Terra Nitrogen Co L P 10-Q 6 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 05, 2015
Document and Entity Information
Entity Registrant Name	TERRA NITROGEN CO L P /DE
Entity Central Index Key	879,575
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Entity Common Stock, Shares Outstanding		18,501,576

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 72	$ 113
Due from affiliates of the General Partner	23.2	25.2
Accounts receivable	0.3	0.4
Inventories	9.4	9.6
Prepaid expenses and other current assets	2.4	0.3
Total current assets	107.3	148.5
Property, plant and equipment, net	306	259.4
Other assets	8.4	7.9
Total assets	421.7	415.8
Current liabilities:
Accounts payable and accrued expenses	21.2	32.4
Due to affiliates of the General Partner	1.8	4.2
Other current liabilities	0.5	3.6
Total current liabilities	23.5	40.2
Other liabilities	1.5	0.7
Partners' capital:
General partner's interest	77.6	70
Total partners' capital	396.7	374.9
Total liabilities and partners' capital	421.7	415.8
Common Units
Partners' capital:
Limited partners' interests, 18,501,576 Common Units authorized, issued and outstanding; 184,072 Class B Common Units authorized, issued and outstanding	316.7	302.7
Class B Common Units
Partners' capital:
Limited partners' interests, 18,501,576 Common Units authorized, issued and outstanding; 184,072 Class B Common Units authorized, issued and outstanding	$ 2.4	$ 2.2

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares	Jun. 30, 2015	Dec. 31, 2014
Common Units
Limited Partners' interests, common units authorized	18,501,576	18,501,576
Common units issued	18,501,576	18,501,576
Common units outstanding	18,501,576	18,501,576
Class B Common Units
Limited Partners' interests, common units authorized	184,072	184,072
Common units issued	184,072	184,072
Common units outstanding	184,072	184,072

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Net sales:
Other income	$ 0.2	$ 0.1	$ 0.4	$ 0.4
Total	153.6	167.5	280.2	345.2
Cost of goods sold:
Materials, supplies and services	43.4	57.4	97.4	122
Gross margin	103.7	104.2	168.7	211.7
Other general and administrative expenses	0.4	0.3	2.5	1
Allocation of net earnings:
Net earnings	$ 99.3	$ 100.1	$ 158.3	$ 203
Net earnings per Common Unit (in dollars per unit)	$ 3.31	$ 3.16	$ 5.34	$ 6.42
Affiliate of General Partner
Net sales:
Product sales to an affiliate of the General Partner	$ 153.2	$ 167.2	$ 279.5	$ 344.5
Other income	0.2	0.2	0.3	0.3
Cost of goods sold:
Services provided by affiliates of the General Partner	6.5	5.9	14.1	11.5
Selling, general and administrative services provided by affiliates of the General Partner	4	3.8	7.9	7.7
General Partner
Allocation of net earnings:
Net earnings	37.1	40.7	58	82.2
Common Units | Class B Common Units
Allocation of net earnings:
Net earnings	0.9	1	1.5	2
Common Units | Common Units
Allocation of net earnings:
Net earnings	$ 61.3	$ 58.4	$ 98.8	$ 118.8

CONSOLIDATED STATEMENTS OF PART

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL - USD ($) $ in Millions	Total	General Partner	Common UnitsCommon Units	Class B Common UnitsCommon Units
Partners' capital at Dec. 31, 2013	$ 309	$ 43	$ 264.5	$ 1.5
Increase (Decrease) in Partners' Capital
Net earnings	203	82.2	118.8	2
Distributions	(156.1)	(60)	(94.6)	(1.5)
Partners' capital at Jun. 30, 2014	355.9	65.2	288.7	2
Partners' capital at Dec. 31, 2014	374.9	70	302.7	2.2
Increase (Decrease) in Partners' Capital
Net earnings	158.3	58	98.8	1.5
Distributions	(136.5)	(50.4)	(84.8)	(1.3)
Partners' capital at Jun. 30, 2015	$ 396.7	$ 77.6	$ 316.7	$ 2.4

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating Activities:
Net earnings	$ 158.3	$ 203
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	15.4	14.1
Unrealized (gain) loss on derivatives	(5.6)	7.6
Loss on disposal of property, plant and equipment	1.2	0
Changes in operating assets and liabilities:
Accounts receivable	0.1	0.4
Inventories	0.2	(1.9)
Accounts payable and accrued expenses	(7)	(3.8)
Due to/from affiliates of the General Partner	(0.4)	2.3
Other assets and liabilities	0.7	(1.2)
Net cash provided by operating activities	162.9	220.5
Investing Activities:
Additions to property, plant and equipment	(67.4)	(27.4)
Net cash used in investing activities	(67.4)	(27.4)
Financing Activities:
Partnership distributions paid	(136.5)	(156.1)
Other	0	(8)
Net cash used in financing activities	(136.5)	(164.1)
(Decrease) increase in cash and cash equivalents	(41)	29
Cash and cash equivalents at beginning of period	113	86.9
Cash and cash equivalents at end of period	$ 72	$ 115.9

