CVR ENERGY INC 10-K

Item 8. Financial Statements and Supplementary Data CVR ENERGY, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) 78 Consolidated Balance Sheets as of December 31, 2022 and 2021 80 Consolidated Statements of Operations for the Years Ended December 31, 2022, 2021 and 2020 81 Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020 82 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020 83 Notes to the Consolidated Financial Statements 84 December 31, 2022 | 77 Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of CVR Energy, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of CVR Energy, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 22, 2023 expressed an unqualified opinion. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2013. Dallas, Texas February 22, 2023 December 31, 2022 | 78 Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of CVR Energy, Inc. Opinion on internal control over financial reporting We have audited the internal control over financial reporting of CVR Energy, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in the 2013 Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control - Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2022, and our report dated February 22, 2023 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Dallas, Texas February 22, 2023 December 31, 2022 | 79 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, (in millions) 2022 2021 ASSETS Current assets: Cash and cash equivalents (including $ 86 and $ 113 , respectively, of consolidated variable interest entity (“VIE”)) $ 510 $ 510 Accounts receivable, net (including $ 90 and $ 88 , respectively, of VIE) 358 299 Inventories (including $ 78 and $ 52 , respectively, of VIE) 624 484 Prepaid expenses and other current assets (including $ 11 and $ 9 , respectively, of VIE) 101 76 Total current assets 1,593 1,369 Property, plant, and equipment, net (including $ 811 and $ 850 , respectively, of VIE) 2,247 2,273 Other long-term assets (including $ 24 and $ 14 , respectively, of VIE) 279 264 Total assets $ 4,119 $ 3,906 LIABILITIES AND EQUITY Current liabilities: Accounts payable (including $ 51 and $ 50 , respectively, of VIE) 497 409 Other current liabilities (including $ 75 and $ 111 , respectively, of VIE) 942 747 Total current liabilities 1,439 1,156 Long-term liabilities: Long-term debt and finance lease obligations, net of current portion (including $ 547 and $ 611 , respectively, of VIE) 1,585 1,654 Deferred income taxes 249 268 Other long-term liabilities (including $ 16 and $ 12 , respectively, of VIE) 55 58 Total long-term liabilities 1,889 1,980 Commitments and contingencies (See Note 11) CVR Energy stockholders’ equity: Common stock, $ 0.01 par value per share; 350,000,000 shares authorized; 100,629,209 and 100,629,209 shares issued as of December 31, 2022 and 2021, respectively 1 1 Additional paid-in-capital 1,508 1,510 Accumulated deficit ( 976 ) ( 956 ) Treasury stock, 98,610 shares at cost ( 2 ) ( 2 ) Total CVR stockholders’ equity 531 553 Noncontrolling interest 260 217 Total equity 791 770 Total liabilities and equity $ 4,119 $ 3,906 The accompanying notes are an integral part of these consolidated financial statements. December 31, 2022 | 80 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (in millions, except per share data) 2022 2021 2020 Net sales $ 10,896 $ 7,242 $ 3,930 Operating costs and expenses: Cost of materials and other 8,766 6,185 3,373 Direct operating expenses (exclusive of depreciation and amortization) 719 569 478 Depreciation and amortization 281 270 268 Cost of sales 9,766 7,024 4,119 Selling, general and administrative expenses (exclusive of depreciation and amortization) 149 119 86 Depreciation and amortization 7 9 10 Loss on asset disposals 11 3 7 Goodwill impairment — — 41 Operating income (loss) 963 87 ( 333 ) Other (expense) income: Interest expense, net ( 85 ) ( 117 ) ( 130 ) Investment income on marketable securities — 81 41 Other (expense) income, net ( 77 ) 15 7 Income (loss) before income tax expense 801 66 ( 415 ) Income tax expense (benefit) 157 ( 8 ) ( 95 ) Net income (loss) 644 74 ( 320 ) Less: Net income (loss) attributable to noncontrolling interest 181 49 ( 64 ) Net income (loss) attributable to CVR Energy stockholders $ 463 $ 25 $ ( 256 ) Basic and diluted earnings (loss) per share $ 4.60 $ 0.25 $ ( 2.54 ) Weighted-average common shares outstanding: Basic and diluted 100.5 100.5 100.5 The accompanying notes are an integral part of these consolidated financial statements. December 31, 2022 | 81 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Common Stockholders (in millions, except share data) Shares Issued $ 0.01 Par Value Common Stock Additional Paid-In Capital Accumulated Deficit Treasury Stock Total CVR Stockholders’ Equity Noncontrolling Interest Total Equity Balance at December 31, 2019 100,629,209 $ 1 $ 1,507 $ ( 113 ) $ ( 2 ) $ 1,393 $ 275 $ 1,668 Net loss — — — ( 256 ) — ( 256 ) ( 64 ) ( 320 ) Dividends paid to CVR Energy stockholders — — — ( 121 ) — ( 121 ) — ( 121 ) Changes in equity due to CVR Partners’ common unit repurchases — — 3 — — 3 ( 11 ) ( 8 ) Balance at December 31, 2020 100,629,209 1 1,510 ( 490 ) ( 2 ) 1,019 200 1,219 Net income — — — 25 — 25 49 74 Dividends paid to CVR Energy stockholders — — — ( 492 ) — ( 492 ) — ( 492 ) Distributions from CVR Partners to public unitholders — — — — — — ( 31 ) ( 31 ) Changes in equity due to CVR Partners’ common unit repurchases — — — — — — ( 1 ) ( 1 ) Other — — — 1 — 1 — 1 Balance at December 31, 2021 100,629,209 1 1,510 ( 956 ) ( 2 ) 553 217 770 Net income — — — 463 — 463 181 644 Dividends paid to CVR Energy stockholders — — — ( 483 ) — ( 483 ) — ( 483 ) Distributions from CVR Partners to public unitholders — — — — — — ( 129 ) ( 129 ) Changes in equity due to CVR Partners’ common unit repurchases — — ( 2 ) — — ( 2 ) ( 9 ) ( 11 ) Balance at December 31, 2022 100,629,209 $ 1 $ 1,508 $ ( 976 ) $ ( 2 ) $ 531 $ 260 $ 791 The accompanying notes are an integral part of these consolidated financial statements. December 31, 2022 | 82 CVR ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (in millions) 2022 2021 2020 Cash flows from operating activities: Net income (loss) $ 644 $ 74 $ ( 320 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 288 279 278 Loss on lower of cost or net realizable value adjustments — — 59 Goodwill impairment — — 41 Deferred income taxes ( 17 ) ( 98 ) ( 30 ) Gain on marketable securities — ( 81 ) ( 34 ) Loss on asset disposals 11 3 7 Loss on extinguishment of debt 1 8 3 Unrealized loss (gain) on derivatives, net 5 ( 16 ) 10 Share-based compensation 71 46 4 Other items 2 4 7 Changes in assets and liabilities: Accounts receivable ( 78 ) ( 91 ) 31 Inventories ( 140 ) ( 182 ) 9 Prepaid expenses and other current assets ( 29 ) 12 ( 28 ) Accounts payable 78 122 ( 121 ) Deferred revenue ( 20 ) 27 ( 2 ) Other current liabilities 158 290 178 Other long-term assets and liabilities ( 7 ) ( 1 ) ( 2 ) Net cash provided by operating activities 967 396 90 Cash flows from investing activities: Capital expenditures ( 191 ) ( 224 ) ( 124 ) Turnaround expenditures ( 83 ) ( 5 ) ( 159 ) Proceeds from sale of assets — 7 1 Acquisition of pipeline assets — ( 20 ) — Investment in marketable securities — 3 ( 140 ) Other investing activities 3 1 ( 1 ) Net cash used in investing activities ( 271 ) ( 238 ) ( 423 ) Cash flows from financing activities: Proceeds from issuance of senior secured notes — 550 1,000 Principal payments on senior secured notes ( 65 ) ( 582 ) ( 500 ) Call premium on extinguishment of debt — — ( 5 ) Repurchase of common units by CVR Partners ( 12 ) ( 1 ) ( 7 ) Dividends to CVR Energy’s stockholders ( 483 ) ( 241 ) ( 121 ) Distributions to CVR Partners’ noncontrolling interest holders ( 129 ) ( 31 ) — Other financing activities ( 7 ) ( 10 ) ( 12 ) Net cash (used in) provided by financing activities ( 696 ) ( 315 ) 355 Net increase (decrease) in cash, cash equivalents and restricted cash — ( 157 ) 22 Cash, cash equivalents and restricted cash, beginning of period 517 674 652 Cash, cash equivalents and restricted cash, end of period $ 517 $ 517 $ 674 The accompanying notes are an integral part of these consolidated financial statements. December 31, 2022 | 83 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Organization and Nature of Business Organization CVR Energy, Inc. (“CVR Energy,” “CVR,” “we,” “us,” “our,” or the “Company”) 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 refines and markets 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. CVR’s common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “CVI.” Icahn Enterprises L.P. and its affiliates (“IEP”) owned approximately 71 % of the Company’s outstanding common stock as of December 31, 2022. Stock Repurchase Program On October 23, 2019, the Board of Directors authorized a stock repurchase program (the “Stock Repurchase Program”). The Stock Repurchase Program enables the Company to repurchase up to $ 300 million of the Company’s common stock. Repurchases under the Stock Repurchase Program may be made from time-to-time through open market transactions, block trades, privately negotiated transactions or otherwise in accordance with applicable securities laws. The timing, price and amount of repurchases (if any) will be made at the discretion of management and are subject to market conditions as well as corporate, regulatory and other considerations. While the Stock Repurchase Program currently has a duration of four years , it does not obligate the Company to acquire any stock and may be terminated by the Board of Directors at any time. We did not repurchase any of our common stock during the years ended December 31, 2022, 2021, and 2020. CVR Partners, LP Interest Holders - As of December 31, 2022, public common unitholders held approximately 63 % of CVR Partners’ outstanding common units and CVR Services, LLC (“CVR Services”), a wholly-owned subsidiary of CVR Energy, held the remaining approximately 37 % of CVR Partners’ outstanding common units. In addition, CVR Services held 100 % of the interest in CVR Partners’ general partner, CVR GP, LLC (“CVR GP”), which held a non-economic general partner interest in CVR Partners as of December 31, 2022. The non-controlling interest reflected on the Consolidated Balance Sheets of CVR is only impacted by the net income of, and distributions from, CVR Partners. Unit Repurchase Program - On May 6, 2020, the board of directors of CVR Partners’ general partner (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 the CVR Partners’ common units. During the years ended December 31, 2022 and December 31, 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. During the year ended December 31, 2020, as adjusted to reflect the impact of the 1-for-10 reverse unit split of CVR Partners’ common units that was effective as of November 23, 2020, CVR Partners repurchased 623,177 common units, respectively, at a cost of $ 7 million, exclusive of transaction costs, or an average price of $ 11.34 per common unit. As of December 31, 2022, CVR Partners, considering all repurchases made since inception of the Unit Repurchase Program, had a no minal 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. As a result of these repurchases, and the resulting change in CVR Energy’s ownership of CVR Partners while maintaining control, CVR Energy recognized a decrease of $ 2 million to additional paid-in capital from the reduction of non-controlling interests totaling $ 3 million and related reduction of a deferred tax liability totaling $ 1 million from changes in its book versus tax basis in CVR Partners as of December 31, 2022. CVR Energy recognized a no minal increase to additional paid-in capital from the non-cash reduction of non-controlling interests totaling $ 0.1 million and the recognition of a deferred tax liability totaling $ 0.1 million from changes in its book versus tax basis in CVR Partners as of December 31, 2021. December 31, 2022 | 84 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (2) Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), include the accounts of the Company and its majority-owned direct and indirect subsidiaries. All intercompany accounts and transactions have been eliminated. The ownership interests of noncontrolling investors in CVR Partners are recorded as noncontrolling interests. CVR Energy has no t recognized any other comprehensive income for the