CVR PARTNERS LP (UAN) – Domestically safe supplied fertilizer maker IPO


Lets get right to the point shall we — It’s a winner! It also no-doubt became HUGE M&A target today when it IPO’d from a few different monopolistic behemoths that don’t like anybody cutting in on their market share…..Momma Mosaic $MOS please come get me..he he
  
$UAN  is going to pay you a quarterly distribution/CASH. I anticipate it being a monthly distribution at some point. UAN is a spin-off of  CVR Energy Inc  $CVI. Who BTW was one of my best speculative picks ever “cough cough cough”.  I was with em since $3.15 avg in November 2008.  On 52wk alone +175% / all time low of $2.15 on 10-19-2008 +900%. They reported stellar earnings along the way Q after Q. Even a few closures due to Biblical Flooding. They paid down debt. They did everything right IMO and then some. Also cap ex via building additional storage in Cushing OK.  Secure supply deals w/ Vitol Group and others.   $CVI  IPO’d @ $21 went to $30 in a few and took swan cliffdive from there (I wonder if that will happen here w/$UAN ?) Some say at the time with $GS Goldman SHORTING them all they down, during  Jim Cramers fame — “Hedge Funds Gone Wild” , and amidst also the financial crisis of 2008. When $GS was selling to raise cash like rest. 
As to what to do here with $CVI @$23 ? It depends where you are in your investment or whether to want to enter here now and take the shares of the long-term holders. Who will more than likely sell you some here,  and go buy some $UAN. That is why a covered call selling strategy works well here, if have substantial profits in $CVI ,  yet want to be there to capture a possible dividend program of CVI to come. Or a take out bid like discussed above. Dont write calls on entire position. But take them proceeds from selling call options (out of money a buck or two) and buy $UAN stake. Will be interesting and a telling in next weeks time in the CVI option chains. It comes down to evaluation,assessing, assigning their P/E in sector now. Right now P/E 143 sector avg is 18 . High because earnings are sometimes suppressed by a number of charges …that might dramatically lower their (NI) Net Income.
resulting is a very high TEMP P/E for a Q or longer.
 
They report earnings on May 3, 2011
The proceeds from the stake sold in IPO about $300 mil so they now have $500mil total. That is about equal to their debt. What they do exactly I dont know. Regardless it is a nice position for them to be in.  Personally, I would like to leave the debt or nix a little. And spend cap ex on more phenomenal growth than they have to this point…..possible?
Future crack spreads? who knows right now?  I dont!
 
It is tough call here @$23 to commit more capital. Until I see how it reacts and how and what is reported in next earings. But if you are here like some you have options (literaly…he he)>mxborne Re: “bought on dip other day @2.92..     11-Dec-08 01:35 pm    
“good….you are going to make some money!!!!! nice buying under $3″~Steve Goff
 
 
 CVR Energy estimates that the tons sold of ammonia of the Partnership during the quarter ended March 31, 2011 will be approximately 23,500 to 26,500 and the tons sold of UAN during the quarter ended March 31, 2011 will be approximately 169,500 to 175,500. During the quarter ended March 31, 2010, the Partnership sold approximately 31,200 tons of ammonia and 155,800 tons of UAN.
 
What made them appealing to me at the time was obviously the break up value to come if ever unlocked (here today in pps $23). But what appealed to me the most back then, when most in USA were saying at time — “we’re going to implode as a nation,  if we dont  pass TARP asap,  no money in ATM’s…lol”  I was seeking stock plays geared towards my protectionist/isolationist society and USA market thesis to come. Well $CVI fit that to a “T” at time, and still does today. And now $UAN. I also add, I dont think they will build any new refineries in the USA. basically what we have is what we have. That makes $CVI and others like Delek USA Holdings $DK very desirable to say a monopolistic behemoth looking to eat! For the already JUMPED  “EPA and NIMBY hurdles”
 
With the government actions that have taken place since I first started compiling portfolio of such picks in 2008. It seems that thesis comes more and more to fruition everyday in USA. And the uprisings around the globe only adding validity also. Also part of this trade thesis/fund was strategy if market behemoth were to fall for any reason ie  Agrium, CF , Potash Corp,Mosaic, and Yara.  Well $CVI was contingency for such.  If you can’t see or comprehend that we are reverting to what Russia once was in essence not too long ago…..then you’ve been asleep throughout defining events. Dont be the lest bit surprised if you one day hear the term “sharecropping as a town”  floating about.  At the time I found them they were domestically secure fed gasoline refiner, who had also a very profitable fertilizer segment. Diverse and unique business plan to say the least in sector. And the stock preformed exceptionally well from there.  
 
 It $UAN is LP Limited Partnership. Means a flow throw entity. Gives most cash/revs back to shareholders monthly. Objective is to maximize quarterly distributions to theunitholders by operating the  nitrogen fertilizer facility in an efficient manner, maximizing production time and growing profitably within the nitrogen fertilizer industry and it’s pricing power.
 
from S-1
 
*Within 45 days after the end of each quarter, beginning with the quarter ending June 30, 2011, we expect to make cash distributions to unitholders of record on the applicable record date.
 