Background and Basis of Present

Background and Basis of Presentation	6 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Background and Basis of Presentation	Background and Basis of Presentation Terra Nitrogen Company, L.P. (TNCLP, we, our or us) is a Delaware limited partnership that produces nitrogen fertilizer products. Our principal products are anhydrous ammonia (ammonia) and urea ammonium nitrate solutions (UAN), which we manufacture at our facility in Verdigris, Oklahoma. We conduct our operations through an operating partnership, Terra Nitrogen, Limited Partnership (TNLP or the Operating Partnership, and collectively with TNCLP, the Partnership). Terra Nitrogen GP Inc. (TNGP or the General Partner), a Delaware corporation, is the General Partner of both TNCLP and TNLP and owns a consolidated 0.05% general partner interest in the Partnership. The General Partner is an indirect, wholly-owned subsidiary of CF Industries Holdings, Inc. (CF Industries), a Delaware corporation. Ownership of TNCLP is comprised of the general partner interests and the limited partner interests. Limited partner interests are represented by common units, which are listed for trading on the New York Stock Exchange under the symbol "TNH," and Class B common units. As of June 30, 2015 , we had 18,501,576 common units and 184,072 Class B common units issued and outstanding. CF Industries through its subsidiaries owned 13,889,014 common units (representing approximately 75% of the total outstanding common units) and all of the Class B common units as of June 30, 2015 . We are a master limited partnership (MLP). Partnerships are generally not subject to federal income tax, although publicly-traded partnerships (such as TNCLP) are treated as corporations for federal income tax purposes (and therefore are subject to federal income tax), unless at least 90% of the partnership's gross income is "qualifying income" as defined in Section 7704 of the Internal Revenue Code of 1986, as amended, and the partnership is not required to register as an investment company under the Investment Company Act of 1940. As we currently satisfy the requirements to be treated as a partnership for federal income tax purposes, no federal income taxes are paid by the Partnership. On May 6, 2015, the Internal Revenue Service (IRS) published proposed regulations on the types of income and activities which constitute or generate qualifying income of MLP. The proposed regulations would have the effect of limiting the types of income and activities which qualify under the MLP rules, subject to certain transition provisions. The proposed regulations include as activities that generate qualifying income processing or refining and transportation activities with respect to any mineral or natural resource (including fertilizer), but reserve on specific proposals regarding fertilizer-related activities. Any change in the federal income tax treatment of income from fertilizer-related activities as qualifying income could have a material impact on the taxation of the Partnership and could have a material adverse impact on unitholder distributions. We continue to monitor these IRS regulatory activities. The accompanying unaudited interim consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the year ended December 31, 2014 , in accordance with accounting principles generally accepted in the United States for interim financial reporting. In the opinion of management, these statements reflect all adjustments, consisting only of normal and recurring adjustments, that are necessary for the fair representation of the information for the periods presented. The unaudited interim consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Operating results for any period presented apply to that period only and are not necessarily indicative of results for any future period. The preparation of the unaudited interim consolidated financial statements requires management to make use of estimates and assumptions that affect the reported amount of assets and liabilities, revenue and expenses and certain financial statement disclosures. Actual results could differ from these estimates. Significant estimates and assumptions in these unaudited interim consolidated financial statements include net realizable value of inventories, environmental remediation liabilities, environmental and litigation contingencies, useful lives of property, plant and equipment, and the assumptions used in the evaluation of potential impairment of property, plant and equipment. The accompanying unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related disclosures included in our 2014 Annual Report on Form 10-K filed with the SEC on February 26, 2015 . Throughout this document, the term "affiliates of the General Partner" refers to consolidated subsidiaries of CF Industries, including TNGP.

New Accounting Standards

New Accounting Standards	6 Months Ended
	Jun. 30, 2015
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
New Accounting Standards	New Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments. Additionally, information concerning the costs to obtain and fulfill a contract, including assets to be recognized, is to be disclosed. In July 2015, the FASB voted to defer the effective date of this ASU to December 15, 2017 for interim and annual reporting periods beginning after that date. Early adoption of the standard as of December 15, 2016 (for interim and annual reporting periods beginning after that date) is permitted by the FASB. We are currently evaluating the impact of the adoption of this ASU on our consolidated financial statements.

Agreement of Limited Partnershi

Agreement of Limited Partnership	6 Months Ended
	Jun. 30, 2015
Partners' Capital Notes [Abstract]
Agreement of Limited Partnership	Agreement of Limited Partnership We make quarterly distributions to holders of our general partner interest and limited partner interests based on Available Cash for the quarter as defined in our agreement of limited partnership. Available Cash is defined generally as all cash receipts less all cash disbursements, less certain reserves (including reserves for future operating and capital needs) established as the General Partner determines in its reasonable discretion to be necessary or appropriate. Changes in working capital affect Available Cash as changes in the amount of cash invested in working capital items (such as increases in inventory and decreases in accounts payable) reduce Available Cash, while declines in the amount of cash invested in working capital items increase Available Cash. During the six months ended June 30, 2015 and 2014 , we declared and paid partnership distributions of $136.5 million and $156.1 million , respectively. We receive 99% of the Available Cash from the Operating Partnership and 1% is distributed by the Operating Partnership to the General Partner. Cash distributions from the Operating Partnership generally represent the Operating Partnership's Available Cash from operations. Our 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 (MQD) of $0.605 per unit. Under such circumstances, the General Partner is entitled to receive Incentive Distribution Rights. On August 5, 2015 , we announced a $2.36 cash distribution per common limited partnership unit, payable on August 31, 2015 to holders of record as of August 17, 2015 . In the second quarter of 2015 , we exceeded the cumulative MQD amounts and will distribute Available Cash as summarized in the following table: Income and Distribution Allocation Target Limit Target Increment Common Units Class B Common Units General Partner Total Minimum Quarterly Distributions $ 0.605 $ 0.605 98.990 % 0.985 % 0.025 % 100.00 % First Target 0.715 0.110 98.990 % 0.985 % 0.025 % 100.00 % Second Target 0.825 0.110 85.859 % 0.985 % 13.156 % 100.00 % Third Target 1.045 0.220 75.758 % 0.985 % 23.257 % 100.00 % Final Target and Beyond >1.045 — 50.505 % 0.985 % 48.510 % 100.00 % The General Partner is required to remit the majority of cash distributions it receives from the Partnership, in excess of its 1% Partnership equity interest, to an affiliated company. As of June 30, 2015 , the General Partner and its affiliates owned 75.3% of our outstanding units. When not more than 25% of our issued and outstanding units are held by non-affiliates of the General Partner, as was the case at June 30, 2015 , we, at the General Partner's sole discretion, may call, or assign to the General Partner or its affiliates, our right to acquire all, but not less than all, such outstanding units held by non-affiliated persons. If the General Partner elects to acquire all outstanding units, we are required to give at least 30 but not more than 60 days' notice of our decision to purchase the outstanding units. The purchase price per unit will be the greater of (1) the average of the previous 20 trading days' closing prices as of the date five days before the purchase is announced or (2) the highest price paid by the General Partner or any of its affiliates for any unit within the 90 days preceding the date the purchase is announced.