periods ended December 31, 2022, 2021, and 2020. CVR Partners was determined to be a variable interest entity (“VIE”) and is consolidated by the Company. As the 100 % owner of the general partner of CVR Partners, the Company has the sole ability to direct the activities that most significantly impact the economic performance of CVR Partners and is considered the primary beneficiary. Investments in entities over which the Company has significant influence, but does not control, are accounted for using the equity method of accounting. Income from equity method investments represents CVR Energy’s proportionate share of net income generated by the equity method investees and is recorded in Other (expense) income, net on the Company’s Consolidated Statements of Operations. Reclassifications Certain immaterial reclassifications have been made within the consolidated financial statements for prior periods to conform with current presentation. Use of Estimates The consolidated financial statements are prepared in conformity with GAAP, which requires management to make certain estimates and assumptions that affect the reported amounts and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are reviewed on an ongoing basis, based on currently available information. Changes in facts and circumstances may result in revised estimates, and actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and on deposit and investments in highly liquid money market accounts with original maturities of three months or less. Restricted Cash Restricted cash consists of cash that must be maintained in a commercial escrow account pending resolution of certain litigation matters and is discussed further in Note 11 (“Commitments and Contingencies”). Accounts Receivable, net Accounts receivable, net primarily consists of customer accounts receivable recorded at the invoiced amounts and generally do not bear interest. Also included within Accounts receivable, net for the Nitrogen Fertilizer Segment are uncollected fixed price contracts which is discussed further within Note 7 (“Revenue”). Allowances for doubtful accounts are based on historical loss experience, expected credit losses from current economic conditions, and management’s expectations of future economic conditions. The allowance is recorded when the receivable is deemed uncollectible and is booked to bad debt expense. The largest concentration of credit for any one customer was approximately 11 % and 8 % of the Accounts receivable, net balance at December 31, 2022 and 2021, respectively. During the years ended December 31, 2022, 2021 and 2020, the Company had no minal bad debt expenses. December 31, 2022 | 85 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Inventories Inventories consist primarily of domestic and foreign crude oil, blending stock and components, work-in-progress, fertilizer products, refined fuels and by-products, and renewable diesel, all of which are valued at the lower of GAAP First-In, First-Out (“FIFO”) cost or net realizable value. Certain inventories in the Petroleum and Nitrogen Fertilizer Segments, including other raw materials, spare parts, and supplies, are valued at the weighted moving-average cost, which approximates FIFO. The cost of inventories includes inbound freight costs. Inventories consisted of the following: December 31, (in millions) 2022 2021 Finished goods $ 297 $ 215 Raw materials 206 177 In-process inventories 35 20 Parts, supplies and other 86 72 Total inventories $ 624 $ 484 At December 31, 2022 and 2021, inventories related to the Nitrogen Fertilizer Segment included depreciation of approximately $ 4 million and $ 3 million, respectively. Property, Plant and Equipment, net Additions to property, plant and equipment, including capitalized interest and certain costs allocable to construction and property purchases, are recorded at cost. Expenditures for improvements that increase economic benefit or returns and/or extend useful life are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of depreciable assets. The lives used in computing depreciation for significant asset classes are as follows: Asset Range of Useful Lives, in Years Land and improvements 10 to 30 Buildings and improvements 1 to 30 Machinery and equipment 1 to 30 Furniture and fixtures 3 to 10 Right-of-use (“ROU”) finance leases 3 to 18 Other 5 to 30 Property, plant, and equipment, net consisted of the following: December 31, (in millions) 2022 2021 Machinery and equipment $ 4,194 $ 4,033 Buildings and improvements 86 88 ROU finance leases 79 81 Land and improvements 72 71 Furniture and fixtures 37 37 Construction in progress 143 142 Other 15 15 4,626 4,467 Less: Accumulated depreciation and amortization ( 2,379 ) ( 2,194 ) Total property, plant and equipment, net $ 2,247 $ 2,273 December 31, 2022 | 86 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Leasehold improvements and assets held under finance leases are depreciated or amortized utilizing the straight-line method over the shorter of the contractual lease term or the estimated useful life of the asset. Expenditures for routine maintenance and repair costs are expensed when incurred and are reported in Direct operating expenses (exclusive of depreciation and amortization) in the Company’s Consolidated Statements of Operations. For the years ended December 31, 2022, 2021, and 2020, depreciation and amortization expenses were $ 221 million, $ 206 million, and $ 210 million, respectively. During the year ended December 31, 2022, the Company had not identified the existence of an impairment indicator for our long-lived asset groups as outlined under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment . Equity Method Investments The Company accounts for investments in which it has a noncontrolling interest, yet has significant influence over the entity, using the equity method of accounting, whereby the Company records its pro-rata share of earnings, contributions to, and distributions from joint ventures as adjustments to the investment balance. Leases At inception, the Company determines whether an arrangement is a lease and the appropriate lease classification. Operating leases are included as operating lease right-of-use (“ROU”) assets within Other long-term assets and lease liabilities within Other current liabilities and Other long-term liabilities on our Consolidated Balance Sheets. Finance leases are included as ROU finance leases within Property, plant, and equipment, net, and finance lease liabilities within Other current liabilities and Long-term debt and finance lease obligations, net of current portion on our Consolidated Balance Sheets. Leases with an initial expected term of 12 months or less are considered short-term and are not recorded on our Consolidated Balance Sheets. The Company recognizes lease expense for these leases on a straight-line basis over the expected lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of minimum lease payments over the lease term using an incremental borrowing rate with a maturity similar to the lease term, as our leases do not generally provide an implicit rate. The lease term is modified to reflect options to extend or terminate the lease when it is reasonably certain we will exercise such option. The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise, in which case the depreciation policy in the “Property, Plant and Equipment, net” section above is applicable. The periodic lease payments are treated as payments of the lease obligation and interest is recorded as interest expense. A lease modification is assessed to conclude whether it is a separate new contract or a modified contract. If it is a modified contract, the Company reconsiders the lease classification and remeasures the lease. Deferred Financing Costs Lender and other third-party costs associated with debt issuances are deferred and amortized to interest expense and other financing costs using the effective-interest method over the term of the debt. Deferred financing costs related to line-of-credit arrangements are amortized using the straight-line method through the maturity date of the facility. The deferred financing costs are included net within Long-term debt and finance lease obligations, net of current portion and in Other long-term liabilities for the line-of-credit arrangements where no debt balance exists. Impairment of Long-Lived Assets and Goodwill Long-lived assets (excluding goodwill, intangible assets with indefinite lives, and deferred tax assets) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future net cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds their fair value. Assets to be disposed of are reported at the lower of their carrying value or fair value less cost to sell. December 31, 2022 | 87 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired less liabilities assumed. Intangible assets are assets that lack physical substance (excluding financial assets). Goodwill acquired in a business combination and intangible assets with indefinite useful lives are not amortized, while intangible assets with finite useful lives are amortized. Goodwill and intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired. The Company uses November 1 of each year as its annual valuation date for its goodwill impairment test. The Company tests goodwill for impairment annually on November 1 of each year, or more frequently if events or changes in circumstances indicate the asset might be impaired. One of our 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, which was fully impaired during the second quarter of 2020 when it was determined the estimated fair value of the Coffeyville Fertilizer Facility reporting unit did not exceed its carrying value. As there was no goodwill balance at December 31, 2022, 2021, or 2020, no annual impairment review was performed. Asset Retirement Obligations The Company records an asset retirement obligation (“ARO”) at fair value for the estimated cost to retire a tangible long-lived asset at the time the liability is incurred, which is generally when the asset is purchased, constructed, or leased. The liability is recorded when there is a legal or contractual obligation to incur costs to retire the asset and only when a reasonable estimate of the fair value can be made. Certain of the Company’s assets can be used for extended or indeterminate periods of time with proper maintenance and upgrades, which the Company intends, and has a historical practice of, to maintain and upgrade as technological advances are made available. As a result, the Company believes these assets have indeterminate lives for purposes of estimating AROs. A liability will be recognized at such time when sufficient information exists to estimate a date or range of potential settlement dates needed to employ a present value technique to estimate fair value. Loss Contingencies In the ordinary course of business, the Company may become party to lawsuits, administrative proceedings, and governmental investigations, including environmental, regulatory, and other matters. The outcome of these matters cannot always be predicted accurately, but the Company accrues liabilities for these matters if the Company has determined that it is probable a loss will be incurred and the loss can be reasonably estimated. While it is not possible to predict the outcome of such proceedings, if one or more of them were decided against us, the Company believes there would be no material impact on its consolidated financial statements. Accrued amounts are reflected in Other current liabilities or Other long-term liabilities depending on when the Company expects to expend such amounts. Refer to Note 11 (“Commitments and Contingencies”) for further discussion. Environmental, Health & Safety (“EH&S”) Matters The Petroleum Segment and Nitrogen Fertilizer Segment are subject to various federal, state, and local environmental, health, and safety rules and regulations. Liabilities related to future remediation costs of past environmental contamination of properties are recognized when the related costs are considered probable and can be reasonably estimated. Estimates of these costs are based upon currently available facts, internal and third-party assessments of contamination, available remediation technology, site-specific costs, and currently enacted laws and regulations. In reporting environmental liabilities, no offset is made for