Terra Nitrogen Company, L.P. Reports Second Quarter 2012 Results And Announces Cash Distribution

Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported net earnings of $154.8 million on net sales of $195.6 million for the second quarter ended June 30, 2012. This compares to net earnings of $128.9 million on net sales of $198.6 million for the 2011 second quarter. Net income allocable to common units was $86.5 million ($4.67 per common unit) and $73.1 million ($3.95 per common unit) for the 2012 and 2011 second quarters, respectively. Results for the second quarter of 2012 included an unrealized non-cash mark-to-market gain on natural gas derivatives of $13.8 million compared to a loss of $3.8 million in the second quarter of 2011.

For the first six months of 2012, TNCLP reported net earnings of $279.0 million on net sales of $392.5 million. This compares to net earnings of $249.8 million on net sales of $394.6 million for the first six months of 2011. Net earnings allocable to common units was $156.4 million ($8.45 per common unit) and $139.7 million ($7.55 per common unit) for the first six months of 2012 and 2011, respectively. Results for the first six months of 2012 included a $2.5 million unrealized non-cash mark-to-market gain on natural gas derivatives compared to a loss of $2.6 million for the first six months of 2011.

Analysis of Results

Net sales for the 2012 second quarter totaled $195.6 million, compared to sales of $198.6 million for the 2011 second quarter. This decrease was due to lower ammonia and UAN average selling prices and lower ammonia sales volume, which were mostly offset by higher UAN sales volumes. The decrease in ammonia selling prices resulted from a change in end-market customer mix toward industrial versus agricultural sales for the second quarter of 2012 as compared to the second quarter of 2011. The decrease in UAN selling prices was due to increased industry-wide supply in the marketplace compared to the same period last year. The decrease in ammonia volume was due to the early start of the application season and strong first quarter sales which led to less inventory being available for sale entering the second quarter of 2012. The increase in UAN volume was due to strong demand based on a large number of planted acres and the Partnership having a higher inventory level available for sale entering the second quarter of 2012 than it had a year ago.

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