Net Earnings per Common Unit

Net Earnings per Common Unit	6 Months Ended
	Jun. 30, 2015
Earnings Per Unit [Abstract]
Net Earnings per Common Unit	Net Earnings per Common Unit Net earnings per common unit are based on the weighted-average number of common units outstanding during the period. The following table provides a calculation for net earnings per common unit for the three and six months ended June 30, 2015 and 2014 : Three months ended Six months ended 2015 2014 2015 2014 (in millions, except per unit amounts) Basic earnings per Common Unit: Net earnings $ 99.3 $ 100.1 $ 158.3 $ 203.0 Less: Net earnings allocable to General Partner 37.1 40.7 58.0 82.2 Less: Net earnings allocable to Class B Common Units 0.9 1.0 1.5 2.0 Net earnings allocable to Common Units $ 61.3 $ 58.4 $ 98.8 $ 118.8 Weighted-average Common Units outstanding 18.5 18.5 18.5 18.5 Net earnings per Common Unit $ 3.31 $ 3.16 $ 5.34 $ 6.42 There were no dilutive TNCLP units outstanding for the three and six months ended June 30, 2015 and 2014 .

Inventories

Inventories	6 Months Ended
	Jun. 30, 2015
Inventory Disclosure [Abstract]
Inventories	Inventories Inventories consisted of the following: June 30, December 31, (in millions) Finished goods $ 6.1 $ 7.8 Materials and supplies 3.3 1.8 Total $ 9.4 $ 9.6

Derivative Financial Instrument

Derivative Financial Instruments	6 Months Ended
	Jun. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Financial Instruments	Derivative Financial Instruments Derivative financial instruments are executed on our behalf by an affiliate of the General Partner to reduce our exposure to changes in commodity prices for natural gas. Natural gas is the largest and most volatile component of the manufacturing cost for nitrogen-based fertilizers. The derivatives that we use are primarily natural gas fixed price swaps and options traded in the over-the-counter (OTC) markets. The derivative contract prices are based on NYMEX future prices based on physical delivery of natural gas at the Henry Hub in Louisiana, the most common and financially-liquid location of reference for derivative financial instruments related to natural gas. However, we purchase natural gas for our manufacturing facility from suppliers whose prices are based primarily on the ONEOK index (based on physical delivery of natural gas in Oklahoma, rather than at the Henry Hub). This creates a location basis differential between the derivative contract price and the price we pay for physical delivery of natural gas. Accordingly, the prices underlying the derivative financial instruments we use may not exactly match the prices of natural gas we purchase and consume. These natural gas derivative contracts are scheduled to coincide with our anticipated purchases of natural gas used to manufacture nitrogen products during those future periods. We use natural gas derivatives as an economic hedge of gas price risk, but without the application of hedge accounting. We report derivatives on our consolidated balance sheets at fair value. Changes in fair value are recognized in cost of sales in the period of change. Cash flows related to natural gas derivatives are classified as operating activities. The gross fair values of derivatives on our consolidated balance sheets are shown below. All balance sheet amounts from derivatives arise from natural gas derivatives that are not designated as hedging instruments. For additional information on derivative fair values, see Note 7—Fair Value Measurements . June 30, December 31, (in millions) Derivative Assets Unrealized gains in other current assets $ 1.9 $ 0.1 Unrealized gains in other assets 1.2 — Total derivative assets 3.1 0.1 Derivative Liabilities Unrealized losses in other current liabilities (0.5 ) (3.6 ) Unrealized losses in other liabilities (0.6 ) — Total derivative liabilities (1.1 ) (3.6 ) Net derivative assets (liabilities) $ 2.0 $ (3.5 ) The effect of derivatives in our consolidated statements of operations is shown below. All amounts arise from natural gas derivatives that are not designated as hedging instruments and are recorded in cost of goods sold. Three months ended Six months ended 2015 2014 2015 2014 (in millions) Unrealized mark-to-market gains (losses) $ 2.6 $ (4.9 ) $ 6.5 $ (8.9 ) Realized (losses) gains (0.8 ) 4.9 (5.4 ) 14.8 Net derivative gains $ 1.8 $ — $ 1.1 $ 5.9 As of June 30, 2015 and December 31, 2014 , we had open derivative contracts for 40.0 million MMBtus and 7.6 million MMBtus, respectively, of natural gas. For the six months ended June 30, 2015 , we used derivatives to cover approximately 72% of our natural gas consumption. As of June 30, 2015 and December 31, 2014 , the aggregate fair value of the derivative instruments with credit-risk-related contingent features in a net liability position were $1.1 million and $3.6 million , respectively, which also approximates the fair value of the maximum amount of additional collateral that would need to be posted or assets needed to settle the obligations if the credit-risk-related contingent features were triggered at the reporting dates. At both June 30, 2015 and December 31, 2014 , we had no cash collateral on deposit with counterparties for derivative contracts. The credit support documents executed in connection with International Swaps and Derivatives Association (ISDA) agreements generally provide the right to set off collateral against amounts owing under the ISDA agreements upon the occurrence of a default or a specified termination event. The following table presents amounts relevant to offsetting of our derivative assets and liabilities as of June 30, 2015 and December 31, 2014 : Gross and net amounts presented in consolidated balance sheets (1) Gross amounts not offset in consolidated balance sheets Financial instruments Cash collateral received (pledged) Net amount (in millions) June 30, 2015 Total derivative assets $ 3.1 $ 1.1 $ — $ 2.0 Total derivative liabilities 1.1 1.1 — — Net derivative assets $ 2.0 $ — $ — $ 2.0 December 31, 2014 Total derivative assets $ 0.1 $ 0.1 $ — $ — Total derivative liabilities 3.6 0.1 — 3.5 Net derivative liabilities $ (3.5 ) $ — $ — $ (3.5 ) _______________________________________________________________________________ (1) We report the fair values of our derivative assets and liabilities on a gross basis on our consolidated balance sheets. As a result, amounts recognized and net amounts presented are the same.