potential recoveries. Loss contingency accruals, including those for environmental remediation, are subject to revision as further information develops or circumstances change, and such accruals can take into account the legal liability of other parties. Management periodically reviews and, as appropriate, revises its environmental accruals. Environmental expenditures for capital assets are capitalized at the time of the expenditure when such costs provide future economic benefits. Accrued amounts are reflected in Other current liabilities or Other long-term liabilities depending on when the Company expects to expend such amounts. Refer to Note 11 (“Commitments and Contingencies”) for further discussion. Revenue Recognition The Company’s revenue is generated from contracts with customers and is recognized at a point in time when performance obligations are satisfied by transferring control of the products or services to a customer. The transfer of control occurs upon December 31, 2022 | 88 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS shipment or delivery of the product, as the customer accepts the product, has title and significant risks and rewards of ownership of the product, physical possession of the product has been transferred, and we have the right to payment. The transaction prices of the Company’s contracts are either fixed or based on market indices, and any uncertainty related to the variable consideration when determining the transaction price is resolved on the pricing date or the date when the product is delivered. The payment terms depend on the product and type of contract, but generally require customers to pay within 30 days or less, and do not contain significant financing components. Any pass-through finished goods delivery costs reimbursed by customers are reported in Net sales, while an offsetting expense is included in Cost of materials and other. Non-monetary product exchanges and certain buy/sell transactions which are entered into in the normal course of business are included on a net cost basis in Cost of materials and other on our Consolidated Statements of Operations. Qualifying excise and other taxes collected from customers and remitted to governmental authorities are recorded as a reduction of the transaction price. Certain sales contracts of the Nitrogen Fertilizer Segment require customer prepayment prior to product delivery to guarantee a price and supply of nitrogen fertilizer. Deferred revenue is recorded at the point in time in which a prepaid contract is legally enforceable and the associated right to consideration is unconditional prior to transferring product to the customer. An associated receivable is recorded for uncollected prepaid contract amounts. Cost Classifications Cost of materials and other consists primarily of crude oil costs, feedstock blendstocks, purchased refined products, purchased ammonia, purchased hydrogen, pet coke expenses, Renewable Identification Number (“RIN”) expenses, derivative gains or losses, and freight and distribution expenses. Direct operating expenses (exclusive of depreciation and amortization) consist primarily of energy and other utility costs, direct costs of labor, including applicable share-based compensation expense, property taxes, plant-related maintenance services, including turnaround expenses for the Nitrogen Fertilizer Segment, and environmental and safety compliance costs, as well as catalyst and chemical costs. Selling, general and administrative expenses (exclusive of depreciation and amortization) consist primarily of labor and other direct expenses associated with the Company’s corporate activities, including accounting, finance, information technology, human resources, legal, and other related administrative functions. For the Company’s Nitrogen Fertilizer Segment, Cost of materials and other and Direct operating expenses (exclusive of depreciation and amortization) are also impacted by changes in inventory balances, as these financial statement line items include inventory production costs. Derivatives Our segments are subject to fluctuations of commodity prices caused by supply and economic conditions, weather, interest rates, and other factors. To manage the impact of price fluctuations of crude oil and other commodities in our results of operations and certain inventories, and to fix margins on future sales and purchases, the Petroleum Segment uses various commodity derivative instruments, such as futures and swaps. The Company has not designated any of its derivative contracts as hedge accounting and records changes in fair value and cash settlements in the Consolidated Statements of Operations. On a regular basis, the Company enters into commodity contracts with counterparties for the purchases or sale of crude oil, blendstocks, various finished products, and RINs. These contracts usually qualify for the normal purchase normal sale exception and follow the accrual method of accounting. The Petroleum Segment may enter into forward purchase or sale contracts associated with RINs. All other derivative instruments are recorded at fair value using mark-to-market accounting on a periodic basis utilizing third-party pricing. The Nitrogen Fertilizer Segment may enter into forward contracts with fixed delivery prices to purchase portions of its natural gas requirements. These natural gas contracts are not treated as derivatives as they qualify for the normal purchase and normal sale exclusions. Accordingly, the fair value of these contracts are not recorded at the end of each reporting period. Refer to Note 8 (“Derivative Financial Instruments, Investments and Fair Value Measurements”) for further discussion of the Company’s derivative activity. December 31, 2022 | 89 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair Value of Financial Instruments In accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures (“Topic 820”), the Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities, or a group of assets or liabilities, such as a business. Topic 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: • Level 1 — Quoted prices in active markets for identical assets or liabilities • Level 2 — Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities) • Level 3 — Significant unobservable inputs (including the Company’s own assumptions in determining the fair value) Financial instruments consisting of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable are carried at cost, which approximates fair value as a result of the short-term nature of the instruments. The Company’s investments, derivative instruments, RFS obligations and long-term debt, which use fair value measurements and are valued using broker quoted market prices of similar instruments, are considered Level 2 inputs. Refer to Note 8 (“Derivative Financial Instruments, Investments and Fair Value Measurements”) for further fair value disclosures. Turnaround Expenses Turnarounds represent major maintenance activities that require the shutdown of significant parts of a plant to perform necessary inspections, cleanings, repairs, and replacements of assets. Costs incurred for routine repairs and maintenance or unplanned outages at our facilities are expensed as incurred. Planned turnaround activities for the Petroleum Segment vary in frequency dependent on refinery units, but generally occur every four to five years , while the frequency of turnarounds in the Nitrogen Fertilizer Segment is every two to three years . Further details of each segment’s turnaround expensing method are discussed below. Petroleum Segment - Consistent with others in the refining industry, the Petroleum Segment follows the deferral method of accounting for turnaround activities. Under the deferral method, the costs of turnarounds are deferred and amortized on a straight-line basis over a four-year period of time, which represents the estimated time until the next turnaround occurs. Turnaround costs and related accumulated amortization are included in the Consolidated Balance Sheets as Other long-term assets. The amortization expense related to turnaround costs is included in Depreciation and amortization in the Consolidated Statements of Operations. During the years ended December 31, 2022, 2021, and 2020, the Petroleum Segment capitalized $ 81 million, $ 8 million, and $ 155 million, respectively. Nitrogen Fertilizer Segment - The Nitrogen Fertilizer Segment follows the direct-expense method of accounting for turnaround activities. Costs associated with these turnaround activities are included in Direct operating expenses (exclusive of depreciation and amortization) in the Consolidated Statements of Operations. During the years ended December 31, 2022, 2021, and 2020, the Nitrogen Fertilizer Segment incurred turnaround expenses of $ 33 million, $ 3 million, and $ 1 million, respectively. Share-Based Compensation The Company accounts for share-based compensation in accordance with FASB ASC Topic 718, Compensation — Stock Compensation . Currently, all of the Company’s share-based compensation awards, including those issued by CVR Partners, are liability-classified and are measured at fair value at the end of each reporting period based on the applicable closing share or unit price. Compensation expense will fluctuate based on changes in the applicable share or unit prices and expense reversals resulting from employee terminations prior to award vesting. Additionally, the Company has issued certain performance unit awards whose fair value is recognized as compensation expense only if the attainment of the performance conditions is considered probable. Uncertainties involved in this estimate include continued employment requirements and whether or not the performance conditions will be attained. The performance objectives are set in accordance with approved levels of the business plan for the fiscal year during the performance cycle and, therefore, are considered reasonably possible of being achieved. If December 31, 2022 | 90 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS this assumption proves not to be true and the awards do not vest, compensation expense recognized during the performance cycle will be reversed. See Note 9 (“Share-Based Compensation”) for further discussion. Income Taxes Income taxes are accounted for utilizing the asset and liability approach. Under this method, deferred tax assets and liabilities are recognized for the anticipated future tax consequences attributable to differences between the amounts recorded in the accounting books and their respective tax basis. Deferred amounts are measured using enacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of the deferred income tax assets, including net operating loss and state tax credit carryforwards, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Further, the Company recognizes interest expense (income) and penalties on uncertain tax positions and income tax deficiencies (refunds) in Income tax expense (benefit). Earnings Per Share There were no dilutive awards outstanding during the years ended December 31, 2022, 2021, and 2020. Recent Accounting Pronouncements - Accounting Standards Issued But Not Yet Implemented In March 2020, FASB issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This guidance applies to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates. The guidance is effective beginning on March 12, 2020 through the sunset date of Topic 848, which is currently expected to occur on December 31, 2024. The Company has not utilized any of the optional expedients or exceptions available under this guidance and will continue to assess whether this guidance is applicable throughout the effective period. (3) Equity Method Investments For each of the following investments, we have the ability to exercise influence through our participation in the boards of directors, which make all significant decisions. However, since we have equal or proportionate influence over each board of directors as a joint partner without regard to its economic interest and do not serve as the day-to-day operator, we have determined that these entities should not be consolidated and have applied the equity method of accounting. • Enable South Central Pipeline, LLC (“Enable JV”) - Through our subsidiaries, we own a 40 % interest in Enable JV, which operates a 12 -inch 26 -mile crude oil pipeline with a capacity of approximately 20,000 barrels per