Petroleum Business

        We operate one of the seven fuels refineries located in the mid-continental U.S. We produce at a throughput of 100,000 barrels per day (bpd), which accounts for approximately 15% of those fuels refineries' production. Our cracking/coking refinery has a modified Solomon complexity of approximately 8.8 and Nelson complexity of approximately 9.7, making ours one of the most complex refineries in our region. Our refinery's high level of complexity allows us to process heavier, less expensive, crude oil compared to competitors with less complex facilities, and still produce a high percentage of high-value, clean transportation fuels such as gasoline and diesel. The current excess availability of heavy crude oil in world markets provides us a significant cost advantage over our less complex peers. During the nine months ended September 30, 2004, our heavy and medium sour crude processing capacity was approximately 40% to 50% of our throughput, and high-value products represented approximately a 94% product yield on a crude oil basis.

        We primarily target a diverse customer base in the Midwestern states where regional demand for petroleum products has exceeded regional refining production. As a result of our geographic location, we do not incur the high cost of transporting refined products to customers in the Midwest compared to refiners located outside the Midwest. Consequently, we estimate our region's refining margins have exceeded Gulf Coast refining margins by approximately $1.93 per barrel on average for the last four years. All of our non-gathered crude is purchased through a credit intermediation agreement, which mitigates crude pricing risks and allows us to reduce our inventory position. We also derive additional

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revenue by leasing storage and charging for terminalling services at Phillipsburg, Kansas, on a throughput basis to third parties in need of asphalt and refined fuels.

Nitrogen Fertilizer Business

        We operate the only nitrogen fertilizer plant in North America utilizing a coke gasification process to generate hydrogen feedstock that is further converted to ammonia for the production of nitrogen fertilizers. By using petroleum coke rather than natural gas as a raw material, we currently have a significant cost advantage over other North American natural gas based fertilizer producers. In addition, we benefit economically from high prevailing natural gas prices because fertilizer prices tend to rise with natural gas prices. We estimate that our cost advantage over natural gas based fertilizer producers is realized when natural gas prices are in the range of $1.50 to $2.50 per million Btu and above. This level is generally low by historical industry prices and our cost advantage is more pronounced at current natural gas prices, which have generally fluctuated between $5.00 and $8.00 per million Btu since the end of 2003.

        We obtain approximately 80% of the petroleum coke we use at our nitrogen fertilizer plant from our adjacent refinery. The use of coke as a raw material in our fertilizer plant also provides a superior value to our refinery's coke, which would otherwise be sold at significantly lower economic value, as is the current practice in the industry. Any coke not obtained from our oil refinery is readily available and purchased on the open market. Our plant produces approximately 370,000 tons per annum of ammonia. We upgrade approximately two-thirds of our ammonia into approximately 638,000 tons per annum of high value UAN, bringing salable tonnage to approximately 755,000 tons per annum of finished product. As the largest single train UAN production facility in North America, our UAN production represents 5.6% of U.S. demand. Our nitrogen products are delivered by trucks and our own fleet of rail cars to retailers and distributors in the mid-continental agricultural and industrial markets and to certain locations served by the Union Pacific (UP) railroad. Our nitrogen fertilizer customers are located in close proximity to us, enabling us to avoid intermediate, transfer, storage, barge freight, or pipeline freight charges. As a result, we believe we enjoy a freight advantage over U.S. Gulf Coast ammonia importers of approximately $65 per ton and over U.S. Gulf Coast UAN importers of approximately $37 per ton. Such cost differentials represent a significant portion of the market price of these commodities. For example, since the end of 2003, ammonia prices have fluctuated between $268 and $329 per ton, and UAN prices have fluctuated between $156 and $195 per ton.

Market Trends

        We have identified several key factors we believe lead to a favorable outlook for the refining and nitrogen fertilizer industries for the next several years.

        For the refining industry, these factors include:

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The supply and demand fundamentals of the domestic refining industry have improved since the 1990s, and are expected to continue as the demand for refined products continues to exceed increases in refining capacity in the U.S.



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Continued excess availability of lower cost sour and heavy sour crude oil is expected to continue to provide a cost advantage to complex refiners with the ability to process these crude oils.