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents assets and liabilities included in our consolidated balance sheets that are recognized at fair value on a recurring basis, and indicates the fair value hierarchy utilized to determine such fair value as of June 30, 2015 and December 31, 2014 . Balances as of June 30, 2015 Total Quoted Market Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Cash and cash equivalents $ 72.0 $ 72.0 $ — $ — Unrealized gains on natural gas derivatives 3.1 — 3.1 — Total assets at fair value $ 75.1 $ 72.0 $ 3.1 $ — Unrealized losses on natural gas derivatives $ (1.1 ) $ — $ (1.1 ) $ — Total liabilities at fair value $ (1.1 ) $ — $ (1.1 ) $ — Balances as of December 31, 2014 Total Quoted Market Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Cash and cash equivalents $ 113.0 $ 113.0 $ — $ — Unrealized gains on natural gas derivatives 0.1 — 0.1 — Total assets at fair value $ 113.1 $ 113.0 $ 0.1 $ — Unrealized losses on natural gas derivatives $ (3.6 ) $ — $ (3.6 ) $ — Total liabilities at fair value $ (3.6 ) $ — $ (3.6 ) $ — Cash and Cash Equivalents As of June 30, 2015 and December 31, 2014 , our cash and cash equivalents consisted primarily of money market mutual funds that invest in U.S. government obligations. Natural Gas Derivatives The derivative instruments that we use are primarily natural gas fixed price swaps and options traded in the OTC markets with multi-national commercial banks, other major financial institutions and large energy companies. The derivatives are traded in months forward and settlements are scheduled to coincide with anticipated gas purchases during those future periods. These contracts settle using NYMEX futures prices and accordingly, to determine the fair value of these instruments, we use quoted market prices from NYMEX and standard pricing models with inputs derived from or corroborated by observable market data such as forward curves supplied by an industry-recognized unrelated third party. See Note 6—Derivative Financial Instruments for additional information.

