LSB Industries Inc. said Nov. 6 that it is proceeding with plans to restart its long-idled Pryor, Okla., nitrogen plant. LSB said it expects that barring any unforeseen delays and subject to securing a sales and distribution contract for the product, that anhydrous ammonia and nitric acid production could start in the second quarter of 2009, with urea and UAN to follow in the third quarter.
LSB expects to get the permits for the expansion within 90-120 days, and sees no impediments to do so. The company has hired key personnel to operate the facility and has positioned the additional necessary personnel to be hired at appropriate intervals during the start-up phases.
The preliminary estimated total cost to activate Pryor is $15-$20 million, with a portion of these costs to be expensed as incurred. LSB said the project will likely be funded from available cash on hand and working capital, and that it is well capitalized. LSB added that based on discussions with large industry customers, it believes it will be able to reach an agreement to sell or distribute the Pryor production. LSB estimates that the Pryor facility will add $120 million in sales at current prices.
LSB had already ordered equipment for the Pryor startup (GM Aug. 11, p. 14). Initial plans are for the facility to produce 325,000 st/y of UAN and an additional 50,000 st/y of anhydrous ammonia.
In the meantime, LSB said that two previously announced factors detracted from the third-quarter 2008 operating performance of its chemical business. “We incurred $5.1 million of expenses associated with the unplanned downtime of the anhydrous ammonia plant at the Cherokee, Ala., facility,” said Barry Golsen, LSB president and chief operating officer. “The lost production meant lost sales, lost fixed overhead absorption, additional repair costs, plus losses we incurred when we purchased anhydrous ammonia to meet firm sales commitments.” The second item was $4.9 million of unrealized non-cash losses on natural gas hedges resulting from the steep decline in natural gas prices in the third quarter.
Third-quarter chemical operating income sank to $1.86 million on sales of $124.5 million from the year-ago $11.5 million and $69.2 million, respectively. Nine-month chemical income was $34.5 million on sales of $329.3 million versus the year-ago $27.1 million and $222.4 million.
Company-wide, LSB reported third-quarter net income of $4.2 million ($.18 per diluted share) on sales of $210.9 million, versus the year-ago $18.3 million ($.77 per share) and $147.6 million, respectively. Nine-month net income was $33 million ($1.40 per share) on sales of $569.4 million, versus the year-ago $42.3 million ($1.67 per share) and $451.7 million, respectively.