Terra Nitrogen Company, L.P. Reports Fourth Quarter 2013 Results

Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported net earnings of $113.6 million on sales of $168.3 million for the quarter ended December 31, 2013. This compares to net earnings of $150.0 million on sales of $206.5 million for the 2012 fourth quarter. Net income allocable to Common Units was $69.0 million ($3.73 per Common Unit) and $85.3 million ($4.61 per Common Unit) for the 2013 and 2012 fourth quarters, respectively.

For the full year 2013, TNCLP reported net earnings of $502.4 million on sales of $736.2 million. This compares to net earnings of $560.8 million on sales of $780.1 million in 2012. Net income allocable to Common Units was $291.8 million ($15.77 per Common Unit) and $315.6 million ($17.06 per Common Unit) in 2013 and 2012, respectively.

Results for the fourth quarter of 2013 included an unrealized mark-to-market gain on natural gas derivatives of $9.3 million compared to a gain of $1.0 million in the fourth quarter of 2012. For the full year 2013, TNCLP had a mark-to-market gain on natural gas derivatives of $9.1 million compared to a gain of $10.6 million in 2012.

Analysis of Results

Sales for the 2013 fourth quarter totaled $168.3 million, compared to sales of $206.5 million for the 2012 fourth quarter. This decrease was due to lower ammonia and urea ammonium nitrate solution (UAN) average selling prices and lower ammonia sales volume, which was partially offset by higher UAN sales volume. Ammonia average selling price decreased compared to the prior year due to high industry-wide inventory and UAN average selling price decreased due to weaker global nitrogen market conditions compared to the prior year period. Ammonia sales volume decreased due to a shorter fall ammonia application season compared to 2012, while UAN sales volume increased due to customers rebuilding their inventory levels.

Comparing the fourth quarter 2013 to 2012, TNCLP’s:

• Ammonia average selling prices decreased by 34 percent and UAN average selling prices decreased by 15 percent;
• Ammonia sales volume decreased by 4 percent and UAN sales volumes increased by 7 percent; and
• Realized natural gas cost per MMBtu decreased by 1 percent.

Sales for the full year totaled $736.2 million, compared to sales of $780.1 million in 2012. This decrease was due to lower sales volume which was partially offset by higher ammonia selling prices. The sales volume decline was due primarily to planned plant turnaround activities completed during the third quarter. UAN average selling price was unchanged from last year, while the ammonia average selling price increased due to higher selling prices in the first half of 2013 as compared to the first half of 2012.

Comparing the full year 2013 to 2012, TNCLP’s:

• Ammonia average selling price increased by 1 percent and UAN average selling price was unchanged;
• Ammonia and UAN sales volumes decreased by 14 and 3 percent, respectively; and
• Realized natural gas cost per MMBtu increased by 8 percent.

Cash Distribution

Cash distributions depend on TNCLP's earnings as well as cash requirements for working capital needs and capital expenditures. In 2013, capital expenditures were $99.6 million as compared to $47.8 million in 2012. In 2013, the capital program included a rail yard expansion, new ammonia and UAN storage tanks, and control and electrical system upgrades. Some of these projects are extending beyond 2013. In 2014, TNCLP is expected to have capital expenditures in the range of $75 million to $125 million for projects, including a turnaround of approximately 50% of the plant that is anticipated to occur in the second half of the year.

TNCLP reported on February 10, 2014 the declaration of a cash distribution for the quarter ended December 31, 2013, of $2.10 per common limited partnership unit payable February 28, 2014, to holders of record as of February 21, 2014.

Cash distributions per limited partnership unit also vary based on increasing amounts allocable to the General Partner when cumulative distributions exceed targeted levels. With this distribution, TNCLP cumulative distributions continue to exceed targeted levels.

This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of the Partnership's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.

About TNCLP

Terra Nitrogen Company, L.P. is a leading manufacturer of nitrogen fertilizer products.

TNCLP is the sole limited partner of Terra Nitrogen, Limited Partnership (TNLP), owner of the Verdigris, Oklahoma manufacturing facility and related assets. Terra Nitrogen GP Inc., an indirect, wholly-owned subsidiary of CF Industries Holdings, Inc., is the General Partner of TNCLP and exercises full control over all of TNCLP’s business affairs.

Forward-Looking Statements

All statements in this communication, other than those relating to historical facts, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond TNCLP’s control, which could cause actual results to differ materially from such statements. Important factors that could cause actual results to differ materially from expectations include, among others:

• risks related to TNCLP’s reliance on one production facility;

• the cyclical nature of TNCLP’s business;

• the global commodity nature of TNCLP’s fertilizer products, the impact of global supply and demand on TNCLP’s selling prices, and the intense global competition from other fertilizer producers;

• conditions in the U.S. agricultural industry;

• the volatility of natural gas prices in North America;

• reliance on third party transportation providers;

• weather conditions;

• potential liabilities and expenditures related to environmental and health and safety laws and regulations;

• future regulatory restrictions and requirements related to greenhouse gas emissions, climate change or other environmental requirements;

• risks associated with cyber security;

• TNCLP’s inability to predict seasonal demand for its products accurately;

• risks involving derivatives and the effectiveness of TNCLP’s risk measurement and hedging activities;

• limited access to capital;

• acts of terrorism and regulations to combat terrorism;

• risks related to TNCLP’s dependence on and relationships with CF Industries;

• deterioration of global market and economic conditions;

• control of TNCLP’s General Partner by CF Industries;

• the conflicts of interest that may be faced by the executive officers of TNCLP’s General Partner, who operate both TNCLP and CF Industries; and

• changes in TNCLP’s treatment as a partnership for U.S. or state income tax purposes.

More detailed information about factors that may affect TNCLP’s performance may be found in its filings with the Securities and Exchange Commission, including its most recent periodic reports filed on Form 10-K and Form 10-Q, which are available through CF Industries’ Web site. Forward-looking statements are given only as of the date of this release and TNCLP disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Terra Nitrogen Company, L.P. news announcements are also available on CF Industries’ Web site, www.cfindustries.com.