Property, Plant and Equipment,

Property, Plant and Equipment, net	6 Months Ended
	Jun. 30, 2015
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment, Net	Property, Plant and Equipment, Net Property, plant and equipment, net consisted of the following: June 30, December 31, (in millions) Land $ 1.6 $ 1.6 Buildings and improvements 14.4 8.1 Machinery and equipment 530.0 401.4 Construction in progress 14.0 109.2 560.0 520.3 Less: Accumulated depreciation and amortization 254.0 260.9 $ 306.0 $ 259.4 During the three and six months ended June 30, 2015 , we recorded losses of approximately $0.2 million and $1.2 million , respectively, on the disposal of certain machinery and equipment, which is included in other general and administrative expenses on our consolidated statements of operations. Plant turnarounds —Scheduled inspections, replacements and overhauls of machinery and equipment at our continuous process manufacturing facility are referred to as plant turnarounds. The expenditures related to turnarounds are capitalized in property, plant and equipment when incurred. The following is a summary of plant turnaround activity: Six months ended 2015 2014 (in millions) Net capitalized turnaround costs: Beginning balance $ 16.7 $ 22.7 Additions 30.7 0.3 Depreciation (5.0 ) (3.2 ) Ending balance $ 42.4 $ 19.8 Scheduled replacements and overhauls of machinery and equipment include the dismantling, repair or replacement and installation of various components including piping, valves, motors, turbines, pumps, compressors, heat exchangers and the replacement of catalyst when a full plant shutdown occurs. Scheduled inspections are also conducted during full plant shutdowns, including required safety inspections which entail the disassembly of various components such as steam boilers, pressure vessels and other equipment requiring safety certifications. Internal employee costs and overhead are not considered turnaround costs and are not capitalized.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Jun. 30, 2015
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions TNCLP and TNGP have no employees. We have entered into several agreements with a subsidiary of CF Industries relating to the operation of our business and the sale of the fertilizer products produced at our Verdigris facility. We believe that each of these agreements is on terms that are fair and reasonable to us. General and Administrative Services and Product Offtake Agreement Pursuant to the Amendment to the General and Administrative Services and Product Offtake Agreement (the Services and Offtake Agreement), the Partnership sells all of its fertilizer products to an affiliate of the General Partner at prices based on market prices for the Partnership's fertilizer products as defined in the Services and Offtake Agreement. Title and risk of loss transfer to an affiliate of the General Partner as the product is shipped from the plant gate. The Services and Offtake Agreement is effective for annual terms starting as of January 1st and will be extended automatically for successive one -year terms unless terminated by one of the parties prior to renewal. Directly Incurred Charges Since we have no employees, we rely on employees from an affiliate of the General Partner to operate our Verdigris facility. As a result, the payroll, payroll-related expenses and benefits, such as health insurance and pension, incurred by an affiliate of the General Partner, are directly charged to us. Payroll, payroll-related expenses and other employee-related benefits directly charged to us for the three and six months ended June 30, 2015 were $6.5 million and $14.1 million , respectively, and for the three and six months ended June 30, 2014 were $5.9 million and $11.5 million , respectively. We report these expenses as services provided by affiliates of the General Partner in cost of goods sold. Allocated Charges CF Industries, together with its affiliates, also provides certain services to us under the Services and Offtake Agreement. These services include production planning, manufacturing management, logistics, procurement, accounting, legal, risk management, investor relations and other general and administrative functions. Allocated expenses charged to us for the three and six months ended June 30, 2015 were $4.0 million and $7.9 million , respectively, and for the three and six months ended June 30, 2014 were $3.8 million and $7.7 million , respectively. We report these expenses as selling, general and administrative services provided by affiliates of the General Partner. Amounts Due to/from Affiliates of the General Partner We receive cash and make expenditures directly from our cash accounts. Because we sell our products to and receive payroll and other related services from affiliates of the General Partner, the affiliates of the General Partner continue to be both debtors and creditors to us. As of June 30, 2015 and December 31, 2014 , we had a net balance due from affiliates of the General Partner of $21.4 million and $21.0 million , respectively. Spare Parts Sharing Agreement Affiliates of CF Industries own and operate nitrogen fertilizer complexes that utilize some equipment that is similar to equipment at our Verdigris nitrogen complex. Each of the various manufacturing complexes maintains spare parts for use in its facilities. In the event that an unplanned need arises and to help minimize manufacturing downtime, we have entered into a spare parts sharing agreement that permits spare parts to be shared among the manufacturing complexes from time to time. Parts that are borrowed from another complex under the agreement are either refurbished and returned to the lender or replaced. Leases We entered into an amended and restated lease with an affiliate of the General Partner under which the ammonia assets in our terminal in Blair, Nebraska are leased by the affiliate. The lease is effective for a five -year term ending on December 31, 2018, and the affiliate of the General Partner has options to renew for three additional five -year terms. The quarterly lease payment is $100,000 , subject to an annual inflation adjustment, and additional rent will be paid equal to all costs, expenses, and obligations incurred by the affiliate of the General Partner related to the use, occupancy and operation of the terminal. We also have leased certain of our rail cars to an affiliate of the General Partner for quarterly market-based rental payments of $3,600 per car. This lease was effective initially for a one -year term and is extended automatically for successive one -year terms unless terminated by either party thereto prior to renewal. We recognized rental income for the three and six months ended June 30, 2015 and 2014 of $0.2 million and $0.3 million , respectively.

New Accounting Pronouncements a

New Accounting Pronouncements and Changes in Accounting Principles (Policies)	6 Months Ended
	Jun. 30, 2015
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
New Accounting Standards	New Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments. Additionally, information concerning the costs to obtain and fulfill a contract, including assets to be recognized, is to be disclosed. In July 2015, the FASB voted to defer the effective date of this ASU to December 15, 2017 for interim and annual reporting periods beginning after that date. Early adoption of the standard as of December 15, 2016 (for interim and annual reporting periods beginning after that date) is permitted by the FASB. We are currently evaluating the impact of the adoption of this ASU on our consolidated financial statements.

Agreement of Limited Partners17

Agreement of Limited Partnership (Tables)	6 Months Ended
	Jun. 30, 2015
Partners' Capital Notes [Abstract]
Summary of available cash distribution	In the second quarter of 2015 , we exceeded the cumulative MQD amounts and will distribute Available Cash as summarized in the following table: Income and Distribution Allocation Target Limit Target Increment Common Units Class B Common Units General Partner Total Minimum Quarterly Distributions $ 0.605 $ 0.605 98.990 % 0.985 % 0.025 % 100.00 % First Target 0.715 0.110 98.990 % 0.985 % 0.025 % 100.00 % Second Target 0.825 0.110 85.859 % 0.985 % 13.156 % 100.00 % Third Target 1.045 0.220 75.758 % 0.985 % 23.257 % 100.00 % Final Target and Beyond >1.045 — 50.505 % 0.985 % 48.510 % 100.00 %

Net Earnings per Common Unit (T

Net Earnings per Common Unit (Tables)	6 Months Ended
	Jun. 30, 2015
Earnings Per Unit [Abstract]
Schedule of calculation for net earnings per common unit	The following table provides a calculation for net earnings per common unit for the three and six months ended June 30, 2015 and 2014 : Three months ended Six months ended 2015 2014 2015 2014 (in millions, except per unit amounts) Basic earnings per Common Unit: Net earnings $ 99.3 $ 100.1 $ 158.3 $ 203.0 Less: Net earnings allocable to General Partner 37.1 40.7 58.0 82.2 Less: Net earnings allocable to Class B Common Units 0.9 1.0 1.5 2.0 Net earnings allocable to Common Units $ 61.3 $ 58.4 $ 98.8 $ 118.8 Weighted-average Common Units outstanding 18.5 18.5 18.5 18.5 Net earnings per Common Unit $ 3.31 $ 3.16 $ 5.34 $ 6.42

