions in 2020.

The change in net cash used in financing activities for the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily due to an increase in dividends paid to CVR Partners non-controlling interest holders and CVR Energy stockholders of $98 million and $242 million, respectively, during 2022 compared to 2021, a change of $33 million in the redemption of the remaining balance of the 2023 UAN Notes in 2022 compared to the partial redemption of the 2023 UAN Notes and the 6.5% UAN Notes due April 2021 during 2021, and an increase of $11 million in unit repurchases of CVR Partners’ common units in 2022 compared to 2021.

Recent Accounting Pronouncements

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We prepare our consolidated financial statements in accordance with GAAP requiring management to make judgments, assumptions, and estimates based on the best available information at the time.

Accounting estimates are considered to be critical if (1) the nature of the estimates and assumptions is material due to the levels of subjectivity and judgment necessary to

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account for highly uncertain matters or the susceptibility of such matters to change;

Accounting estimates are considered to be critical if (1) the nature of the estimates and assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change;

and (2) the impact of the estimates and assumptions on financial condition or operating performance is material.

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Reductions to selling prices for unreimbursed freight costs are included to arrive at net realizable value, as applicable.

During the year ended December 31, 2020, we recognized losses on inventory of $59 million to reflect net realizable value, primarily associated with our Petroleum Segment.

During the year ended December 31, 2020, we recognized

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losses on inventory of $59 million to reflect net realizable value, primarily associated with our Petroleum Segment.

No amounts were recognized for the years ended December 31, 2022 and 2021.

Due to the amount and variability in volume of inventories maintained, changes in production costs, and the volatility of market pricing for our products, losses recognized to reflect inventories at the lower of cost or net realizable value could have a material impact on the Company’s results of operations.

Impairment of Long-lived Assets and Goodwill

Impairment of Long-lived Assets

Long-lived assets used in operations are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in future expected cash flows.

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Individual assets are grouped for impairment purposes based on a judgmental assessment of the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other assets (for example, at a refinery or fertilizer facility level).

One of the reporting units associated with our Nitrogen Fertilizer Segment’s Coffeyville, Kansas facility (the “Coffeyville Fertilizer Facility”) had a goodwill balance of $41 million at December 31, 2019.

During the second quarter of 2020, following the completion of the spring planting season, the market pricing for ammonia and UAN, the Nitrogen Fertilizer Segment’s two primary products, experienced significant pricing declines driven by updated market expectations around supply and demand fundamentals which were expected to continue into the second half of 2020.

Additionally, significant uncertainty remained as to the nature and extent of impacts to be seen on the overall demand for corn and soybean given reduced ethanol production and broader economic conditions which may negatively impact demand.

Therefore, in connection with the preparation of the financial statements for the three months ended June 30, 2020, given the pricing declines experienced in the second quarter of 2020, further muting of our near-term economic recovery assumptions, and market price performance of CVR Partners’ common units, the Company concluded an impairment indicator was present and a triggering event under Accounting Standards Codification (“ASC”) Topic 350, Intangibles-Goodwill and Other , had occurred as of June 30, 2020.

Significant assumptions inherent in the valuation methodologies for goodwill are employed and include, but are not limited to, prospective financial information, growth rates, discount rates, inflationary factors, and cost of capital.

Based on the interim quantitative analysis, it was determined that the estimated fair value of the Coffeyville Fertilizer Facility reporting unit did not exceed its carrying value.

As a result, the Company recorded a full, non-cash impairment charge of $41 million during the year ended December 31, 2020.

As there was no goodwill balance at December 31, 2021, no annual impairment review was performed.

The Company performed its annual impairment review of goodwill for 2019 associated with the Coffeyville Fertilizer Facility reporting unit and concluded there were no impairments.

For the period ended December 31, 2019, no events or circumstances were identified

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which would trigger the performance of a quantitative analysis after reviewing all qualitative factors impacting the Coffeyville Fertilizer Facility reporting unit, including improved market conditions, financial results, and financial forecasts from those used in the fair value analysis at December 31, 2018.

For the period ended December 31, 2018, the fair value of the Coffeyville Fertilizer Facility reporting unit exceeded its carrying value by approximately 36% based upon the results of the reporting unit’s goodwill impairment test.

In addition, when preparing the expected future cash flows or estimating the fair value of impaired assets, we make several estimates that include subjective assumptions related to future sales volumes, commodity prices, operating costs, discount rates, and capital expenditures, among others.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis