10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017 OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                    to                                     

Commission file number 033-43007

TERRA NITROGEN COMPANY, L.P.

(Exact name of registrant as specified in its charter)

Delaware	73-1389684
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4 Parkway North, Suite 400 Deerfield, Illinois	60015
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number, including area code (847) 405-2400
Securities registered pursuant to section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
Common Units Representing Limited Partner Interests Evidenced by Depositary Receipts	New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities

Act. o Yes x No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. o Yes    x No 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes    o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes    o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer x Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) o Yes   x No

The aggregate market value of the voting and non-voting common units held by non-affiliates computed by reference to the price at which the common units were last sold, or the average bid and asked price of such common units, as of the last business day of the registrant's most recently completed second fiscal quarter was $396,034,573.

The number of common units, without par value, outstanding as of February 21, 2018 was 18,501,576.

TERRA NITROGEN COMPANY, L.P.

Table of Contents

Part I
	Item 1.	Business.	1
	Item 1A.	Risk Factors.	6
	Item 1B.	Unresolved Staff Comments.	21
	Item 2.	Properties.	21
	Item 3.	Legal Proceedings.	21
	Item 4.	Mine Safety Disclosures.	21
Part II
	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	22
	Item 6.	Selected Financial Data.	24
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	25
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	34
	Item 8.	Financial Statements and Supplementary Data.	35
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	55
	Item 9A.	Controls and Procedures.	55
	Item 9B.	Other Information.	55
Part III
	Item 10.	Directors, Executive Officers and Corporate Governance.	57
	Item 11.	Executive Compensation.	63
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	66
	Item 13.	Certain Relationships and Related Transactions, and Director Independence.	67
	Item 14.	Principal Accountant Fees and Services.	68
Part IV
	Item 15.	Exhibits and Financial Statement Schedules.	69
	Item 16.	Form 10-K Summary.	69
		Exhibit Index	70
		Signatures	72

TERRA NITROGEN COMPANY, L.P.

Part I

ITEM 1.    BUSINESS.

"Notes" referenced throughout this document refer to financial statement note disclosures that are found in Item 8. Financial Statements and Supplementary Data.

Recent Development—Exercise of Call Right

On February 7, 2018, Terra Nitrogen Company, L.P. ("TNCLP," "we," "our" or "us") announced that, in accordance with Section 17.1 of TNCLP’s First Amended and Restated Agreement of Limited Partnership, as amended (the TNCLP Partnership Agreement), Terra Nitrogen GP Inc., a Delaware corporation and the general partner of TNCLP ("TNGP" or the "General Partner"), elected to exercise the right, assigned to TNGP by TNCLP, to purchase all of the issued and outstanding common units representing limited partner interests in TNCLP not already owned by TNGP or its affiliates (the Public Units).

 TNGP will purchase the Public Units on April 2, 2018 for a cash purchase price of $84.033 per Public Unit. The purchase price was determined in accordance with Section 17.1 of the TNCLP Partnership Agreement.

 As of April 2, 2018, all rights of the holders of the Public Units will cease, except for the right to receive payment of the purchase price. Upon completion of the purchase on April 2, 2018, TNGP will own 100 percent of the Public Units and will be entitled to all of the benefits resulting from the Public Units. In addition, upon completion of the purchase, the common units representing limited partner interests in TNCLP will cease to be publicly traded or listed on the New York Stock Exchange (NYSE).

Overview

TNCLP is a Delaware limited partnership that produces nitrogen fertilizer products. Our principal products are anhydrous ammonia (ammonia) and urea ammonium nitrate solution (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). We own a 99% limited partner interest in the Operating Partnership, and Terra LP Holdings LLC (TLPH), an affiliate of the General Partner, owns a 0.975% limited partner interest. TNGP is the general partner of both TNCLP and TNLP and owns a 0.025% general partner interest in each of TNCLP and TNLP. The General Partner is an indirect, wholly owned subsidiary of CF Industries Holdings, Inc. (CF Industries), a Delaware corporation. Ownership of TNCLP is composed of the general partner interest and the limited partner interests. The general partner interest in TNCLP is represented by 4,720 general partner units. Limited partner interests are represented by common units, which are listed for trading on the NYSE under the symbol "TNH", and Class B common units. As of December 31, 2017, 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 75.1% of the total outstanding common units) and all of the Class B common units as of December 31, 2017. Throughout this document, the term "affiliates of the General Partner" refers to consolidated subsidiaries of CF Industries, including TNGP. CF Industries acquired Terra Industries, Inc. (Terra) in April 2010, and acquired the General Partner and Terra's ownership in the Partnership at that time.

CF Industries, through its subsidiaries, is a global leader in the manufacturing and distribution of nitrogen products, serving both agricultural and industrial customers. CF Industries operates world-class nitrogen manufacturing complexes in the United States, Canada and the United Kingdom and distributes plant nutrients through a system of terminals, warehouses, and associated transportation equipment located primarily in the midwestern United States.

For the year ended December 31, 2017, we sold 2.4 million tons of nitrogen fertilizers, recognized net sales of $397.2 million and generated net earnings of $153.9 million. Additional financial information about our business is included in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, and in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

TNCLP and TNGP have no employees. Pursuant to the Amendment to the General and Administrative Services and Product Offtake Agreement (the Services and Offtake Agreement), which is accounted for as an operating lease, the Partnership sells all of its nitrogen fertilizer products to affiliates of the General Partner at prices based on market prices for the Partnership's nitrogen fertilizer products. Also, pursuant to the Services and Offtake Agreement, selling prices are determined monthly and are equal to the volume weighted average net invoice price for third party sales (that is, sales by the affiliates of the General Partner to their customers) of product during each month. These selling prices are reduced by any freight or other transportation charges and incentives paid by the affiliates of the General Partner. Title and risk of loss transfer to affiliates of the General Partner as the product is shipped from the plant gate. Affiliates of the General Partner provide certain services to us

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under the Services and Offtake Agreement, including production planning, manufacturing management, logistics, procurement, accounting, legal, risk management, investor relations and other general and administrative services. For further information regarding our agreements with CF Industries and the General Partner, see Note 10—Related Party Transactions.

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 January 19, 2017, the Internal Revenue Service (IRS) issued final regulations on the types of income and activities that constitute or generate qualifying income of a MLP. For calendar year MLPs, the effective date of the regulations is January 1, 2018. The regulations have the effect of limiting the types of income and activities that qualify under the MLP rules, subject to certain transition provisions. The regulations define the activities that generate qualifying income from certain processing or refining and transportation activities with respect to any mineral or natural resource (including fertilizer) as activities that generate qualifying income, but the regulations reserve on specifics regarding fertilizer-related activities. However, the IRS has issued two private letter rulings to taxpayers in the fertilizer industry unrelated to TNCLP (one before and one after the issuance of the final regulations) which would indicate that each taxpayer's fertilizer manufacturing activities should produce qualifying income for purposes of determining whether 90% of the partnership's gross income is qualifying income under the final regulations. The entities to which these private letter rulings were issued would appear to operate nitrogen fertilizer manufacturing businesses that are similar to ours. While these private letter rulings provide some insight into the manner in which the IRS analyzed fertilizer manufacturing activities at the time these rulings were issued, these private letter rulings are specific to different entities. Thus, the IRS is not bound to follow them in respect of TNCLP, nor may we rely on them as precedent when determining whether we satisfy the MLP 90% gross income test. 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.

We make available free of charge through CF Industries' Internet website, www.cfindustries.com, all of our reports on Forms 10-K, 10-Q and 8-K and all amendments to those reports as soon as reasonably practicable after such material is filed electronically with, or furnished to, the Securities and Exchange Commission (SEC). Copies of the General Partner's Corporate Governance Guidelines and charters for the Audit Committee and Corporate Governance and Nominating Committee of the General Partner's Board of Directors (TNGP Board of Directors) are also available on CF Industries' Internet website. We will provide electronic or paper copies of these documents free of charge upon written request delivered to our principal executive offices at the address below. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

Our principal executive offices are located outside of Chicago, Illinois, at 4 Parkway North, Suite 400, Deerfield, Illinois 60015.

Product Tons and Nutrient Tons

Unless otherwise stated, we measure our production and sales volume in this Annual Report on Form 10-K in product tons, which represents the weight of the product measured in short tons (one short ton is equal to 2,000 pounds). 

We also provide certain supplementary volume information measured in nutrient tons. Nutrient tons represent the weight of the product’s nitrogen content, which varies by product. Ammonia product tons represent 82% nitrogen content and UAN product tons assume a 32% nitrogen content basis. 

Our Products

Our principal products are ammonia and UAN, which we manufacture at our Verdigris, Oklahoma facility. Our nitrogen products are used primarily by farmers to improve the yield and quality of their crops. Although ammonia and UAN are often interchangeable, each has its own characteristics, and customer product preferences vary according to the crop planted, soil and weather conditions, regional farming practices, relative prices and the cost and availability of appropriate storage, handling and application equipment.

Our historical sales of nitrogen fertilizer products are shown in the following table. The sales shown do not reflect product used internally in the manufacture of other products (for example, in 2017 we used approximately 0.8 million tons of ammonia in the production of UAN).

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	2017			2016			2015
	Tons	Sales		Tons	Sales		Tons	Sales
	(tons in thousands; sales dollars in millions)
Nitrogen Fertilizer Products
Ammonia	480	$	123.8	409	$	132.2	418	$	199.5
UAN	1,909	271.8		1,759	284.4		1,668	379.2

Our gross margin was $156.7 million, $226.8 million and $325.8 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Our Facilities

Our sole production facility, in Verdigris, Oklahoma, is the second largest UAN production facility in North America. It has two ammonia plants, two nitric acid plants and two UAN plants, providing us with some flexibility to adjust our product mix between ammonia and UAN. It has the annual capacity to produce approximately 1.2 million tons of ammonia (most of which is upgraded to UAN) and 2.0 million tons of UAN. The Verdigris facility represents approximately 5% of North American ammonia capacity and 12% of North American UAN capacity.

The following table summarizes our nitrogen fertilizer production volume for the last three years.

	2017	2016	2015
	(tons in thousands)
Ammonia(1)	1,241	1,126	1,109
UAN (32%)	1,906	1,739	1,688

_______________________________________________________________________________

⁽¹⁾  Gross ammonia production, including amounts subsequently upgraded to UAN.

Our Verdigris location is well suited to serve the midwestern U.S. corn belt. Verdigris is strategically located on approximately 800 acres near Tulsa's Port of Catoosa on the Verdigris River. We lease a port terminal from the Tulsa-Rogers County Port Authority, which provides access to transport fertilizer by way of river barges. In addition, Verdigris is located on the Burlington Northern Santa Fe railroad, providing access to rail transport. We also have access to a 1,100-mile ammonia pipeline. The complex has on-site storage for 60,000 tons of ammonia and 100,000 tons of UAN, providing us with flexibility to handle temporary disruptions to shipping activities without impacting production.

Our capital expenditures are primarily related to plant maintenance and turnaround projects to sustain our asset base, to increase capacity, to improve plant efficiency and to comply with various environmental, health and safety requirements. Occasionally, we have had other capital expenditure projects related to items such as the installation of new plant control systems or construction of additional on-site storage. Planned capital expenditures and plant turnarounds are subject to change due to delays in regulatory approvals and/or permitting, unanticipated increases in cost, changes in scope and completion time, performance of third parties, delay in the receipt of equipment, adverse weather, defects in materials and workmanship, labor or material shortages, transportation constraints and other unforeseen difficulties. Capital expenditures also reduce the Available Cash (as defined in the TNCLP Partnership Agreement) for unitholder distributions.

Customers

We sell all of the nitrogen fertilizer products that we produce to affiliates of the General Partner, making them our only customers.

Raw Materials

Natural gas is the principal raw material and primary fuel source used in our ammonia production process. In 2017, natural gas accounted for approximately 51% of our total cost of goods sold for nitrogen fertilizers and a higher percentage of cash production costs (total production costs less depreciation and amortization). Our Verdigris facility has access to abundant, competitively-priced natural gas through a transportation arrangement connecting it to ONEOK Gas Transportation, L.L.C.'s intrastate pipeline system.

In 2017, our Verdigris facility consumed approximately 44 million MMBtus of natural gas. We purchase natural gas from a variety of suppliers to maintain a reliable, competitively-priced supply of natural gas. We also use certain financial

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instruments to hedge natural gas prices. For further information about our natural gas hedging activities, see Note 7—Derivative Financial Instruments.

Distribution

Our production facility in Verdigris is located near the agricultural areas of the midwestern United States, and has ready access to barge, truck and rail transportation. In addition, the Verdigris facility has access to an ammonia pipeline to transport product to high demand regions.

Competition

The market for nitrogen fertilizer products is global and intensely competitive. Competition in the nitrogen fertilizer market is based primarily on delivered price and to a lesser extent on customer service and product quality. During peak demand periods, product availability and delivery time also play a role in the buying decisions of customers. CF Industries, CVR Partners, LP, Iowa Fertilizer Company, Koch Nitrogen Company, LSB Industries, Inc. and Nutrien Ltd. (formed in January 2018 by the merger of Agrium Inc. and Potash Corporation of Saskatchewan Inc.) are all large North American-based producers of nitrogen fertilizer products. Additionally, Yara BASF is expected to bring new nitrogen fertilizer production facilities located in North America on line in 2018. There is also significant competition from product sourced from other regions of the world, including some with lower natural gas or other feedstock costs.

Seasonality

The fertilizer business is seasonal. However, the sales pattern of our business can change significantly from year to year due to weather conditions and other factors impacting the agricultural industry. The strongest demand for our products occurs during the spring planting season, with a second period of strong demand following the fall harvest. Wholesale buyers generally build inventories during the low demand periods of the year in order to ensure timely product availability during the peak sales seasons. Seasonality is greatest for ammonia due to the short application season and the limited ability of customers to store significant quantities of this product. The seasonality of fertilizer demand generally results in sales volumes and net sales being the highest during the spring and working capital requirements being the highest just prior to the start of the spring planting season. Our quarterly financial results can vary significantly from one year to the next due to weather-related shifts in planting schedules and purchasing patterns.

Environmental and Other Regulatory Matters

We are subject to numerous environmental, health and safety laws and regulations, including laws and regulations relating to land reclamation; the generation, treatment, storage, disposal and handling of hazardous substances and wastes; and the cleanup of hazardous substance releases. These laws include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the Toxic Substances Control Act and various other federal, state and local statutes. Violations can result in substantial penalties, court orders to install pollution-control equipment, civil and criminal sanctions, permit revocations and facility shutdowns. In addition, environmental, health and safety laws and regulations may impose joint and several liability, without regard to fault, for cleanup costs on potentially responsible parties who have released or disposed of hazardous substances into the environment.

We may be subject to more stringent enforcement of existing or new environmental, health and safety laws in the future. Additionally, future environmental, health and safety laws and regulations or reinterpretation of current laws and regulations may require us to make substantial expenditures. Our costs to comply with, or any liabilities under, these laws and regulations could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

Freeport-McMoRan Resource Partners, Limited Partnership (a former owner and operator of the Partnership's production facilities) has retained liability for certain environmental matters originating prior to the Partnership's acquisition of these facilities.

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Environmental, Health and Safety Expenditures

Our environmental, health and safety capital expenditures in 2017 totaled approximately $0.6 million. In 2018, we estimate that we will spend approximately $2.2 million for environmental, health and safety capital expenditures. Environmental, health and safety laws and regulations are complex, change frequently and have tended to become more stringent over time. We expect that continued government and public emphasis on environmental issues will result in increased future expenditures for environmental controls at our operations. Such expenditures could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

Legislation and Regulation of Greenhouse Gases

We are subject to greenhouse gas (GHG) regulations. The United States Environmental Protection Agency (EPA) has issued federal GHG regulations that impact our facility, including a mandatory GHG reporting rule that required us to commence monitoring GHG emissions beginning on January 1, 2010 and begin reporting the previous year's emissions annually starting in 2011. In addition, if we seek to modify or expand our facility and as a result are required to obtain a Prevention of Significant Deterioration (PSD) air construction permit, we could be subject to pollution control requirements applicable to GHGs in addition to requirements applicable to conventional air pollutants. Such requirements may result in increased costs or delays in completing such facility modifications and expansions.

On December 12, 2015, 195 countries, including the United States, adopted by consensus a new international agreement known as the Paris Agreement. The Paris Agreement is intended to provide a framework pursuant to which the parties to the agreement will attempt to hold the increase in global average temperatures to below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels. The Paris Agreement has been accepted by the United States and went into effect in November 2016. However, in June 2017 the United States announced its intention to withdraw from the Paris Agreement, subject to renegotiation of the Paris Agreement on terms more favorable to the United States. Under the terms of the Paris Agreement, the United States cannot formally provide notice of its withdrawal before November 2019, which would become effective one year after providing such notice. In the interim, it is unclear if the United States will comply with its commitments under the Paris Agreement. If the Paris Agreement remains in effect, it could result in more aggressive efforts to reduce GHG emissions. There are substantial uncertainties as to the nature, stringency and timing of any future regulations. More stringent GHG limitations, if they are enacted, are likely to have a significant impact on us because our production facility emits GHGs such as carbon dioxide and nitrous oxide and because natural gas, a fossil fuel, is a primary raw material used in our nitrogen production process. Regulation of GHGs may require us to make changes in our operating activities that would increase our operating costs, reduce our efficiency, limit our output, require us to make capital improvements to our facilities, increase our costs for or limit the availability of energy, raw materials or transportation, or otherwise materially adversely affect our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders. In addition, to the extent GHG restrictions are not imposed in countries where our competitors operate or are less stringent than regulations that may be imposed in the United States, our competitors may have cost or other competitive advantages over us.

New Source Performance Standards for Nitric Acid Plants

On August 14, 2012, the EPA issued a final regulation revising air emission standards applicable to newly constructed, reconstructed or modified nitric acid plants. The regulations will apply to our nitric acid plants if and when we undertake activities or operations that are considered modifications, including physical changes that would allow us to increase our production capacity at the plants. The regulations include certain provisions that could make it difficult for us to meet the limits on emissions of nitrogen oxides (NOx) notwithstanding pollution controls we may add to our plants, and, accordingly, the regulations could impact our ability to expand production at our existing plants. The EPA regulation did not include a limitation on emissions of nitrous oxide (a greenhouse gas).

Employees

TNCLP and TNGP have no employees. An affiliate of the General Partner provides services to us under the Services and Offtake Agreement.

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ITEM 1A.    RISK FACTORS.

In addition to the other information contained in this Annual Report on Form 10-K, you should carefully consider the factors discussed below before deciding to invest in TNCLP's common units. These risks and uncertainties could materially and adversely affect our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

RISKS RELATED TO OUR PARTNERSHIP STRUCTURE

Common units are subject to the General Partner's call right, which, on February 7, 2018, the General Partner elected to exercise. As a result of the exercise of the call right, the General Partner will purchase all publicly traded common units on April 2, 2018 for $84.033 per common unit.

The General Partner and its affiliates own approximately 75.1% of our outstanding common units. When not more than 25% of the issued and outstanding common units are held by persons other than the General Partner and its affiliates (collectively, non-affiliated persons), we, at the General Partner's sole discretion, may call, or assign to the General Partner or its affiliates, our right to acquire all such outstanding common units held by non-affiliated persons.

On February 7, 2018, TNCLP announced that, in accordance with Section 17.1 of the TNCLP Partnership Agreement, TNGP elected to exercise the right, assigned to TNGP by TNCLP, to purchase all of the issued and outstanding common units representing limited partner interests in TNCLP not already owned by TNGP or its affiliates (the Public Units).

 TNGP will purchase the Public Units on April 2, 2018 for a cash purchase price of $84.033 per Public Unit. The purchase price was determined in accordance with Section 17.1 of the TNCLP Partnership Agreement.

 As of April 2, 2018, all rights of the holders of the Public Units will cease, except for the right to receive payment of the purchase price. Upon completion of the purchase on April 2, 2018, TNGP will own 100 percent of the Public Units and will be entitled to all of the benefits resulting from the Public Units. In addition, upon completion of the purchase, the common units representing limited partner interests in TNCLP will cease to be publicly traded or listed on the NYSE. Unitholders may incur a tax liability upon the sale of their common units.

The General Partner's discretion in determining the level of cash reserves may adversely affect our ability to make cash distributions to our unitholders.

Our cash distributions to our unitholders are based on Available Cash as defined in the TNCLP Partnership Agreement. The TNCLP Partnership Agreement provides that the General Partner may reduce Available Cash by establishing cash reserves for the proper conduct of our business or the business of the Operating Partnership (including reserves for future operating and capital needs), to provide funds for future distributions to our unitholders in any one or more of the next four quarters or to comply with applicable law or any agreement or obligation to which we or the Operating Partnership are a party or otherwise bound. These cash reserves will affect the amount of cash available for current distribution to our unitholders.

As a result of TNGP’s exercise of the right to purchase the Public Units, there will be no further cash distributions on the common units after the distribution payable February 28, 2018.

Our unitholders have limited voting rights and are not entitled to elect the General Partner or the General Partner's directors.

Unlike the holders of common stock in a corporation, our unitholders have only limited voting rights on matters affecting our business and, therefore, limited ability to influence management's decisions regarding our business. Unitholders have no right to elect the General Partner or the TNGP Board of Directors on an annual or other continuing basis. The TNGP Board of Directors, including the independent directors, is chosen entirely by CF Industries as the indirect owner of the General Partner and not by our common unitholders. Unlike publicly traded corporations, we do not hold annual meetings of our unitholders to elect directors or conduct other matters routinely conducted at annual meetings of shareholders. Furthermore, even if our unitholders are dissatisfied with the performance of the General Partner, the General Partner may only be removed by a vote of the holders of at least 66 2/3% of our outstanding common units, including any common units held by the General Partner and its affiliates (including CF Industries). As a result, given that the General Partner and its affiliates own approximately 75.1% of our outstanding common units, holders of our publicly traded common units are not able to remove the General Partner under any circumstances.

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The control of the General Partner may be transferred to a third party without unitholder consent.

There is no restriction in the TNCLP Partnership Agreement on the ability of CF Industries to transfer its equity interest in the General Partner to a third party. The new equity owner of the General Partner would then be in a position to replace the TNGP Board of Directors and the officers of the General Partner with its own choices and to influence the decisions taken by the TNGP Board of Directors and officers of the General Partner.

The TNGP Board of Directors and officers of the General Partner have fiduciary duties to TNGP and its stockholders, and the interests of TNGP and its stockholders may differ significantly from, or conflict with, the interests of our public common unitholders.

The General Partner is responsible for managing us. Although the General Partner has, as limited and reduced by the TNCLP Partnership Agreement, fiduciary duties to manage us in a manner that is beneficial to our common unitholders, the directors and officers of the General Partner also have fiduciary duties to manage the General Partner in a manner beneficial to TNGP and its stockholders. The interests of TNGP and its stockholders may differ from, or conflict with, the interests of our common unitholders. In resolving these conflicts, the General Partner may favor its own interests or the interests of holders of TNGP's common stock over our interests and those of our common unitholders.

The potential conflicts of interest include, among others, the following:

• the General Partner's determination of the amount of our cash expenditures, borrowings and reserves;

• the issuance of additional units or the purchase, call, or redemption of outstanding units;

• transactions with CF Industries and its affiliates;

• the decision to retain separate counsel, accountants or others to perform services on our behalf;

• the decision by affiliates of the General Partner to engage in activities that would compete with us; and

• the fact that all executive officers of the General Partner, and the majority of the directors of the General Partner, also serve as executive officers of CF Industries. Such executive officers, including the General Partner's chief executive officer, chief financial officer and senior vice presidents, divide their time between our business and the business of CF Industries. These executive officers will face conflicts of interest from time to time in making decisions which may benefit either us or CF Industries.

The TNCLP Partnership Agreement limits the liability and reduces the fiduciary duties of the General Partner and restricts the remedies available to us and our common unitholders for actions taken by the General Partner that might otherwise constitute breaches of fiduciary duty.

The TNCLP Partnership Agreement limits the liability and reduces the fiduciary duties of the General Partner and its directors and officers, while also restricting the remedies available to our common unitholders for actions that, without these limitations and reductions, might constitute breaches of fiduciary duty. For example:

• The TNCLP Partnership Agreement provides that none of the General Partner, any of its affiliates, or any director or officer of the General Partner or any of its affiliates will have any liability for monetary damages to us or our unitholders for any act or omission if such person acted in good faith.

• The TNCLP Partnership Agreement provides broad flexibility for the directors and officers of the General Partner to be involved in the management of the businesses of the owners of the General Partner, including any businesses that are in competition with our business, and specifically permits the owners of the General Partner to engage in activities that are competitive with our business. The TNCLP Partnership Agreement provides that no such activities will constitute a breach of any fiduciary duty owed by the General Partner.

• The TNCLP Partnership Agreement provides that in connection with its resolution of any conflict of interest by the General Partner, the General Partner may consider: the relative interests of any party involved in such conflict or affected by such action, agreement, transaction or situation and the benefits and burdens relating to such interest, as well as any additional factors as the General Partner determines in its sole discretion to be relevant, reasonable or appropriate under the circumstances. The TNCLP Partnership Agreement further provides that, in the absence of bad faith by the General Partner, the resolution provided by the General Partner with respect to any conflict of interest will not constitute a breach of the TNCLP Partnership Agreement or any standard of care or duty imposed in the TNCLP Partnership Agreement or under any law, rule or regulation.

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By purchasing a common unit, a unitholder becomes bound by the provisions of the TNCLP Partnership Agreement, including the provisions described above.

CF Industries and its affiliates are also engaged in fertilizer manufacturing.

The TNCLP Partnership Agreement does not prohibit CF Industries and its affiliates, other than TNGP, from owning and operating nitrogen fertilizer manufacturing plants and storage and distribution assets or engaging in any businesses which could compete with our business. In addition, CF Industries has recently constructed certain assets related to our business and may in the future acquire, construct or dispose of additional assets related to our business, without any obligation to offer us the opportunity to purchase or construct any of these assets.

As a publicly traded partnership we qualify for, and are relying on, certain exemptions from the corporate governance requirements of the NYSE.

As a publicly traded partnership, we qualify for, and are relying on, certain exemptions from the NYSE's corporate governance requirements, including:

• the requirement that a majority of the TNGP Board of Directors consist of independent directors; and

• the requirement that the TNGP Board of Directors have a compensation committee that is composed entirely of independent directors.

As a result of these exemptions, the TNGP Board of Directors is not comprised of a majority of independent directors, and the TNGP Board of Directors did not establish a compensation committee. Accordingly, unitholders do not have the same protections afforded to equity holders of companies that are subject to all of the corporate governance requirements of the NYSE.

Limited partners of TNCLP may not have limited liability if a court finds that unitholder action constitutes control of our business.

A general partner of a limited partnership generally has unlimited liability for the obligations of the partnership, except for those contractual obligations of the partnership that are expressly made without recourse to the general partner. TNCLP is organized under Delaware law and the Operating Partnership conducts business in Oklahoma. Limited partners of TNCLP (Limited Partners) could be liable for our obligations as if such Limited Partners were general partners if a court or government agency determined that:

• we were conducting business in a state but had not complied with that particular state's partnership statute; or

• Limited Partners' right to act with other unitholders to remove or replace the General Partner, to approve some amendments to the TNCLP Partnership Agreement or to take other actions under the TNCLP Partnership Agreement constituted "control" of our business.

Unitholders may have liability to repay distributions.

In the event that (i) we make distributions to our unitholders when our nonrecourse liabilities exceed the sum of (a) the fair market value of our assets not subject to recourse liability and (b) the excess of the fair market value of our assets subject to recourse liability over such liability, or a distribution causes such a result, and (ii) a unitholder knows at the time of the distribution of such circumstances, such unitholder will be liable for a period of three years from the time of the impermissible distribution to repay the distribution under Section 17-607 of the Delaware Revised Uniform Limited Partnership Act (the Delaware Act).

Likewise, upon the winding up of TNCLP, in the event that (a) we do not distribute assets in the following order: (i) to creditors in satisfaction of their liabilities; (ii) to partners and former partners in satisfaction of liabilities for distributions owed under the TNCLP Partnership Agreement; (iii) to partners for the return of their contribution; and (iv) to the partners in the proportions in which the partners share in distributions, and (b) a unitholder knows at the time of such circumstances, then such unitholder will be liable for a period of three years from the impermissible distribution to repay the distribution under Section 17-804 of the Delaware Act.

A purchaser of common units who becomes a Limited Partner is liable for the obligations of the transferring Limited Partner to make contributions to TNCLP that are known by the purchaser at the time it became a Limited Partner, and for unknown obligations if the liabilities could be determined from the TNCLP Partnership Agreement.

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We may issue additional common units and other equity interests without unitholder approval, which would dilute unitholders' existing interests.

Under the TNCLP Partnership Agreement, we are authorized to issue an unlimited number of additional interests without a vote of the unitholders. The issuance by us of additional common units or other equity interests of equal or senior rank will have the following effects:

• the proportionate ownership interest of unitholders immediately prior to the issuance will decrease;

• the amount of cash distributions on each unit will decrease;

• the ratio of our taxable income to distributions may increase;

• the relative voting strength of each previously outstanding unit will be diminished; and

• the market price of the common units may decline.

RISKS RELATED TO OUR BUSINESS

We are wholly dependent on our Verdigris manufacturing facility, and any operational disruption could result in a reduction of sales volumes and could cause us to incur substantial expenditures.

Our manufacturing operations, located at a single site in Verdigris, Oklahoma, are subject to significant operating hazards and interruptions. Any significant curtailment of production at one or more of our production units could result in materially reduced revenues and cash flows for the duration of any shutdown. Operations at our manufacturing facility could be curtailed or partially or completely shut down, temporarily or permanently, as the result of a number of circumstances, most of which are not within our control, such as unscheduled maintenance or catastrophic events like a major accident or fire, damage by severe weather or other natural disaster or sabotage or terrorist incidents. The manufacturing operations at our facility could also be subject to interruption if our ammonia storage facilities were to be removed from service due to damage from an accident or natural disaster or sabotage or terrorist incidents, or due to problems discovered during inspections associated with long-term maintenance or safety requirements.

Our business is cyclical, resulting in periods of industry oversupply during which our financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders tend to be negatively affected.

Historically, selling prices for our products have fluctuated in response to periodic changes in supply and demand conditions. Demand is affected by planted acreage, crop selection and fertilizer application rates, driven by population growth or changes in dietary habits and non-food use of crops, such as production of ethanol and other biofuels, among other things. Supply is affected by available capacity and operating rates, raw material costs and availability, government policies and global trade.

Periods of strong demand, high capacity utilization and increasing operating margins tend to stimulate global investment in production capacity. The construction of new nitrogen fertilizer manufacturing capacity in the industry, plus improvements to increase output from the existing production assets, increase nitrogen supply availability and affect the balance of supply and demand. In recent years, fertilizer producers, including CF Industries, have built new production facilities or expanded capacity of existing production assets, or announced plans to do so. Global nitrogen fertilizer capacity has increased faster than global nitrogen fertilizer demand, creating a surplus of global nitrogen fertilizer capacity leading to lower nitrogen fertilizer selling prices.

Selling prices reached multi-year lows in 2017. The average selling price for our products in 2017 was $166 per ton, compared to $193 per ton in 2016 and $279 per ton in 2015. Selling prices decreased 14% from 2016 to 2017 and 31% from 2015 to 2016.

Additional production capacity is expected to come on line over the next twelve months. We cannot predict the extent to which the current oversupply environment, global or local economic and financial conditions or changes in such conditions, or other factors may cause delays, cancellation or acceleration of other announced and/or ongoing projects. Should imports of nitrogen fertilizer products into the United States continue, and not take this additional capacity into account, we could see a decline in pricing or potentially experience lower prices than those we saw in the spring and summer of 2017. We also cannot predict the closures or operating rates of existing installed capacity.

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We expect the lower priced environment to continue until global supply and demand become more balanced through a combination of continued demand growth and supply reductions as producers respond to lower realized margins by taking higher cost production facilities off line.

During periods of industry oversupply, our financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders tend to be affected negatively as the price at which we sell our products typically declines, resulting in possible reduced profit margins, write-downs in the value of our inventory and temporary or permanent curtailments of production. Our financial performance, the amount of our cash distributions, and the trading price for our common units have been negatively impacted by the lower selling prices resulting from the current global oversupply of nitrogen fertilizer. The period of time that these conditions will persist and the degree to which they will impact our business, financial condition, results of operations, cash flows and ability to pay cash distributions are uncertain.

Our products are global commodities, and we face intense global competition from other fertilizer producers.

We are subject to intense price competition from our competitors. Most fertilizers are global commodities, with little or no product differentiation, and customers make their purchasing decisions principally on the basis of delivered price and to a lesser extent on customer service and product quality.

We compete with many producers, including state-owned and government-subsidized entities. Consolidation in the industry may increase the resources of several of our competitors. For example, in January 2018, our competitors Agrium Inc. and Potash Corporation of Saskatchewan Inc. completed their merger into the newly-formed company Nutrien Ltd. Some of our competitors have greater total resources and are less dependent on earnings from fertilizer sales, which make them less vulnerable to industry downturns and better positioned to pursue new expansion and development opportunities. Furthermore, certain governments as owners of some of our competitors may be willing to accept lower prices and profitability on their products in order to support domestic employment or other political or social goals. Our competitive position could suffer to the extent we are not able to expand our own resources, either through investments in new or existing operations or through acquisitions, joint ventures or partnerships.

China, the world's largest producer and consumer of nitrogen fertilizers, currently has significant capacity surplus and many high-cost plants. As a result, the domestic nitrogen industry in China is operating at less than full capacity. If Chinese government policy, devaluation of the Chinese renminbi or decreases in Chinese producers' underlying costs such as the price of Chinese coal encourage increased production capacity utilization, any resulting export volume could adversely affect the balance between global supply and demand and may put downward pressure on global fertilizer prices, which could materially adversely affect our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

A decline in U.S. agricultural production or limitations on the use of our products for agricultural purposes could materially adversely affect the demand for our products.

Conditions in the U.S. agricultural industry significantly impact our operating results. Agricultural planted areas and production can be affected by a number of factors, including weather patterns and field conditions, current and projected grain inventories and prices, demand for agricultural products and governmental policies regarding production of or trade in agricultural products. These factors are outside of our control.

Governmental policies, including farm and biofuel subsidies and commodity support programs, as well as the prices of fertilizer products, may also directly or indirectly influence the number of acres planted, the mix of crops planted and the use of fertilizers for particular agricultural applications. Ethanol production in the United States contributes significantly to corn demand, due in part to federal legislation mandating use of renewable fuels. An increase in ethanol production has led to an increase in the amount of corn grown in the United States and to increased fertilizer usage on both corn and other crops that have also benefited from improved farm economics. While the current Renewable Fuel Standard (RFS) encourages continued high levels of corn-based ethanol production, a continuing "food versus fuel" debate and other factors have resulted in calls to eliminate or reduce the renewable fuel mandate, or to eliminate or reduce corn-based ethanol as part of the renewable fuel mandate. This could have an adverse effect on corn-based ethanol production, planted corn acreage and fertilizer demand.

Developments in crop technology, such as nitrogen fixation, the conversion of atmospheric nitrogen into compounds that plants can assimilate, or nitrogen-efficient varieties, could also reduce the use of chemical fertilizers and adversely affect the demand for our products. Widespread adoption of emerging application technologies could disrupt traditional application practices, affecting the volume or types of products used and timing of applications. In addition, from time to time various state legislatures have considered limitations on the use and application of chemical fertilizers due to concerns about the impact of these products on the environment. Any reduction in the demand for chemical fertilizer products, including any limitation on

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the use and application of chemical fertilizer, could affect the demand for our products, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

Our business is dependent on North American natural gas, the prices of which are subject to volatility.

Natural gas is the principal raw material used to produce nitrogen fertilizers. We use natural gas both as a chemical feedstock and as a fuel to produce our nitrogen products. Natural gas comprises a significant portion of the total production cost of our products. The price of natural gas in North America has been volatile in recent years. During 2017, the daily closing price at the Henry Hub, the most heavily-traded natural gas pricing point in North America, reached a low of $2.44 per MMBtu on February 28, 2017 and a high of $3.65 per MMBtu on three consecutive days in January 2017. During the three year period ended December 31, 2017, the daily closing price at the Henry Hub reached a low of $1.49 per MMBtu on three consecutive days in March 2016 and a high of $3.77 per MMBtu on December 8, 2016.