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Increasing reliance on imports to satisfy refined products demand, especially gasoline, and lower ability to deliver refined products due in part to varying product specifications from state to state will favor regional refiners with transportation cost advantages.



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More products based on new and evolving fuel specifications, including ultra-low sulfur content, reduced vapor pressure, and the addition of oxygenates such as ethanol, will require refiners to blend and process these boutique fuels and exert pressure on product availability.

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High capital costs, excess capacity, and environmental regulatory requirements have limited the construction of new refineries in the U.S. over the past thirty to forty years. No new major refinery has been built in the U.S. since 1976. More than 150 small and unsophisticated refineries, however, have been shut down in recent years.

        For the nitrogen fertilizer industry, these factors include:

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Persistently high natural gas prices, a deficit in natural gas supply and increased demand for natural gas in North America as an environmentally friendly fuel are expected to result in reduced production of natural gas based nitrogen fertilizer products in the U.S. Imports of nitrogen fertilizer product will only partially address this shortfall due to the lack of surplus of natural gas and a shortage of fertilizer transportation infrastructure, such as terminals, pipelines, barges and railcars. These factors will help maintain high nitrogen fertilizer prices in the central Midwestern U.S., or the U.S. farm belt, the largest market for nitrogen fertilizer products in the U.S.



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The combined impact of a growing world population, improving diets, and low grain inventories will drive grain prices and productions worldwide and consequently drive high nitrogen and nitrogen-based fertilizer prices in order to stimulate increased grain production.



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Continued high prices of petroleum and natural gas will result in a cost preferential position for coke gasification technology.

Competitive Strengths

    Strong Oil Refining Industry Fundamentals

        We believe attractive demand and supply dynamics for refined products favor us because of our ability to receive and process crude efficiently, produce high-value products, and transport our refined products cost-effectively to our customers. Throughout the U.S., expected annual increases in demand continue to exceed estimated increases in refining capacity. There has also been a shortage of refined products as evidenced by inventories of refined products, especially gasoline, below their historical averages. These nationwide trends are more pronounced in our marketing region, where demand for refined products has exceeded refining production by approximately 38% since 1997.

    Strong Nitrogen Fertilizer Industry Fundamentals

        The combined impact of growing world population and low grain inventories results in rising grain prices and strong projections for acres of corn and wheat planted in North America, which we believe will drive the demand for nitrogen fertilizer. Consequently, we expect high nitrogen fertilizer prices to prevail in North America for the foreseeable future. This projection is further supported by strong natural gas prices, a deficit in North American ammonia and UAN production and a shortage of infrastructure, such as pipelines, barges, and railcars that are needed to transport imported products into the mid-continent market where nitrogen fertilizer is primarily consumed. The total UAN capacity of our nitrogen fertilizer business is well suited to reach into premium agricultural markets in Kansas, Missouri, Nebraska, Iowa, Illinois and Texas.

    Regional Focus and Strategic Location

        As one of the seven fuels refineries located in the Midwest, we are located in close proximity to our customers and we benefit from favorable crude oil supply and product distribution logistics, including access to pipelines. As a result, we do not incur high transportation costs. We believe our low transportation costs enable us to capture higher margins than similar refineries outside the Midwest. We have ready and economical access to international crudes available in the U.S. Gulf Coast through the Seaway pipeline, which currently has excess capacity available, and potentially in Canada through a

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proposed future pipeline connection. In addition, our favorable plant location relative to end users of ammonia and UAN, as well as high product demand relative to production volume allow us to target freight-advantaged destinations in the U.S. farm belt.

    Efficient, Modern Asset Base

        Since 1994, approximately $188 million has been invested to modernize our oil refinery to make it one of the most advanced in our region and to meet environmental regulations. Similarly, between 1999 and 2002, approximately $370 million was invested to create our coke gasification facility. Our nitrogen fertilizer plant's gasification process uses less than 1% of natural gas used by natural gas based nitrogen fertilizer plants and emits significantly less pollutants during normal operations compared to other nitrogen fertilizer facilities.

