5 unchanged sentences
The physical commodities that comprise our raw materials and finished goods are typically bought and sold at a spot or index price that can be highly variable.
−Removed: Beginning on January 1, 2024, the Petroleum Segment will utilize a new crude oil purchasing intermediary, Gunvor USA LLC, to purchase the majority of its non-gathered crude oil inventory for the refineries (prior to January 1, 2024, Vitol, Inc.
−Removed: was the intermediary;
−Removed: refer to Note 14 (“Commitments and Contingencies”) for additional information).
+Added: The Petroleum Segment utilizes a crude oil purchasing intermediary to purchase the majority of its non-gathered crude oil inventory for the refineries.
This arrangement allows the Petroleum Segment to take title to and price its crude oil at locations in close proximity to the refineries, as opposed to the crude oil origination point, reducing its risk associated with volatile commodity prices by shortening the commodity conversion cycle time.
The commodity conversion cycle time refers to the time elapsed between raw material acquisition and the sale of finished goods.
−Removed: December 31, 2023 | 73
In addition, our refining business seeks to reduce the variability of commodity price exposure by engaging in hedging strategies and transactions that will serve to protect gross margin as forecasted in the annual operating plan.
−Removed: With regard to its hedging activities, our refining business may enter into, or has entered into, financial instruments which serve to (1) lock in or fix a percentage of the anticipated or planned gross margin in future periods when the derivative market offers commodity spreads that generate positive cash flows, (2) hedge the value of inventories in excess of minimum required inventories, and (3) manage existing positions related to a change in anticipated operations and market conditions.
−Removed: The Nitrogen Fertilizer Segment has commitments to purchase natural gas for use in the East Dubuque Fertilizer Facility at the spot market and through short-term, fixed supply, fixed price, and index price purchase contracts.
+Added: With regard to its hedging activities, our refining business may enter into, or has entered into, financial instruments which serve to (1) lock in or fix a percentage of the anticipated or planned gross margin in future periods when the derivative market offers commodity
+Added: December 31, 2024 | 85
+Added: spreads that generate positive cash flows, (2) hedge the value of inventories in excess of minimum required inventories, and (3) manage existing positions related to a change in anticipated operations and market conditions.
+Added: The Nitrogen Fertilizer Segment has commitments to purchase pet coke and natural gas for use in the fertilizer facilities through short-term, fixed price, and index price purchase contracts.
In the normal course of business, nitrogen-based fertilizer products are produced throughout the year to supply the needs of our customers during the high-delivery-volume spring and fall seasons.
−Removed: The value of fertilizer product inventory is subject to market risk due to fluctuations in the relevant commodity prices.
−Removed: Prices of nitrogen fertilizer products can be volatile.
+Added: The value of fertilizer product inventory is subject to market risk due to fluctuations in the relevant commodity prices, which can lead to volatile prices of nitrogen fertilizer products.
We believe that market prices of nitrogen products are affected by changes in grain prices, demand, natural gas prices, and other factors.
+Added: A $1.00 per MMBtu change in the price of natural gas would change the cost to produce a ton of ammonia and UAN by approximately $14.29 and $5.86, respectively.
+Added: A $1.00 per ton change in the price of pet coke would change the cost to produce a ton of ammonia and UAN by approximately $0.66 and $0.27, respectively.
+Added: In the opinion of our management, there are no financial instruments that correlate with our firm pet coke commitments and forecasted commodity sales transactions that could be used to effectively reduce commodity price risk.
RFS Compliance Price Risk
2 unchanged sentences
To mitigate the impact of this risk on the Petroleum Segment’s results of operations and cash flows, the Petroleum Segment’s obligated-party subsidiaries blend ethanol and biodiesel to the extent possible.
−Removed: Alleviating the Company’s exposure to the market risk of RINs price volatility, the Petroleum Segment’s obligated-party subsidiaries purchase internally generated RINs from our renewable diesel operations to partially satisfy their RFS obligations through the completion of the renewable diesel project at our Wynnewood Refinery in April 2022, which converted the Wynnewood Refinery’s hydrocracker to a RDU capable of producing approximately 100 million gallons of renewable diesel per year and generating up to approximately 170 to 180 million RINs annually depending on operations.
+Added: Alleviating the Company’s exposure to the market risk of RINs price volatility, the Petroleum Segment’s obligated-party subsidiaries purchase internally generated RINs from our Renewables Segment to partially satisfy their RFS obligations.
We continually monitor the impact of the RFS on our business and evaluate strategies to mitigate the impacts of the RFS program, the administration thereof, and the market volatility for RINs on our business.
−Removed: Refer to Part I, Item 1A, “Risk Factors”, Part II, Item 7, “Management’s Discussion and Analysis” and Part II, Item 8, Note 14 (“Commitments and Contingencies”), of this Report for further discussion about compliance with the RFS and the potential impacts on our business.
+Added: Refer to Part I, Item 1A, “Risk Factors”, Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 8, Note 14 (“Commitments and Contingencies”) of this Report for further discussion about compliance with the RFS and the potential impacts on our business.
+Added: Interest Rate Risk
+Added: We may be exposed to risk based on changes in interest rates related to the CVR Energy ABL, CVR Partners ABL, and the Term Loan, which bear interest at the Secured Overnight Financing Rate (“SOFR”) plus a premium.
+Added: As of and during the year ended December 31, 2024, there were $325 million of outstanding borrowings under the Term Loan that were subject to variable interest rates, and no variable rate borrowings under the CVR Energy ABL or CVR Partners ABL as of and during the years ended December 31, 2024 and 2023.
+Added: Based on the outstanding Term Loan balance at December 31, 2024, a hypothetical 50-basis point fluctuation in interest rates would result in an annual change of $2 million recognized in Interest expense, net on the Consolidated Statements of Operations.
+Added: Further, fixed-rate debt, such as the 2028 Notes, 2028 UAN Notes, and 2029 Notes (collectively, the “Notes”), exposes us to changes in the fair value of our debt due to changes in market interest rates, but not our earnings or cash flows.
+Added: Based on the Notes, a hypothetical 50-basis point fluctuation in interest rates at December 31, 2024 would have resulted in a change of $23 million in fair value disclosure.
+Added: Fixed-rate debt also exposes us to the risk that we may need to refinance maturing debt with new debt at higher rates, or that we may be obligated to pay rates higher than the current market.
December 31, 2024 | 86
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.