Changes in the supply of and demand for natural gas can lead to periods of volatile natural gas prices. If high prices were to occur during a period of low fertilizer selling prices, it could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders. We sell all of our output of nitrogen fertilizer products to affiliates of the General Partner at prices based on market prices for our nitrogen fertilizer products as defined in the Services and Offtake Agreement.

The price of natural gas in North America and worldwide has been volatile in recent years and has declined on average due in part to the development of significant natural gas reserves, including shale gas, and the rapid improvement in shale gas extraction techniques, such as hydraulic fracturing and horizontal drilling. Future production of natural gas from shale formations could be reduced by regulatory changes that restrict drilling or hydraulic fracturing or increase its cost or by reduction in oil exploration and development prompted by lower oil prices and resulting in production of less associated gas. Additionally, increased demand for natural gas, particularly in the Gulf Coast Region, due to increased industrial demand and increased natural gas exports could result in increased natural gas prices. If such reduced production or increased demand were to occur, or if other developments adversely impact the supply/demand balance for natural gas in the United States or elsewhere, natural gas prices could rise, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

Our operations are dependent upon raw materials provided by third parties, and any delay or interruption in the delivery of raw materials may adversely affect our business.

We use natural gas and other raw materials in the manufacture of nitrogen fertilizer products. We purchase the natural gas and other raw materials from third party suppliers. Our natural gas is transported by pipeline to our facility by third party transportation providers or through the use of facilities owned by third parties. Delays or interruptions in the delivery of natural gas or other raw materials may be caused by, among other things, severe weather or natural disasters, unscheduled downtime, labor difficulties, insolvency of our suppliers or their inability to meet existing contractual arrangements, deliberate sabotage and terrorist incidents, or mechanical failures. In addition, the transport of natural gas by pipeline is subject to additional risks, including delays or interruptions caused by capacity constraints, leaks or ruptures. Any delay or interruption in the delivery of natural gas or other raw materials, even for a limited period, could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

Our transportation and distribution activities rely on third party providers and are subject to environmental, safety and regulatory oversight. This exposes us to risks and uncertainties beyond our control that may adversely affect our operations and exposes us to additional liability.

We rely on railroad, truck, pipeline, and river barge companies to transport raw materials to our manufacturing complex, to coordinate and deliver finished products into CF Industries' distribution system and to ship finished products to CF Industries' customers. We also lease rail cars in order to ship raw materials and finished products. These transportation operations, equipment and services are subject to various hazards, including adverse operating conditions on the inland waterway system, extreme weather conditions, system failures, work stoppages, delays, accidents such as spills and derailments and other accidents and operating hazards. Additionally, due to the aging infrastructure of certain bridges, roadways, rail lines, river locks, and equipment that our third party service providers utilize, we may experience delays in the shipment of finished product while repairs, maintenance or replacement activities are conducted. Also, certain third party service providers, particularly railroads, have experienced periodic service slowdowns due to capacity constraints in their systems, operational and maintenance difficulties and other events, which impact the shipping times of our products.

These transportation operations, equipment and services are also subject to environmental, safety, and regulatory oversight. Due to concerns related to accidents, discharges or other releases of hazardous substances, terrorism or the potential

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use of fertilizers as explosives, governmental entities could implement new or more stringent regulatory requirements affecting the transportation of raw materials or finished products.

If shipping of our products is delayed or we are unable to obtain raw materials as a result of these transportation companies' failure to operate properly, or if new and more stringent regulatory requirements are implemented affecting transportation operations or equipment, or if there are significant increases in the cost of these services or equipment, our revenues and cost of operations could be adversely affected.

In the United States, the railroad industry continues various efforts to limit the railroads' potential liability stemming from the transportation of Toxic Inhalation Hazard materials, such as the anhydrous ammonia that we transport to and from our facility. For example, various railroads shift liability to shippers by contract, purport to shift liability to shippers by tariff, or otherwise seek to require shippers to indemnify and defend the railroads from and against liabilities (including in negligence, strict liability, or statutory liability) that may arise from certain acts or omissions of the railroads, third parties with insufficient resources, unknown causes or acts of god. These initiatives could materially and adversely affect our operating expenses and potentially our ability to transport anhydrous ammonia and increase our liability for releases of our anhydrous ammonia while in the care, custody and control of the railroads or third parties, for which our insurance may be insufficient or unavailable. New or more stringent regulatory requirements also could be implemented affecting the equipment used to ship our raw materials or finished products. Restrictions on service, increases in transportation costs, or changes in such costs relative to transportation costs incurred by our competitors, and any railroad industry initiatives that may impact our ability to transport our products, could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

Our operations and the production and handling of our products involve significant risks and hazards. We are not fully insured against all potential hazards and risks incident to our business. Therefore, our insurance coverage may not adequately cover our losses.

Our operations are subject to hazards inherent in the manufacture, transportation, storage and distribution of chemical products, including ammonia, which is highly toxic and corrosive. These hazards include: explosions; fires; severe weather and natural disasters; train derailments, collisions and other transportation and maritime incidents; leaks and ruptures involving storage tanks, pipelines and rail cars; spills, discharges and releases of toxic or hazardous substances or gases; deliberate sabotage and terrorist incidents; mechanical failures; unscheduled plant downtime; labor difficulties and other risks. Some of these hazards can cause bodily injury and loss of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties and liabilities.

We are currently insured under CF Industries' property, business interruption, casualty and liability insurance policies, but we are not fully insured against all potential hazards and risks incident to our business. If we were to incur significant liability for which we were not fully insured, it could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders. CF Industries' insurance policies are subject to various self-retentions, deductibles and limits. The policies also contain exclusions and conditions that could have a material adverse impact on our ability to receive indemnification thereunder. CF Industries' insurance policies are generally renewed annually. As a result of market conditions, insurance premiums, self-retentions and deductibles for certain insurance policies can increase substantially and, in some instances (including if CF Industries had fully utilized the purchased coverage), certain insurance may become unavailable or available only for reduced amounts of coverage. In addition, significantly increased costs could lead CF Industries to decide to reduce, or possibly eliminate, coverage. There can be no assurance that CF Industries or we will be able to buy and maintain insurance with adequate limits and reasonable pricing terms and conditions.

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Cyber security risks could result in disruptions in business operations and adverse operating results.

The information management systems that we use are those provided by CF Industries, while we own the computer control systems that operate our plants. We rely on information technology and computer control systems in many aspects of our business, including internal and external communications, the management of our accounting, financial and supply chain functions and plant operations. Business and supply chain disruptions, plant and utility outages and information technology system and network disruptions due to cyber attacks could seriously harm our operations and materially adversely affect our operating results. Cyber security risks include attacks on information technology and infrastructure by hackers, damage or loss of information due to viruses, the unintended disclosure of confidential information, the misuse or loss of control over computer control systems, and breaches due to employee error. Our exposure to cyber security risks includes exposure through third parties on whose systems we place significant reliance for the conduct of our business. We routinely review and implement security procedures and measures in order to protect our systems and information from being vulnerable to evolving cyber attacks. We believe these measures and procedures are appropriate. However, we may not have the resources or technical sophistication to anticipate, prevent, or recover from rapidly evolving types of cyber attacks. Compromises to our information and control systems could have severe financial and other business implications.

Adverse weather conditions may decrease demand for our fertilizer products, increase the cost of natural gas or materially disrupt our operations.

Weather conditions that delay or disrupt field work during the planting, growing, harvesting or application periods may cause agricultural customers to use different forms of nitrogen fertilizer, which may adversely affect demand for the forms that we sell or may impede farmers from applying our fertilizers until the following application period, resulting in lower demand for our products.

Adverse weather conditions during or following harvest may delay or eliminate opportunities to apply fertilizer in the fall. Weather can also have an adverse effect on crop yields, which could lower the income of growers and impair their ability to purchase fertilizer from CF Industries' customers. Our quarterly financial results can vary significantly from one year to the next due to weather-related shifts in planting schedules and purchasing patterns.

Weather conditions or, in certain cases, weather forecasts, also can affect the price of natural gas, the principal raw material used to make our nitrogen fertilizer products. Colder than normal winters and warmer than normal summers increase the demand for natural gas for power generation and for residential and industrial use, which can increase the cost and/or decrease the availability of natural gas. In addition, adverse weather events such as very low temperatures leading to well freeze-offs or hurricanes affecting the Gulf of Mexico coastal states can impact the supply of natural gas and cause prices to rise.

We are subject to numerous environmental, health and safety laws, regulations and permitting requirements, as well as potential environmental liabilities, which may require us to make substantial expenditures.

We are subject to numerous environmental, health and safety laws and regulations in the United States, including laws and regulations relating to the generation and handling of hazardous substances and wastes; the cleanup of hazardous substance releases; the discharge of regulated substances to air or water; and the demolition of existing plant sites upon permanent closure. These laws include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, CERCLA, the Toxic Substances Control Act and various other federal, state and local statutes.

As a producer of nitrogen fertilizer products working with hazardous substances, our business faces risks of spills, discharges or other releases of those substances into the environment. Certain environmental laws, including CERCLA, impose joint and several liability, without regard to fault, for cleanup costs on persons who have disposed of or released hazardous substances into the environment. Given the nature of our business, we have incurred, are incurring currently, and are likely to incur periodically in the future, liabilities under CERCLA and other environmental cleanup laws at our facility, adjacent or nearby third-party facilities or offsite disposal locations. The costs associated with future cleanup activities that we may be required to conduct or finance may be material. Additionally, we may become liable to third parties for damages, including personal injury and property damage, resulting from the disposal or release of hazardous substances into the environment.

Violations of environmental, health and safety laws can result in substantial penalties, court orders to install pollution-control equipment, civil and criminal sanctions, permit revocations and facility shutdowns. Environmental, health and safety laws change regularly and have tended to become more stringent over time. As a result, we have not always been and may not always be in compliance with all environmental, health and safety laws and regulations. We may be subject to more stringent enforcement of existing or new environmental, health and safety laws in the future. Additionally, future environmental, health and safety laws and regulations or reinterpretation of current laws and regulations may require us to make substantial

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expenditures. Our costs to comply with, or any liabilities under, these laws and regulations could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

From time to time, our production of anhydrous ammonia has resulted in accidental releases that have temporarily disrupted our manufacturing operations and resulted in liability for administrative penalties and claims for personal injury. To date, our costs to resolve these liabilities have not been material. However, we could incur significant costs if our liability coverage is not sufficient to pay for all or a large part of any judgments against us, or if our insurance carrier refuses coverage for these losses.

We hold numerous environmental and other governmental permits and approvals authorizing operations at our Verdigris facility. Expansion or modification of our operations is predicated upon securing necessary environmental or other permits or approvals. A decision by a government agency to deny or delay issuing a new or renewed regulatory material permit or approval, or to revoke or substantially modify an existing permit or approval, or a determination that we have violated a law or permit as a result of a governmental inspection of our facility could have a material adverse effect on our ability to continue operations at the Verdigris facility and on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders. On October 26, 2015, the EPA released a final regulation lowering the national ambient air quality standard for ozone. Ozone attainment designations were due by October 1, 2017. In November 2017, the EPA issued a partial list of air quality regions that are in attainment with the 2015 ozone standard, but it has not yet promulgated the final list of air quality regions that will be classified as being in nonattainment with the ozone standard. These regions will be subject to more stringent permitting requirements, which in turn could make it much more difficult and expensive to obtain permits to construct new facilities or expand our existing operations.

Future regulatory restrictions on GHG emissions in the jurisdictions in which we operate could materially adversely affect our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

We are subject to GHG regulations. In the United States, our existing facility currently is only subject to GHG emissions reporting, although any new or modified facility is likely to be subject to GHG emissions standards included in their air permits. There are substantial uncertainties as to the nature, stringency and timing of any future GHG regulations. On December 12, 2015, 195 countries adopted by consensus a new international agreement known as the Paris Agreement. The Paris Agreement has been accepted by the United States and went into effect in November 2016. However, in June 2017 the United States announced its intention to withdraw from the Paris Agreement, subject to renegotiation of the Paris Agreement on terms more favorable to the United States. Under the terms of the Paris Agreement, the United States cannot formally provide notice of its withdrawal before November 2019, which would become effective one year after providing such notice. In the interim, it is unclear if the United States will comply with its commitments under the Paris Agreement. If the Paris Agreement remains in effect, it could result in more aggressive efforts to reduce GHG emissions.

More stringent GHG regulations, if they are enacted, are likely to have a significant impact on us, because our production facility emits GHGs such as carbon dioxide and nitrous oxide and because natural gas, a fossil fuel, is a primary raw material used in our nitrogen production process. Regulation of GHGs may require us to make changes in our operating activities that would increase our operating costs, reduce our efficiency, limit our output, require us to make capital improvements to our facilities, increase our costs for or limit the availability of energy, raw materials or transportation, or otherwise materially adversely affect our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders. In addition, to the extent that GHG restrictions are not imposed in countries where our competitors operate or are less stringent than regulations that may be imposed in the United States, our competitors may have cost or other competitive advantages over us.

Our operating results fluctuate due to seasonality.

The fertilizer business is seasonal. However, the sales pattern of our business can change significantly from year to year due to conditions impacting the agricultural industry and other factors. The strongest demand for fertilizer products occurs during the spring planting season, with a second period of strong demand following the fall harvest. Wholesale buyers generally build inventories during the low demand periods of the year to ensure timely product availability during the peak sales seasons. Seasonality is greatest for ammonia due to the short application season and the limited ability of our customers and their customers to store significant quantities of this product. The seasonality of fertilizer demand generally results in sales volumes and net sales being the highest during the spring and working capital requirements being the highest just prior to the start of the spring planting season.

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As a result of this seasonality, you will not be able to rely on our operating results in any particular period as an indication of our future performance. In addition, as a consequence of our seasonality, our Available Cash for distributions can be volatile, and will vary quarterly and annually.

Our business is subject to risks involving derivatives and the risk that our hedging activities might not prevent losses.

We often utilize natural gas derivatives to hedge our financial exposure to the price volatility of natural gas, the principal raw material used in the production of nitrogen-based fertilizers. We have used futures, financial swaps and option contracts traded in the over-the-counter markets or on exchanges.

Our use of derivatives can result in volatility in reported earnings due to the unrealized mark-to-market adjustments that occur from changes in the value of the derivatives that do not qualify for, or to which we do not apply, hedge accounting. To the extent that our derivative positions lose value, we may be required to post collateral with our counterparties, adversely affecting our liquidity and our ability to pay cash distributions to unitholders.

We have also used fixed-price, physical purchase and sales contracts to hedge our exposure to natural gas price volatility. Hedging arrangements are imperfect and unhedged risks will always exist. In addition, our hedging activities may themselves give rise to various risks that could adversely affect us. For example, we are exposed to counterparty credit risk when our derivatives are in a net asset position. The counterparties to our derivatives are multi-national commercial banks, major financial institutions or large energy companies. We monitor the derivative portfolio and credit quality of our counterparties and adjust the level of activity we conduct with individual counterparties as necessary. We also manage the credit risk through the use of multiple counterparties, credit limits, credit monitoring procedures, cash collateral requirements and master netting arrangements. However, our liquidity and cash available for distributions to unitholders could be negatively impacted by a counterparty default on settlement of one or more of our derivative financial instruments.

Our limited access to capital in a time of need could materially adversely impact our business.

We invest capital in our business to comply with environmental, health and safety regulations and policies, maintain our manufacturing assets, improve our production capabilities and capitalize on growth opportunities. The primary source of capital invested in our business is cash from operations. In the event that cash generated from operations is insufficient to fund capital investments, we would need to obtain additional funding in the form of loans or equity. Our ability to obtain such funding would be determined by market conditions at the time of the capital need. Our partnership structure, our reliance on a single manufacturing facility in Verdigris, Oklahoma and our reliance on affiliates of the General Partner as our only customer could impede our ability to obtain such capital, which could materially adversely impact our business, financial condition, results of operations, liquidity and ability to pay cash distributions to unitholders.

Acts of terrorism and regulations to combat terrorism could negatively affect our business.

Like other companies with major industrial facilities, we may be the target of terrorist activities. Our Verdigris facility stores significant quantities of ammonia and other materials that can be dangerous if mishandled. Any damage to infrastructure facilities, such as electric generation, transmission and distribution facilities, or injury to employees, who could be direct targets or indirect casualties of an act of terrorism, may affect our operations. Any disruption of our ability to produce or distribute our products could result in a significant decrease in revenues and significant additional costs to replace, repair or insure our assets, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

Due to concerns related to terrorism or the potential use of certain fertilizers as explosives, we are subject to various security laws and regulations. In the United States, these security laws include the Maritime Transportation Security Act of 2002 and the Chemical Facilities Anti-Terrorism Standards regulation. In addition, President Obama issued in 2013 Executive Order 13650 Improving Chemical Facility Safety and Security to improve chemical facility safety in coordination with owners and operators. Governmental entities could implement new or impose more stringent regulations affecting the security of our plants and warehouse or the transportation and use of fertilizers. These regulations could result in higher operating costs or limitations on the sale of our products and could result in significant unanticipated costs, lower revenues and reduced profit margins.

In October 2016, the Department of Homeland Security (DHS) released its new Chemical Security Assessment Tool (CSAT 2.0) surveys and enhanced risk tiering methodology. Facilities that had previously submitted a survey response to the DHS were notified to resubmit responses to online questionnaires to be evaluated through the revised and enhanced risk tiering methodology. In April 2017, the DHS began sending tiering determination letters to chemical facilities based on the new methodology. Depending on the risk classification resulting from the application of CSAT 2.0, our plants and warehouse could be subject to more stringent requirements related to chemical security.

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TERRA NITROGEN COMPANY, L.P.

We are dependent on CF Industries and its employees for the success of our business.

