Terra Nitrogen Company, L.P. Reports Second Quarter 2014 Results and Announces Cash Distribution

Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported net earnings of $100.1 million on sales of $167.5 million for the quarter ended June 30, 2014. This compares to net earnings of $149.3 million on sales of $215.4 million for the 2013 second quarter. Net income allocable to Common Units was $58.4 million ($3.16 per Common Unit) and $84.0 million ($4.54 per Common Unit) for the 2014 and 2013 second quarters, respectively.

Results for the second quarter of 2014 included an unrealized net mark-to-market loss on natural gas derivatives of $4.9 million compared to a loss of $2.9 million in the second quarter of 2013.

For the first six months of 2014, TNCLP reported net earnings of $203.0 million on net sales of $345.2 million. This compares to net earnings of $316.1 million on net sales of $439.5 million for the first six months of 2013. Net earnings allocable to Common Units was $118.8 million ($6.42 per Common Unit) and $176.2 million ($9.52 per Common Unit) for the first six months of 2014 and 2013, respectively. Results for the first six months of 2014 included an $8.9 million unrealized net mark-to-market loss on natural gas derivatives compared to a gain of $0.8 million for the first six months of 2013.

Analysis of Results

Net sales for the 2014 second quarter totaled $167.5 million, compared to sales of $215.4 million for the 2013 second quarter. This decrease was due to lower average selling prices and sales volume. The decrease in overall prices was due to lower global nitrogen prices driven by increased international supply. Ammonia prices also were lower than in the prior year period due to high industry-wide North American ammonia inventory levels coming into 2014 while UAN prices also decreased due to customers’ reluctance to hold inventory. The decrease in ammonia sales volume was due to the company having lower available inventory to sell due to strong shipments in the first quarter of 2014. UAN sales volume declined due to farmers’ preference for ammonia over UAN.

Net earnings for the 2014 second quarter totaled $100.1 million, compared to net earnings of $149.3 million for the 2013 second quarter. This decrease was due to lower revenue and higher realized natural gas costs.

Comparing the 2014 to the 2013 second quarter, TNCLP’s:

• Ammonia and UAN average selling prices decreased by 23 and 14 percent, respectively;
• Ammonia and UAN sales volume decreased by 14 and 5 percent, respectively; and
• Realized natural gas costs per MMBtu increased by 3 percent.

Cash Distribution

TNCLP reported today the declaration of a cash distribution for the quarter ended June 30, 2014, of $3.11 per common limited partnership unit payable August 29, 2014, to holders of record as of August 18, 2014.

Cash distributions depend on TNCLP's earnings as well as cash requirements for working capital needs and capital expenditures. In 2014, TNCLP is expected to have capital expenditures in the range of $70 million to $90 million. A turnaround of approximately 50 percent of the complex is anticipated to occur in the first quarter of 2015 and is expected to have an impact on cash available to fund distributions.

Cash distributions are made 99.975% to common and Class B common unitholders and 0.025% to the General Partner except when cumulative distributions of available cash exceed specified target levels above the minimum quarterly distributions of $0.605 per unit. Under such circumstances, the General Partner is entitled to receive Incentive Distribution Rights. 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;

• 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;

• risks related to TNCLP’s partnership structure and 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

• tax risks to TNCLP’s common unit holders 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’ website, www.cfindustries.com.