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Executives

Jack Lipinski – President and Chief Executive Officer

Ed Morgan – Chief Financial Officer

Stan Riemann – Chief Operating Officer

Stirling Pack – Vice President of Investor Relations

Analysts

Arjun Murti – Goldman Sachs

Rakesh Advani – Credit Suisse

Todd Godfrey – UBS

Graham Mars – Contarian Capital [ph]

Gene Laverty -- Bloomberg

CVR Energy, Inc. (CVI) Q1 2011 Earnings Call May 9, 2011 11:00 AM ET

Operator

Greetings and welcome to the CVR Energy first quarter 2011 conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation (Operator instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Stirling Pack; Vice President of Investor Relations for CVR Energy. Thank you, Mr. Pack, you may begin.

Stirling Pack

Thank you, Kathleen. Good morning, everyone. We very much appreciate you being here for our CVR Energy call this morning. With me today are Jack Lipinski; our Chief Executive Officer, Ed Morgan; our Chief Financial Officer and Stan Riemann; our Chief Operating Officer.

Prior to the discussion of our 2011 first quarter results, we are required to make the following Safe Harbor statement. In accordance with Federal Securities laws, the statements in this earnings call relating to matters that are not historical facts are forward-looking statements based on management’s belief and assumptions, using currently available information and expectations as of this date and are not guarantees of future performance and do involve certain risks and uncertainties, including those noted in our filings with the Securities & Exchange Commission.

This presentation includes various non-GAAP financial measures. The disclosures related to such non-GAAP measures including reconciliation to the most directly comparable GAAP financial measures are included in our 2011 first quarter earnings release that we filed with the SEC yesterday after the close of the market.

With that briefly said, I’ll turn the call over to Jack Lipinski, our Chief Executive Officer. Jack?

Jack Lipinski

Thank you, Stirling, and thank you all for joining us. From the results we released last night, you can see we had a solid first quarter. Consolidated net income was $45.8 million on net sales of $1.2 billion, and that compares to a loss in the same period last year of $12.4 million on sales of $895 million. Adjusted net income was $45.9 million compared to a $15.6 million loss in the same period a year earlier. Adjusted net income per diluted share was $0.56, versus a loss of $0.18 a share last year.

As always, I’ll speak first and provide some color about the results, then Ed will provide additional financial information, including details about the adjusted net income figures I just mentioned, and after that, Ed, Stan and I will take your questions.

The petroleum segment had an operating income of $105.7 million on net sales of $1.1 billion for Q1 2011. The largest positive impact on our results was the significantly improved market environment we found ourselves in. The biggest negative impact on petroleum segment results was an SEC outage lasting 26 days into January. I mentioned that on our last call. As a result, we were forced to reduce crude runs by 1.9 million barrels. Great margins and good operations followed the outage, allowing us to produce 93% of the quarterly segment operating income, or $98 million, during February and March.

Q1 results also reflect derivative losses on crude oil we bought for line fill and start up inventory obligations for the new Trans-Canada Keystone pipeline. That $7.2 million after tax negative impact from Q1 will be offset in Q2 with a positive impact, as we process these lower cost barrels, and effective April 1, all Keystone barrels have been transferred into our mediation agreement. As I mentioned on our last quarterly call, we expect crude runs to average between 95 and 100,000 barrels a day. We actually ran 98,700 barrels a day.

We also ran 17.2% heavy sour crude in Q1, as compared to 17.3% heavy sours in the same period a year ago. 9X 2-1-1 crack spreads for Q1 averaged $20.99 a barrel. That compared to $8.48 in the same quarter a year ago. In February last year, Group 3 2-1-1 cracks dipped as low a $4.00 a barrel; what a difference a year makes. Last night the 2-1-1 crack stood at $28.49.

The nitrogen fertilizer segment has operating income of $16.8 million on net sales of $57 million for Q1, versus $3 million Q1 2010. The big news came after the quarter closed, with our successful IPO of CVR Partners, LP. We issued 22.1 million common units at $16.00 each. That’s $2.00 over the top of the initial pricing range. We began trading at our MLP on Friday, April 8, under the NYSE ticker UAN. CVR Energy subsidiaries still own the MLP’s general partner, and 69.80% of the common units.

The increased proceeds from our offering allowed us to place additional cash on the MLP balance sheet, which will serve us well as we look to aggressively grow this business. Ed will discuss the details of the new MLP financial structure in his presentation. As part of our growth strategy, a portion of the proceeds from the IPO will be used to expand our UAN plant by almost 50%, to more than one million tons per year.