We are dependent on CF Industries for our success in a number of respects. CF Industries, through subsidiaries, purchases all of the production from our manufacturing facility and, together with its affiliates, provides certain services to us, including staffing, benefits, human resources administration, production planning, manufacturing management, procurement, logistics, accounting, legal, risk management, investor relations and other general and administrative services. CF Industries and its wholly-owned subsidiaries have debt and debt service requirements and we currently do not. Although CF Industries is affected by most of the factors that affect us, a higher level of debt could put CF Industries at greater risk than us in the event business conditions deteriorate materially. Our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders might be adversely affected by any financial or operational difficulties at CF Industries, including any potential default by CF Industries or its subsidiaries on their debt or any bankruptcy proceeding by CF Industries. Information regarding CF Industries can be obtained in its various filings with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Deterioration of global market and economic conditions could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay cash distributions to unitholders.

A slowdown of, or persistent weakness in, economic activity caused by a deterioration of global market and economic conditions could adversely affect our business in the following ways, among others: conditions in the credit markets could affect the ability of CF Industries' customers and their customers to obtain sufficient credit to support their operations and the failure of certain key suppliers could increase our exposure to disruptions in supply or to financial losses. We also may experience declining demand and falling prices for some of our products due to CF Industries' customers' reluctance to replenish inventories. Changes in global economic conditions can arise suddenly and the full impact of such changes can be difficult to ascertain, resulting in anxiety among market participants that can persist for protracted periods. For example, concern and uncertainty over the potential impact on the global economy of the referendum in the United Kingdom in June 2016, which resulted in a vote in favor of exting the European Union, has resulted in increased volatility in the global financial markets. The overall impact of changes in global economic conditions on us is difficult to predict, and our business could be materially adversely impacted.

In addition, conditions in the international market for nitrogen fertilizers significantly influence our operating results. The international market for fertilizers is influenced by such factors as currency exchange rates, including the relative value of the U.S. dollar and its impact upon the cost of importing of nitrogen fertilizers into the United States, foreign agricultural policies, the existence of, or changes in, import or foreign currency exchange barriers in certain foreign markets and the laws and policies of the markets in which we operate that affect foreign trade and investment.

TAX RISKS TO OUR COMMON UNITHOLDERS

TNCLP's tax treatment depends on its status as a partnership for U.S. federal income tax purposes, as well as it not being subject to a material amount of entity-level taxation by individual states. If the Internal Revenue Service were to treat TNCLP as a corporation for federal income tax purposes or if it were to become subject to a material amount of entity-level taxation for state tax purposes, then TNCLP's Available Cash would be substantially reduced.

The anticipated after-tax economic benefit of an investment in our common units depends largely on TNCLP being treated as a partnership for federal income tax purposes. To maintain TNCLP's status as a partnership for federal income tax purposes, current law requires that 90% or more of our gross income for every taxable year consist of "qualifying income," as defined in Section 7704 of the Internal Revenue Code of 1986, as amended (the Code). We have not requested, and do not plan to request, a ruling from the Internal Revenue Service (the IRS) on this or any other matter affecting us.

If TNCLP were to be treated as a corporation in any taxable year, its income, gains, losses, deductions and credits would be reflected on its tax return rather than being passed through to unitholders, and its net income would be taxed at corporate rates. In addition, distributions made to unitholders would be treated as dividend income, to the extent of current and accumulated earnings and profits, and in the absence of earnings and profits, as a nontaxable return of capital (to the extent of a unitholder's basis in his units) or as capital gain (after a unitholder's basis in his units has been reduced to zero). If the IRS were to challenge the federal income tax status of TNCLP, it could result in an audit of a unitholder's entire tax return and in adjustments to items on that return which are unrelated to the ownership of our units. In addition, each unitholder would bear the cost of any expenses incurred in connection with an examination of its personal tax return.

There can be no assurance that TNCLP will continue to satisfy the requirements for treatment as a partnership for federal income tax purposes or that the law will not be changed to make TNCLP taxable as a corporation for federal income tax purposes. If such a new law were enacted, then the Minimum Quarterly Distribution (as defined in the TNCLP Partnership

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TERRA NITROGEN COMPANY, L.P.

Agreement) and each of the target distribution levels would be adjusted downward. In such an event, the Minimum Quarterly Distribution and first, second and third target distributions for each quarter thereafter would be reduced to take into account the federal, state and local taxes applicable to TNCLP that would be imposed on the earnings used to make such distributions. For additional information regarding cash distributions, see the "Liquidity and Capital Resources" section of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, of this Annual Report on Form 10-K.

If the IRS contests the federal income tax positions we take, the market for our units may be adversely impacted and the cost of any IRS contest will reduce our Available Cash.

We have not requested a ruling from the IRS with respect to TNCLP's treatment as a partnership for federal income tax purposes or any other matter. The IRS may adopt positions that differ from the positions we take. It may be necessary to resort to administrative or court proceedings to sustain some or all of the positions we take. A court may not agree with some or all of our positions. Any contest with the IRS could materially and adversely impact the market for our units and the price at which they trade. In addition, the costs of any contest with the IRS (for tax years beginning before December 31, 2017) will be borne indirectly by our unitholders because the costs would reduce our Available Cash.

If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced.

Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us. Generally, we expect to elect to have our General Partner and our unitholders take such audit adjustment into account in accordance with their interests in the same manner as if the adjustment had originally been included into the allocable share of partnership profit or loss during the tax year under audit, but there can be no assurance that such election will be made or effective in all circumstances. If we are unable to have our General Partner and our unitholders take such audit adjustment into account in accordance with their interests in us during the tax year under audit, our current unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if such unitholders did not own units in us during the tax year under audit. If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties and interest, our cash available for distribution to our unitholders might be substantially reduced. These rules are not applicable to us for tax years beginning on or prior to December 31, 2017.

The tax treatment of publicly traded partnerships or an investment in our units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.

The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our units, may be modified by administrative, legislative or judicial interpretation at any time. On January 19, 2017, the IRS issued final regulations on the types of income and activities that constitute or generate qualifying income of a MLP. For calendar year MLPs, the effective date of the regulations is January 1, 2018. The regulations have the effect of limiting the types of income and activities that qualify under the MLP rules, subject to certain transition provisions. The regulations define the activities that generate qualifying income from certain processing or refining and transportation activities with respect to any mineral or natural resource (including fertilizer) as activities that generate qualifying income, but the regulations reserve on specifics regarding fertilizer-related activities. However, the IRS has issued two private letter rulings to taxpayers in the fertilizer industry unrelated to TNCLP (one before and one after the issuance of the final regulations) which would indicate that each taxpayer's fertilizer manufacturing activities should produce qualifying income for purposes of determining whether 90% of the partnership's gross income is qualifying income under the final regulations. The entities to which these private letter rulings were issued would appear to operate nitrogen fertilizer manufacturing businesses that are similar to ours.  While these private letter rulings provide some insight into the manner in which the IRS analyzed fertilizer manufacturing activities at the time these rulings were issued, these private letter rulings are specific to different entities. Thus, the IRS is not bound to follow them in respect of TNCLP, nor may we rely on them as precedent when determining whether we satisfy the MLP 90% gross income test. 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.

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TERRA NITROGEN COMPANY, L.P.

Our unitholders will be required to pay taxes on their share of TNCLP income even if they do not receive any cash distributions from us.

A unitholder is required to pay U.S. federal income tax and, in certain cases, state and local income taxes on its allocable share of TNCLP's income, whether or not such unitholder receives cash distributions from us. No assurance is given that our unitholders will receive cash distributions equal to their allocable share of taxable income from us.

We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of units as of the close of business on the last day of the preceding month, instead of on the basis of the date a particular unit is transferred.

We prorate our items of income and loss between transferors and transferees of our units each month based upon the ownership of our units as of the close of business on the last day of the preceding month instead of the date a particular unit is transferred. As a result of this monthly allocation, a unitholder transferring units may be allocated income, gain, loss, deduction and credit recognized after the transfer. The use of these proration methods may not be permitted under existing Treasury Regulations promulgated under the Code (Treasury Regulations). If the IRS were to challenge this method or new Treasury Regulations regarding allocation methods were issued, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders.

Tax gain or loss on disposition of our units could be more or less than expected.

If a unitholder sells its units, for income tax purposes, the unitholder will recognize a gain or loss equal to the difference between the amount realized and that unitholder's adjusted tax basis in those units. Because distributions in excess of a unitholder's allocable share of our net taxable income decrease that unitholder's tax basis in its units, the amount, if any, of such prior excess distributions with respect to the units sold will, in effect, become taxable income allocated to that unitholder if the unitholder sells such units at a price greater than that unitholder's tax basis in those units, even if the price received is less than the original cost. Furthermore, a portion of the amount realized, whether or not representing gain, may be taxed as ordinary income due to potential recapture items, including depreciation recapture. In addition, because the amount realized may include a unitholder's share of our nonrecourse liabilities, if a unitholder sells its units, such unitholder may incur a tax liability in excess of the amount of cash received from the sale.

Tax-exempt entities and non-U.S. persons face unique tax issues from owning our units that may result in adverse tax consequences to them.

Investment in our common units by tax-exempt entities, including employee benefit plans and individual retirement accounts (known as IRAs), and non-U.S. persons raises issues unique to them. For example, substantially all of our income allocated to organizations exempt from U.S. federal income tax, including IRA's, pension plans and other retirement plans and arrangements, will constitute unrelated business taxable income and may be taxable to such unitholders. Distributions to non-U.S. persons will be reduced by withholding taxes imposed at the highest applicable effective tax rate, and non-U.S. persons will be required to file U.S. federal income tax returns and pay tax on their share of our taxable income. Any tax-exempt entity or non-U.S. person should consult its tax advisor before investing in our units. Any tax-exempt entity or non-U.S. person who currently holds our units should consult with their tax advisor as to the U.S. federal and state tax consequences of their holding of our units, including the taxability of income and/or distributions to them.

We treat each purchaser of our units as having the same tax benefits without regard to the actual units purchased. The IRS may challenge this treatment, which could adversely affect the value of our units.

Because we cannot match transferors and transferees of our units and to maintain the uniformity of the economic and tax characteristics of our common units, we have adopted depreciation and amortization positions that may not conform to all aspects of existing Treasury Regulations. A successful IRS challenge to these positions could adversely affect the amount of tax benefits available to a unitholder or the value of our common units.

The sale or exchange of 50% or more of our capital and profits interests during any twelve-month period will result in a termination of TNCLP for federal income tax purposes.

TNCLP and the Operating Partnership will be considered to have constructively terminated for federal income tax purposes if there is a sale or exchange of 50% or more of the total interests in TNCLP capital and profits within a 12-month period. For purposes of determining whether the 50% threshold has been met, multiple sales of the same interest are counted only once. Because CF Industries currently owns approximately 75.1% of the outstanding common units and all of the outstanding Class B common units of TNCLP, a sale or exchange of all or a substantial portion of CF Industries' interests in TNCLP (including sales or transfers to affiliates of CF Industries), when combined with trading in the open market, may

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TERRA NITROGEN COMPANY, L.P.

constitute a sale or exchange of 50% or more of the total interest in TNCLP. A constructive termination would, among other things, result in the closing of TNCLP's taxable year for all unitholders and could result in a deferral of depreciation deductions allowable in computing our taxable income. In the case of a unitholder reporting on a taxable year other than a calendar year, the closing of a tax year of TNCLP may also result in more than twelve months of our taxable income or loss being included in such unitholder's taxable income for the year of termination. Termination could also subject us to penalties if we are unable to determine that a termination occurred and therefore failed to make necessary elections in a timely manner. IRS Code Section 708(b)(1)(B) containing this technical termination rule was repealed by the Tax Cuts and Jobs Act of 2017 effective January 1, 2018.

A unitholder whose units are loaned to a "short seller" to cover a short sale may be considered as having disposed of those units. If so, the unitholder would no longer be treated for federal income tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition.

Because a unitholder whose units are loaned to a "short seller" to cover a short sale may be considered as having disposed of the loaned units, the unitholder may no longer be treated for federal income tax purposes as a partner with respect to those units during the period of the loan, and the unitholder may recognize gain or loss from such disposition. Moreover, during the period of the loan to the short seller, any of our income, gain, loss or deduction with respect to those units may not be reportable by the unitholder and any cash distributions received by the unitholder as to those units could be fully taxable as ordinary income. Unitholders desiring to assure their status as partners should modify any applicable brokerage account agreements to prohibit their brokers from borrowing their units.

As a result of investing in our units, a unitholder may become subject to state and local taxes and return filing requirements in jurisdictions where we operate or own or acquire property.

In addition to federal income taxes, our unitholders will likely be subject to other taxes, including state and local taxes, imposed by the various jurisdictions in which we conduct business or are otherwise deemed to be taxable now or in the future, even if our unitholders do not live in any of those jurisdictions. Our unitholders may be required to file state income tax returns and pay state income taxes in some or all of these various jurisdictions. Further, our unitholders may be subject to penalties for failure to comply with such requirements.

Income allocated to our common unitholders may be subject to the 3.8% Health Care Surtax.

Beginning in 2013, for federal income tax purposes, certain investment income earned by unitholders has become subject to an additional 3.8% surtax enacted as part of the Health Care and Education Reconciliation Act of 2010 (the Health Care Surtax). Unitholders will need to take into consideration the Health Care Surtax for estimated tax purposes, as well as in the filing of their income tax returns. Gross income from a passive activity, or a trade or business of trading in financial instruments or commodities can be subject to the Health Care Surtax. A "passive activity" is defined to be a trade or business in which the taxpayer does not "materially" participate. This category could include net business income from MLPs such as TNCLP. Investors in our common units are encouraged to consult their tax advisors as to the applicability of the Health Care Surtax to their particular tax situation.

K-1 Reporting Information is dependent upon proper reporting of purchases and sales by unitholders, their representatives and/or their brokers to TNCLP.

Under applicable federal law, we are permitted and do rely on brokerage firms, investor representatives and investors to report sales and dispositions of TNCLP units to us. This information forms the basis of our tax reporting to unitholders. If an investor (or their broker) fails to timely report a purchase or disposition of a unitholder’s interest in TNCLP, the investor will receive an inaccurate Form K-1. The failure to properly report a disposition of a unitholder’s interest does not mean that a unitholder is a continuing unitholder in TNCLP, rather it means that the investor, their representative or their broker have failed to meet its reporting obligations to us. We accept no responsibility for the failure of unitholders, their representatives or their brokers to comply with their reporting obligations to us.

The Tax Cuts and Jobs Act of 2017 (Tax Reform) will require us to make determinations that may not benefit all unitholders equally and could benefit the General Partner and its affiliates.

On December 22, 2017, Tax Reform was signed into law. Tax Reform impacts the taxation of pass through entities such as TNCLP. The majority of the provisions of Tax Reform are effective as of January 1, 2018. Some of the provisions (like capital expensing) are elective and the Tax Matters Partner (which is an affiliate of the General Partner) has the right to make such elections or determinations on behalf of TNCLP. In making such an election or determination under the tax law not all unitholders may realize the same tax benefit and in some cases, an election or determination could benefit the General Partner and its affiliates.

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TERRA NITROGEN COMPANY, L.P.

FORWARD-LOOKING STATEMENTS

From time to time, in this Annual Report on Form 10-K as well as in other written reports and oral statements, we make forward-looking statements that are not statements of historical fact and may involve a number of risks and uncertainties. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our prospects, future developments and business strategies. We have used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will" or "would" and similar terms and phrases, including references to assumptions, to identify forward-looking statements in this document. These forward-looking statements are made based on currently available competitive, financial and economic data, our current expectations, estimates, forecasts and projections about the industries and markets in which we operate and management's beliefs and assumptions concerning future events affecting us. These statements are not guarantees of future performance and are subject to risks, uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Therefore, our actual results may differ materially from what is expressed in or implied by any forward-looking statements. We want to caution you not to place undue reliance on any forward-looking statements. We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this document. Additionally, we do not undertake any responsibility to provide updates regarding the occurrence of any unanticipated events which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this document.

Important factors that could cause actual results to differ materially from our expectations are disclosed under "Risk Factors" in Item 1A and elsewhere in this Annual Report on Form 10-K. Such factors include, among others:

• risks related to our partnership structure and control of the General Partner by CF Industries;

• changes in our available cash for distribution to our unitholders, due to, among other things, changes in our earnings, the amount of cash generated by our operations and the amount of cash reserves established by the General Partner for operating, capital and other requirements;

• the conflicts of interest that may be faced by the executive officers of the General Partner, who operate both us and CF Industries;

• risks related to our reliance on one production facility;

• the cyclical nature of our business and the agricultural sector;

• the global commodity nature of our fertilizer products, the impact of global supply and demand on our selling prices, and the intense global competition from other fertilizer producers;

• conditions in the U.S. agricultural industry;

• the volatility of natural gas prices in North America;

• difficulties in securing the supply and delivery of raw materials, increases in their costs or delays or interruptions in their delivery;

• reliance on third party providers of transportation services and equipment;

• the significant risks and hazards involved in producing and handling our products against which we may not be fully insured;

• risks associated with cyber security;

• weather conditions;

• potential liabilities and expenditures related to environmental, health and safety laws and regulations and permitting requirements;

• future regulatory restrictions and requirements related to greenhouse gas emissions;

• the seasonality of the fertilizer business;

• risks involving derivatives and the effectiveness of our risk measurement and hedging activities;

• limited access to capital;

• acts of terrorism and regulations to combat terrorism;

• risks related to our dependence on and relationships with CF Industries;

• deterioration of global market and economic conditions; and

• tax risks to our common unitholders and changes in our treatment as a partnership for U.S. or state income tax purposes.

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TERRA NITROGEN COMPANY, L.P.

ITEM 1B.    UNRESOLVED STAFF COMMENTS.

None.

ITEM 2.    PROPERTIES.

Information regarding our Verdigris, Oklahoma facility is included in Item 1. Business—Our Products and —Our Facilities.

ITEM 3.    LEGAL PROCEEDINGS.

From time to time, we may be involved in claims, disputes, administrative proceedings and litigation arising in the ordinary course of business. Based on the information available as of the date of this filing, we do not believe that the matters in which the Partnership may be currently involved, either individually or in the aggregate, will have a material adverse effect on our business, financial condition, results of operations or cash flows.

ITEM 4.    MINE SAFETY DISCLOSURES.

Not applicable.

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TERRA NITROGEN COMPANY, L.P.

