Lynn Cowan has this report on a hot energy IPO:

Rising demand for refinery services in the central U.S. drew investors to the initial public offering of petroleum refiner CVR Energy Inc. Tuesday, just four months after a serious flood temporarily shut down its operations and caused an oil spill.

The stock opened at $21.05 a share on the New York Stock Exchange, up 11% from its IPO price of $19. The company sold 20 million shares — 1.5 million more than expected — at the midpoint of its expected $18 to $20 price range. The stock was trading recently at $20.51, up 8%.

Headquartered in Sugar Land, Texas, CVR Energy operates a refinery in Kansas and sells its resulting products via tanker trucks and bulk pipeline deliveries. Its location outside of the Gulf Coast gives CVR a profit edge; in 2006, demand exceeded refining production in the mid-continent region by 22%. As a result, the company’s refining margins outpaced those of refineries on the Gulf Coast by about $1.74 a barrel on average over the past four years.

In June, heavy rains led to the nearby Verdigris River overflowing its banks, damaging CVR’s facilities and putting them out of operation for more than a month. In addition, nearly 2,000 barrels of crude oil leaked into the river and onto commercial and residential properties during the flood, which required a cleanup under a U.S. Environmental Protection Agency order. Both the damage to CVR and to surrounding properties negatively affected the company’s performance in the third quarter.

Although its refining business makes up the bulk of its net sales every year, the company also operates a nitrogen fertilizer business using a refining byproduct, petroleum coke, as its raw material. Petroleum coke is a less expensive raw material for fertilizer than natural gas, so CVR Energy still benefits from rising fertilizer prices when natural gas is climbing, even though its costs aren’t tied to natural gas.

CVR Energy has multiple links to Goldman Sachs. Private-equity funds affiliated with Goldman and Kelso acquired the company in June 2005, a year after it was purchased by Coffeyville Resources in a bankruptcy auction; Goldman is also one of the two lead underwriters for the IPO, alongside Deutsche Bank. The bulk of the IPO’s proceeds are being used to pay down a loan that Goldman made to the company.