Our fertilizer business operated well in Q1. Our gas incation [ph] plant was on stream 100% of the time, our ammonia synthesis loop was on stream 96.7% of the time, and our UAN plant, 93.2% of the time. Big change year over year is in product realizations; in Q1 2011, we averaged $564 a ton for ammonia, a year ago, that was $282 a ton. UAN, priced at $207 a ton for the quarter versus $167 a ton a year ago.

We are on track to meet the forecast being published in the IPO prospectus of $150 million of EBITDA and $140 million of distributable cash in the 12 months beginning Q2 2011. It’s worth mentioning at the end of the quarter we signed an agreement with Chaparral Energy, and Oklahoma based oil producer for them to purchase up to 850,000 tons of CO2 from our gas incation [ph] plant, to be used for enhanced oil recovery in their fields in Oklahoma.

Basically, we now have a carbon solution for our gas incation technology fertilizer facility. Chaparral expects to break ground before the end of the year on the compression station and pipeline interconnects necessary to implement their EOR project. Looking forward in the refining business, the Brent/WTI relationship will continue to define our market. The 2-1-1 crack spread is really based on Brents to market crude. Brent reflects the world price, crude price, and WTI acetylene discounts into it as a result of logistics.

Today, that spread between Brent and WTI is more than $14.00 a barrel. This year, so far, we’ve seen it range from a low of $3.29 in January to a high of $19.54 in February. Over time, the congestion of crude in Cushing that has led to the wide dislocation will disappear. I believe over the next two years, as pipeline connections allow Cushing crude to reach the Gulf, the differential will reduce to the tariff necessary to transport main continent crudes to Cushing. I would expect that differential to remain between $2.00 and $3.00 a barrel, which would approximate that tariff.

We process over 40 million barrels a year of crude, and to me that means we’ll enjoy an EBITDA advantage in a range of $80 million to $120 million over a similarly situated refinery on the East or Gulf coast. The wild card will remain the astounding increases in production in crude in areas such as Bakkan, the DD [ph} basin, and Eagle Ford, which may lay the ground work for the structural and larger WTI discount to Brent simply because of volumes.

With that said, the next few years looks very promising for our ability to generate significant cash. Our crude gathering operations provide yet another advantage for CVR Energy, and will continue to provide a benefit regardless of the narrowing of the Brent/WTI spread. In March and April, we averaged 35,000 barrels a day of gathered crude. It was only a year ago that we increased our system capacity from 30 to 35,000. We’re looking to aggressively expand this business once again.

Just before the call today, I received a call from the refinery; we had a flange fire on our CCR. Preliminary indications, it will have no major impact on Q2 results; I’m mentioning it simply because you may hear about it. Obviously the unit’s down and we will immediately begin repair; but even so, we expect Q2 crude throughput to average approximately 115,000 barrels per day. As of this morning, the consolidated business had $694 million of cash and cash equivalents on hand, and cash investment and excess working inventories of an additional $75 million.

Ed will take you through the cash waterfall during his part of the presentation, but as of today, with cash on hand, we’re net debt free. With that, Ed.

Ed Morgan

Thank you Jack, and good morning everyone. At the consolidated level, our net income was $45.8 million or $0.53 per diluted share, versus last year’s $12.4 million or $0.14 per diluted share. Adjusted earnings per share were $0.56 versus a loss of $0.18 per diluted share last year; we believe that adjusted earnings is a meaningful metric for analyzing our performance, as it doesn’t make the impact of non-recurring items and non-cash accounting matters, providing for a better comparison to analyst expectations. In Q1, we adjusted for share based compensation and FIFO inventory accounting, the loss on extinguishment of debt, and any turn around expenses; and I’ll be glad to walk you through these adjustments and provide some brief color at this point in time.

Our share based compensation for Q1 was $13.28 million after tax, or $0.16 per share. Two reasons stock based compensation exceeded our prior guidance on this line item; first, our two prior majority shareholders completed a secondary offering in February, which triggered the sum of the founding partners equity rights, second, this founders equity is really linked to the movement of our stock price, which increased 53% during Q1. Stock based compensation expense is projected to be approximately $9 million over the next three quarters, or will average $3 million per quarter.