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Jun. 30, 2015
Inventory Disclosure [Abstract]
Schedule of inventories	Inventories consisted of the following: June 30, December 31, (in millions) Finished goods $ 6.1 $ 7.8 Materials and supplies 3.3 1.8 Total $ 9.4 $ 9.6

Derivative Financial Instrume20

Derivative Financial Instruments (Tables)	6 Months Ended
	Jun. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of the gross fair values of derivatives on balance sheet	The gross fair values of derivatives on our consolidated balance sheets are shown below. All balance sheet amounts from derivatives arise from natural gas derivatives that are not designated as hedging instruments. For additional information on derivative fair values, see Note 7—Fair Value Measurements . June 30, December 31, (in millions) Derivative Assets Unrealized gains in other current assets $ 1.9 $ 0.1 Unrealized gains in other assets 1.2 — Total derivative assets 3.1 0.1 Derivative Liabilities Unrealized losses in other current liabilities (0.5 ) (3.6 ) Unrealized losses in other liabilities (0.6 ) — Total derivative liabilities (1.1 ) (3.6 ) Net derivative assets (liabilities) $ 2.0 $ (3.5 )
Schedule of effects of derivatives in consolidated statements of operations	The effect of derivatives in our consolidated statements of operations is shown below. All amounts arise from natural gas derivatives that are not designated as hedging instruments and are recorded in cost of goods sold. Three months ended Six months ended 2015 2014 2015 2014 (in millions) Unrealized mark-to-market gains (losses) $ 2.6 $ (4.9 ) $ 6.5 $ (8.9 ) Realized (losses) gains (0.8 ) 4.9 (5.4 ) 14.8 Net derivative gains $ 1.8 $ — $ 1.1 $ 5.9
Schedule of offsetting of derivative assets and liabilities	The following table presents amounts relevant to offsetting of our derivative assets and liabilities as of June 30, 2015 and December 31, 2014 : Gross and net amounts presented in consolidated balance sheets (1) Gross amounts not offset in consolidated balance sheets Financial instruments Cash collateral received (pledged) Net amount (in millions) June 30, 2015 Total derivative assets $ 3.1 $ 1.1 $ — $ 2.0 Total derivative liabilities 1.1 1.1 — — Net derivative assets $ 2.0 $ — $ — $ 2.0 December 31, 2014 Total derivative assets $ 0.1 $ 0.1 $ — $ — Total derivative liabilities 3.6 0.1 — 3.5 Net derivative liabilities $ (3.5 ) $ — $ — $ (3.5 ) _______________________________________________________________________________ (1) We report the fair values of our derivative assets and liabilities on a gross basis on our consolidated balance sheets. As a result, amounts recognized and net amounts presented are the same.

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Schedule of assets and liabilities that are recognized at fair value on a recurring basis	The following table presents assets and liabilities included in our consolidated balance sheets that are recognized at fair value on a recurring basis, and indicates the fair value hierarchy utilized to determine such fair value as of June 30, 2015 and December 31, 2014 . Balances as of June 30, 2015 Total Quoted Market Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Cash and cash equivalents $ 72.0 $ 72.0 $ — $ — Unrealized gains on natural gas derivatives 3.1 — 3.1 — Total assets at fair value $ 75.1 $ 72.0 $ 3.1 $ — Unrealized losses on natural gas derivatives $ (1.1 ) $ — $ (1.1 ) $ — Total liabilities at fair value $ (1.1 ) $ — $ (1.1 ) $ — Balances as of December 31, 2014 Total Quoted Market Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in millions) Cash and cash equivalents $ 113.0 $ 113.0 $ — $ — Unrealized gains on natural gas derivatives 0.1 — 0.1 — Total assets at fair value $ 113.1 $ 113.0 $ 0.1 $ — Unrealized losses on natural gas derivatives $ (3.6 ) $ — $ (3.6 ) $ — Total liabilities at fair value $ (3.6 ) $ — $ (3.6 ) $ —

Property, Plant and Equipment22

Property, Plant and Equipment, net (Tables)	6 Months Ended
	Jun. 30, 2015
Property, Plant and Equipment [Abstract]
Schedule of property, plant and equipment, net	Property, plant and equipment, net consisted of the following: June 30, December 31, (in millions) Land $ 1.6 $ 1.6 Buildings and improvements 14.4 8.1 Machinery and equipment 530.0 401.4 Construction in progress 14.0 109.2 560.0 520.3 Less: Accumulated depreciation and amortization 254.0 260.9 $ 306.0 $ 259.4
Summary of plant turnaround activity	The following is a summary of plant turnaround activity: Six months ended 2015 2014 (in millions) Net capitalized turnaround costs: Beginning balance $ 16.7 $ 22.7 Additions 30.7 0.3 Depreciation (5.0 ) (3.2 ) Ending balance $ 42.4 $ 19.8

Background and Basis of Prese23

Background and Basis of Presentation (Details) - shares	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Common Units
Common units and interest in the partnership
Common units issued	18,501,576	18,501,576
Class B Common Units
Common units and interest in the partnership
Common units issued	184,072	184,072
General Partner
Common units and interest in the partnership
Ownership interest in the partnership (as a percent)	0.05%
CF Industries | Common Units
Common units and interest in the partnership
Common units owned through subsidiaries	13,889,014
Percentage of outstanding units owned through subsidiaries	75.00%