day that is connected to the Wynnewood Refinery. The remaining interest in Enable JV is owned by Enable Midstream Partners, LP, which was merged with Energy Transfer LP in December 2021. • Midway Pipeline, LLC (“Midway JV”) - Through our subsidiaries, we own a 50 % interest in Midway JV, which operates a 16 -inch 99 -mile crude oil pipeline with a capacity of approximately 131,000 barrels per day which connects the Coffeyville Refinery to the Cushing, Oklahoma oil hub. The remaining interest in Midway JV is owned by Plains Pipeline, L.P. December 31, 2022 | 91 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in millions) Enable JV Midway JV Total Balance at December 31, 2020 6 74 80 Cash distributions ( 3 ) ( 8 ) ( 11 ) Equity income 3 7 10 Balance at December 31, 2021 6 73 79 Cash distributions ( 4 ) ( 9 ) ( 13 ) Equity income 3 7 10 Balance at December 31, 2022 $ 5 $ 71 $ 76 (4) Leases Lease Overview We lease certain pipelines, storage tanks, railcars, office space, land, and equipment across our refining, fertilizer, and corporate operations. Most of our leases include one or more renewal options to extend the lease term, which can be exercised at our sole discretion. Certain leases also include options to purchase the leased property. Certain of our lease agreements include rental payments which are adjusted periodically for factors such as inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, we do not have any material lessor or sub-leasing arrangements. Balance Sheet Summary as of December 31, 2022 and 2021 The following tables summarize the ROU asset and lease liability balances for the Company’s operating and finance leases at December 31, 2022 and 2021: December 31, 2022 December 31, 2021 (in millions) Operating Leases Finance Leases Operating Leases Finance Leases ROU assets, net Pipeline and storage $ 16 $ 20 $ 17 $ 23 Railcars 11 — 6 — Real estate and other 13 15 14 18 Lease liability Pipelines and storage $ 16 $ 32 $ 17 $ 35 Railcars 11 — 6 — Real estate and other 13 16 14 19 Lease Expense Summary for the Year Ended December 31, 2022, 2021 and 2020 We recognize lease expense on a straight-line basis over the lease term and short-term lease expense within Direct operating expenses (exclusive of depreciation and amortization). For the years ended December 31, 2022, 2021, and 2020, we recognized lease expense comprised of the following components: Year Ended December 31, (in millions) 2022 2021 2020 Operating lease expense $ 16 $ 15 $ 17 Finance lease expense: Amortization of ROU asset $ 6 $ 6 $ 6 Interest expense on lease liability 5 5 6 Short-term lease expense $ 11 $ 8 $ 8 December 31, 2022 | 92 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lease Terms and Discount Rates The following outlines the remaining lease terms and discount rates used in the measurement of the Company’s ROU assets and lease liabilities at December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Operating Leases Finance Leases Operating Leases Finance Leases Weighted-average remaining lease term 4.1 years 6.3 years 4.1 years 7.2 years Weighted-average discount rate 5.2 % 9.0 % 5.4 % 9.0 % Maturities of Lease Liabilities The following summarizes the remaining minimum lease payments through maturity of the Company’s lease liabilities at December 31, 2022: (in millions) Operating Leases Finance Leases Year Ended December 31, 2023 $ 16 $ 10 2024 12 10 2025 6 10 2026 5 10 2027 3 10 Thereafter 3 14 Total lease payments 45 64 Less: imputed interest ( 5 ) ( 16 ) Total lease liability $ 40 $ 48 On February 21, 2022, Coffeyville Resources Nitrogen Fertilizer, LLC (“CRNF”) entered into the First Amendment to the On-Site Product Supply Agreement with Messer LLC (“Messer”), which amended the July 31, 2020 On-Site Product Supply Agreement (as amended, the “Messer Agreement”). Under the Messer Agreement, among other obligations, Messer is obligated to supply and make certain capital improvements during the term of the Messer Agreement, and CRNF is obligated to take as available and pay for oxygen from Messer’s facility. This arrangement for CRNF’s purchase of oxygen from Messer does not meet the definition of a lease under FASB ASC Topic 842, Leases (“Topic 842”), as CRNF does not expect to receive substantially all of the output, which includes oxygen, nitrogen, and compressed air, of Messer’s on-site production from its air separation unit over the life of the Messer Agreement. The Messer Agreement also obligates Messer to install a new oxygen storage vessel, related equipment and infrastructure (“Oxygen Storage Vessel” or “Vessel”) to be used solely by the Coffeyville Facility. The arrangement for the use of the Oxygen Storage Vessel meets the definition of a lease under Topic 842, as CRNF will receive all output associated with the Vessel. Based on terms outlined in the Messer Agreement, the Company expects the lease of the Oxygen Storage Vessel to be classified as a financing lease with an amount of approximately $ 25 million being capitalized upon lease commencement when the Vessel is placed in service, which is currently expected within the next 12 months. On July 14, 2022, the Company entered into the Sixth Amendment to the Sugar Land Plaza Office Building Agreement with LCFRE Sugar Land Town Square, LLC (“LCFRE”), which amends the Sugar Land Plaza Office Building Agreement dated 2016 (as amended, the “LCFRE Agreement”). Under the LCFRE Agreement, LCFRE will provide office space to the Company which will continue to serve as the Company’s corporate office in Sugar Land, Texas and will commence on October 1, 2023. Based on the terms outlined in the LCFRE Agreement, the Company expects the lease to be classified as an operating lease under Topic 842, with approximately $ 12 million capitalized upon lease commencement. December 31, 2022 | 93 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (5) Other Current Liabilities Other current liabilities were as follows: December 31, (in millions) 2022 2021 Accrued Renewable Fuel Standards (“RFS”) obligation $ 692 $ 494 Accrued taxes other than income taxes 51 45 Deferred revenue 48 87 Personnel accruals 47 46 Share-based compensation 31 15 Accrued interest 24 24 Operating lease liabilities 15 13 Current portion of long-term debt and finance lease obligations 6 6 Derivatives 4 2 Other accrued expenses and liabilities 24 15 Total other current liabilities $ 942 $ 747 (6) Long-Term Debt and Finance Lease Obligations December 31, (in millions) 2022 2021 CVR Partners: 9.25 % Senior Secured Notes, due June 2023 (1) $ — $ 65 6.125 % Senior Notes, due June 2028 550 550 Unamortized discount and debt issuance costs ( 3 ) ( 4 ) Total CVR Partners debt $ 547 $ 611 CVR Refining, LP (“CVR Refining”): Finance lease obligations, net of current portion (2) 42 48 Total CVR Refining debt $ 42 $ 48 CVR Energy: 5.250 % Senior Notes, due February 2025 $ 600 $ 600 5.750 % Senior Notes, due February 2028 400 400 Unamortized debt issuance costs ( 4 ) ( 5 ) Total CVR Energy debt 996 995 Total long-term debt and finance lease obligations $ 1,585 $ 1,654 Current portion of finance lease obligations (2) 6 6 Total long-term debt and finance lease obligations, including current portion $ 1,591 $ 1,660 (1) The $ 65 million outstanding balance of the 9.25 % Senior Secured Notes due 2023 (the “2023 UAN Notes”) was paid in full on February 22, 2022 at par, plus accrued and unpaid interest. (2) Current portion of finance lease obligations was approximately $ 6 million as of both December 31, 2022 and 2021. December 31, 2022 | 94 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Credit Agreements (in millions) Total Capacity Amount Borrowed as of December 31, 2022 Outstanding Letters of Credit Available Capacity as of December 31, 2022 Maturity Date CVR Partners: Asset Based (“Nitrogen Fertilizer ABL”) Credit Agreement $ 35 $ — $ — $ 35 September 30, 2024 CVR Refining: Petroleum ABL (as defined below) $ 275 $ — $ 23 $ 252 June 30, 2027 CVR Partners 2023 UAN Notes - On June 10, 2016, CVR Partners and its subsidiary, CVR Nitrogen Finance Corporation (“Finance Co.” and, together with CVR Partners, the “2023 Notes Issuers”), certain subsidiary guarantors named therein and Wilmington Trust, National Association, as trustee and as collateral trustee, completed a private offering of $ 645 million aggregate principal amount of the 2023 UAN Notes. The 2023 UAN Notes would have matured on June 15, 2023, but the 2023 Notes Issuers redeemed the remaining outstanding balance at par plus accrued and unpaid interest to the applicable redemption date on February 22, 2022. Interest on the 2023 UAN Notes was paid semi-annually in arrears on June 15 and December 15 of each year and were guaranteed on a senior secured basis by all of the Nitrogen Fertilizer Partnership’s existing subsidiaries. The 2023 UAN Notes contained customary covenants for a financing of this type that, among other things, restricted CVR Partners’ ability and the ability of certain of its subsidiaries to have: (i) sold assets; (ii) paid distributions on, redeemed or repurchased the Nitrogen Fertilizer Partnership’s units or to have redeemed or repurchased its subordinated debt; (iii) made investments; (iv) incurred or guaranteed additional indebtedness or issued preferred units; (v) created or incurred certain liens; (vi) entered into agreements that restricted distributions or other payments from CVR Partners’ restricted subsidiaries to CVR Partners; (vii) consolidated, merged or transferred all or substantially all of CVR Partners’ assets; (viii) engaged in transactions with affiliates; and (ix) created unrestricted subsidiaries. In addition, the indenture contained customary events of default, the occurrence of which would have resulted in or permitted the trustee or the holders of at least 25 % of the 2023 UAN Notes to have caused the acceleration of the 2023 UAN Notes, in addition to pursuing other available remedies. During 2021, CVR Partners redeemed $ 580 million in aggregate principal amounts of the outstanding 2023 UAN Notes at par. On February 22, 2022, CVR Partners redeemed all of the remaining outstanding 2023 UAN Notes at par and settled accrued interest of approximately $ 1 million through the date of redemption. As a result of this transaction, CVR Partners recognized a loss on extinguishment of debt of $ 1 million in the first quarter of 2022, which included the write-off of unamortized deferred financing costs and discount of less than $ 1 million each. 2028 UAN Notes - On June 23, 2021, CVR Partners and Finance Co. (the “Issuers”), completed a private offering of $ 550 million aggregate principal amount of 6.125 % Senior Secured Notes due 2028 (the “2028 UAN Notes”). Interest on the 2028 UAN Notes is payable semi-annually in arrears on June 15 and December 15 each year, commencing on December 15, 2021. The 2028 UAN Notes mature on June 15, 2028, unless earlier redeemed or repurchased by the Issuers. The 2028 UAN Notes are jointly and severally guaranteed on a senior secured basis by all the existing domestic subsidiaries of CVR Partners, excluding Finance Co. The Issuers may, at their option, at any time and from time to time prior to June 15, 2024, on any one or more occasions, redeem all or part of the 2028 UAN Notes, at a price equal to 100 % of the principal amount plus a “make whole” premium, plus accrued and unpaid interest. On or after June 15, 2024, the Issuers may, on any one or more occasions, redeem all or part of the 2028 UAN Notes at the redemption prices set forth below, expressed as a percentage of the principal amount of the respective notes, plus accrued and unpaid interest to the applicable redemption date. 12-month period beginning June 15, Percentage 2024 103.063 % 2025 101.531 % 2026 and thereafter 100.000 % December 31, 2022 | 95 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The indenture governing the 2028 UAN Notes contains covenants that are substantially the same as the indenture governing the 2023 UAN Notes. However, the 2028 UAN Notes contain a permitted investment activity carveout that allows for the transfer of certain carbon capture assets to a joint venture for the purpose of monetizing potential tax credits. Nitrogen Fertilizer ABL - On September 30, 2021, CVR Partners, LP and its subsidiaries, CVR Nitrogen, LP, East Dubuque Nitrogen Fertilizers, LLC, Coffeyville Resources Nitrogen Fertilizers, LLC, CVR Nitrogen Holdings, LLC, Finance Co. and