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By Tanya Rutledge
Special to the Houston Chronicle
Eight years after a private equity group acquired a Coffeyville, Kan., oil refinery out of bankruptcy to use as a building block for CVR Energy, the Sugar Land company vaulted to No. 5 on the Chronicle’s list of top public firms.
Jack Lipinski, CEO of CVR, said the oil refiner and fertilizer manufacturer’s 2011 growth was in part due to strong commodity prices. But a lot of other pieces had to fall into place before such a comeback, namely $500 million spent to upgrade the refinery.
CVR increased the Kansas refinery’s production from 95,000 barrels a day in 2005 to a current rate of 115,000 a day and added the ability to process heavy Canadian oil.
CVR, which has more than 1,000 employees including 70 in Houston, also resurrected an orphaned fertilizer business and eventually spun it off into a related master limited partnership. The MLP began expanding its fertilizer plant last year.
“We were really able to show the value of that fertilizer business,” Lipinski said.
CVR also showed it could boost profits, turning earnings-per-share growth of more than 2,000 percent last year. Revenue was $5 billion, a 23 percent increase. The company, No. 26 on the Chronicle’s list last year, also logged a shareholder return of 23 percent.
“2010 was not a particularly attractive year – we were still coming out of the recession,” Lipinski he said. “But as the economy started to improve, we were in the perfect position to take advantage of it.”
In November, CVR closed a deal to buy Gary-Williams Energy Corp. and its Wynnewood, Okla., refinery.
Lipinski said the “shale revolution” benefited CVR, which operates primarily in the central U.S., which he said is under-supplied in terms of refineries.
CVR’s refineries produce mostly gasoline, diesel fuels and propane.
CVR caught the attention of billionaire investor Carl Icahn, who in late May raised his stake in CVR to 80 percent, giving him control over the company’s board more than three months after he made a buyout offer.
Once he gains a 90 per- cent share, Icahn can execute his plan to merge CVR with one of his affiliates and sell it.
“The whole situation has worked out well for our shareholders,” Lipinski said. “We are very shareholder-driven. We have always been about creating value, and it’s still that way.”
Rutledge is a freelance reporter.