NEW YORK (TheStreet) -- CVR Refining (CVRR_) is an independent refiner based in Sugar Land, Texas, with a market cap of $3.3 billion. The firm, which is a master limited partnership (MLP), was formed by CVR Energy (CVI_) to handle its refining and related logistics operations. The most recent quarterly earnings of the refiner witnessed a significant drop. But that was largely due to an equipment failure at one of its refineries, which caused a considerable drop in throughput. More important, CVR Refining has cut down its cash distribution. The business is a variable rate MLP and has just two refineries, which makes it an inherently riskier investment than other traditional MLPs. Although CVR Refining has decent long-term growth prospects, it is certainly not for the fainthearted.
CVR Refining owns two of the seven refineries in Group 3 of the PADD II region of the United States: a 115,000-barrel-a-day oil refinery in Coffeyville, Kan., and a 70,000-barrel-a-day oil refinery in Wynnewood, Okla. The refiner also owns pipelines, crude oil gathering tank farms, storage capacity and other related assets.
The company supplies its products to Kansas, Oklahoma, Missouri, Nebraska and Iowa. This is an area where the demand for gasoline and distillates has exceeded the supply. As a result, CVR Refining benefits from favorable market fundamentals.
