CVR REFINING (CVI)

[michaelmerriman]

Hey everyone, I've been watching this board for awhile but never had much to add until now. Recently purchased more CVRR today as I feel these shares should recover pretty nicely approaching the next earnings report and dividend. Wish I could have caught it in the low $16's but oh well.

I don't think the refiners are as affected by low oil prices in the short term as everyone thinks, and I've actually read some evidence that refineries benefit more as oil prices drop due to the lag between raw material cost and refined product pricing. One source claims that about 28% of CVRR Q4'14 production to be hedged at a hefty $27.25/bbl margin, and estimates a $0.625/unit distribution for Q4. I think that's a pretty solid payout that would bring investors back to the stock and increase unit price.

Earlier today CVRR filed an SEC document with an investor presentation (EX-99.1) that outlines some of their hedging and crack spreads going into 2015... Seems to be about 10% hedged at a margin of $24.61/bbl for the year.

I'd love everyones take on the presentation, specifically the hedges on pg 14 and YOY capex increases on pg 16. I'm not sure the Q1'15 hedge and spreads are going to be enough to deliver the kind of distribution everyone will be expecting, but Q4'14 should still surprise most and offer a lot of upside if the capex doesn't cut into the distro.