Agreement of Limited Partners24

Agreement of Limited Partnership (Details) $ / shares in Units, $ in Millions	Aug. 05, 2015$ / shares	Jun. 30, 2015USD ($)$ / Unit	Jun. 30, 2014USD ($)
Agreement of limited partnership
Declared partnership distributions | $		$ 136.5	$ 156.1
Cash partnership distributions paid | $		$ 136.5	$ 156.1
Available cash received from operating partnership (as a percent)		99.00%
Number of average trading days' closing prices used to determine the purchase price of outstanding units of non-affiliates		20 days
Number of days before the purchase announcement is made, as a basis for determining the purchase price of outstanding units of non-affiliates		5 days
Minimum
Agreement of limited partnership
Percentage of ownership of non-affiliates of the General Partner allowing majority owner to acquire outstanding units held by non-affiliated persons		25.00%
Notice period for making decision to purchase the outstanding units		30 days
Maximum
Agreement of limited partnership
Notice period for making decision to purchase the outstanding units		60 days
Minimum Quarterly Distributions
Agreement of limited partnership
Target Limit		0.605
Target Increment		0.605
Income and distribution allocation (as a percent)		100.00%
First Target
Agreement of limited partnership
Target Limit		0.715
Target Increment		0.110
Income and distribution allocation (as a percent)		100.00%
Second Target
Agreement of limited partnership
Target Limit		0.825
Target Increment		0.110
Income and distribution allocation (as a percent)		100.00%
Third Target
Agreement of limited partnership
Target Limit		1.045
Target Increment		0.220
Income and distribution allocation (as a percent)		100.00%
Final Target and Beyond
Agreement of limited partnership
Income and distribution allocation (as a percent)		100.00%
Final Target and Beyond | Minimum
Agreement of limited partnership
Target Limit		1.045
Common and Class B Common Units
Agreement of limited partnership
Cash distribution made, excluding when cumulative distribution is specified, (as a percent)		99.975%
Common Units | Minimum Quarterly Distributions
Agreement of limited partnership
Income and distribution allocation (as a percent)		98.99%
Common Units | First Target
Agreement of limited partnership
Income and distribution allocation (as a percent)		98.99%
Common Units | Second Target
Agreement of limited partnership
Income and distribution allocation (as a percent)		85.859%
Common Units | Third Target
Agreement of limited partnership
Income and distribution allocation (as a percent)		75.758%
Common Units | Final Target and Beyond
Agreement of limited partnership
Income and distribution allocation (as a percent)		50.505%
Class B Common Units | Minimum Quarterly Distributions
Agreement of limited partnership
Income and distribution allocation (as a percent)		0.985%
Class B Common Units | First Target
Agreement of limited partnership
Income and distribution allocation (as a percent)		0.985%
Class B Common Units | Second Target
Agreement of limited partnership
Income and distribution allocation (as a percent)		0.985%
Class B Common Units | Third Target
Agreement of limited partnership
Income and distribution allocation (as a percent)		0.985%
Class B Common Units | Final Target and Beyond
Agreement of limited partnership
Income and distribution allocation (as a percent)		0.985%
General Partner
Agreement of limited partnership
Available cash distributed from operating partnership to General Partner (as a percent)		1.00%
Cash distribution made, excluding when cumulative distribution is specified, (as a percent)		0.025%
Partnership equity interest (as a percent)		1.00%
Percentage of outstanding units owned by the General Partner and its affiliates		75.30%
Period within which highest price is paid for any unit preceding the date the purchase is announced used to determine the purchase price of outstanding units of non-affiliates		90 days
General Partner | Minimum Quarterly Distributions
Agreement of limited partnership
Income and distribution allocation (as a percent)		0.025%
General Partner | First Target
Agreement of limited partnership
Income and distribution allocation (as a percent)		0.025%
General Partner | Second Target
Agreement of limited partnership
Income and distribution allocation (as a percent)		13.156%
General Partner | Third Target
Agreement of limited partnership
Income and distribution allocation (as a percent)		23.257%
General Partner | Final Target and Beyond
Agreement of limited partnership
Income and distribution allocation (as a percent)		48.51%
Subsequent Event
Agreement of limited partnership
Cash distribution declared per common limited partnership unit (in dollars per unit) | $ / shares	$ 2.36

Net Earnings per Common Unit (D

Net Earnings per Common Unit (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Net earnings per limited partner common unit
Net earnings	$ 99.3	$ 100.1	$ 158.3	$ 203
Weighted-average Common Units outstanding	18,500,000	18,500,000	18,500,000	18,500,000
Net earnings per Common Unit (in dollars per unit)	$ 3.31	$ 3.16	$ 5.34	$ 6.42
Dilutive TNCLP units outstanding	0	0	0	0
General Partner
Net earnings per limited partner common unit
Net earnings	$ 37.1	$ 40.7	$ 58	$ 82.2
Less: Net earnings allocable to General Partner	37.1	40.7	58	82.2
Common Units | Class B Common Units
Net earnings per limited partner common unit
Net earnings	0.9	1	1.5	2
Net earnings allocated	0.9	1	1.5	2
Common Units | Common Units
Net earnings per limited partner common unit
Net earnings	61.3	58.4	98.8	118.8
Net earnings allocated	$ 61.3	$ 58.4	$ 98.8	$ 118.8

Inventories (Details)

Inventories (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Finished goods	$ 6.1	$ 7.8
Materials and supplies	3.3	1.8
Total	$ 9.4	$ 9.6

