Terra Nitrogen Company, L.P. Reports First Quarter Results, Declares Cash Distribution

TNCLP also announced a cash distribution for the quarter ended March 31, 2009, of $2.10 per common limited partnership unit payable May 27, 2009, to holders of record as of May 5, 2009. Cash distributions depend on TNCLP's earnings, which can be affected by nitrogen selling prices, natural gas costs, seasonal demand factors, production levels and weather, cash requirements for working capital needs, and capital expenditures. Cash distributions per limited partnership unit also vary based on increasing amounts allocable to the General Partner when cumulative distributions exceed targeted levels. Those targeted levels were attained in the 2008 first quarter.

Analysis of results TNCLP's 2009 decline in first quarter earnings versus those of the 2008 first quarter was due to lower ammonia selling prices and UAN sales volumes, partially offset by higher ammonia sales volumes and lower natural gas costs. The lower ammonia selling prices were in part due to decreased industrial demand in light of the economic slowdown. UAN sales volumes declined due to growers having delayed their purchasing commitments. Natural gas costs were affected by declining energy demand due to the global economic slowdown. From the 2008 to the 2009 first quarter, TNCLP's:

-- Ammonia selling prices decreased by 16 percent and urea ammonium nitrate (UAN) selling prices increased by 3 percent.

-- Ammonia sales volumes increased by 176 percent and UAN sales volumes decreased by 27 percent.

-- Natural gas unit costs decreased by 1 percent.

Forward natural gas position TNCLP's forward purchase contracts at March 31, 2009, fixed prices for about 29 percent of its next 12 months' natural gas requirements at $11.7 million above published forward markets at that date. TNCLP has entered into these forward gas positions to secure margins on nitrogen products sold forward at fixed prices.

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

TNCLP Distributions This release serves 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.

Forward-looking statements Certain statements in this news release may constitute "forward-looking" statements within the meaning of the Private Litigation Reform Act of 1995. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and TNCLP undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Words such as "expects," "intends," "plans," "projects," "believes," "estimates," and similar expressions are used to identify these forward-looking statements. These include, among others, statements relating to:

-- financial markets,

-- general economic conditions within the agricultural industry,

-- competitive factors and price changes (principally, sales prices of nitrogen products and natural gas costs),

-- product mix,

-- the seasonality of demand patterns,

-- weather conditions,

-- environmental and other government regulation, and

-- agricultural regulations.

Additional information as to these factors can be found in TNCLP's 2008 Annual Report/10-K, in the sections entitled "Business," "Legal Proceedings," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the Notes to the consolidated financial statements.

Terra Nitrogen Company, L.P. news announcements are also available on Terra Industries' Web site, www.terraindustries.com.

Terra Nitrogen Company, L.P.
Condensed Consolidated Statements of Income
(in thousands except per-unit amounts)
(unaudited)
                            Three Months Ended March 31,
                            2009               2008
Revenues:
Product revenues            $    165,076       $    174,253
Other income                     226                279
Total revenues                   165,302            174,532
Costs and expenses:
Cost of goods sold               117,016            91,971
Gross profit                     48,286             82,561
Operating expenses               5,277              3,524
Income from operations           43,009             79,037
Interest expense                 (81     )          (81     )
Interest income                  414                2,640
Net income                  $    43,342        $    81,596
Allocation of net income:
General Partner             $    15,423        $    8,096
Class B Common Units             423                796
Common Units                     27,496             72,704
Net income                  $    43,342        $    81,596
Net income per Common Unit  $    1.49          $    3.93

Nitrogen Volumes and Prices
Note: All UAN data are expressed on a 32% nitrogen basis.
                            2009                       2008
                            Sales       Average        Sales          Average
                            Volumes     Unit Price     Volumes        Unit Price
                            (000 tons)  ($/ton)(1)     (000 tons)     ($/ton)(1)
First quarter
Ammonia                     105               437            38       519
UAN                         367               289            502      281
Natural Gas Costs/MMBtu(2)
                                        Three Months Ended March 31,
                                        2009           2008
                                        $     7.07     $     7.16

1. After deducting outbound freight costs.

2. Including effect of settled hedged natural gas position.

Terra Nitrogen Company, L.P.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                                                       March 31,
                                                       2009               2008
Assets
Cash and cash equivalents                              $    138,588       $    248,780
Demand deposits with affiliate                              6,408              1,012
Accounts receivable                                         34,314             28,267
Inventory                                                   37,869             38,833
Prepaid expenses and other current assets                   5,297              16,338
Total current assets                                        222,476            333,230
Property, plant and equipment, net                          69,185             69,698
Other long-term assets                                      9,840              19,157
Total assets                                           $    301,501       $    422,085
Liabilities and partners' capital
Accounts payable and accrued liabilities               $    18,904        $    43,191
Customer prepayments                                        72,253             154,058
Derivative hedge liabilities                                11,510             567
Total current liabilities                                   102,667            197,816
Other long-term liabilities                                 1,212              436
Total liabilities                                           103,879            198,252
Partners' Capital
Limited partners' interests, 18,502 Common Units
authorized and outstanding                                  190,420            211,525
Limited partners' interests, 184 Class B Common Units
authorized and outstanding                                  536                550
General partners' interest                                  17,025             (2,693  )
Accumulated other comprehensive income (loss)               (10,359 )          14,451
Total partners' capital                                     197,622            223,833
Total liabilities and partners' capital                $    301,501       $    422,085

SOURCE: Terra Nitrogen Company, L.P.

Terra Nitrogen Company, L.P. 
Joe A. Ewing, 712-277-7305 
jewing@terraindustries.com