Part II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

TNCLP's common units are traded on the New York Stock Exchange (NYSE) under the symbol "TNH". There is no public trading market with respect to TNCLP's Class B common units. The table below discloses the high and low sales prices of the common units for each quarterly period for 2017 and 2016, as reported on the NYSE Composite Price History.

	2017				2016
Quarter	High		Low		High		Low
1st	$	115.86	$	91.07	$	114.99	$	84.12
2nd	98.29		80.50		127.00		99.55
3rd	88.57		75.20		122.00		104.88
4th	89.60		76.18		113.35		95.92

Ownership of TNCLP is composed of the general partner interest and the limited partner interests. The general partner interest in TNCLP is represented by 4,720 general partner units. The Limited Partners' interests consist of 18,501,576 common units and 184,072 Class B common units. CF Industries through its subsidiaries owned 13,889,014 common units and all of the Class B common units as of December 31, 2017. Based on information received from TNCLP's transfer and service agent, the number of registered unitholders as of February 15, 2018 was 81.

On February 7, 2018, TNCLP announced that, in accordance with Section 17.1 of the TNCLP Partnership Agreement, TNGP elected to exercise the right, assigned to TNGP by TNCLP, to purchase all of the issued and outstanding common units representing limited partner interests in TNCLP not already owned by TNGP or its affiliates (the Public Units).

 TNGP will purchase the Public Units on April 2, 2018 for a cash purchase price of $84.033 per Public Unit. The purchase price was determined in accordance with Section 17.1 of the TNCLP Partnership Agreement.

 As of April 2, 2018, all rights of the holders of the Public Units will cease, except for the right to receive payment of the purchase price. Upon completion of the purchase on April 2, 2018, TNGP will own 100 percent of the Public Units and will be entitled to all of the benefits resulting from the Public Units. In addition, upon completion of the purchase, the common units representing limited partner interests in TNCLP will cease to be publicly traded or listed on the NYSE.

Under the TNCLP Partnership Agreement, cash distributions to unitholders are based on Available Cash for the quarter as defined therein. 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. For additional information regarding cash distributions, see the "Liquidity and Capital Resources" section of Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of this Annual Report on Form 10-K.

On February 7, 2018, we announced a cash distribution of $2.03 per common unit, payable on February 28, 2018 to holders of record as of February 16, 2018. As a result of TNGP’s exercise of the right to purchase the Public Units, there will be no further cash distributions on the common units after the distribution payable February 28, 2018.

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TERRA NITROGEN COMPANY, L.P.

The quarterly cash distributions to the unitholders and the General Partner declared to date in 2018 and during 2017 and 2016 are as follows:

Distribution		Common Units				Class B Common Units				General Partner		Total Distributions Declared
Declared in	Related to	Total		Per unit		Total		Per unit		Total
		(in millions, except per unit amounts)
First Quarter 2018	Fourth Quarter 2017	$	37.6	$	2.03	$	0.6	$	3.10	$	20.4	$	58.6
First Quarter 2017	Fourth Quarter 2016	$	22.6	$	1.22	$	0.3	$	1.52	$	5.7	$	28.6
Second Quarter 2017	First Quarter 2017	17.9		0.97		0.2		1.04		1.4		19.5
Third Quarter 2017	Second Quarter 2017	29.6		1.60		0.4		2.26		12.7		42.7
Fourth Quarter 2017	Third Quarter 2017	25.2		1.36		0.3		1.79		8.3		33.8
First Quarter 2016	Fourth Quarter 2015	$	53.3	$	2.88	$	0.9	$	4.78	$	36.0	$	90.2
Second Quarter 2016	First Quarter 2016	28.0		1.51		0.4		2.09		11.1		39.5
Third Quarter 2016	Second Quarter 2016	47.7		2.58		0.7		4.17		30.4		78.8
Fourth Quarter 2016	Third Quarter 2016	32.7		1.77		0.5		2.60		15.8		49.0

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TERRA NITROGEN COMPANY, L.P.

ITEM 6.    SELECTED FINANCIAL DATA.

The following selected historical financial data as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015 have been derived from our audited consolidated financial statements and related notes included elsewhere in this document. The following selected historical financial data as of December 31, 2015, 2014 and 2013 and for the years ended December 31, 2014 and 2013 have been derived from our consolidated financial statements. The selected financial data should be read in conjunction with Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, and Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

	Year ended December 31,
	2017		2016		2015		2014		2013
	(in millions, except per unit data)
Income Statement Data:
Net sales	$	397.2	$	418.3	$	581.7	$	648.3	$	736.2
Gross margin	156.7		226.8		325.8		386.7		519.8
Net earnings	153.9		209.3		306.9		370.0		502.4
Net earnings per common unit	5.93		7.56		10.06		12.07		15.77
Partnership Distributions Paid:
Limited Partner, common units	$	95.3	$	161.7	$	180.4	$	185.1	$	265.6
Limited Partner, Class B common units	1.2		2.5		2.9		2.9		4.6
General Partner interest	28.1		93.3		111.5		116.1		195.0
Total partnership distributions	$	124.6	$	257.5	$	294.8	$	304.1	$	465.2
Distributions Paid Per Common Unit	$	5.15	$	8.74	$	9.75	$	10.00	$	14.35

	December 31,
	2017		2016		2015		2014		2013
	(in millions)
Balance Sheet Data:
Total assets	$	403.9	$	373.3	$	443.7	$	415.8	$	349.8
Total partners' capital	368.1		338.8		387.0		374.9		309.0

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TERRA NITROGEN COMPANY, L.P.

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Recent Development—Exercise of Call Right

On February 7, 2018, Terra Nitrogen Company, L.P. ("TNCLP," "we," "our" or "us") announced that, in accordance with Section 17.1 of TNCLP’s First Amended and Restated Agreement of Limited Partnership, as amended (the TNCLP Partnership Agreement), Terra Nitrogen GP Inc., a Delaware corporation and the general partner of TNCLP ("TNGP" or the "General Partner"), elected to exercise the right, assigned to TNGP by TNCLP, to purchase all of the issued and outstanding common units representing limited partner interests in TNCLP not already owned by TNGP or its affiliates (the Public Units).

 TNGP will purchase the Public Units on April 2, 2018 for a cash purchase price of $84.033 per Public Unit. The purchase price was determined in accordance with Section 17.1 of the TNCLP Partnership Agreement.

 As of April 2, 2018, all rights of the holders of the Public Units will cease, except for the right to receive payment of the purchase price. Upon completion of the purchase on April 2, 2018, TNGP will own 100 percent of the Public Units and will be entitled to all of the benefits resulting from the Public Units. In addition, upon completion of the purchase, the common units representing limited partner interests in TNCLP will cease to be publicly traded or listed on the New York Stock Exchange (NYSE).

You should read the following discussion and analysis in conjunction with the consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Data. Notes referenced in this discussion and analysis refer to the notes to consolidated financial statements that are found in Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements. Unless otherwise stated, our production and sales volume refer to product tons, which represents the weight of the product measured in short tons (one short ton is equal to 2,000 pounds). The following is an outline of the discussion and analysis included herein:

• Company Overview;

• Nitrogen Fertilizer Market Conditions;

• Results of Operations;

• Liquidity and Capital Resources;

• Off-Balance Sheet Arrangements and Contractual Obligations;

• Application of Critical Accounting Policies and Estimates; and

• Recent Accounting Pronouncements.

Company Overview

TNCLP is a Delaware limited partnership that produces nitrogen fertilizer products. Our principal products are anhydrous ammonia (ammonia) and urea ammonium nitrate solution (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). We own a 99% limited partner interest in the Operating Partnership, and Terra LP Holdings LLC (TLPH), an affiliate of the General Partner, owns a 0.975% limited partner interest. Terra Nitrogen GP Inc. (TNGP or the General Partner), a Delaware corporation, is the general partner of both TNCLP and TNLP and owns a 0.025% general partner interest in each of TNCLP and TNLP. The General Partner is an indirect, wholly owned subsidiary of CF Industries Holdings, Inc. (CF Industries), a Delaware corporation. Throughout this document, the term "affiliates of the General Partner" refers to consolidated subsidiaries of CF Industries, including TNGP. Ownership of TNCLP is composed of the general partner interest and the limited partner interests. The general partner interest in TNCLP is represented by 4,720 general partner units. 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 December 31, 2017, 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 75.1% of the total outstanding common units) and all of the Class B common units as of December 31, 2017.

CF Industries, through its subsidiaries, is a global leader in the manufacturing and distribution of nitrogen products, serving both agricultural and industrial customers. CF Industries operates world-class nitrogen manufacturing complexes in the

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United States, Canada and the United Kingdom and distributes plant nutrients through a system of terminals, warehouses, and associated transportation equipment located primarily in the midwestern United States.

We are dependent on CF Industries for our success in a number of respects. TNCLP and TNGP have no employees. Pursuant to the Amendment to the General and Administrative Services and Product Offtake Agreement (the Services and Offtake Agreement), which is accounted for as an operating lease, the Partnership sells all of its nitrogen fertilizer products to affiliates of the General Partner at prices based on market prices for the Partnership's nitrogen fertilizer products. Also, pursuant to the Services and Offtake Agreement, selling prices are determined monthly and are equal to the volume weighted average net invoice price for third party sales (that is, sales by the affiliates of the General Partner to their customers) of product during each month. These selling prices are reduced by any freight or other transportation charges and incentives paid by the affiliates of the General Partner. Title and risk of loss transfer to affiliates of the General Partner as the product is shipped from the plant gate. Affiliates of the General Partner provide certain services to us under the Services and Offtake Agreement, including production planning, manufacturing management, logistics, procurement, accounting, legal, risk management, investor relations and other general and administrative services. For further information regarding our agreements with CF Industries and the General Partner, see Notes to the Consolidated Financial Statements, Note 10—Related Party Transactions.

Nitrogen Fertilizer Market Conditions

Our products are global commodities and are subject to price competition. The customers for our products make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, on customer service and product quality. The selling prices of our products fluctuate in response to global market conditions and changes in supply and demand.

Historically, global fertilizer demand has been driven primarily by population growth, gross domestic product growth, changes in dietary habits, planted acreage, and application rates, among other things. We expect these key variables to continue to have major impacts on long-term fertilizer demand for the foreseeable future. Short-term fertilizer demand growth may depend on global economic conditions, weather patterns, the level of global grain stocks relative to consumption, governmental regulations, including fertilizer subsidies or requirements mandating increased use of bio-fuels or industrial nitrogen products, and farm sector income. Supply of fertilizers is generally driven by available capacity and operating rates, raw material costs and availability, government policies, global trade, and supply costs for raw materials such as natural gas or coal. The economics of nitrogen-based fertilizer manufacturing play a key role in decisions to increase or reduce fertilizer production capacity.

Over the last decade, strong demand, high capacity utilization and increasing operating margins as a result of higher global nitrogen fertilizer prices stimulated global investment in nitrogen production facilities, which resulted in an increase in global nitrogen fertilizer production capacity. As a result, global nitrogen fertilizer supply increased faster than global nitrogen fertilizer demand, creating the current global oversupply in the market, and leading to lower nitrogen fertilizer selling prices.

A significant amount of new nitrogen production capacity came on line in 2016 and 2017, including an increase in production capacity located in North America. This new nitrogen production capacity includes the capacity expansion projects that were completed in 2016 by affiliates of our General Partner. The new nitrogen production capacity has further increased supply. We expect the lower priced environment to continue until global supply and demand become more balanced through a combination of continued demand growth and supply reductions as producers respond to lower realized margins by taking higher cost production facilities off line.

The significant price fluctuations we have experienced in 2017 are symptoms of a market in transition as new capacity comes fully on line and global trade flows adjust, and this transition is not complete. We expect another set of capacity additions to come fully on line by mid-2018. Should imports of nitrogen fertilizer products into the United States continue, and not fully take this additional capacity into account, we could see a decline in pricing or potentially experience lower prices than those we saw in the spring and summer of 2017. However, after this set of global capacity additions is on line, we expect global demand growth to exceed new capacity growth and set the stage for a more stable nitrogen price environment.

The greater global nitrogen supply availability and resulting low nitrogen fertilizer selling prices significantly impacted our results for the years ended December 31, 2017 and 2016. Our average selling prices for ammonia and UAN in 2017 declined by 20% and 12%, respectively, as compared to 2016, which reduced both our net sales and gross margin in 2017 by $68.3 million. Our average selling prices for ammonia and UAN in 2016 declined by 32% and 29%, respectively, as compared to 2015, which reduced both our net sales and gross margin in 2016 by $178.5 million.

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Results of Operations

We reported net earnings of $153.9 million in 2017 on net sales of $397.2 million compared with 2016 net earnings of $209.3 million on net sales of $418.3 million. Net earnings per common unit in 2017 were $5.93 compared with $7.56 in 2016.

The following table shows our results of operations for the years ended December 31, 2017, 2016 and 2015:

	Year ended December 31,									2017 vs. 2016					2016 vs. 2015
	2017			2016			2015			Change			Percent		Change			Percent
	(in millions, except as noted)
Net sales	$	397.2		$	418.3		$	581.7		$	(21.1	)	(5	)%	$	(163.4	)	(28	)%
Cost of goods sold	240.5			191.5			255.9			49.0			26	%	(64.4		)	(25	)%
Gross margin	156.7			226.8			325.8			(70.1		)	(31	)%	(99.0		)	(30	)%
Gross margin percentage	39.5		%	54.2		%	56.0		%	(14.7		)%			(1.8		)%
Selling, general and administrative expenses	17.6			17.6			18.9			—			—	%	(1.3		)	(7	)%
Gain on sale of equity method investment	(14.3		)	—			—			(14.3		)	N/M		—			—	%
Earnings from operations	153.4			209.2			306.9			(55.8		)	(27	)%	(97.7		)	(32	)%
Interest income	0.5			0.1			—			0.4			N/M		0.1			N/M
Net earnings	$	153.9		$	209.3		$	306.9		$	(55.4	)	(26	)%	$	(97.6	)	(32	)%
Net earnings allocable to common units	$	109.8		$	139.9		$	186.2		$	(30.1	)	(22	)%	$	(46.3	)	(25	)%
Net earnings per common unit (dollars per common unit)	$	5.93		$	7.56		$	10.06		$	(1.63	)	(22	)%	$	(2.50	)	(25	)%
Sales volume (tons in thousands):
Ammonia	480			409			418			71			17	%	(9		)	(2	)%
UAN(1)	1,909			1,759			1,668			150			9	%	91			5	%
Total	2,389			2,168			2,086			221			10	%	82			4	%
Average selling prices (dollars per ton):
Ammonia	$	258		$	323		$	477		$	(65	)	(20	)%	$	(154	)	(32	)%
UAN(1)	$	142		$	162		$	227		$	(20	)	(12	)%	$	(65	)	(29	)%
Cost of natural gas (dollars per MMBtu):
Purchased natural gas costs(2)	$	2.71		$	2.32		$	2.49		$	0.39		17	%	$	(0.17	)	(7	)%
Realized derivatives loss(3)	0.07			0.40			0.26			(0.33		)	(83	)%	0.14			54	%
Cost of natural gas	$	2.78		$	2.72		$	2.75		$	0.06		2	%	$	(0.03	)	(1	)%
Production volume by product (tons in thousands):
Ammonia(4)	1,241			1,126			1,109			115			10	%	17			2	%
UAN(1)	1,906			1,739			1,688			167			10	%	51			3	%

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N/M - Not Meaningful

⁽¹⁾  The nitrogen content of UAN is 32% by weight.

⁽²⁾  Represents the cost of natural gas purchased during the period for use in production.

⁽³⁾  Represents realized gains and losses on natural gas derivatives settled during the period. Excludes unrealized mark-to-market gains and losses on natural gas derivatives.

⁽⁴⁾  Gross ammonia production, including amounts subsequently upgraded on-site into UAN.

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Year ended December 31, 2017 Compared to Year ended December 31, 2016

In the first quarter of 2016, we experienced an unplanned outage for maintenance on one of the facility’s two ammonia plants, resulting in approximately one-half of the complex's ammonia capacity being shut down for approximately two months, and approximately one-half of the complex's UAN capacity being shut down for approximately one month. Maintenance was completed and the affected ammonia plant was restarted in March 2016. This turnaround reduced production in the year ended December 31, 2016.

Our net sales in 2017 were $397.2 million, a decrease of $21.1 million, or 5%, from net sales of $418.3 million in 2016. The decrease was due to a 14%decline in average selling prices in 2017 versus 2016, which reduced net sales by $68.3 million. Partially offsetting this decline was a 10%increase in sales volume in 2017 versus 2016, which increased net sales by $47.2 million.

UAN average selling prices declined by 12% from $162 per ton in 2016 to $142 per ton in 2017, which reduced net sales by $36.8 million, due to greater global nitrogen supply availability. UAN sales volume increased by 9% in 2017 to 1,909,000 tons from 1,759,000 tons in 2016, which increased net sales by $24.2 million, due to greater supply availability from increased production in 2017 compared to 2016 as a result of the unplanned outage in 2016.

Ammonia average selling prices declined by 20% from $323 per ton in 2016 to $258 per ton in 2017, which reduced net sales by $31.5 million, due to greater global nitrogen supply availability. Ammonia sales volume increased by 17% in 2017 to 480,000 tons from 409,000 tons in 2016, which increased net sales by $23.0 million, due to greater supply availability from increased production in 2017 compared to 2016 as a result of the unplanned outage in 2016 and an improved fall application season in 2017 compared to 2016.

The following table shows the components of cost of goods sold and the average cost of goods sold per ton for the years ended December 31, 2017 and 2016:

	Year ended December 31,
	2017		2016			2017 vs. 2016
	(in millions, except per ton amounts)
Realized natural gas costs	$	121.6	$	111.2		$	10.4		9	%
Unrealized mark-to-market loss (gain) on natural gas derivatives	10.6		(35.3		)	45.9			N/M
Payroll-related expenses	27.9		27.9			—			—	%
Other	80.4		87.7			(7.3		)	(8	)%
Total cost of goods sold	$	240.5	$	191.5		$	49.0		26	%
Average cost of goods sold per ton	$	101	$	88		$	13		15	%

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N/M - Not Meaningful

The average cost of goods sold per ton increased to $101 per ton in 2017 from $88 per ton in 2016. The 15%increase in the average cost of goods sold per ton was due primarily to the change in value of our natural gas derivatives and the unrealized net mark-to-market changed to a loss of $10.6 million in 2017 from a gain of $35.3 million in 2016. Additionally, there was an increase in realized natural gas costs due to higher natural gas prices in 2017 as compared to 2016. These factors were partially offset by higher sales volume in 2017 and the non-recurrence of idle plant costs incurred as a result of the unplanned outage in 2016 as shown in the line titled Other in the table above.