Pay Out All of the Available Cash We Generate Each Quarter.  Our strategy is to pay out all of the available cash we generate each quarter. We expect that holders of our common units will receive a greater percentage of our operating cash flow when compared to our publicly traded corporate competitors across the broader fertilizer sector, such as Agrium, CF Industries, Potash Corporation and Yara. These companies have provided an average dividend yield of 0.1%, 0.4%, 0.3% and 1.6%, respectively, as of February 28, 2011, compared to our expected distribution yield of     % (calculated by dividing our forecasted distribution for the twelve months ending March 31, 2012 of $      per common unit by the mid-point of the price range on the cover page of this prospectus). The board of directors of our general partner will adopt a policy under which we will distribute all of the available cash we generate each quarter, as described in “Our Cash Distribution Policy and Restrictions On Distributions” on page 53. We do not intend to maintain excess distribution coverage for the purpose of maintaining stability or  growth in our quarterly distributions or Otherwise to reserve cash for future distributions. Unlike many publicly traded partnerships that have economic general partner interests and incentive distribution rights that entitle the general partner to receive disproportionate percentages of cash distributions as distributions increase (often up to 50%), our general partner will have a non-economic interest and no incentive distribution rights, and will therefore not be entitled to receive cash distributions. Our common unitholders will receive 100% of our cash distributions.
 
 
Highly Reliable Pet Coke Gasification Fertilizer Plant with Low Capital Requirements.  Our nitrogen fertilizer plant was completed in 2000 and, based on data supplied by Blue Johnson, is the newest nitrogen fertilizer plant built in North America. Prior to our plant’s construction in 2000, the last ammonia plant built in the United States was constructed in 1977. Our nitrogen fertilizer facility was built with the dual objectives of being low cost and reliable. Our facility has low maintenance costs, with maintenance capital expenditures ranging between approximately $3 million and $9 million per year from 2007 through 2010. We have configured the plant to have a dual-train gasifier complex to provide redundancy and improve our reliability. In 2010, our gasifier had an on-stream factor, which is defined as the total number of hours operated divided by the total number of hours in the reporting period, in excess of 97% excluding the impact of downtime associated with the Linde air separation outage, the rupture of a high-pressure UAN vessel and the major scheduled turnaround.
 
Nitrogen, phosphate and potassium are the three essential nutrients plants need to grow for which there are no substitutes. Nitrogen is the primary determinant of crop yield. Nutrients are depleted in soil over time and therefore must be replenished through fertilizer use. Nitrogen is the most quickly depleted nutrient and so must be replenished every year, whereas phosphate and potassium can be retained in soil for up to three years.
 
Global demand for fertilizers is driven primarily by population growth, dietary changes in the developing world and increased consumption of bio-fuels. According to the International Fertilizer Industry Association, or IFA, from 1972 to 2010, global fertilizer demand grew 2.1% annually. Fertilizer use is projected to increase by 45% between 2005 and 2030 to meet global food demand, according to a study funded by the Food and Agriculture Organization of the United Nations. Currently, the developed world uses fertilizer more intensively than the developing world, but sustained economic growth in emerging markets is increasing food demand and fertilizer use.
As an example, China’s grain production increased 31% between September 2001 and September 2010, but still failed to keep pace with increases in demand, prompting China to double its grain imports over the same period, according to the United States Department of Agriculture, or USDA.
 
 
World grain demand has increased 11% over the last five years leading to a tight grain supply environment and significant increases in grain prices, which is highly supportive of fertilizer prices. During the last five years, corn prices in Illinois have averaged $3.80 per bushel, an increase of 80% above the average price of $2.12 per bushel during the preceding five years. Recently, this trend has continued as U.S. 30-day corn and wheat futures increased 104% and 74%, respectively, from June 1, 2010 to February 28, 2011. During this same time period, Southern Plains ammonia prices increased 67% from $360 per ton to $603 per ton and corn belt UAN prices increased 41% from $252 per ton to $354 per ton. At existing grain prices and prices implied by futures markets, farmers are expected to generate substantial profits, leading to relatively inelastic demand for fertilizers. Nitrogen fertilizer prices have decoupled from their historical correlation with natural gas prices and are now driven primarily by demand dynamics. Nitrogen fertilizer prices in the U.S. farm belt are typically higher than U.S. Gulf Coast prices because it is costly to transport nitrogen fertilizer.
 
 
The United States is the world’s largest exporter of coarse grains, accounting for 46% of world exports and 31% of total world production, according to the USDA. The United States is also the world’s third largest consumer of nitrogen fertilizer and historically the world’s largest importer of nitrogen fertilizer, importing approximately 48% of its nitrogen fertilizer needs. North American producers have a significant and sustainable cost advantage over European producers that export to the U.S. market. Over the last decade, the North American nitrogen fertilizer market has experienced significant consolidation through plant closures and corporate consolidation.
 
