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

SIOUX CITY, Iowa--(Business Wire)--
Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported
net income of $106.2 million, $63.2 million of which is allocable to
Common Units ($3.41 per Common Unit), on revenues of $246.6 million
for the third quarter ended Sept. 30, 2008. This compares with net
income of $45.6 million, $44.7 million of which is allocable to Common
Units ($2.42 per Common Unit) on revenues of $133.2 million for the
2007 third quarter. For the 2008 first nine months, TNCLP reported net
income of $318.0 million, $210.1 million of which is allocable to
Common Units ($11.35 per Common Unit), on revenues of $677.8 million,
compared to net income of $138.0 million, $135.2 million of which is
allocable to Common Units ($7.31 per Common Unit) on revenues of
$438.7 million for the 2007 first nine months.

TNCLP also announced a cash distribution for the quarter ended
Sept. 30, 2008, of $2.80 per common limited partnership unit payable
Nov. 25, 2008, to holders of record as of Nov. 7, 2008. 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

Third quarter

TNCLP's third quarter earnings improvement over last year was due
to higher nitrogen products selling prices and sales volumes,
partially offset by higher natural gas costs. Low grain inventories
supported strong U.S. nitrogen demand and selling prices in the third
quarter. From the 2007 to the 2008 third quarter, TNCLP's:

-- Ammonia and urea ammonium nitrate (UAN) selling prices
increased by 81 and 47 percent, respectively.

-- Ammonia and UAN sales volumes increased by 19 percent 24
percent, respectively.

-- Natural gas unit costs increased by 32 percent.

Year-to-date

TNCLP's year-to-date earnings improvement over last year was due
to higher nitrogen products selling prices and sales volumes,
partially offset by higher natural gas costs. Year-to-date results
were affected by generally the same factors as those affecting the
third quarter. From the 2007 to the 2008 first nine months, TNCLP's:

-- Ammonia and UAN selling prices increased by 57 and 49 percent,
respectively.

-- Ammonia sales volumes stayed approximately the same, while UAN
sales volumes increased by 5 percent.

-- Natural gas unit costs increased by 19 percent.

Forward natural gas position

TNCLP's forward purchase contracts at Sept. 30, 2008, fixed prices
for about 37 percent of its next 12 months' natural gas requirements
at $70 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.

Forward-looking statement

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
2007 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.

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

-0-
*T
Terra Nitrogen Company, L.P.
Condensed Consolidated Statements of Income
(in thousands except per-unit amounts)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------

Product revenues $246,450 $133,009 $677,495 $438,019
Other income 135 142 293 729
--------- --------- --------- ---------
Total revenues 246,585 133,151 677,788 438,748
--------- --------- --------- ---------
Cost of goods sold 138,286 86,490 352,118 291,371
Total gross profit 108,299 46,661 325,670 147,377
Operating expenses 3,196 2,452 12,833 13,100
Interest income--net (1,097) (1,402) (5,114) (3,721)
--------- --------- --------- ---------
Net income 106,200 45,611 317,951 137,998
========= ========= ========= =========
Net income allocable to
Common Units 63,169 44,699 210,058 135,239
========= ========= ========= =========
Earnings per Common Unit $ 3.41 $ 2.42 $ 11.35 $ 7.31
========= ========= ========= =========
*T

-0-
*T
Nitrogen Volumes and Prices

Note: All UAN data for 2008 and 2007 are expressed on a 32% nitrogen
basis.

2008 2007
--------------------- ---------------------
Sales Average Sales Average
Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton)(1) (000 tons) ($/ton)(1)
---------- ---------- ---------- ----------
Third quarter
Ammonia 68 664 57 367
UAN 536 342 432 233

First nine months
Ammonia 222 582 221 370
UAN 1,560 321 1,486 215

Natural Gas Costs/MMBtu(2)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
$ 9.28 $ 7.02 $ 8.00 $ 6.70
*T

1. After deducting outbound freight costs.

2. Including effect of forward natural gas position.

-0-
*T
Terra Nitrogen Company, L.P.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

September 30,
---------------------
2008 2007
---------- ----------
ASSETS
Cash and cash equivalents $185,763 $ 93,549
Demand deposit with affiliate 4,369 --
Accounts receivable 57,140 40,174
Inventories 43,697 30,487
Prepaid expenses and other current assets 12,703 3,747
---------- ----------

Total current assets 303,672 167,957

Property, plant and equipment, net 68,480 72,413
Other assets 12,137 24,975
---------- ----------

Total assets $384,289 $265,345
========== ==========

LIABILITIES
Accounts payable and accrued liabilities $119,732 $ 52,012
Customer prepayments 92,092 39,762
---------- ----------
Total current liabilities 211,824 91,774

Other long-term liabilities 1,071 1,979
---------- ----------

Total liabilities 212,895 93,753

PARTNERS' CAPITAL 171,394 171,592
---------- ----------

Total liabilities and partners'
capital $384,289 $265,345
========== ==========
*T

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

Copyright Business Wire 2008