Our gross margin was $156.7 million in 2017 compared to $226.8 million in 2016. Gross margin decreased31% compared to the prior year due primarily to lower average selling prices, an unrealized net mark-to-market loss on natural gas derivatives in 2017 compared to a gain in the same period in 2016 and higher realized natural gas costs, partially offset by higher sales volume and the non-recurrence of idle plant costs incurred in 2016 as a result of the unplanned outage. Gross margin as a percentage of sales decreased to 39.5% in 2017 from 54.2% in 2016.

Our net earnings were $153.9 million in 2017, a decrease of $55.4 million, or 26%, as compared to $209.3 million in 2016. Net earnings decreased due to the lower gross margin discussed above, and were partially offset by a gain of $14.3 million related to the sale of our 50% interest in Oklahoma CO2 Partnership (OKCO2), a joint venture that owns a carbon dioxide liquefaction and purification facility, in the fourth quarter of 2017.

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Year ended December 31, 2016 Compared to Year ended December 31, 2015

Our production and sales volume in 2016 was impacted by an unplanned outage, while in 2015 our production and sales volume was impacted by a scheduled turnaround. In the first quarter of 2016, we experienced an unplanned outage for maintenance on one of the Verdigris nitrogen complex’s two ammonia plants, resulting in approximately one-half of the complex's ammonia capacity being shut down for approximately two months, and approximately one-half of the complex's UAN capacity being shut down for approximately one month. Maintenance was completed and the affected ammonia plant was restarted in March 2016. In the first quarter of 2015, we commenced planned turnarounds of an ammonia plant and a UAN plant, together representing approximately one-half of the production capacity of the Verdigris nitrogen complex. The ammonia plant turnaround was completed in the first quarter of 2015 and the UAN plant turnaround, including certain follow-on maintenance, was completed in the second quarter of 2015. The net impact of these actions was marginally higher production in 2016, which contributed to higher sales volume for UAN.

Our net sales in 2016 were $418.3 million, a decrease of $163.4 million, or 28%, from net sales of $581.7 million in 2015. This decrease was due to a 31%decline in average selling prices, which reduced net sales by $178.5 million. Partially offsetting this decline was a 4%increase in sales volume in 2016 compared to 2015, which increased net sales by $15.1 million.

UAN average selling prices declined by 29% from $227 per ton in 2015 to $162 per ton in 2016, which reduced net sales by $115.5 million, due to the global fertilizer oversupply for all nitrogen fertilizer products. UAN sales volume increased by 5% to 1,759,000 tons in 2016 from 1,668,000 tons in 2015, which increased net sales by $19.4 million, due to increased UAN production.

Ammonia average selling prices declined by 32% from $477 per ton in 2015 to $323 per ton in 2016, which reduced net sales by $63.0 million. The decrease in ammonia selling prices was due to the global fertilizer oversupply for all nitrogen fertilizer products. Ammonia sales volume declined by 2% in 2016 to 409,000 from 418,000 tons in 2015, which reduced net sales by $4.3 million. The decrease in ammonia sales volume was a result of unfavorable weather and economic considerations, including declining year-over-year farmer disposable income and futures prices favoring soybeans over corn, which led many farmers to delay fertilizer and planting decisions until spring 2017.

The following table shows the components of cost of goods sold and the average cost of goods sold per ton for the years ended December 31, 2016 and 2015:

	Year ended December 31,
	2016			2015		2016 vs. 2015
	(in millions, except per ton amounts)
Realized natural gas costs	$	111.2		$	108.8	$	2.4		2	%
Unrealized mark-to-market (gain) loss on natural gas derivatives	(35.3		)	23.1		(58.4		)	N/M
Payroll-related expenses	27.9			27.9		—			—	%
Other	87.7			96.1		(8.4		)	(9	)%
Total cost of goods sold	$	191.5		$	255.9	$	(64.4	)	(25	)%
Average cost of goods sold per ton	$	88		$	123	$	(35	)	(28	)%

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N/M - Not Meaningful

The average cost of goods sold per ton decreased to $88 per ton in 2016 from $123 per ton in 2015. The 28%decrease in the average cost of goods sold per ton was due primarily to an unrealized net mark-to-market gain on natural gas derivatives of $35.3 million in 2016 compared to an unrealized net mark-to-market loss on natural gas derivatives of $23.1 million in 2015, as well as lower idle plant costs, which are shown in the Other line in the table above, due to the turnarounds that occurred in the first half of 2015.

Our gross margin was $226.8 million in 2016 compared to $325.8 million in 2015. Gross margin decreased 30% compared to the prior year due primarily to lower average selling prices partially offset by an unrealized net mark-to-market gain on natural gas derivatives and, to a lesser extent, higher UAN sales volume in 2016 compared to 2015. Gross margin as a percentage of sales decreased to 54.2% in 2016 from 56.0% in 2015.

Total selling, general, and administrative expenses, including other general and administrative expenses, were $17.6 million in 2016 compared to $18.9 million in 2015. The decline was due primarily to lower losses on the disposal of property, plant, and equipment during 2016 compared to 2015.

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Our net earnings were $209.3 million in 2016, a decrease of $97.6 million, or 32%, as compared to $306.9 million in 2015. Net earnings decreased due to the lower gross margin, as discussed above.

Liquidity and Capital Resources

Our principal funding needs and uses of cash are working capital, plant turnaround costs, capital expenditures, and quarterly distributions. Our cash and cash equivalents balance as of December 31, 2017 was $81.5 million, an increase of $42.0 million from the balance of $39.5 million as of December 31, 2016. Our cash and cash equivalents consist primarily of money market mutual funds that invest in U.S. treasuries and direct investments in U.S. treasuries with original maturities of three months or less.

Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities for each of the past three fiscal years:

	Year Ended December 31,
	2017			2016			2015
	(in millions)
Total cash provided by (used in):
Operating activities	$	177.5		$	223.5		$	375.1
Investing activities	(10.9		)	(32.9		)	(86.9		)
Financing activities	(124.6		)	(257.5		)	(294.8		)
Increase (decrease) in cash and cash equivalents	$	42.0		$	(66.9	)	$	(6.6	)

Operating Activities

Net cash provided by operating activities was $177.5 million in 2017 compared to $223.5 million in 2016 and $375.1 million in 2015. The $46.0 milliondecline in 2017 and the $151.6 million decline in 2016 were due primarily to lower profitability as a result of greater global nitrogen supply availability. Also contributing to the decline in 2017 compared to 2016 was a higher amount of cash invested in working capital, primarily as a result of an increase in the receivables due from affiliates of our General Partner as a result of higher selling prices at the end of 2017 compared to 2016.

Investing Activities

Net cash used in investing activities was $10.9 million in 2017 compared to $32.9 million in 2016 and $86.9 million in 2015. The $22.0 milliondecrease in 2017 in cash used in investing activities from 2016 was due to lower capital expenditures in 2017 due to the unplanned outage for maintenance in the first quarter of 2016 as well as proceeds of $16.3 million from the sale of our 50% joint venture interest in OKCO2. Cash used in investing activities decreased by $54.0 million in 2016 from 2015 due to higher capital expenditures in 2015 due to planned plant turnaround activities in 2015. Additions to property, plant and equipment were $27.2 million, $33.1 million and $87.8 million in 2017, 2016 and 2015, respectively. See further discussion under "Capital Expenditures."

Financing Activities

Net cash used in financing activities was $124.6 million in 2017 compared to $257.5 million in 2016 and $294.8 million in 2015, and consists of distributions paid to our unitholders. The $132.9 milliondecrease in distributions paid to our unitholders in 2017 compared to 2016, and the $37.3 milliondecrease in distributions paid to our unitholders in 2016 compared to 2015, were both primarily driven by lower net earnings. The distributions are paid based on Available Cash, as defined in the TNCLP Partnership Agreement. For additional information on distributions, see "Partnership Distributions" and Note 4—Agreement of Limited Partnership.

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Capital Expenditures

Capital expenditures totaled $27.2 million in 2017 compared to $33.1 million in 2016. Capital expenditures are made to sustain our asset base, to increase capacity, to improve plant efficiency and to comply with various environmental, health and safety requirements. Due to the size, scope and timing of capital projects, certain projects require more than a year to complete.

In 2018, we expect to make capital expenditures in the range of $65 million to $75 million. Planned maintenance, capital expenditures and turnarounds are subject to change due to delays in regulatory approvals and/or permitting, unanticipated increases in cost, changes in scope and completion time, performance of third parties, delay in the receipt of equipment, adverse weather, defects in materials and workmanship, labor or material shortages, transportation constraints and other unforeseen difficulties. We anticipate a planned turnaround of one-half of our Verdigris nitrogen complex will occur in the third quarter of 2018 and will cost approximately $38 million. We had previously estimated that this turnaround would occur in late 2017 or early 2018, but the turnaround was delayed due to a delay in receiving certain critical equipment. The turnaround will result in lower ammonia and UAN production, lower sales and lower profitability during the period of the turnaround.

General Partner

The General Partner is an indirect, wholly owned subsidiary of CF Industries. Under the General Partner’s governing documents, neither we nor the General Partner may make any bankruptcy filing (or take similar action) without the approval of at least two of the General Partner’s independent directors, except in specified circumstances if there are not two independent directors on the General Partner's Board of Directors (the TNGP Board of Directors).

Partnership Distributions

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 the TNCLP Partnership Agreement. 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 increases in the amount of cash invested in working capital items (such as increases in receivables or 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 years ended December 31, 2017, 2016 and 2015, we declared and paid partnership distributions of $124.6 million, $257.5 million and $294.8 million, respectively.

We receive 99% of the Operating Partnership's Available Cash (as defined in the Operating Partnership's agreement of limited partnership) and 1% of the Operating Partnership's Available Cash is distributed by the Operating Partnership to the General Partner and its affiliate, TLPH. Distributions recognized by the Operating Partnership with respect to the General Partner and TLPH were $1.2 million, $2.6 million and $2.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Pursuant to the TNCLP Partnership Agreement, distributions of our Available Cash are made 99.975% to common and Class B common unitholders and 0.025% to the General Partner except that the General Partner is entitled, as an incentive, to a larger percentage of our distribution of Available Cash to the extent that cumulative distributions of Available Cash exceed specified target levels above the Minimum Quarterly Distributions (MQD) of $0.605 per unit. The General Partner has assigned its right to receive such incentive distributions to an affiliate of the General Partner.

On February 7, 2018, we announced a cash distribution of $2.03 per common unit, payable on February 28, 2018 to holders of record as of February 16, 2018. As a result of TNGP’s exercise of the right to purchase the Public Units, there will be no further cash distributions on the common units after the distribution payable February 28, 2018.

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In the fourth quarter of 2017, we exceeded the cumulative MQD amounts and will distribute Available Cash as summarized in the following table:

	Quarterly Income and Distribution Allocation
	Target Limit (per unit)		Target Increment (per unit)		Distribution Threshold (in millions) (1)		Common Units		Class B Common Units		General Partner (2)		Total
Minimum Quarterly Distributions	$	0.605	$	0.605	$	11.3	98.990	%	0.985	%	0.025	%	100	%
First Target	0.715		0.110		13.4		98.990	%	0.985	%	0.025	%	100	%
Second Target	0.825		0.110		15.4		85.859	%	0.985	%	13.156	%	100	%
Third Target	1.045		0.220		19.5		75.758	%	0.985	%	23.257	%	100	%
Final Target and Beyond	>1.045		—		> 19.5		50.505	%	0.985	%	48.510	%	100	%

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⁽¹⁾  The Distribution Threshold represents the cumulative amount of Available Cash necessary to distribute the Target Limit per unit, as shown in the table above, to all unitholders and the General Partner based on the number of units outstanding as of December 31, 2017.

⁽²⁾  Reflects Minimum Quarterly Distributions and incentive distributions to the General Partner.  The General Partner has assigned its right to incentive distributions to an affiliate of the General Partner.

General Partner Option to Effect Mandatory Redemption of Partnership Units

At December 31, 2017, the General Partner and its affiliates owned approximately 75.1% of our outstanding common units. When not more than 25% of the issued and outstanding common units are held by persons other than the General Partner and its affiliates (collectively, non-affiliated persons), as was the case at December 31, 2017, 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 common units held by non-affiliated persons.

On February 7, 2018, TNCLP announced that, in accordance with Section 17.1 of the TNCLP Partnership Agreement, TNGP elected to exercise the right, assigned to TNGP by TNCLP, to purchase all of the issued and outstanding common units representing limited partner interests in TNCLP not already owned by TNGP or its affiliates (the Public Units).

TNGP will purchase the Public Units on April 2, 2018 for a cash purchase price of $84.033 per Public Unit. The purchase price was determined in accordance with Section 17.1 of the TNCLP Partnership Agreement as the average of the daily closing prices per common unit for the 20 consecutive trading days beginning with January 5, 2018 and ending with February 2, 2018.

As of April 2, 2018, all rights of the holders of the Public Units will cease, except for the right to receive payment of the purchase price. Upon completion of the purchase on April 2, 2018, TNGP will own 100 percent of the Public Units and will be entitled to all of the benefits resulting from the Public Units. In addition, upon completion of the purchase, the common units representing limited partner interests in TNCLP will cease to be publicly traded or listed on the NYSE.

Cash Transactions with Affiliates

We receive cash and make expenditures directly from our cash accounts. Because we sell our products to and receive labor and other services from affiliates of the General Partner, the affiliates of the General Partner continue to be both debtors and creditors to us.

Derivatives

We purchase natural gas at market prices to meet production requirements at our manufacturing facility. Natural gas prices are volatile, and CF Industries' natural gas acquisition policy allows us to establish derivative positions that are associated with anticipated natural gas requirements. The derivatives that we use are primarily natural gas fixed price swaps and options traded in the over-the-counter markets.

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 derivatives involve the risk of dealing with counterparties and their ability to meet the terms of the contracts. The counterparties to our natural gas derivatives are multinational commercial banks, other major financial institutions and large energy companies. For derivatives that are in net asset positions, we are exposed to credit loss from nonperformance by the counterparties. Credit risk is controlled through the use of multiple counterparties, credit limits, credit monitoring procedures, cash collateral requirements and master netting arrangements.

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Internal Revenue Service Regulations Impacting Master Limited Partnerships

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 January 19, 2017, the Internal Revenue Service (IRS) issued final regulations on the types of income and activities that constitute or generate qualifying income of a MLP. For calendar year MLPs, the effective date of the regulations is January 1, 2018. The regulations have the effect of limiting the types of income and activities that qualify under the MLP rules, subject to certain transition provisions. The regulations define the activities that generate qualifying income from certain processing or refining and transportation activities with respect to any mineral or natural resource (including fertilizer) as activities that generate qualifying income, but the regulations reserve on specifics regarding fertilizer-related activities. However, the IRS has issued two private letter rulings to taxpayers in the fertilizer industry unrelated to TNCLP (one before and one after the issuance of the final regulations) which would indicate that each taxpayer's fertilizer manufacturing activities should produce qualifying income for purposes of determining whether 90% of the partnership's gross income is qualifying income under the final regulations. The entities to which these private letter rulings were issued would appear to operate nitrogen fertilizer manufacturing businesses that are similar to ours. While these private letter rulings provide some insight into the manner in which the IRS analyzed fertilizer manufacturing activities at the time these rulings were issued, these private letter rulings are specific to different entities. Thus, the IRS is not bound to follow them in respect of TNCLP, nor may we rely on them as precedent when determining whether we satisfy the MLP 90% gross income test. 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.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law, which among other provisions allows individual taxpayers to deduct 20% of domestic qualified business income (QBI) from a partnership subject to certain limitations and thresholds. This provision is effective for tax years beginning after December 31, 2017 and before January 1, 2026. Partnerships are required to report to their investors their eligible share of QBI. We intend to report this information to our investors. The determination as to whether an investor is entitled to this benefit is an investor level decision.

Off-Balance Sheet Arrangements and Contractual Obligations

We have operating leases that are off-balance sheet arrangements. Contractual obligations and commitments to make future payments were as follows as of December 31, 2017:

	Payments Due by Period
	2018		2019		2020		2021		2022		Thereafter		Total
	(in millions)
Operating leases	$	0.2	$	0.2	$	—	$	—	$	—	$	—	$	0.4
Equipment purchases and plant improvements	13.4		—		—		—		—		—		13.4
Purchase obligations(1)	31.6		—		—		—		—		—		31.6
Total(2)	$	45.2	$	0.2	$	—	$	—	$	—	$	—	$	45.4

_______________________________________________________________________________

⁽¹⁾  Consists of minimum commitments to purchase natural gas and other items used in our operations. Natural gas purchases are based on prevailing ONEOK forward prices as of December 31, 2017, and do not include any amounts related to our natural gas derivatives.

⁽²⁾  We have unrecorded asset retirement obligations (AROs) with an estimated cost of $4.0 million in 2017 dollars at our Verdigris facility that are conditional upon cessation of operations and are not included in this table. For additional information on our AROs, see Note 11—Asset Retirement Obligations.

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Application of Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). U.S. GAAP requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates. We base our estimates on historical experience, technological assessment, opinions of appropriate outside experts, and the most recent information available to us. Actual results may differ from these estimates. Changes in estimates that may have a material impact on our results are discussed in the context of the underlying financial statements to which they relate. The following discussion presents information about our most critical accounting policies and estimates.

Inventory Valuation

We review our inventory account balances at least quarterly, and more frequently if required by market conditions, to determine whether the carrying amount of inventories exceeds their net realizable value. This review process incorporates current industry and customer-specific trends, current operating plans, historical price activity, and selling prices expected to be realized. If the carrying amount of our inventories exceeds its estimated net realizable value, we immediately adjust our carrying values accordingly. Upon the sale of inventory, if the actual sales prices are less than our most recent estimate of net realizable value, additional losses would be recorded in the period of sale. Fixed production costs related to idle capacity are not included in the cost of inventories but are charged directly to cost of sales in the period incurred.