The convenience of UAN fertilizer has led to an 8.5% increase in its consumption from 2000 through 2010 (estimated) on a nitrogen content basis, whereas ammonia fertilizer consumption decreased by 2.4% for the same period, according to data supplied by Blue Johnson. Unlike ammonia and urea, UAN can be applied throughout the growing season and can be applied in tandem with pesticides and fungicides, providing farmers with flexibility and cost savings. UAN is not widely traded globally because it is costly to transport (it is approximately 65% water), therefore there is little risk to U.S. UAN producers of an influx of UAN from foreign imports. As a result of these factors, UAN commands a premium price to urea and ammonia, on a nitrogen equivalent basis.
 
Fert prices are going nothing but up! It is world food demand and week US Dollar thing. And this company (UAN) has the one of a  and cheapest prices to make it in the country. . The CEO’s of CVI even bought shares $3mils worth and lays right to buy more.
“Ya miss a 100% of the shots ya never take”…statistical fact

http://finance.yahoo.com/q?s=uan&ql=1

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Aditiion to blog 13-Apr-11 06:03 pm  : http://www.secinfo.com/dsvr4.q12ft.htm#1pwe
 
“Following the consummation of the Offering, CVR Energy’s indirect wholly-owned subsidiary, CRLLC, owns 69.8% of the common units, and members of the public own the remaining 30.2% of the common units.”
 
“The agreement also addresses the means by which we and CVR Energy obtain natural gas. Currently, natural gas is delivered to both the nitrogen fertilizer plant and the refinery pursuant to a contract between CVR Energy and Atmos Energy Corp. (“Atmos”). Under the feedstock and shared services agreement, we reimburse CVR Energy for natural gas transportation and natural gas supplies purchased on our behalf. At our request, or at the request of CVR Energy, in order to supply us with natural gas directly, both parties will be required to use their commercially reasonable efforts to (i) add us as a party to the current contract with Atmos or reach some other mutually acceptable accommodation with Atmos whereby both we and CVR Energy would each be able to receive, on an individual basis, natural gas transportation service from Atmos on similar terms and conditions as set forth in the current contract, and (ii) purchase natural gas supplies on their own account.””To effectuate the Offering, we, Coffeyville Resources Nitrogen Fertilizers, LLC, our direct wholly-owned subsidiary , CVR GP, LLC, our general partner that is an indirect wholly-owned subsidiary of CVR Energy and CRLLC and Morgan Stanley & Co. Incorporated, Barclays Capital Inc. and Goldman, Sachs & Co., as representatives of the several underwriters named therein , entered into an Underwriting Agreement, dated April 7, 2011 and attached hereto as Exhibit 1.1. Pursuant to the Underwriting Agreement, we sold 22,080,000 common units to the Underwriters (including 2,880,000 common units issued upon the exercise of the Underwriters’ over-allotment option) who resold them to the public.”
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About Steven L. Goff

I'm a 38 yr old, modern day Renaissance Man, Polymath, in ever sense of the words. Self educated genius no doubt. "The Police often questioned me, just because they found me interesting" (The Most Interesting Man in the World...drink Dos Equis beer...lol) I come from the last generation who knows what it was like before the computer age per se. The Rotary style phone to the iPhone I like to say. Don't be shocked by this below.......because it's only HALF of it! All true I assure you. Days of telling lies to myself and others are done. Masters Degree from the School of Hard Knocks. Double Doctorate PhD from Google University (like most will have in future). Jack of all trades. Jack Russel loving dog owner of 8yrs. Master of them all. 38 yr old heterosexual. Master electrician and stock trader now, wanna be fund manager, a never be nothing, political and economics junkie, former master safe cracker thief, liar, professional slot machine cheat, before tech advancement made me obsolete! A bad father, bad brother, bad son, and much more. Have been baker, cook, barber, teacher, student, ultra submissive lovers master, semi pro poker player. I'm a novice mathematician, mechanical genius ALL most would say. Sun worshiper, surfer, convicted felon at age 18. Five year prison stay from 18 until 24yrs old. Hence school of Hard Knocks Degrees. Amateur magician, Rubik's Cube solver, social algorithms developer, exponential growth being humanity's most powerful force. My mom was a closet drinker for much of my youth and worked night and slept all day. I am Drake Equation believer, a Luddite I think, student of great societal cyclicality in humanity. I've been shot, I've been stabbed, I've been loved more than life to some, and abandon by the same. Raised Catholic, now of the agnostic mindset. Frankly I dont care if God Almighty exist, for we have bigger problems as a species to solve. I'm speed reader semi cursed with photographic memory, say cursed for some memories are not good. Great pool player, better marksman, Have hunted and killed the beast. A believer information to the masses is more powerful than oil and gold put together. Occam's Razor believer, Rube Goldberg simplifier, Huge student of propaganda and all it's techniques, I wanna go to outer space someday before I die. I dont fear death. I fear not Livin'
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