The past weeks rally will be taken back if that spread doesn't get back above $9 quick. My analysis is that CVR, CVRR and HFC are the most impacted by the declining crude differentials. If this spread were to actually fall to $2 and stay down i would expect CVRR to get cut in half. Yes in half. you would see maintenance Q's were the refineries are down, earnings go toward breakeven. Not predicting that, but keep an eye on it. CVRR is almost entirely a play on crude differentials. Their refineries overall are #$%$. Only the abiliity to get crude cheap is their value.
Don't they hedge against moves in the spread? Why would the predict the pay out for the entire year if they don't have some insight into it? Wonder how long it takes a change in the spread to actually effect their earnings?
Good questions Mad. The answer yes they have for this FY and second question: last quarter this year possibly but more probably 1st quarter reporting next year for the effect to affect their bottom line. However, if you look at their Annual they have already started hedging through 2014. People are trading on future declines. They don't realize that this year (or are actively trying to keep the price down) management has strong hedges already in place. With the return (even at management's reassessment to the lower end of $5.50-$6.50 a share) this stock should be trading in the low to mid $40's especially when compared to their "parent" company CVI's price.