CVR Nitrogen GP, LLC, entered into the Nitrogen Fertilizer ABL with Wells Fargo Bank National Association, a national banking association (“Wells Fargo”), as administrative agent, collateral agent, and lender. The Nitrogen Fertilizer ABL has an aggregate principal amount of availability of up to $ 35 million with an incremental facility, which permits an increase in borrowings of up to $ 15 million in the aggregate subject to additional lender commitments and certain other conditions. The proceeds of the loans may be used for general corporate purposes of CVR Partners and its subsidiaries. The Nitrogen Fertilizer ABL provides for loans and letters of credit, subject to meeting certain borrowing base conditions, with sub-limits of $ 4 million for swingline loans and $ 10 million for letters of credit. The Nitrogen Fertilizer ABL is scheduled to mature on September 30, 2024. Beginning September 30, 2021, loans under the Nitrogen Fertilizer ABL bear interest at an annual rate equal to, at the option of the borrowers, (i) (a) 1.615 % plus the daily simple Secured Overnight Financing Rate (“SOFR”) or (b) 0.615 % plus a base rate, if our quarterly excess availability is greater than or equal to 75%, (ii) (a) 1.865 % plus SOFR or (b) 0.865 % plus a base rate, if our quarterly excess availability is greater than or equal to 50% but less than 75%, or (iii) (a) 2.115 % plus SOFR or (b) 1.115 % plus a base rate, otherwise. The borrowers must also pay a commitment fee on the unutilized commitments and also pay customary letter of credit fees. The Nitrogen Fertilizer ABL contains customary covenants for a financing of this type and requires CVR Partners in certain circumstances to comply with a minimum fixed charge coverage ratio test and contains other restrictive covenants that limit the ability of CVR Partners and its subsidiaries ability to, among other things, incur liens, engage in a consolidation, merger, purchase or sale of assets, pay dividends, incur indebtedness, make advances, investments and loans, enter into affiliate transactions, issue certain equity interests, create subsidiaries and unrestricted subsidiaries, and create certain restrictions on the ability to make distributions, loans, and asset transfers among CVR Partners or its subsidiaries. CVR Refining Petroleum ABL - On June 30, 2022, CVR Refining and certain of its subsidiaries (the “Credit Parties”) entered into Amendment No. 3 to the Amended and Restated ABL Credit Agreement, dated December 20, 2012 (the “Petroleum ABL Amendment”, and as amended, the “Petroleum ABL”), with a group of lenders and Wells Fargo Bank, National Association, as administrative agent and collateral agent (the “Agent”). The Petroleum ABL is a senior secured asset based revolving credit facility in an aggregate principal amount of up to $ 275 million with a $ 125 million incremental facility, which is subject to additional lender commitments and certain other conditions. The proceeds of the loans may be used for capital expenditures, working capital and general corporate purposes of the Credit Parties and their subsidiaries. The Petroleum ABL provides for loans and letters of credit in an amount up to the aggregate availability under the facility, subject to meeting certain borrowing base conditions, with sub-limits of $ 30 million for swingline loans and $ 60 million (or $ 100 million if increased by the Agent) for letters of credit. The Petroleum ABL is scheduled to mature on June 30, 2027. Beginning June 30, 2022, loans under the Petroleum ABL bear interest at an annual rate equal to, at the option of the borrowers, (i) (a) 1.50 % plus the Term SOFR or (b) 0.50 % plus a base rate, if CVR Refining’s quarterly excess availability is greater than 50%, and (ii) (a) 1.75 % plus the Term SOFR or (b) 0.75 % plus a base rate, otherwise. All borrowings under the Petroleum ABL are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representations and warranties. The Credit Parties must also pay a commitment fee on the unutilized commitments and pay customary letter of credit fees. The Petroleum ABL contains customary covenants for a financing of this type and requires the Credit Parties in certain circumstances to comply with a minimum fixed charge coverage ratio test, and contains other customary restrictive covenants that limit the Credit Parties’ ability and the ability of their subsidiaries to, among other things, incur liens, engage in a consolidation, merger and purchase or sale of assets, pay dividends, incur indebtedness, make advances, investment and loans, enter into affiliate transactions, issue equity interests, or create subsidiaries and unrestricted subsidiaries. December 31, 2022 | 96 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On April 12, 2022 and July 22, 2022, in connection with the Petroleum ABL, numerous additional indirect, wholly-owned subsidiaries (the “Joining Subsidiaries”) of CVR Energy delivered to the Agent Joinder Agreements pursuant to which such Joining Subsidiaries became borrowers for all purposes under the Petroleum ABL and other Credit Documents. CVR Energy 2025 Notes and 2028 Notes - On January 27, 2020, CVR Energy completed a private offering of $ 600 million aggregate principal amount of 5.25 % Senior Unsecured Notes due 2025 (the “2025 Notes”) and $ 400 million aggregate principal amount of 5.75 % Senior Unsecured Notes due 2028 (the “2028 Notes” and, collectively with the 2025 Notes, the “Notes”). Interest on the Notes is payable semi-annually in arrears on February 15 and August 15 each year, commencing on August 15, 2020. The 2025 Notes mature on February 15, 2025, unless earlier redeemed or repurchased by the issuers. The 2028 Notes mature on February 15, 2028, unless earlier redeemed or repurchased by the issuers. The Notes are jointly and severally guaranteed on a senior unsecured basis by the wholly-owned subsidiaries of CVR Energy with the exception of CVR Partners and its subsidiaries and certain immaterial wholly-owned subsidiaries of CVR Energy. On or after February 15, 2022 and February 15, 2023, we may on any one or more occasions, redeem all or part of the 2025 Notes and 2028 Notes, respectively, at the redemption prices set forth below expressed as a percentage of the principal amount of the respective notes, plus accrued and unpaid interest to the applicable redemption date. 2025 Notes 2028 Notes 12-month period beginning February 15, Percentage 12-month period beginning February 15, Percentage 2022 102.625 % 2023 102.875 % 2023 101.313 % 2024 101.917 % 2024 and thereafter 100.000 % 2025 100.958 % 2026 and thereafter 100.000 % The indenture governing the Notes imposes covenants that will, among other things, limit our ability and the ability of our restricted subsidiaries to: (i) incur additional indebtedness or issue certain disqualified equity; (ii) create liens on certain assets to secure debt; (iii) pay dividends or make other equity distributions; (iv) purchase or redeem capital stock; (v) make certain investments; (vi) sell assets; (vii) agree to certain restrictions on the ability of restricted subsidiaries to make distributions, loans, or other asset transfers to us; (viii) consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets; (ix) engage in transactions with affiliates; and (x) designate our restricted subsidiaries as unrestricted subsidiaries. In addition, the indenture contains customary events of default, the occurrence of which would result in or permit the trustee or the holders of at least 25 % of the 2025 Notes and 2028 Notes to cause, amongst other available remedies, the acceleration of the respective notes. In connection with the Notes, issued pursuant to the Indenture dated January 27, 2020 (the “Indenture”), among CVR Energy, the subsidiary guarantors listed therein (collectively, the “Guarantors”), and Wells Fargo Bank, National Association, as trustee (the “Trustee”), a new wholly-owned subsidiary of CVR Energy, CVR Renewables, LLC (“CVR Renew”), the Guarantors, and the Trustee executed and delivered a Supplemental Indenture pursuant to which CVR Renew unconditionally guaranteed all of the Company’s obligations under the Notes on the terms and conditions set forth in the Note Guarantee and the Indenture. On April 12, 2022, CVR Energy, the existing subsidiary guarantors of the Notes and CVR Renewables, LLC, a new wholly-owned subsidiary of CVR Energy (“CVR Renew”), on the one hand, and the trustee for the Notes, on the other hand, executed and delivered a Supplemental Indenture pursuant to which CVR Renew unconditionally guaranteed all of the Company’s obligations under the Notes on the terms and conditions set forth in the note guarantee and the indenture governing the Notes. On July 1, 2022, in connection with the Petroleum ABL Amendment, the Joining Subsidiaries that were not previously parties to the Indenture executed and delivered a Supplemental Indenture to the Trustee pursuant to which such Joining Subsidiaries unconditionally guaranteed all of the Company’s obligations under the Notes on the terms and conditions set forth in the Note Guarantee and the Indenture. December 31, 2022 | 97 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Covenant Compliance The Company and its subsidiaries, as applicable, have been in compliance with all covenants of the Nitrogen Fertilizer ABL, the Petroleum ABL, and the senior notes as of December 31, 2022. (7) Revenue The following tables present the Company’s revenue disaggregated by major product, which include a reconciliation of the disaggregated revenue by the Company’s reportable segments. Year Ended December 31, 2022 (in millions) Petroleum Segment (1) Nitrogen Fertilizer Segment Other / Eliminations Consolidated Gasoline $ 4,830 $ — $ — $ 4,830 Distillates (2) 4,789 — 111 4,900 Ammonia — 200 — 200 UAN — 557 — 557 Other urea products — 33 — 33 Freight revenue (3) 17 35 — 52 Other (4) 244 11 30 285 Revenue from product sales 9,880 836 141 10,857 Crude oil sales 37 — — 37 Other revenue (4) 2 — — 2 Total revenue $ 9,919 $ 836 $ 141 $ 10,896 Year Ended December 31, 2021 (in millions) Petroleum Segment (1) Nitrogen Fertilizer Segment Other / Eliminations Consolidated Gasoline $ 3,679 $ — $ — $ 3,679 Distillates (2) 2,809 — — 2,809 Ammonia — 146 — 146 UAN — 316 — 316 Other urea products — 29 — 29 Freight revenue (3) 21 31 — 52 Other (4) 163 11 ( 12 ) 162 Revenue from product sales 6,672 533 ( 12 ) 7,193 Crude oil sales 47 — — 47 Other revenue (4) 2 — — 2 Total revenue $ 6,721 $ 533 $ ( 12 ) $ 7,242 December 31, 2022 | 98 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2020 (in millions) Petroleum Segment (1) Nitrogen Fertilizer Segment Other / Eliminations Consolidated Gasoline $ 1,882 $ — $ — $ 1,882 Distillates (2) 1,543 — — 1,543 Ammonia — 94 — 94 UAN — 198 — 198 Other urea products — 15 — 15 Freight revenue (3) 18 33 — 51 Other (4) 79 10 ( 6 ) 83 Revenue from product sales 3,522 350 ( 6 ) 3,866 Crude oil sales 63 — — 63 Other revenue (4) 1 — — 1 Total revenue $ 3,586 $ 350 $ ( 6 ) $ 3,930 (1) The Petroleum Segment may incur broker commissions or transportation costs prior to the transfer on certain sales. The broker costs are expensed since the contract durations are less than one year. Transportation costs are accounted for as fulfillment costs and are expensed as incurred. (2) Distillates consist primarily of diesel fuel, kerosene, jet fuel and renewable fuels activity. (3) Freight revenue recognized by the Petroleum Segment is primarily tariff and line loss charges rebilled to customers to reimburse the Petroleum Segment for expenses incurred from a pipeline operator. Freight revenue recognized by the Nitrogen Fertilizer Segment represents the pass-through finished goods delivery costs incurred prior to customer acceptance and is reimbursed by customers. An offsetting expense for freight is included in Cost of materials and other. (4) Other revenue consists primarily of renewable fuels activity, feedstock, asphalt sales, and pipeline and processing fees. Remaining Performance Obligations We have spot and term contracts with customers and the transaction prices are either fixed or based on market indices (variable consideration). We do not disclose remaining performance obligations for contracts that have terms of one year or less and for contracts where the variable consideration was entirely allocated to an unsatisfied performance obligation. As of December 31, 2022, these