The second adjustment to income is increase or decrease in inventory value that we realized under first in, first out, or FIFO inventory accounting. In Q1 2011, we realized the very valuable impact of $13.2 million after tax, or $0.15 per share. The third adjustment to income was the voluntary extinguishment of debt at $1.2 million after tax, or $0.01 per share. The extinguishment related to the refinancing of our existing $150 million working capital facility into a $250 million asset backed credit facility commonly referred to as an ABL.

The final adjustment to the income was the expenses associated with our refinery’s upcoming major scheduled turnaround of $1.9 million after tax or $0.02 per share. As you may remember, we treat our turnaround as an expense as incurred rather than amortizing them. We will continue to incur similar costs associated with our upcoming turnaround in both Q2 and Q3, and we do anticipate spending an additional $45 million in Q4 for the first stage of our split turnaround.

During the quarter, we refinanced $150 working capital facility with a $250 million ABL; besides increasing our liquidity, reduce our letter of credit, and draw interest spread by 200 basis points, we extended the maturity from December 2012 to August 2015. The new facility also has a $250 million accordion feature, should we need additional working capital capacity in support of our future growth plans. We ended the quarter with a liquidity position of $445 million, which is comprised of $156 million in cash, $71 million in excess inventory, and $208 million available under the ABL.

In Q1 2011, we continued our purchasing of gain and crude for line fill in the TransCanada pipeline. During Q1, we processed these Canadian barrels and recognized the $12 million rivet of loss. The $12 million driven loss in Q1 is a one time event associated with our initial purchase of this inventory. This driven loss represents the timing difference between the quarters, since the loss will turn into a realized benefit through our cost of goods sold when these barrels are processed in Q2.

Beginning on April 1, all Canadian barrels being delivered are being purchased through our retail mediation agreement. Our total debt position at the end of Q1 was $431 million, a decrease of $6 million from the end of the year, leaving us with net debt position of $305 million in Q1. Moving to CapEx, Q1 2011 totaled $7.3 million in spend, versus $11.5 million in the same period last year. We did incur major turnaround expenses in preparation for the late Q4 2011 and early 2012 refinery scheduled turnaround of $3.2 million in the quarter.

With the completion of our fertilizer MLP IPO in April, our total 2011 CapEx forecast is expected to be $144 million, of which $38 million is related to our UAN expansion, $92 million is budgeted for the petroleum business, and that does include the $23 million for the Cushing Oklahoma tank farm project. We also expect to expand through 2011, approximately $54 million at the refinery, with connection to the turnaround in Q4 this year.

As a reminder, for accounting purposes, we do expense turnaround costs as they are incurred. Briefly, regarding taxes, our income tax rate was 37% for Q1 2011; as I mentioned, a portion of our stock based compensation is not tax deductible, resulting in a higher effective tax rate. For tax purposes, $5.6 million of stock based compensation was not tax deductible in Q1, resulting in an unfavorable impact on our income taxes, to the equivalent of $0.03 per share.

We anticipate that our income tax rate will be approximately 34% for the full year 2011. With the recent completion of our public offering for the fertilizer business, we will continue to consolidate the full pre-tax earnings of CVR Partners. All income attributable to the non-controlling interest of our MLP will represent a permanent and non-taxable adjustment for CVR Energy, and effectively will act to lower our effective tax rate going forward.

In conjunction of the completion of the MLP IPO, we also entered into a new credit facility at the fertilizer business, which included term limit facility of $125 million and a $25 revolver. This facility also does have an uncommitted but incremental facility of up to $50 million. The facility matures in April 2016, and has no scheduled amortization payments. The current cost of borrowing under that facility is literally just over 4%.

In connection with the successful completion of the offering, we’re required to offer to redeem $100 million of our first and second lien notes, at a price of 103, and the holders of our notes have until May 16 to tender notes they wish to have repurchased. Post IPO, at the end of the day, we have a liquidity position of $987 million, which is comprised of $694 million in cash, $75 million in excess inventory or contained inventory, and $218 million available in our ABL. We are debt free from a debt perspective and position ourselves to execute on our growth strategy, which will be accreted to our shareholders.

On April 12, Standard and Poor’s upgraded our corporate grade to a B+ from a single B, with the expectation for continued stability in our rating. At the same time, S&P upgraded the rating of our first lien secured notes to a BB, from a BB-. We believe that these upgrades reflect the actions we have taken to properly manage our balance sheet and maximize shareholder return. With that, I’ll turn the call back to Jack.

