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LSB Industries, Inc. Reports Progress On El Dorado, Arkansas And Pryor, Oklahoma Chemical Facilities

LSB Industries, Inc. (the “Company”) (NYSE: LXU) released an update on progress in certain areas of its chemical facilities located in El Dorado, Arkansas (“El Dorado Facility”) and Pryor, Oklahoma (“Pryor Facility”).

El Dorado Facility

The Company announced on May 15, 2012 that the El Dorado Facility suffered major damage to its DSN 98% concentrated nitric acid (“DSN”) plant and peripheral damage to other plants at that location. On June 5, 2012, the Company provided an assessment of the damages and its plan to resume production at the El Dorado Facility. As planned, we restarted regular nitric acid and ammonium nitrate production, on a partial basis in June, and we are on track to increase that production during July and August, as various plants are brought back on-line, as per our originally announced timetable.

Following is a detailed update:
  • DSN concentrated nitric acid plant – We have determined that repair of this plant is not feasible. The Company intends to replace the nitric acid production capacity lost by this event with a new nitric acid plant. Engineering is underway to determine the specification for the new acid plant. Before the May 15 th event, the DSN concentrated nitric acid plant produced approximately 20% of the nitric acid manufactured at the El Dorado Facility.
  • Other “regular” nitric acid plants – The three other nitric acid plants, which produce approximately 80% of the nitric acid at the El Dorado Facility in concentrations from 56% to 63%, sustained less damage and are being brought back on-line. The first of these three nitric acid plants has returned to full production, and the other two should restart later this month and August.
  • Ammonium Nitrate Prill plants – Both the high density and low density ammonium nitrate prill plants are ready for full production as acid production continues to be restored. These prill plants are currently operating at less than full capacity due to limited availability of feedstock.
  • Sulfuric acid plant – Production at this plant should resume before year end. Before the May 15 th event, sulfuric acid was approximately 8% of the El Dorado Facility sales.
  • Transportation – All loading and unloading facilities are fully operational.
  • Control systems – The temporary nitric acid control room is operational and plans are being prepared for a new permanent control facility.
  • General – Repairs to the permanent electrical service and various support facilities are nearing completion.
  • Insurance - The Company is continuing to work with its insurance carriers and is making good progress.

Pryor Facility

During March 2012 the urea plant was taken out of operation to repair a break in the reactor’s stainless steel liner. On April 25 th we determined that the break could not be repaired, so we decided to replace the liner and announced that the urea plant would be down through the second quarter.

The liner replacement is completed and UAN production has resumed. During the time that the urea plant was down, we continued to produce and sell ammonia and downstream products.

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