Recoverability of Long-Lived Assets

We review the carrying values of our property, plant and equipment and other long-lived assets in accordance with U.S. GAAP in order to assess recoverability. Factors that we must estimate when performing impairment tests include sales volume, selling prices, raw material costs, operating expenses, inflation, discount rates, exchange rates and capital spending. Significant judgment is involved in estimating each of these factors, which include inherent uncertainties. The factors we use are consistent with those used in our internal planning process. The recoverability of the values associated with our long-lived assets is dependent upon future operating performance. Certain of the operating assumptions are particularly sensitive to the cyclical nature of the fertilizer business. Adverse changes in demand for our products, increase in supply and the availability and costs of key raw materials could significantly affect the results of our review. The recoverability and impairment tests of long-lived assets are required only when conditions exist that indicate the carrying value may not be recoverable.

Recent Accounting Pronouncements

See Note 3—New Accounting Standards for a discussion of recent accounting pronouncements.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to the impact of changes in the price of natural gas which we use in the manufacture of our nitrogen fertilizer products. Because natural gas prices are volatile, we manage the risk of changes in natural gas prices through the use of derivative financial instruments.

The derivative instruments that we use are primarily natural gas fixed price swaps and options. These contracts settle using NYMEX futures prices, which represent the basis for fair value at any given time. The derivatives are traded in months forward and settlements are scheduled to coincide with anticipated natural gas purchases during those future periods.

As of December 31, 2017 and 2016, we had open natural gas derivative contracts for 8.4 million MMBtus and 29.4 million MMBtus, respectively. A $1.00 per MMBtu increase in the forward curve prices of natural gas as of December 31, 2017 would result in a favorable change in the fair value of these derivative positions by $7.6 million, and a $1.00 per MMBtu decrease would change their fair value unfavorably by $7.6 million.

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

The Partners and Common Unit Holders

Terra Nitrogen Company, L.P.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Terra Nitrogen Company, L.P. (a Limited Partnership) (the Partnership) as of December 31, 2017 and 2016, the related consolidated statements of operations, partners’ capital, and cash flows for each of the years in the three‑year period ended December 31, 2017, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 22, 2018 expressed an unqualified opinion on the effectiveness of the Partnership’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Partnership’s auditor since 2010.

Chicago, Illinois

February 22, 2018

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TERRA NITROGEN COMPANY, L.P.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2017		2016
	(in millions, except for units)
ASSETS
Current assets:
Cash and cash equivalents	$	81.5	$	39.5
Due from affiliates of the General Partner	17.1		4.0
Accounts receivable	0.9		0.6
Inventories	5.3		8.6
Prepaid expenses and other current assets	0.3		7.9
Total current assets	105.1		60.6
Property, plant and equipment—net	290.2		301.3
Other assets	8.6		11.4
Total assets	$	403.9	$	373.3
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable and accrued expenses	$	27.4	$	27.8
Due to affiliates of the General Partner	4.2		4.1
Other current liabilities	3.2		—
Total current liabilities	34.8		31.9
Other liabilities	1.0		2.6
Partners' capital:
Limited partners' interests, 18,501,576 common units authorized, issued and outstanding	301.2		286.7
Limited partners' interests, 184,072 Class B common units authorized, issued and outstanding	2.1		1.8
General partner's interest	64.8		50.3
Total partners' capital	368.1		338.8
Total liabilities and partners' capital	$	403.9	$	373.3

See accompanying Notes to the Consolidated Financial Statements.

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TERRA NITROGEN COMPANY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year ended December 31,
	2017			2016		2015
	(in millions, except per unit amounts)
Net sales:
Product sales to affiliates of the General Partner	$	396.1		$	417.7	$	580.2
Other income from an affiliate of the General Partner	0.6			0.6		0.6
Other income	0.5			—		0.9
Total	397.2			418.3		581.7
Cost of goods sold:
Materials, supplies and services	212.6			163.6		228.0
Services provided by affiliates of the General Partner	27.9			27.9		27.9
Gross margin	156.7			226.8		325.8
Selling, general and administrative services provided by affiliates of the General Partner	15.9			15.7		15.7
Other general and administrative expenses	1.7			1.9		3.2
Gain on sale of equity method investment	(14.3		)	—		—
Earnings from operations	153.4			209.2		306.9
Interest income	0.5			0.1		—
Net earnings	$	153.9		$	209.3	$	306.9
Allocation of net earnings:
General Partner	$	42.6		$	67.4	$	117.7
Class B common units	1.5			2.0		3.0
Common units	109.8			139.9		186.2
Net earnings	$	153.9		$	209.3	$	306.9
Net earnings per common unit	$	5.93		$	7.56	$	10.06

See accompanying Notes to the Consolidated Financial Statements.

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TERRA NITROGEN COMPANY, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL

	Common Units			Class B Common Units			General Partner's Interest			Total Partners' Capital
	(in millions)
Partners' capital as of December 31, 2014	$	302.7		$	2.2		$	70.0		$	374.9
Net earnings	186.2			3.0			117.7			306.9
Distributions	(180.4		)	(2.9		)	(111.5		)	(294.8		)
Partners' capital as of December 31, 2015	$	308.5		$	2.3		$	76.2		$	387.0
Net earnings	139.9			2.0			67.4			209.3
Distributions	(161.7		)	(2.5		)	(93.3		)	(257.5		)
Partners' capital as of December 31, 2016	$	286.7		$	1.8		$	50.3		$	338.8
Net earnings	109.8			1.5			42.6			153.9
Distributions	(95.3		)	(1.2		)	(28.1		)	(124.6		)
Partners' capital as of December 31, 2017	$	301.2		$	2.1		$	64.8		$	368.1

See accompanying Notes to the Consolidated Financial Statements.

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TERRA NITROGEN COMPANY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year ended December 31,
	2017			2016			2015
	(in millions)
Operating Activities:
Net earnings	$	153.9		$	209.3		$	306.9
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	39.0			40.4			35.8
Unrealized loss (gain) on derivatives	10.6			(35.3		)	24.3
Loss on disposal of property, plant and equipment	—			0.1			2.0
Gain on sale of equity method investment	(14.3		)	—			—
Changes in operating assets and liabilities:
Accounts receivable	(0.3		)	0.2			(0.4		)
Inventories	3.3			2.0			(1.1		)
Accounts payable and accrued expenses	(0.9		)	2.5			(6.7		)
Due to/from affiliates of the General Partner	(13.0		)	6.0			15.1
Other assets and liabilities	(0.8		)	(1.7		)	(0.8		)
Net cash provided by operating activities	177.5			223.5			375.1
Investing Activities:
Additions to property, plant and equipment	(27.2		)	(33.1		)	(87.8		)
Proceeds from sale of property, plant and equipment	—			0.2			0.9
Proceeds from sale of equity method investment	16.3			—			—
Net cash used in investing activities	(10.9		)	(32.9		)	(86.9		)
Financing Activities:
Partnership distributions paid	(124.6		)	(257.5		)	(294.8		)
Net cash used in financing activities	(124.6		)	(257.5		)	(294.8		)
Increase (decrease) in cash and cash equivalents	42.0			(66.9		)	(6.6		)
Cash and cash equivalents at beginning of period	39.5			106.4			113.0
Cash and cash equivalents at end of period	$	81.5		$	39.5		$	106.4

See accompanying Notes to the Consolidated Financial Statements.

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Notes to the Consolidated Financial Statements

1.     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 solution (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). We own a 99% limited partner interest in the Operating Partnership, and Terra LP Holdings LLC (TLPH), an affiliate of the General Partner, owns a 0.975% limited partner interest. Terra Nitrogen GP Inc. (TNGP or the General Partner), a Delaware corporation, is the general partner of both TNCLP and TNLP and owns a 0.025% general partner interest in each of TNCLP and TNLP. The General Partner is an indirect, wholly owned subsidiary of CF Industries Holdings, Inc. (CF Industries), a Delaware corporation. Throughout this document, the term "affiliates of the General Partner" refers to consolidated subsidiaries of CF Industries, including TNGP. Ownership of TNCLP is composed of the general partner interest and the limited partner interests. The general partner interest in TNCLP is represented by 4,720 general partner units. Limited partner interests are represented by common units, which are listed for trading on the New York Stock Exchange (NYSE) under the symbol "TNH", and Class B common units. As of December 31, 2017, 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 75.1% of the total outstanding common units) and all of the Class B common units as of December 31, 2017. On February 7, 2018, TNCLP announced that, in accordance with Section 17.1 of TNCLP’s First Amended and Restated Agreement of Limited Partnership, as amended (the TNCLP Partnership Agreement), TNGP elected to exercise the right, assigned to TNGP by TNCLP, to purchase all of the issued and outstanding common units representing limited partner interests in TNCLP not already owned by TNGP or its affiliates (the Public Units). For additional information, see Note 15—Subsequent Event.

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 January 19, 2017, the Internal Revenue Service (IRS) issued final regulations on the types of income and activities that constitute or generate qualifying income of a MLP. For calendar year MLPs, the effective date of the regulations is January 1, 2018. The regulations have the effect of limiting the types of income and activities that qualify under the MLP rules, subject to certain transition provisions. The regulations define the activities that generate qualifying income from certain processing or refining and transportation activities with respect to any mineral or natural resource (including fertilizer) as activities that generate qualifying income, but the regulations reserve on specifics regarding fertilizer-related activities. However, the IRS has issued two private letter rulings to taxpayers in the fertilizer industry unrelated to TNCLP (one before and one after the issuance of the final regulations) which would indicate that each taxpayer's fertilizer manufacturing activities should produce qualifying income for purposes of determining whether 90% of the partnership's gross income is qualifying income under the final regulations. The entities to which these private letter rulings were issued would appear to operate nitrogen fertilizer manufacturing businesses that are similar to ours. While these private letter rulings provide some insight into the manner in which the IRS analyzed fertilizer manufacturing activities at the time these rulings were issued, these private letter rulings are specific to different entities. Thus, the IRS is not bound to follow them in respect of TNCLP, nor may we rely on them as precedent when determining whether we satisfy the MLP 90% gross income test. 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 consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP).

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2.     Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements of TNCLP and the accompanying notes include the accounts of the Partnership. All intercompany transactions and balances have been eliminated. Income is allocated to the General Partner and the limited partners of TNCLP (Limited Partners) in accordance with the provisions of the TNCLP Partnership Agreement that provides for allocations of income between the Limited Partners and the General Partner in the same proportion as cash distributions related to such year. The 0.975% limited partner interest and the 0.025% general partner interest in the Operating Partnership held by TLPH and the General Partner, respectively, are included in the line labeled General Partner’s interest in the consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results could differ from these estimates. Significant estimates and assumptions are used for, but are not limited to, the net realizable value of inventories, environmental remediation liabilities, environmental and litigation contingencies, useful lives of property, plant and equipment, the assumptions used in the evaluation of potential impairments of property, plant and equipment and the allowance for doubtful accounts receivable.

Revenue Recognition

The primary products we sell are ammonia and UAN. Sales are made in accordance with the Amendment to the General and Administrative Services and Product Offtake Agreement (the Services and Offtake Agreement) we have with an affiliate of the General Partner under which affiliates of the General Partner purchase our products. We recognize revenue as products are shipped from the plant gate when title and risk of loss transfer to affiliates of the General Partner. The Services and Offtake Agreement is accounted for as an operating lease comprised entirely of variable lease payments associated with the sale of our products. The Services and Offtake Agreement is described in Note 10—Related Party Transactions.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less. The carrying value of cash and cash equivalents approximates fair value.

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 labor and other services from affiliates of the General Partner, the affiliates of the General Partner continue to be both debtors and creditors to us.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at face amounts less an allowance for doubtful accounts. The allowance is an estimate based on historical collection experience, current economic and market conditions, and a review of the current status of each customer's trade accounts receivable. A receivable is past due if payments have not been received within the agreed upon invoice terms. Account balances are charged-off against the allowance when management determines that it is probable the receivable will not be recovered.

Inventories

Inventories are reported at the lower of cost and net realizable value and are determined on a first-in, first-out (FIFO) and average cost basis. Inventories include the cost of materials, production labor and production overhead. Net realizable value is reviewed quarterly. Fixed production costs related to idle capacity are not included in the cost of inventories but are charged directly to cost of sales. On January 1, 2017, we adopted Accounting Standards Update (ASU) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, as discussed in Note 3—New Accounting Standards.

Property, Plant and Equipment

Property, plant and equipment are stated at cost and are subject to the Services and Offtake Agreement, which is accounted for as an operating lease, as described in Note 10—Related Party Transactions. Depreciation and amortization are computed using the straight-line method over the estimated useful life of the property, plant and equipment. Useful lives for

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TERRA NITROGEN COMPANY, L.P.

property, plant, and equipment range from 10 to 40 years for buildings and 3 to 30 years for machinery and equipment. We periodically review these useful lives and change the estimates to reflect the results of those reviews.

Scheduled inspections, replacements and overhauls of machinery and equipment at our continuous process manufacturing facility are referred to as plant turnarounds. Plant turnarounds are accounted for under the deferral method, as opposed to the direct expense or built-in overhaul methods. Under the deferral method, expenditures related to turnarounds are capitalized when incurred and amortized to production costs on a straight-line basis over the period benefited, which is until the next scheduled turnaround in up to 5 years. If the direct expense method were used, all turnaround costs would be expensed as incurred. Internal employee costs and overhead amounts are not considered turnaround costs and are not capitalized. Turnaround costs are classified as investing activities in our consolidated statements of cash flows. For additional information, see Note 9—Property, Plant and Equipment—Net.

Recoverability of Long-Lived Assets

We review property, plant and equipment and other long-lived assets in order to assess recoverability based on expected future undiscounted cash flows whenever events or circumstances indicate that the carrying value may not be recoverable. If the sum of the expected future net cash flows is less than the carrying value, an impairment loss is recognized. The impairment loss is measured as the amount by which the carrying value exceeds the fair value of the asset.

Other Leases

Leases are classified as either operating leases or capital leases. Assets acquired under capital leases are depreciated on the same basis as property, plant and equipment. We currently do not have any capital leases. Rental payments, including rent holidays, leasehold incentives, and scheduled rent increases, if any, are expensed on a straight-line basis over the lease term.

Income Taxes

As a partnership, we are not subject to income taxes. For additional information, see Note 1—Background and Basis of Presentation. The income tax liability of the individual partners is not reflected in our consolidated financial statements.

Derivative Financial Instruments

Natural gas is the principal raw material used to produce nitrogen fertilizers. We use natural gas both as a chemical feedstock and as a fuel to produce ammonia and UAN. We manage the risk of changes in natural gas prices primarily through the use of derivative financial instruments. The derivative instruments that we use are primarily natural gas fixed price swaps and options traded in the over-the-counter markets. These derivatives reference NYMEX futures contract prices, which represent the basis for fair value at any given time. The derivatives are traded in months forward and settlements are scheduled to coincide with anticipated gas purchases during those future periods. We do not use derivatives for trading purposes and are not a party to any leveraged derivatives. We have elected to not apply hedge accounting to our derivatives; as a result, changes in the fair value of the derivatives are recorded in cost of goods sold in our consolidated statements of operations.

Derivatives are recognized in our consolidated balance sheets at fair value. Cash flows related to natural gas derivatives are reported as operating activities in our consolidated statements of cash flows. For additional information, see Note 7—Derivative Financial Instruments.

Asset Retirement Obligations

Asset retirement obligations (AROs) are legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development or normal operation of such assets. AROs are initially recognized as liabilities as incurred when sufficient information exists to estimate fair value. When initially recognized, the fair value based on discounted future cash flows is recorded both as a liability and an increase in the carrying amount of the related long-lived asset. In subsequent periods, depreciation of the asset and accretion of the liability are recorded. For additional information on AROs, see Note 11—Asset Retirement Obligations.

Environmental

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations are expensed. Expenditures that increase the capacity or extend the useful life of an asset, improve the safety or efficiency of the operations, or mitigate or prevent future environmental contamination are capitalized. Liabilities are recorded when it is probable that a liability has been incurred, the costs can be reasonably estimated, and the liability would not be discounted.

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TERRA NITROGEN COMPANY, L.P.

Litigation

From time to time, the Partnership is subject to ordinary, routine legal proceedings related to the usual conduct of its business. From time to time, the Partnership also is involved in legal proceedings regarding public utility and transportation rates, environmental matters, taxes and permits relating to the operations of its plant and facilities. Accruals for such contingencies are recorded to the extent management concludes their occurrence is probable and the financial impact of an adverse outcome is reasonably estimable. Disclosure for specific legal contingencies is provided if the likelihood of occurrence is at least reasonably possible and the exposure is considered material to the consolidated financial statements. In making determinations of likely outcomes of litigation matters, many factors are considered. These factors include, but are not limited to, past history, scientific and other evidence, and the specifics and status of each matter. If the assessment of various factors changes, the estimates may change. Predicting the outcome of claims and litigation, and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates and accruals. Legal fees are expensed as incurred and are included in selling, general, and administrative services provided by affiliates of the General Partner in our consolidated statements of operations.

3.     New Accounting Standards

Recently Adopted Pronouncement

On January 1, 2017, we adopted ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. ASU No. 2015-11 changes the inventory measurement principle for entities using the FIFO or average cost methods. For entities utilizing one of these methods, the inventory measurement principle changed from the lower of cost or market to the lower of cost and net realizable value. We follow the FIFO and average cost methods, and the adoption of this ASU did not have a material effect on our consolidated financial statements.