Jack Lipinski

Thanks, Ed. And before I open the call up for questions, I’d like to make a few points. We are aggressively recruiting additions to our fertilizer management team to facilitate aggressive growth in the MLP. We’re also recruiting new and dependent Board members for our GT. We have no plans or intentions of making a secondary offering of the common LP units held by CVR Energy through subsidiaries. We have no need for the additional cash, we like the exposure to the nitrogen fertilizer market, and we will benefit from almost 70% of the distribution from CVR farmers.

As I said in my letter to shareholders and our annual report, success is defined by plenty of work and working your plan. Our goal was and remains to be a leader among our peers. Over five years ago we recognized what was necessary to configure our facilities into flexible position and low cost operations. We executed the $500 million capital expansion program that is paying out handsomely today. We put in place a team of operators, managers, and support staff who shared our vision to carry us forward.

We transitioned from a private equity enterprise to a non-control public company dedicated to returning value to those who invest in us. Two years ago, we focused on strengthening our balance sheet. We were saddled with a term loan that was getting long in the tooth, and we exited from a cash flow slough that cost the company almost $400 million over its course. Today, we have a well capitalized business, a flexible balance sheet, [interference], and we operate in a region of the country with one of the highest current profit margins.

Our message today is no different than what I’ve said historically; we are a growth oriented company that will aggressively invest in projects and acquisitions that are accretive to our cash flow, and will deliver long term value to our shareholders. Whether we choose to reduce long term debt, diversify and expand our business, or invest in organic opportunities, you can be sure we will act in the best interest of our stakeholders. We truly appreciate your support, and I’d like to open the call up now for questions. Operator, we’re ready for questions.

Question-and-Answer Session

Operator

Thank you, gentlemen. (Operator Instructions.) Our first question is coming from the line of Arjun Murti with Goldman Sachs. Your line is live.

Arjun Murti -- Goldman Sachs

Thanks, Jack it’s Arjun. Jack, I appreciate your comments on the Brent/TIO/STI spreads. I guess a couple of related questions to that; you mentioned that over the next couple of years as people build out pipelines, you see the spread normalizing as the pipeline tariff; we certainly agree with that. I think the question is sort of the past and tying together and just would be interested in your thoughts in terms of some of these pipelines getting up and going and facing permitting issues, etc.

Do you think that all that can really happen within a two year window, or is there risk that as these things get drawn out? And then maybe just a related question on your crude gathering business, which has obviously been an advantage for you all. I’m pretty sure it’s in and around your existing areas and where your refinery is. Are you looking to expand into some of the other shale plays further afield, or is it really just building upon the existing infrastructure that you have? Thank you.

Jack Lipinski

Well, let me talk first – answer your first question about the pipelines. There is a lot of risk today. Last year’s pipeline leaks have forced increased regulatory scrutiny on any new pipeline. Everybody wants to be first and then everybody sits there and either overbuilds or it doesn’t get built. We believe there will be some lines that will become active in 2013, and if you can get a couple of hundred thousand barrels per day out of Cushing, that will significantly reduce that Brent/WTI differential.

Like I said in my comments, the wild card is you’ve got places like Bakken that are growing at 16,000 barrels a day, and we still don’t have any idea what the front range of the Rockies will look like, or even toward our other areas. I mean, even the Permian Basin is growing with enhanced oil recovery projects. Chaparral, re-using RCO2; two years from now will significantly increase their production. So you know, I believe that this is not – two years from now I’d like to talk about it and say I’m right, but I don’t expect very much in the way of alleviating the congestion between now and Q1 2013.

On the second question, regarding our free gathering, we are looking up yield. We obviously have been growing in our back yard, but given our pipeline connections and the logistics we have, we are actually looking at growing our business into the DJ Basin and Bakken. Bakken gets a little bit more difficult, because you can hire people, and you can get a credit, you just can’t house them. It’s the new gold rush era, but certainly we are ready to gather crude in eastern Colorado. Our gathering business ranges today from eastern Colorado, all across Kansas, into western Missouri, and from southern Nebraska all the way down into Oklahoma.

So the first natural progression would be for us to move into the DJ Basin. I don’t know if that answers your question, but –

Arjun Murti -- Goldman Sachs

Yeah, that’s very helpful. In terms of crudes you like, obviously the bigger the discount probably the better, but are you noticing material differences in the quality of these crudes in these various shale plays that makes you like them less or more?

