Terra Nitrogen Co L P 8-K Terra Nitrogen Company, L.P. reports third quarter results; declares cash distribution

Exhibit 99.1

Terra Nitrogen Company, L.P. reports third quarter results;
declares cash distribution

Sioux City, Iowa (October 23, 2008)—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.

(Tables follow)

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

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/MMBtu²

Three Months Ended				Nine Months Ended
September 30,				September 30,
2008		2007		2008		2007
$	9.28	$	7.02	$	8.00	$	6.70

1.	After deducting outbound freight costs.
2.	Including effect of forward natural gas position.

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