contracts have a remaining duration of less than three years . As of December 31, 2022, the Nitrogen Fertilizer Segment had approximately $ 5 million of remaining performance obligations for contracts with an original expected duration of more than one year. The Nitrogen Fertilizer Segment expects to recognize approximately $ 4 million of these performance obligations as revenue by the end of 2023 and the remaining balance during 2024. December 31, 2022 | 99 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Contract Balances A summary of the Nitrogen Fertilizer Segment’s deferred revenue activity during the year ended December 31, 2022 is presented below: (in millions) Balance at December 31, 2021 $ 87 Add: New prepay contracts entered into during the period (1) 117 Less: Revenue recognized that was included in the contract liability balance at the beginning of the period ( 86 ) Revenue recognized related to contracts entered into during the period ( 69 ) Other changes ( 1 ) Balance at December 31, 2022 $ 48 (1) Includes $ 83 million where payments associated with prepaid contracts were collected as of December 31, 2022. Major Customers Petroleum Segment - The Petroleum Segment had two customers who comprised 25 % and 26 % of petroleum net sales for the years ended December 31, 2022 and 2020, respectively, and one customer who comprised 16 % of petroleum net sales for the year ended December 31, 2021. Nitrogen Fertilizer Segment - The Nitrogen Fertilizer Segment had two customers who comprised 30 % and 26 % of nitrogen fertilizer net sales for the years ended December 31, 2022 and 2020, respectively, and one customer who comprised 13 % of nitrogen fertilizer net sales for the year ended December 31, 2021. (8) Derivative Financial Instruments, Investments and Fair Value Measurements Derivative Financial Instruments The following outlines the net notional buy (sell) position of our commodity derivative instruments held as of December 31, 2022 and 2021: December 31, (in thousands of barrels) Commodity 2022 2021 Forwards Crude 373 67 Futures Crude ( 150 ) ( 20 ) Futures ULSD ( 215 ) ( 220 ) Futures Soybean ( 109 ) — As of December 31, 2022, the Petroleum Segment had open fixed-price commitments to purchase a net amount of 34 million RINs. December 31, 2022 | 100 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following outlines the realized and unrealized gains (losses) incurred from derivative activities, all of which were recorded in Cost of materials and other on the Consolidated Statements of Operations: Year Ended December 31, (in millions) 2022 2021 2020 Forwards $ 12 $ 25 $ 53 Swaps ( 48 ) ( 68 ) ( 8 ) Futures ( 19 ) ( 1 ) 10 Total (loss) gain on derivatives, net $ ( 55 ) $ ( 44 ) $ 55 Offsetting Assets and Liabilities The following outlines the consolidated balance sheet line items that include our derivative financial instruments and the effect of the collateral netting. Such amounts are presented on a gross basis, before the effects of collateral netting. The Company elected to offset the derivative assets and liabilities with the same counterparty on a net basis when the legal right of offset exists. December 31, 2022 2021 Derivatives Collateral Netting Net Value Derivatives Collateral Netting Net Value (in millions) Assets Liabilities Assets Liabilities Prepaid expenses and other current assets $ — $ ( 1 ) $ 1 $ — $ — $ — $ — $ — Other current liabilities — ( 4 ) — ( 4 ) 5 ( 7 ) — ( 2 ) At December 31, 2022 and 2021, the Company had $ 7 million and $ 4 million of collateral under master netting arrangements not offset against the derivatives within Prepaid expenses and other current assets on the Consolidated Balance Sheets, respectively, primarily related to initial margin requirements. Our derivative instruments may contain credit risk-related contingent provisions associated with our credit ratings. If our credit rating were to be downgraded, it would allow the counterparty to require us to post collateral or to request immediate, full settlement of derivative instruments in liability positions. There were no derivative liabilities with credit risk-related contingent provisions as of December 31, 2022 and 2021, and no collateral has been posted. Investments Investments consisted of equity securities, which are reported at fair value in Prepaid expenses and other current assets on our Consolidated Balance Sheets. These investments were considered trading securities. Investment income on marketable securities consisted of the following: Year Ended December 31, (in millions) 2022 2021 2020 Dividend income $ — $ — $ 7 Gain on marketable securities — 81 34 Investment income on marketable securities $ — $ 81 $ 41 On January 18, 2022, the Company divested its remaining nominal investment in Delek US Holdings, Inc. (“Delek”). As of December 31, 2022, the Company did not hold any investment in Delek. See further discussion of the distribution in Note 14 (“Related Party Transactions”). December 31, 2022 | 101 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair Value Measurements The following tables set forth the assets and liabilities measured or disclosed at fair value on a recurring basis, by input level, as of December 31, 2022 and 2021: December 31, 2022 (in millions) Level 1 Level 2 Level 3 Total Location and description Other current liabilities (commodity derivatives) $ — $ ( 4 ) $ — $ ( 4 ) Other current liabilities (RFS obligations) — ( 692 ) — ( 692 ) Long-term debt and finance lease obligations, net of current portion (long-term debt) — ( 1,394 ) — ( 1,394 ) Total liabilities $ — $ ( 2,090 ) $ — $ ( 2,090 ) December 31, 2021 (in millions) Level 1 Level 2 Level 3 Total Location and description Prepaid expenses and other current assets (derivative financial instruments) $ — $ 1 $ — $ 1 Total assets $ — $ 1 $ — $ 1 Other current liabilities (derivative financial instruments) $ — $ ( 2 ) $ — $ ( 2 ) Other current liabilities (RFS obligations) — ( 494 ) — ( 494 ) Long-term debt and finance lease obligations, net of current portion (long-term debt) — ( 1,620 ) — ( 1,620 ) Total liabilities $ — $ ( 2,116 ) $ — $ ( 2,116 ) The Company had no transfers of assets or liabilities between any of the above levels during the years ended December 31, 2022 and 2021. (9) Share-Based Compensation Overview CVR Energy and CVR Partners have Long-Term Incentive Plans (collectively, the “LTIPs”) that permit the granting of options, stock and unit appreciation rights, restricted shares, restricted stock units, phantom units, unit awards, substitute awards, other unit-based awards, cash awards, dividend and distribution equivalent rights, share awards, and performance awards (including performance share units, performance units, and performance-based restricted stock). Individuals who are eligible to receive awards and grants under or in connection with the LTIPs include the employees, officers, and directors of the Company and CVR Partners. The Company had 6.8 million shares available for future grants under the CVR Energy LTIP at December 31, 2022. Incentive and Phantom Unit Awards Incentive and phantom unit awards that have been granted to officers, employees, and directors (collectively, the “Share-Based Awards”) reflect the value and dividends or distributions of CVR Energy or CVR Partners, as applicable. Each Share-Based Award and the related dividend or distribution equivalent right represents the right to receive, upon vesting, a cash payment equal to (i) the average fair market value of one share or unit, as applicable, in accordance with the award agreement, plus (ii) the per share or unit cash value of all dividends or distributions declared and paid, as applicable, from the grant date through the vesting date. The Share-Based Awards are generally graded-vesting awards, which vest over three years with one-third of the award vesting each year the grantee remains employed by the Company or its subsidiaries. Compensation expense is recognized ratably, based on service provided to the Company and its subsidiaries, with the amount recognized fluctuating as a result of the Share-Based Awards being remeasured to fair value at the end of each reporting period due to their liability-award classification. December 31, 2022 | 102 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A summary of activity for the Company’s Share-Based Awards for the year ended December 31, 2022 is presented below: Shares or Units (1) Weighted-Average Grant-Date Fair Value (per share or unit) Aggregate Intrinsic Value (in millions) Non-vested at December 31, 2021 2,293,105 $ 18.23 $ 62 Granted 591,528 34.02 Vested ( 1,004,918 ) 19.30 Forfeited ( 141,095 ) 18.35 Non-vested at December 31, 2022 1,738,620 $ 22.97 $ 68 (1) As of December 31, 2022, there are no outstanding awards under the LTIPs, and the only outstanding and unvested awards are issued in connection with and not under the LTIPs. Performance Unit Awards Pursuant to the amended employment agreement, effective December 22, 2021, with the Company’s current chief executive officer, the Company amended the performance award agreement (the “CEO Performance Award”) to extend the end of the performance period thereunder to December 31, 2024. The CEO Performance Award represents the right to receive upon vesting, a cash payment equal to $ 10 million if the average closing price of the Company’s common stock over the 30 -day trading period from January 6, 2025 through February 20, 2025 is equal to or greater than $ 60 per share. Compensation Expense A summary of total share-based compensation expense and unrecognized compensation expense related to the Share-Based Awards and the Company’s performance awards during the years ended December 31, 2022, 2021, and 2020 is presented below: Expenses Unrecognized Expense For the year ended December 31, At December 31, 2022 (in millions) 2022 2021 2020 Amount Weighted-Average Remaining Years Share-Based Awards: Incentive Units $ 45 $ 22 $ 3 $ 33 2.0 CVR Partners - Phantom Units 26 27 1 11 1.4 Performance Unit Awards: CEO Performance Award (1) — ( 3 ) — 10 2.0 Total share-based compensation expense $ 71 $ 46 $ 4 $ 54 (1) All expenses, recognized and unrecognized, related to the CEO Performance Award are contingent upon whether the performance parameters are probable of being met. If the performance parameters are not met, no expense will be recognized. The total tax benefit recognized during the years ended December 31, 2022, 2021, and 2020 related to compensation expense was $ 19 million, $ 12 million, and $ 1 million, respectively. As of December 31, 2022 and 2021, the Company had a liability of $ 35 million and $ 23 million, respectively, for cash settled non-vested Share-Based Awards and associated dividend and distribution equivalent rights. For the years ended December 31, 2022, 2021, and 2020, the Company paid cash of $ 58 million, $ 30 million, and $ 8 million, respectively, to settle liability-classified awards upon vesting. Other Benefit Plans The Company sponsors and administers two defined-contribution 401(k) plans, the CVR Energy 401(k) Plan and the CVR Energy 401(k) Plan for Represented Employees (collectively, the “Plans”), in which the Company’s employees may participate. December 31, 2022 | 103 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Participants in the Plans may elect to contribute a designated percentage of their eligible compensation in accordance with the Plans, subject to statutory limits. The Company provides a matching contribution of 100 % of the first 6 % of eligible compensation contributed by participants. Participants in the Plans are immediately vested in their individual contributions. The Plans provide for a three-year vesting schedule for the Company’s matching contributions and contain a provision to count service with predecessor organizations. The Company had approximately $ 11 million and $ 10 million in contributions under the Plans for the years ended December 31, 2022 and 2020, respectively. The Company had no contributions for the year ended December 31, 2021, as the Company’s matching contributions for the Plans were suspended effective January 1, 2021 and resumed effective January 1, 2022. (10) Income Taxes As of December 31, 2022 and 2021, the Company’s Consolidated Balance Sheets reflected a receivable of $ 22 million and $ 26 million, respectively, from the IRS and certain state jurisdictions. Income Tax Expense (Benefit) Income