Jack Lipinski

Actually, most of the shale crudes are better quality than what we’ve been used to consuming. They’re a lot lighter, they’re sweeter; the lighter and sweeter they are, the more heavy and sour we can run.

Arjun Murti -- Goldman Sachs

And then you also have this fertilizer MLP now; you have a gathering business, a lot of that stuff is pipeline and related assets. Do you think about those assets down the road as being worthy of an MLP? I presume that would be a separate situation from the fertilizer MLP, but any thoughts there would be appreciated. Thank you very much.

Jack Lipinski

At the size we are right now, while we’re sizable we don’t think we have the critical mass to take our petroleum logistics into an MLP. However, if we do acquire another asset or we look for assets, that can become a very easy way for us to improve our acquisition opportunities. This gathering business is very profitable and has been a keystone of our growth strategy.

Arjun Murti -- Goldman Sachs

Terrific, thank you very much.

Operator

Thank you, our next question’s coming from Rakesh Advani with Credit Suisse.

Rakesh Advani – Credit Suisse

Hi, thank you for taking my question. I just wanted to start off with if you can give an indication of what kind of demand you’re seeing in your specific areas, for gasoline and (inaudible)?

Jack Lipinski

We’re seeing a very strong demand. I mean, if you take a look, an indication – well, first of all, we’ve seen strong demand and growing demand, particularly in (inaudible) over the last year and a half. We’re seeing demand for gasoline increase; one of the best indicators of that is simply price. We have gone, from a few weeks ago, where the basis, meaning the price we receive for our gasoline over the 9X, we went from a regime of – until about a month ago where it was slightly negative to New York, and part of that was because of the rapid run up in the overall crack, today we are seeing gasoline basis, and it’s been increasing every day, as much as $0.09 a gallon over the 9X above gasoline and diesel, which is an indication of what demand is. With the flooding in Mississippi, there is also some concern that this flooding will impact a significant number of refineries further south as it comes down river. And then also, in general, Magellan inventories; which you know we are a Magellan based marketer, we do move into New Start and we do move up Enterprise, but Magellan inventories are lower this year, significantly lower this year than they were last year. All of that indicating that product demand is strong and product supply is weak.

Rakesh Advani – Credit Suisse

Okay, thank you. And just another one is obviously you guys have been building up a lot of cash as you go forward; can we talk about what your planned uses are for the cash, and what kind of minimum level; what cash are you comfortable with holding on your balance sheet?

Jack Lipinski

Alright; well you know, first of all, the first thing we had to do in conjunction with our offering was offer our bond holders redemption at 103 – what was the total number? $100 million?

Ed Morgan

That’s correct.

Jack Lipinski

That window is still open, so we won’t know how much actually gets redeemed. We are getting redemptions, but we won’t know the number until the 16th. The minimum amount of cash that lets us sleep at night, if you sit and you look at our business, and you say “alright, what if we had another major outage like we did on the crack the first quarter of the year?” We would like to keep something in the range of $150 to $200 million of cash, just in reserve. That way we obviously can go into our undrawn ABL; I mean, our ABL has a lot of room, but at that level, given the amount of cash that this company generates, that’s kind of the level we’d like to stay at. As far as what do we do? I personally believe that we are getting full value for our fertilizer business, you can see where its March cap is. Adversely, because we are a single asset refiner, we’re trading below others who have multiple assets. You know, we’re not going to do it crazy, we’re not going to overpay, but we’re going to aggressively look for the asset that will increase shareholder value. I’m not a big fan of buying assets that don’t flow cash.

Rakesh Advani – Credit Suisse

Okay, and then I guess just to follow up, you’re looking at, I guess, possibly refining acquisitions; would the preference be something close by to you guys, or would you think about going into a new kind of pattern?

Jack Lipinski

You know, everybody’s saying the same thing, because everybody’s seeing the same thing we are. Anything in the Rocky Mountains and basically ped two [ph], I would not, however, move down into anything along the Gulf Coast. I’m not interested in buying a big monster plant on the Gulf, or a small plant on the Gulf. We think that they – compared to our earnings potential, they are going to be under pressure from the imports.

Rakesh Advani – Credit Suisse

Okay, thank you.

Operator

Thank you. (operator instructions.) Our next question is from Todd Godfrey at UBS. Your line is live.

Todd Godfrey – UBS

Hi, thanks for taking my question. My first one is of that $694 of consolidate cash, how much is at the UAN level?