Derivative Financial Instrume27

Derivative Financial Instruments (Details) MMBTU in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015USD ($)MMBTU	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)MMBTU	Jun. 30, 2014USD ($)	Dec. 31, 2014USD ($)MMBTU
Derivative financial instruments
Unrealized mark-to-market gains (losses)			$ 5,600,000	$ (7,600,000)
Open derivative contracts for natural gas (in MMBtus) | MMBTU	40		40		7.6
Percentage of natural gas consumption covered by derivatives			72.00%
Aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability position	$ 1,100,000		$ 1,100,000		$ 3,600,000
Cash Collateral for Borrowed Securities	0		0		0
Total derivative assets
Gross and net amounts presented in consolidated balance sheet	3,100,000		3,100,000		100,000
Gross amounts not offset in consolidated balance sheet
Financial instruments	1,100,000		1,100,000		100,000
Cash collateral received	0		0		0
Net amount	2,000,000		2,000,000		0
Total derivative liabilities
Gross and net amounts presented in consolidated balance sheet	1,100,000		1,100,000		3,600,000
Gross amounts not offset in consolidated balance sheet
Financial instruments	1,100,000		1,100,000		100,000
Cash collateral pledged	0		0		0
Net amount	0		0		3,500,000
Net assets (liabilities)
Gross and net amounts presented in consolidated balance sheet	2,000,000		2,000,000		(3,500,000)
Natural gas derivatives not designated as hedging instruments
Derivative financial instruments
Derivative Asset, Current	1,900,000		1,900,000		100,000
Unrealized gains in other current assets	3,100,000		3,100,000		100,000
Derivative Liability, Current	(500,000)		(500,000)		(3,600,000)
Derivative Asset, Noncurrent	1,200,000		1,200,000		0
Unrealized losses in other current liabilities	(1,100,000)		(1,100,000)		(3,600,000)
Derivative Liability, Noncurrent	600,000		600,000		0
Net derivative assets (liabilities)	2,000,000		2,000,000		$ (3,500,000)
Unrealized mark-to-market gains (losses)	2,600,000	$ (4,900,000)	6,500,000	(8,900,000)
Realized (losses) gains	(800,000)	4,900,000	(5,400,000)	14,800,000
Net derivative gains	$ 1,800,000	$ 0	$ 1,100,000	$ 5,900,000

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Recurring basis - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Quoted Market Prices in Active Markets (Level 1)
Fair value measurements
Cash and cash equivalents	$ 72	$ 113
Unrealized gains on natural gas derivatives	0
Total assets at fair value	72	113
Significant Other Observable Inputs (Level 2)
Fair value measurements
Unrealized gains on natural gas derivatives	3.1	0.1
Total assets at fair value	3.1	0.1
Unrealized losses on natural gas derivatives	(1.1)	(3.6)
Total liabilities at fair value	(1.1)	(3.6)
Total
Fair value measurements
Cash and cash equivalents	72	113
Unrealized gains on natural gas derivatives	3.1	0.1
Total assets at fair value	75.1	113.1
Unrealized losses on natural gas derivatives	(1.1)	(3.6)
Total liabilities at fair value	$ (1.1)	$ (3.6)

Property, Plant and Equipment29

Property, Plant and Equipment, net (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Property, plant and equipment, net
Document Period End Date		Jun. 30, 2015
Gross property, plant and equipment	$ 560	$ 560		$ 520.3
Less: Accumulated depreciation and amortization	254	254		260.9
Net property, plant and equipment	306	306		259.4
Loss on disposal of property, plant and equipment	0.2	1.2	$ 0
Net capitalized turnaround costs:
Beginning balance		16.7	22.7
Additions		30.7	0.3
Depreciation		(5)	(3.2)
Ending balance	42.4	42.4	$ 19.8
Land
Property, plant and equipment, net
Gross property, plant and equipment	1.6	1.6		1.6
Buildings and improvements
Property, plant and equipment, net
Gross property, plant and equipment	14.4	14.4		8.1
Machinery and equipment
Property, plant and equipment, net
Gross property, plant and equipment	530	530		401.4
Construction in progress
Property, plant and equipment, net
Gross property, plant and equipment	$ 14	$ 14		$ 109.2

Related Party Transactions (Det

Related Party Transactions (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)Term$ / Car	Jun. 30, 2014USD ($)	Dec. 31, 2014USD ($)
Related party transactions
Document Period End Date			Jun. 30, 2015
Affiliate of General Partner
Related party transactions
Payroll, payroll-related expenses and other employee related benefits	$ 6,500,000	$ 5,900,000	$ 14,100,000	$ 11,500,000
Due From (To) Affiliates, Net	21,400,000		$ 21,400,000		$ 21,000,000
Services and Offtake Agreement | Affiliate of General Partner
Related party transactions
Extended term of agreement			1 year
Services and Offtake Agreement | CF Industries
Related party transactions
Allocated expenses	4,000,000	3,800,000	$ 7,900,000	7,700,000
Lease Agreements | Affiliate of General Partner
Related party transactions
Rental income received	$ 200,000	$ 200,000	$ 300,000	$ 300,000
Lease Agreements | Affiliate of General Partner | Ammonia assets
Related party transactions
Term of agreement			5 years
Related Party Transaction Number of Extensions Possible in Agreement Term | Term			3
Base quarterly rent of leased asset			$ 100,000
Lease Agreements | Affiliate of General Partner | Rail cars
Related party transactions
Extended term of agreement			1 year
Term of agreement			1 year
Quarterly rent per leased asset (in dollars per car) | $ / Car			3,600