tax expense (benefit) is comprised of the following: Year Ended December 31, (in millions) 2022 2021 2020 Current: Federal $ 156 $ 84 $ ( 63 ) State 14 7 ( 5 ) Total current 170 91 ( 68 ) Deferred: Federal ( 26 ) ( 76 ) ( 1 ) State 13 ( 23 ) ( 26 ) Total deferred ( 13 ) ( 99 ) ( 27 ) Total income tax expense (benefit) $ 157 $ ( 8 ) $ ( 95 ) The following is a reconciliation of total income tax expense (benefit) to income tax expense (benefit) computed by applying the statutory federal income tax rate to pretax income (loss): Year Ended December 31, (in millions) 2022 2021 2020 Tax computed at federal statutory rate $ 168 $ 14 $ ( 87 ) State income taxes, net of federal tax benefit 28 3 ( 18 ) Changes in enacted state tax rates, net of federal tax benefit — ( 10 ) — State tax incentives, net of federal tax expense ( 6 ) ( 6 ) ( 7 ) Noncontrolling interest ( 38 ) ( 10 ) 13 Goodwill impairment — — 3 Other, net 5 1 1 Total income tax expense (benefit) $ 157 $ ( 8 ) $ ( 95 ) December 31, 2022 | 104 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Deferred Tax Assets and Liabilities The income tax effect of temporary differences that give rise to the Deferred income tax assets and Deferred income tax liabilities at December 31, 2022 and 2021 are as follows: December 31, (in millions) 2022 2021 Deferred income tax assets: Personnel accruals $ 14 $ 6 State tax credit carryforward, net 8 17 Net operating loss carryforward — 2 Total gross deferred income tax assets 22 25 Deferred income tax liabilities: Investment in CVR Partners ( 68 ) ( 70 ) Investment in CVR Refining ( 202 ) ( 222 ) Other ( 1 ) ( 1 ) Total gross deferred income tax liabilities ( 271 ) ( 293 ) Net deferred income tax liabilities $ ( 249 ) $ ( 268 ) Although realization is not assured, management believes that it is more likely than not that all of the deferred income tax assets will be realized, and therefore, no valuation allowance was recognized as of December 31, 2022 and 2021. As of December 31, 2022, CVR Energy has state tax credits of approximately $ 9 million, which are available to reduce future state income taxes. These credits have an indefinite carryover period. Uncertain Tax Positions A reconciliation of unrecognized tax benefits is as follows: Year Ended December 31, (in millions) 2022 2021 2020 Balance, beginning of year $ 17 $ 17 $ 22 Decrease based on prior year tax position — — ( 2 ) Reductions related to expirations from statute of limitations ( 6 ) — ( 3 ) Balance, end of year $ 11 $ 17 $ 17 Included in the balance of unrecognized tax benefits as of December 31, 2022, 2021, and 2020 are $ 9 million, $ 13 million, and $ 13 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate. Additionally, the Company reasonably believes that $ 10 million of unrecognized tax positions related to state income tax credits will be recognized by the end of 2023 as a result of the expiration of statute of limitations. Approximately $ 2 million and $ 7 million of unrecognized tax benefits were netted with Deferred income tax asset carryforwards as of December 31, 2022 and 2021, respectively. The remaining unrecognized tax benefits are included in Other long-term liabilities in the Consolidated Balance Sheets. CVR Energy recognized $ 1 million interest expense and $ 3 million liability for interest as of December 31, 2022, $ 1 million interest expense and $ 2 million liability for interest as of December 31, 2021, and a no minal interest expense and $ 1 million liability for interest as of December 31, 2020. No penalties were recognized during 2022, 2021, or 2020. At December 31, 2022, the Company’s tax filings are open to examination in the United States for the tax years ended December 31, 2018 through December 31, 2021 and in various individual states for the tax years ended December 31, 2018 through December 31, 2021. December 31, 2022 | 105 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (11) Commitments and Contingencies Supply Commitments The Company is a party to various supply agreements with both related and third parties which commit the Company to purchase minimum volumes of crude oil, hydrogen, oxygen, nitrogen, pet coke, and natural gas to run its facilities’ operations. The minimum required payments for unconditional purchase obligations are as follows: (in millions) Unconditional Purchase Obligations Year Ended December 31, 2023 $ 142 2024 83 2025 83 2026 77 2027 71 Thereafter 187 $ 643 For the years ended December 31, 2022, 2021, and 2020, amounts purchased under these supply agreements totaled approximately $ 200 million, $ 176 million, and $ 153 million, respectively. Crude Oil Supply Agreement Effective on August 4, 2021, an indirect, wholly-owned subsidiary of CVR Refining entered into the Second Amended and Restated Crude Oil Supply Agreement (the “Crude Oil Supply Agreement”) with Vitol Inc. (“Vitol”), which superseded, in its entirety, the August 31, 2012 Amended and Restated Crude Oil Supply Agreement between the parties. Under the Crude Oil Supply Agreement, Vitol supplies the Petroleum Segment with crude oil and intermediation logistics helping to reduce the amount of inventory held at certain locations and mitigate crude oil pricing risk. Volumes contracted under the Crude Oil Supply Agreement, as a percentage of the total crude oil purchases (in barrels), were approximately 34 %, 42 %, and 33 % for the years ended December 31, 2022, 2021, and 2020, respectively. The Crude Oil Supply Agreement, which currently extends through December 31, 2023, automatically renews for successive one-year terms (each such term, a “Renewal Term”) unless either party provides the other with notice of non-renewal at least 180 days prior to expiration of the term or any Renewal Term. Contingencies Call Option Lawsuits - In December 2022, the Delaware Court of Chancery approved the final settlement of the consolidated lawsuits (collectively, the “Call Option Lawsuits”) filed by purported former unitholders of CVR Refining on behalf of themselves and an alleged class of similarly situated unitholders against the Company and certain of its affiliates (the “Call Defendants”) relating to the Company’s exercise of the call option under the CVR Refining Amended and Restated Agreement of Limited Partnership assigned to it by CVR Refining’s general partner including the Stipulation, Compromise and Release (the “Settlement”) entered into by the parties on August 19, 2022. The Settlement had no further impact on the Company’s financial position or results of operations beyond the $ 79 million recognized within Other (expense) income, net in the Consolidated Statements of Operations for the year ended December 31, 2022 to reflect the estimated probable loss. On November 28, 2022, the 434 th Judicial District Court of Fort Bend County, Texas granted summary judgment in favor of the primary and excess insurers (the “Insurers”) of the Call Defendants in the Insurers’ declaratory judgment action seeking determination that the Insurers owe no indemnity coverage for the Call Option Lawsuits in relation to insurance policies that have coverage limits of $ 50 million. The Company intends to appeal the grant of summary judgment while it concurrently pursues its claims against the Insurers it filed in October 2022 in the Superior Court of the State of Delaware (the “Superior Court”) alleging breach of contract and breach of the implied covenant of good faith and fair dealing against their primary and excess insurers relating to their denial of coverage of the Call Defendants’ defense expenses and indemnity, as well as other December 31, 2022 | 106 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS conduct of the Insurers relating to the Call Option Lawsuits. On January 3, 2023, the Superior Court granted the Call Defendants’ motion for leave to amend its complaint to seek recovery from the Insurers of all of the amounts paid in settlement of the Call Option Lawsuits. As our potential appeal of the Texas court decision and our Superior Court lawsuit are in their early stages, the Company cannot determine at this time the outcome of these lawsuits, including whether the outcome would have a material impact on the Company’s financial position, results of operations, or cash flows. Renewable Fuel Standards - The Petroleum Segment’s subsidiaries that are subject to the RFS (collectively, the “obligated-party subsidiaries”) implemented by the Environmental Protection Agency (the “EPA”), which requires refiners to either blend renewable fuels into their transportation fuels or purchase renewable fuel credits, known as RINs, in lieu of blending. The Petroleum Segment’s obligated-party subsidiaries are not able to blend the majority of its transportation fuels and must either purchase RINs or obtain waiver credits for cellulosic biofuels, or other exemptions from the EPA, in order to comply with the RFS. Additionally, the Petroleum Segment’s obligated-party subsidiaries purchase RINs generated from our renewable diesel operations, whose operating results are not included in either of our reportable segments, to partially satisfy their RFS obligations. For the years ended December 31, 2022, 2021, and 2020, the Company’s obligated-party subsidiaries recognized expense of approximately $ 435 million, $ 435 million, and $ 190 million, respectively, for their compliance with the RFS (based on the 2020, 2021, and 2022 renewable volume obligation (“RVO”), for the respective periods, excluding the impacts of any exemptions or waivers to which the Company may be entitled). The recognized amounts are included within Cost of materials and other in the Consolidated Statements of Operations and represent costs to comply with the RFS obligation through purchasing of RINs not otherwise reduced by blending of ethanol, biodiesel, or renewable diesel. At each reporting period, to the extent RINs purchased and generated through blending are less than the RFS obligation (excluding the impact of exemptions or waivers to which the Company may be entitled), the remaining position is valued using RIN market prices at period end. As of December 31, 2022 and 2021, the Company’s obligated-party subsidiaries’ RFS positions were approximately $ 692 million and $ 494 million, respectively, and are recorded in Other current liabilities on the Consolidated Balance Sheets. RFS Disputes - The Company has filed a number of petitions in the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) and the United States Court of Appeals for the District of Columbia Circuit (the “DC Circuit”) challenging the EPA’s denial of small refinery exemptions sought by Wynnewood Refining Company, LLC (“WRC”) for the 2017 through 2021 compliance periods (the “SRE Denial Lawsuits”), the EPA’s April 2022 and June 2022 alternative compliance rulings and the EPA’s Final Rule issued in July 2022 establishing RVO, and also intervened in an action filed by certain biofuels producers relating to the RFS. In late 2022, the Fifth Circuit denied the EPA’s motions to stay the SRE Denial Lawsuits, which motion remains pending. In February 2023, WRC filed a motion in the Fifth Circuit seeking a stay of enforcement of the RFS against WRC pending resolution of the SRE Denial Lawsuits. As each of these proceedings is in its preliminary stages, the Company cannot determine at this time the outcomes of these matters. While we intend to prosecute these actions vigorously, if these matters are ultimately concluded in a manner adverse to the Company, they could have a material effect on the Company’s financial position, results of operations, or cash flows. Environmental, Health, and Safety (“EHS”) Matters Clean Air Act Matter - In June and October 2020, the United States (on behalf of the EPA) and the state of Kansas, acting by and through the Kansas Department of Health and Environment (“KDHE”), demanded stipulated penalties from CRRM for alleged violations of a Consent Decree (“CD”) the parties entered into in 2012. On April 5, 2021, CRRM filed a petition for judicial review of the stipulated penalty demand with the United States District Court for the District of Kansas (“D. Kan.”). On March 30, 2022, the D. Kan. issued a memorandum and order denying CRRM’s petition for judicial review and awarding the United States and KDHE approximately $ 6.8 million in stipulated penalties (the “Stipulated Claims”). On May 12, 2022, CRRM appealed the D. Kan.’s order to the United States Court