    Low Input and Operational Costs

        Our refinery is capable of processing a broad array of crude oils from both foreign and domestic sources, with approximately 40% to 50% of its feedstock comprised of heavy and medium sour crude. As a result, we believe we are well positioned to benefit from the increasing share of global crude oil production represented by heavy sour crude oil, which tends to be less expensive than lighter, sweeter types of crudes and contributes to higher margins. In addition, we estimate that our fertilizer plant, which has lower feedstock costs and capital requirements than natural gas based fertilizer plants, retains its competitive advantage at natural gas prices in the range of $1.50 to $2.50 per million Btu and above. This price level is generally low by historical industry standards and our cost advantage is more pronounced at current natural gas prices, which have generally fluctuated between $5.00 and $8.00 per million Btu since the end of 2003.

    Experienced Management Team

        We have a highly experienced management team, each with an average of over 23 years of industry experience. Our management compensation is directly tied to achieving certain performance objectives. Under the leadership of our chief executive officer, Philip L. Rinaldi, we have made significant operational improvements, which have reduced operating costs and increased stockholder value.

Our Business Strategy

        Our goal is to continue to be a premier independent refiner and marketer of high-value, clean transportation fuels and producer of ammonia and UAN. We believe that this offering will strengthen our ability to execute the following strategic objectives:

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We intend to continue to take advantage of favorable supply and demand dynamics in the Midwest by capitalizing on our position as one of the largest refiners in the mid-continental U.S. and growing organically.



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We intend to improve our competitive position in our refining and fertilizer operations by selectively investing in high-return projects that enhance our operating efficiency and expand our capacity while rigorously controlling costs.



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We intend to increase our sales and supply capabilities of boutique fuels, UAN, and other high-value products, while finding cheaper sources of raw materials, such as crude oil from Canada.



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We intend to maximize our location and transportation cost advantages and continue to focus on being a reliable, low-cost supplier of our products to our existing customers and identify new commercial customers.

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We intend to continue to devote significant time and resources toward improving the reliability, safety and environmental performance of our operations and build on our status as a premier employer in Southeastern Kansas, serving as a beneficial economic presence in our communities and with our employees.

Our History

        Prior to March 3, 2004, our assets were operated as a small component of Farmland Industries, Inc. (Farmland), an agricultural cooperative. Farmland filed for bankruptcy protection on May 31, 2002. Coffeyville Resources, LLC, a subsidiary of Coffeyville Group Holdings, LLC, won the bankruptcy court auction for Farmland's petroleum business and a nitrogen fertilizer plant and completed the purchase of these assets on March 3, 2004. Throughout this prospectus we refer to this purchase as the Transaction. Prior to consummation of the Transaction, we expended significant time and money preparing for our proposed post-closing implementation of several key strategic initiatives that we believed would significantly enhance our competitive position and improve our financial and operational performance following the Transaction. Specifically, the following initiatives were implemented:

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We contracted to construct a crude pipeline which would enable us to control our crude oil supply chain from Cushing, Oklahoma, a major mid-continental hub, to Coffeyville, at a favorable economic cost to us.



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We negotiated new collective bargaining agreements with the existing unions which would enable us to improve the overall work force and reward our employees for increasing productivity and diversifying their skills.



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We negotiated new agreements with respect to potential environmental liabilities with the United States Environmental Protection Agency (EPA) and the Kansas Department of Health and Environment (KDHE) and significant insurance coverage for certain historical and potential future liabilities.



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We negotiated a long-term electric supply agreement with the City of Coffeyville.



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We renegotiated a number of key supplier contracts on favorable terms.



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We identified a new management team, consisting of experienced non-Farmland industry managers as well as certain key Farmland employees.

        Following the consummation of the Transaction, we significantly improved our coke gasifiers' performance and optimized operations at our nitrogen fertilizer plant, enabling us to be one of the top performers in our industry. We have also reduced operating costs at our refinery.

Our Structure

        All information in this prospectus assumes that prior to this offering, Coffeyville Group Holdings, LLC will contribute the stock of its subsidiaries to us and we will issue 74,852,941 shares of common stock to Coffeyville Group Holdings, LLC. Prior to the contribution of stock by Coffeyville Group Holdings, LLC and our issuance of common stock to Coffeyville Group Holdings, LLC, we anticipate that we will seek a waiver from the lenders under our senior secured credit facility permitting this transaction. See "Description of Our Senior Secured Credit Facility."

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