Ed Morgan

$227.

Todd Godfrey – UBS

$227, thank you. And the second question, I know the Coker outage in January caused this, but the percentage of the light medium sour was only like 60 basis points, versus around 7% last year. What should we expect to import? Should we get back to those low single digit levels?

Jack Lipinski

No, actually we processed through the quarter, 17% heavy sour.

Todd Godfrey – UBS

I beg your pardon, the light medium sour.

Jack Lipinski

Oh, you know those are – when you look across those crudes, we buy crude which gives us the best refining value, so we don’t target for buy the same crude every day. As a matter of fact, that’s what we took – when we took over the company, that’s a thing we stopped. We don’t buy what we did a month ago or two years ago just because it’s there. We buy and run anywhere up to a dozen kinds of crudes every month, and every time we buy a crude we then rerun our LPs and see what goes next. And frankly, heavy crude displaces medium sour crude.

Just so everybody, if I have new investors on this call, we are in a medium sour refinery. We run up to 1.2% blended sulfur, and we can run from 28 to 35 or 36 API, so we’re very flexible on API, and can run up to 1.2% sulfur. Generally, we buy the crudes that get us closest to that sulfur limit within that API range, and it’s based on economics and newest LP runs. So it’s nothing structural or fundamental, it’s just the way we buy crude every day.

Todd Godfrey – UBS

Okay great, and I’m sure this is subject to change, but if I sort of use what the slate was in Q1, that would probably be a decent approximation for the rest of the year, assuming things stay the way they are?

Jack Lipinski

I think we ran a little wider in January, because we didn’t want to produce as much cataseed [ph], so we will probably be heavier going forward.

Todd Godfrey – UBS

Okay, thanks very much.

Operator

Thank you, our next question is coming from Graham Mars of Contarian Capital.

Graham Mars – Contarian Capital

Good morning. I had a quick question about your comment regarding asset purchases. From where I sit, your refinery trades for under a billion dollars after you back out the UAN, and I can’t – I mean, correct me if I’m wrong, there can’t be a mid-con refinery that trades for under four times normalized cash flow and ignores the fact that there’s going to be an enormous windfall over the next two years, so it concerns me a little bit that you’re going to go out and pay full price for a mid-con refinery that trades at a material multiple premium to what your refinery trades for. Why not buy back shares of CBI?

Jack Lipinski

That’s at least a possibility. Again, this is something we’re discussing with our Board, functionally though, we trade at a discount in large part to the fact that we are a single asset; so the way of growing shareholder value as well is to pick up the right asset. Again, I stated it, we will not overpay. I mean, if you look back at the history of this company, we started as a private equity enterprise in 2005, we looked at almost a dozen acquisitions, and we bought none because we found them to be overpriced. That same discipline will apply right now. If I can’t find something to do with the cash, we will find something else to do with the cash.

Graham Mars – Contarian Capital

Okay, that’s comforting to hear. Thank you.

Operator

Your next question is coming from Gene Laverty with Bloomberg.

Gene Laverty – Bloomberg

Hi, I just wanted to get a little more color on the refinery today, if you have anything. If the unit is down or how long it will be down?

Jack Lipinski

Oh, our CCR – we had a flange fire this morning; and of course in these kind of incidents you just typically let them burn out. We had some instruments too, and again, all this came to me just before the call, but I have enough information to indicate that the unit will be down for several days. We’ll make accommodations; we actually have plans – the way I said it, if you have a plan and you work your plan, we actually have contingency plans in place any time a unit comes down. We would expect – we have hydrogen supply from the fertilizer facility, so that’s primarily what the CCR does. It does make gasoline as well, but the rate that the plant is running well, we’ll probably trim rates a little bit for the next several days and then come on back up. When I said we would run in the range of 115,000 barrels a day based on information given me, the Piedmont field, we believe that’s going to be pretty much our operating range. Certainly there’ll be some cost, but it’s not a major impact. We did have one minor injury, it was not a burn. An operator was actually responding to a leak that he heard, and in getting away from it, he tripped and fell.

Gene Laverty – Bloomberg

Okay, thank you.

Operator

Thank you gentlemen. I am showing no further questions in my queue at this time.

Jack Lipinski

Thank you all so much for joining us. I appreciate you being with us, and we’re here to work for you. Join us next quarter, and we look forward to what the margin gods give us as we go forward, so thank you all.

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