of Appeals for the Tenth Circuit, where it remains pending. Pursuant to the CD, CRRM has deposited the amount of the stipulated penalty demand into a commercial escrow account pending resolution of the disputed claim, and such funds are legally restricted for use and are included within Prepaid expenses and other current assets on the Consolidated Balance Sheets. In December 2020, the United States and KDHE filed a supplemental complaint in the D. Kan., related to alleged violations of the CAA, CRRM’s Title V permit, the Kansas state implementation plan (“SIP”), and Kansas law. The United States and KDHE subsequently amended that complaint in February 2022, adding claims for alleged violations of the CAA, CRRM’s Title V permit, the Kansas SIP, and Kansas law. The United States and KDHE are seeking civil penalties and December 31, 2022 | 107 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS injunctive relief. In March 2022, CRRM filed a partial motion to dismiss certain claims in the amended supplemental complaint. On October 3, 2022, the D. Kan. issued a memorandum and order granting CRRM’s motion to dismiss KDHE’s request for penalties under Kansas law but denying the remainder of CRRM’s motion to dismiss. The D. Kan. subsequently held a scheduling conference in December 2022 and entered a scheduling order in January 2023. Under that schedule, the case will proceed through discovery in 2023 and 2024. The court will schedule a trial in the case at a later date. In January 2023, the United States (on behalf of the EPA) and the State of Kansas, through KDHE, amended their complaint before the D. Kan. in connection with their allegations that CRRM violated the CAA, the Kansas State Implementation Plan, Kansas law, 40 C.F.R. Part 63 and CRRM’s permits relating to flares, heaters, and related matters and seeking civil penalties, injunctive and related relief (collectively, the “Statutory Claims”), adding certain claims including relating to an alleged failure to comply with certain emissions reporting requirements for 2016. Negotiations and proceedings remain ongoing relating to the Statutory Claims, and also relating to the Stipulated Claims being sought by the United States (on behalf of the EPA) and the State of Kansas (through KDHE) in connection with their allegations that CRRM violated the CAA and a 2012 Consent Decree between CRRM, the United States (on behalf of the EPA) and KDHE, following CRRM’s appeal to the United States Court of Appeals for the Tenth Circuit of the denial by D.Kan. of CRRM’s petition for judicial review of the Stipulated Claims. As negotiations and proceedings relating to the Stipulated Claims and the Statutory Claims are ongoing, the Company cannot determine at this time the outcome of these matters, including whether such outcome, or any subsequent enforcement or litigation relating thereto would have a material impact on the Company’s financial position, results of operations, or cash flows. Environmental Remediation - As of December 31, 2022 and 2021, environmental accruals representing estimated costs for future remediation efforts at certain Petroleum Segment sites totaled approximately $ 22 million and $ 12 million, respectively. These amounts are reflected in Other current liabilities or Other long-term liabilities depending on when the Company expects to expend such amounts. (12) Business Segments CVR Energy’s revenues are primarily derived from two reportable segments: Petroleum and Nitrogen Fertilizer. The Company evaluates the performance of its segments based primarily on segment operating income (loss) and Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”). For the purposes of the business segments disclosure, the Company presents operating income (loss) as it is the most comparable measure to the amounts presented on the Consolidated Statements of Operations. The other amounts reflect renewable fuels activities, intercompany eliminations, corporate cash and cash equivalents, income tax activities, and other corporate activities that are not allocated or aggregated to the reportable segments. December 31, 2022 | 108 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes operating results and capital expenditures information by segment: Year Ended December 31, (in millions) 2022 2021 2020 Net sales: Petroleum $ 9,919 $ 6,721 $ 3,586 Nitrogen Fertilizer 836 533 350 Other, including intersegment eliminations (1) 141 ( 12 ) ( 6 ) Total net sales $ 10,896 $ 7,242 $ 3,930 Operating income (loss): Petroleum $ 719 $ ( 27 ) $ ( 281 ) Nitrogen Fertilizer 320 134 ( 35 ) Other, including intersegment eliminations (1) ( 76 ) ( 20 ) ( 17 ) Total operating income (loss) 963 87 ( 333 ) Interest expense, net ( 85 ) ( 117 ) ( 130 ) Investment income on marketable securities — 81 41 Other (expense) income, net ( 77 ) 15 7 Income (loss) before income tax expense $ 801 $ 66 $ ( 415 ) Depreciation and amortization: Petroleum $ 187 $ 203 $ 202 Nitrogen Fertilizer 82 73 76 Other (1) 19 3 — Total depreciation and amortization $ 288 $ 279 $ 278 Capital expenditures: (2) Petroleum $ 86 $ 50 $ 90 Nitrogen fertilizer 41 26 16 Other (1) 76 150 15 Total capital expenditures $ 203 $ 226 $ 121 The following table summarizes total assets by segment: December 31, (in millions) 2022 2021 Petroleum $ 4,354 $ 3,368 Nitrogen Fertilizer 1,100 1,127 Other, including intersegment eliminations (1) ( 1,335 ) ( 589 ) Total assets $ 4,119 $ 3,906 (1) Other includes amounts for the Wynnewood renewable diesel unit project. (2) Capital expenditures are shown exclusive of capitalized turnaround expenditures and business combinations. December 31, 2022 | 109 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (13) Supplemental Cash Flow Information Cash flows related to income taxes, interest, leases, capital expenditures and deferred financing costs included in accounts payable, and non-cash dividends were as follows: Year Ended December 31, (in millions) 2022 2021 2020 Supplemental disclosures: Cash paid, net of refunds (received, net of payments) for income taxes $ 170 $ 72 $ ( 2 ) Cash paid for interest 96 114 107 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 17 15 17 Operating cash flows from finance leases 5 5 6 Financing cash flows from finance leases 6 6 5 Non-cash investing and financing activities: Change in capital expenditures included in accounts payable (1) 12 2 ( 3 ) Change in turnaround expenditures included in accounts payable ( 2 ) 3 ( 4 ) Change in deferred financing costs included in accounts payable — 1 — Non-cash dividends to CVR Energy stockholders — 251 — Cash, cash equivalents and restricted cash consisted of the following: As of December 31, (in millions) 2022 2021 Cash and cash equivalents $ 510 $ 510 Restricted cash (2) 7 7 Cash, cash equivalents and restricted cash $ 517 $ 517 (1) Capital expenditures are shown exclusive of capitalized turnaround expenditures. (2) The restricted cash balance is included within Prepaid expenses and other current assets on the Consolidated Balance Sheets. (14) Related Party Transactions Activity associated with the Company’s related party arrangements for the years ended December 31, 2022, 2021, and 2020 is summarized below: Expenses from Related Parties Year Ended December 31, (in millions) 2022 2021 2020 Cost of materials and other: Enable Joint Venture Transportation Agreement $ 10 $ 11 $ 11 Midway Joint Venture Agreement (1) 22 20 17 Payments: Dividends (2) 342 348 85 (1) Represents reimbursements for crude oil transportation services incurred on the Midway JV through Vitol as the intermediary purchasing agent. (2) See below for a summary of the dividends paid to IEP during the years ended December 31, 2022, 2021, and 2020. December 31, 2022 | 110 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Enable Joint Venture Transportation and Terminalling Services Agreements We are party to a transportation agreement, effective September 19, 2016, as part of the Enable JV for an initial term of 20 years under which Enable provides transportation services for crude oil purchased within a defined geographic area. Additionally, we entered into a terminalling services agreement, effective September 19, 2016, with Enable JV under which it receives access to Enable JV’s terminal in Lawrence, Oklahoma to unload and pump crude oil into Enable JV’s pipeline for an initial term of 20 years. Corporate Master Service Agreement On April 12, 2022, in connection with our Corporate Master Service Agreement effective January 1, 2020, by and among our wholly-owned subsidiary, 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 Joining Subsidiaries were joined as service recipients under the Corporate MSA. Dividends to CVR Energy Stockholders Dividends, if any, including the payment, amount and timing thereof, are determined in the discretion of CVR Energy’s board of directors (the “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). 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. 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 the common stock of 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. IEP received approximately 7,464,652 shares of common stock of Delek and $ 171 million in cash. 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. For the fourth quarter of 2022, the Company, upon approval by the 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. December 31, 2022 | 111 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 tables present quarterly distributions paid by CVR Partners to its unitholders, including amounts received by the Company, during 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 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 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. Of this amount, CVR Energy will receive approximately $ 41 million, with the remaining amount payable to public unitholders. (15) Subsequent Events We believe that certain carbon oxide capture and sequestration activities conducted at or in connection with the Coffeyville Fertilizer Facility qualify under the Internal Revenue Service safe harbor described in Revenue Procedure 2020-12 for certain tax credits available to joint ventures under Section 45Q of the Internal Revenue Code of 1986, as amended (“Section 45Q Credits”). In January 2023, we entered into a series of agreements with CapturePoint LLC, an unaffiliated Texas limited liability company, and certain unaffiliated third-party investors intended to qualify under the Internal Revenue Service safe harbor described in Revenue Procedure 2020-12 for certain joint ventures that are eligible to claim Section 45Q Credits and to allow us to monetize Section 45Q Credits we expect to generate from January 6, 2023 until March 31, 2030. In January 2023, we received an initial upfront payment, net of expenses, of approximately $ 18 million and could receive up to an additional $ 60 million in payments through March 31, 2030, if certain carbon oxide capture and sequestration milestones are met, subject to the terms of the applicable agreements. The foregoing summaries of the applicable agreements do not purport to be complete and are qualified in their entirety by the terms of the relevant agreements, which will be filed with our Quarterly Report on Form 10-Q for the period ended March 31, 2023. Effective February 1, 2023, in connection with our growing focus on decarbonization, we completed a transformation and restructuring of our business to segregate our renewables business. The restructuring took place in several phases, and included the formation of new, wholly-owned subsidiaries (“NewCos”) of CVR Energy, and transferred certain assets to these NewCos December 31, 2022 | 112 Table of Contents CVR ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS to, among other purposes, better align our organizational structure with management, financial reporting, and our goal to maximize our renewables focus. The Company evaluated all other subsequent events, if any, that would require an adjustment to the Company’s consolidated financial statements or require disclosure in the notes to the consolidated financial statements through the date of issuance of the consolidated financial statements. Where applicable, the notes to these consolidated financial statements have been updated to discuss all significant subsequent events which have occurred. December 31, 2022 | 113 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.