Recently Issued Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers, (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 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, the costs to obtain and fulfill a contract, including assets to be recognized, are to be capitalized and such capitalized costs are to be disclosed. All of our nitrogen fertilizer production is sold to affiliates of the General Partner. The Services and Offtake Agreement, under which all of our nitrogen fertilizer products are sold, is accounted for as an operating lease comprised entirely of variable lease payments associated with the sale of our nitrogen fertilizer products, therefore, it does not meet the definition of a contract as defined by ASU No. 2014-09. As such, our adoption of ASU No. 2014-09 on January 1, 2018 did not have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the lease accounting requirements in ASC Topic 840, Leases. This ASU will require lessees to recognize the rights and obligations resulting from virtually all leases (other than leases that meet the definition of a short-term lease) on their balance sheets as right-of-use assets with corresponding lease liabilities. For lessors, ASU No. 2016-02 leaves the current lessor accounting in ASC Topic 840 largely unchanged. Quantitative and qualitative disclosures, including significant judgments made by management, will be required. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted, and requires the modified retrospective method of adoption. Under ASU No. 2016-02, and consistent with the current accounting treatment under ASC Topic 840, we expect that the Services and Offtake Agreement will continue to be accounted for as an operating lease. We expect the adoption of this ASU will not have a material impact on our consolidated financial statements.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedged items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted in any interim period. We do not expect the adoption of this ASU will have a material effect on our consolidated financial statements.

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TERRA NITROGEN COMPANY, L.P.

4.     Agreement of Limited Partnership

Ownership of TNCLP is composed of the general partner interest and the limited partner interests (see Note 1—Background and Basis of Presentation). Holders of common units and Class B common units do not have preemptive rights. Holders of common units are entitled to one vote per common unit with respect to each matter on which holders of common units are entitled to vote. The Class B common units have no voting rights on any matter. Unitholders have only limited voting rights on matters affecting our business and, therefore, limited ability to influence management's decisions regarding our business. Unitholders have no right to elect the General Partner or the TNGP Board of Directors on an annual or other continuing basis. Furthermore, the General Partner may only be removed by a vote of the holders of at least 66 2/3% of our outstanding common units, including any common units held by the General Partner and its affiliates (including CF Industries). Given that the General Partner and its affiliates own approximately 75.1% of our outstanding common units, holders of our publicly traded common units are not able to remove the General Partner under any circumstances.

The General Partner and its affiliates own approximately 75.1% of our outstanding common units. When not more than 25% of our issued and outstanding common units are held by persons other than the General Partner and its affiliates (collectively, non-affiliated persons), as was the case at December 31, 2017, 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 common units held by non-affiliated persons.

On February 7, 2018, TNCLP announced that, in accordance with Section 17.1 of the TNCLP Partnership Agreement, TNGP elected to exercise the right, assigned to TNGP by TNCLP, to purchase all of the issued and outstanding common units representing limited partner interests in TNCLP not already owned by TNGP or its affiliates (the Public Units).

TNGP will purchase the Public Units on April 2, 2018 for a cash purchase price of $84.033 per Public Unit. The purchase price was determined in accordance with Section 17.1 of the TNCLP Partnership Agreement as the average of the daily closing prices per common unit for the 20 consecutive trading days beginning with January 5, 2018 and ending with February 2, 2018.

As of April 2, 2018, all rights of the holders of the Public Units will cease, except for the right to receive payment of the purchase price. Upon completion of the purchase on April 2, 2018, TNGP will own 100 percent of the Public Units and will be entitled to all of the benefits resulting from the Public Units. In addition, upon completion of the purchase, the common units representing limited partner interests in TNCLP will cease to be publicly traded or listed on the NYSE.

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 the TNCLP Partnership Agreement. 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 increases in the amount of cash invested in working capital items (such as increases in receivables or 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 years ended December 31, 2017, 2016 and 2015, we declared and paid partnership distributions of $124.6 million, $257.5 million and $294.8 million, respectively.

We receive 99% of the Operating Partnership's Available Cash (as defined in the Operating Partnership's agreement of limited partnership) and 1% of the Operating Partnership's Available Cash is distributed by the Operating Partnership to the General Partner and its affiliate, TLPH. Distributions recognized by the Operating Partnership with respect to the General Partner and TLPH were $1.2 million, $2.6 million and $2.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Pursuant to the TNCLP Partnership Agreement, distributions of our Available Cash are made 99.975% to common and Class B common unitholders and 0.025% to the General Partner except that the General Partner is entitled, as an incentive, to a larger percentage of our distribution of Available Cash to the extent that cumulative distributions of Available Cash exceed specified target levels above the Minimum Quarterly Distributions (MQD) of $0.605 per unit. The General Partner has assigned its right to receive such incentive distributions to an affiliate of the General Partner.

On February 7, 2018, we announced a cash distribution of $2.03 per common unit, payable on February 28, 2018 to holders of record as of February 16, 2018. As a result of TNGP’s exercise of the right to purchase the Public Units, there will be no further cash distributions on the common units after the distribution payable February 28, 2018.

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TERRA NITROGEN COMPANY, L.P.

In the fourth quarter of 2017, we exceeded the cumulative MQD amounts and will distribute Available Cash as summarized in the following table:

	Quarterly Income and Distribution Allocation
	Target Limit (per unit)		Target Increment (per unit)		Distribution Threshold (in millions) (1)		Common Units		Class B Common Units		General Partner (2)		Total
Minimum Quarterly Distributions	$	0.605	$	0.605	$	11.3	98.990	%	0.985	%	0.025	%	100	%
First Target	0.715		0.110		13.4		98.990	%	0.985	%	0.025	%	100	%
Second Target	0.825		0.110		15.4		85.859	%	0.985	%	13.156	%	100	%
Third Target	1.045		0.220		19.5		75.758	%	0.985	%	23.257	%	100	%
Final Target and Beyond	>1.045		—		> 19.5		50.505	%	0.985	%	48.510	%	100	%

_______________________________________________________________________________

⁽¹⁾  The Distribution Threshold represents the cumulative amount of Available Cash necessary to distribute the Target Limit per unit, as shown in the table above, to all unitholders and the General Partner based on the number of units outstanding as of December 31, 2017.

⁽²⁾  Reflects Minimum Quarterly Distributions and incentive distributions to the General Partner.  The General Partner has assigned its right to incentive distributions to an affiliate of the General Partner.

We paid distributions of $5.15, $8.74 and $9.75 per common unit during 2017, 2016 and 2015, respectively. We also paid distributions of $6.61, $13.64 and $15.61 per Class B common unit during 2017, 2016 and 2015, respectively.

The quarterly cash distributions to the unitholders and the General Partner declared to date in 2018 and during 2017 and 2016 are as follows:

Distribution		Common Units				Class B Common Units				General Partner		Total Distributions Declared
Declared in	Related to	Total		Per unit		Total		Per unit		Total
		(in millions, except per unit amounts)
First Quarter 2018	Fourth Quarter 2017	$	37.6	$	2.03	$	0.6	$	3.10	$	20.4	$	58.6
First Quarter 2017	Fourth Quarter 2016	$	22.6	$	1.22	$	0.3	$	1.52	$	5.7	$	28.6
Second Quarter 2017	First Quarter 2017	17.9		0.97		0.2		1.04		1.4		19.5
Third Quarter 2017	Second Quarter 2017	29.6		1.60		0.4		2.26		12.7		42.7
Fourth Quarter 2017	Third Quarter 2017	25.2		1.36		0.3		1.79		8.3		33.8
First Quarter 2016	Fourth Quarter 2015	$	53.3	$	2.88	$	0.9	$	4.78	$	36.0	$	90.2
Second Quarter 2016	First Quarter 2016	28.0		1.51		0.4		2.09		11.1		39.5
Third Quarter 2016	Second Quarter 2016	47.7		2.58		0.7		4.17		30.4		78.8
Fourth Quarter 2016	Third Quarter 2016	32.7		1.77		0.5		2.60		15.8		49.0

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TERRA NITROGEN COMPANY, L.P.

5.     Net Earnings per Common Unit

Net income and net losses are allocated to the common units, Class B common units and the general partner interest in accordance with the provisions of the TNCLP Partnership Agreement. In general, the TNCLP Partnership Agreement provides that if the Partnership has a net profit for a year, net income (including any undistributed net earnings) will be allocated among the General Partner and limited partners in the same proportion that Available Cash for such year was declared among the General Partner and the limited partners. If the Partnership has a net loss for a year, the loss will be allocated among the General Partner and limited partners in the same proportion as any net income was allocated to such partners in prior years (beginning with the first year in which net income was allocated to the partners). Net earnings per common unit are calculated using the two-class method and 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 years ended December 31, 2017, 2016 and 2015:

	Year Ended December 31,
	2017			2016			2015
	(in millions, except per unit amounts)
Basic earnings per common unit:
Net earnings	$	153.9		$	209.3		$	306.9
Less distributions declared to:
Common units	110.3			130.9			187.4
Class B common units	1.5			1.9			3.1
General partner interest	42.8			63.1			118.4
(Distributions in excess of earnings) undistributed earnings	$	(0.7	)	$	13.4		$	(2.0	)
Allocation percentage for undistributed earnings or distributions in excess of earnings (1):
Common units	71.33		%	66.82		%	60.67		%
Class B common units	0.97		%	0.97		%	0.97		%
General partner interest	27.70		%	32.21		%	38.36		%
Allocation of (distributions in excess of earnings) undistributed earnings to:
Common units	$	(0.5	)	$	9.0		$	(1.2	)
Class B common units	—			0.1			(0.1		)
General partner interest	(0.2		)	4.3			(0.7		)
Total (distributions in excess of earnings) undistributed earnings	$	(0.7	)	$	13.4		$	(2.0	)
Net earnings allocable to General Partner (2)	$	42.6		$	67.4		$	117.7
Net earnings allocable to Class B common units	$	1.5		$	2.0		$	3.0
Net earnings allocable to common units	$	109.8		$	139.9		$	186.2
Weighted-average common units outstanding	18.5			18.5			18.5
Net earnings per common unit	$	5.93		$	7.56		$	10.06

⁽¹⁾  In accordance with the TNCLP Partnership Agreement, undistributed earnings or distributions in excess of earnings are allocated in the same percentage that Available Cash for such period was declared among the General Partner (including with respect to the embedded incentive distribution rights) and limited partners.

⁽²⁾  Net earnings allocable to the General Partner include net earnings allocated to the General Partner and TLPH from the Operating Partnership of $1.5 million, $2.1 million and $3.1 million for the years ended December 31, 2017, 2016 and 2015, respectively.

There were no dilutive TNCLP units outstanding for the years ended December 31, 2017, 2016 and 2015 and therefore basic and diluted net earnings per common unit are the same.

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TERRA NITROGEN COMPANY, L.P.

6.     Inventories

Inventories consisted of the following:

	December 31,
	2017		2016
	(in millions)
Finished goods	$	3.5	$	6.8
Raw materials, spare parts and supplies	1.8		1.8
Total	$	5.3	$	8.6

7.     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. We enter into natural gas derivative contracts with respect to gas to be consumed by us in the future, and settlements of those 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.

The gross fair values of derivatives in 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 8—Fair Value Measurements.

	December 31,
	2017			2016
	(in millions)
Derivative Assets
Unrealized gains in other current assets	$	—		$	7.9
Unrealized gains in other assets	—			1.1
Total derivative assets	—			9.0
Derivative Liabilities
Unrealized losses in other current liabilities	(3.2		)	—
Unrealized losses in other liabilities	—			(1.6		)
Total derivative liabilities	(3.2		)	(1.6		)
Net derivative (liabilities) assets	$	(3.2	)	$	7.4

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TERRA NITROGEN COMPANY, L.P.

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.

	Year ended December 31,
	2017			2016			2015
	(in millions)
Unrealized net mark-to-market (losses) gains	$	(10.6	)	$	35.3		$	(23.1	)
Realized net losses	(3.0		)	(16.7		)	(10.6		)
Net derivative (losses) gains	$	(13.6	)	$	18.6		$	(33.7	)

As of December 31, 2017 and 2016, we had open natural gas derivative contracts for 8.4 million MMBtus (millions of British thermal units) of natural gas and 29.4 million MMBtus of natural gas, respectively. The derivative portfolio at December 31, 2017 includes natural gas derivatives that economically hedge a portion of anticipated natural gas purchases through December 2018. For the year ended December 31, 2017, we used derivatives to cover approximately 48% of our natural gas consumption.

The counterparties to our derivative contracts are multinational commercial banks, other major financial institutions and large energy companies. The derivatives are executed with several counterparties, generally under International Swaps and Derivatives Association (ISDA) agreements. The ISDA agreements are master netting arrangements commonly used for OTC derivatives that mitigate exposure to counterparty credit risk, in part, by creating contractual rights of netting and setoff, the specifics of which vary from agreement to agreement. These rights are described further below:

• Settlement netting generally allows the parties to net, into a single net payable or receivable, ordinary settlement obligations arising under the ISDA agreement on the same day, in the same currency, for the same types of derivative instruments, and through the same pairing of offices.

• Close-out netting rights are provided in the event of a default or other termination event (as defined in the ISDA agreements), including bankruptcy. Depending on the cause of early termination, the non-defaulting party may elect to terminate all or some transactions outstanding under the ISDA agreement. The values of all terminated transactions and certain other payments under the ISDA agreement are netted, resulting in a single net close-out amount payable to or by the non-defaulting party. Termination values may be determined using a mark-to-market approach or based on a party's good faith estimate of its loss. If the final net close-out amount is payable by the non-defaulting party, that party's obligation to make the payment may be conditioned on factors such as the termination of all derivative transactions between the parties or payment in full of all of the defaulting party's obligations to the non-defaulting party, in each case regardless of whether arising under the ISDA agreement or otherwise.

• Setoff rights are provided by certain of the ISDA agreements and generally allow a non-defaulting party to elect to set off, against the final net close-out payment, other matured and contingent amounts payable between the parties under the ISDA agreement or otherwise. Typically, these setoff rights arise upon the early termination of all transactions outstanding under an ISDA agreement following a default or specified termination event.

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TERRA NITROGEN COMPANY, L.P.

Most of the ISDA agreements contain credit-risk-related contingent features such as cross-default provisions and credit support thresholds that are dependent upon the credit ratings of the General Partner affiliate. In the event of certain defaults or a credit ratings downgrade of the General Partner affiliate, the counterparty may request early termination and net settlement of certain derivative trades or may require the General Partner affiliate to collateralize derivatives in a net liability position. The General Partner affiliate’s revolving credit agreement, at any time when it is secured, provides a cross collateral feature for those derivatives that are with counterparties that are party to, or affiliates of parties to, the revolving credit agreement so that no separate collateral would be required for those counterparties in connection with such derivatives. In the event the General Partner affiliate's revolving credit agreement becomes unsecured, the General Partner affiliate could be required to post separate collateral in connection with such derivatives. As of December 31, 2017 and 2016, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in a net liability position was $3.2 million and $1.6 million, respectively, which also approximates the fair value of the maximum amount of assets needed to settle the obligations if the credit-risk-related contingent features were triggered and the General Partner affiliate was unable to post collateral at the reporting dates. As of December 31, 2017 and 2016, we and the General Partner affiliate had no cash collateral on deposit for derivative contracts assigned to us. The credit support documents executed in connection with certain ISDA agreements generally provide the General Partner affiliate and the counterparties 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 December 31, 2017 and 2016:

				Gross amounts not offset in  consolidated balance sheets
	Gross and net amounts presented in consolidated balance sheets (1)			Financial instruments			Cash collateral received (pledged)		Net amount
	(in millions)
December 31, 2017
Total derivative assets	$	—		$	—		$	—	$	—
Total derivative liabilities	(3.2		)	—			—		(3.2		)
Net derivative liabilities	$	(3.2	)	$	—		$	—	$	(3.2	)
December 31, 2016
Total derivative assets	$	9.0		$	1.6		$	—	$	7.4
Total derivative liabilities	(1.6		)	(1.6		)	—		—
Net derivative assets	$	7.4		$	—		$	—	$	7.4

_______________________________________________________________________________

⁽¹⁾  We report the fair values of our derivative assets and liabilities on a gross basis in our consolidated balance sheets. As a result, the gross amounts recognized and net amounts presented herein are the same.

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TERRA NITROGEN COMPANY, L.P.

8.     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 December 31, 2017 and 2016:

	Balances as of December 31, 2017
	Total			Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Cash equivalents	$	80.5		$	80.5	$	—		$	—
Total assets at fair value	$	80.5		$	80.5	$	—		$	—
Unrealized losses on natural gas derivatives	$	(3.2	)	$	—	$	(3.2	)	$	—
Total liabilities at fair value	$	(3.2	)	$	—	$	(3.2	)	$	—

	Balances as of December 31, 2016
	Total			Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Cash equivalents	$	32.0		$	32.0	$	—		$	—
Unrealized gains on natural gas derivatives	9.0			—		9.0			—
Total assets at fair value	$	41.0		$	32.0	$	9.0		$	—
Unrealized losses on natural gas derivatives	$	(1.6	)	$	—	$	(1.6	)	$	—
Total liabilities at fair value	$	(1.6	)	$	—	$	(1.6	)	$	—

Cash Equivalents

As of December 31, 2017 and 2016, our cash equivalents consisted primarily of money market mutual funds that invest in U.S. treasuries and direct investments in U.S. treasuries with original maturities of three months or less.

Natural Gas Derivatives

The derivative instruments that we use are primarily natural gas fixed price swaps and options traded in the OTC markets with multinational 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 7—Derivative Financial Instruments for additional information.

Assets Measured at Fair Value on a Nonrecurring Basis

We also have assets that may be measured at fair value on a nonrecurring basis; that is, the assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. These include long-lived assets that may be written down to fair value as a result of impairment. We determined that these fair value measurements would rely primarily on Partnership-specific inputs and the Partnership's assumptions about the use of the assets. Since certain of the assumptions would involve inputs that are not observable, these fair values would reside within Level 3 of the fair value hierarchy.

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TERRA NITROGEN COMPANY, L.P.

9.     Property, Plant and Equipment—Net

Property, plant and equipment—net consisted of the following:

	December 31,
	2017		2016
	(in millions)
Land	$	1.4	$	1.4
Buildings and improvements	16.9		16.7
Machinery and equipment	568.3		562.3
Construction in progress	41.1		21.9
Property, plant and equipment	627.7		602.3
Less: Accumulated depreciation and amortization	337.5		301.0
Property, plant and equipment—net	$	290.2	$	301.3

Property, plant and equipment used to produce nitrogen fertilizer products are subject to the Services and Offtake Agreement with an affiliate of the General Partner, which is accounted for as an operating lease. See Note 10—Related Party Transactions for additional information.

Additions to property, plant and equipment included in our consolidated statements of cash flows represents cash outflows for capital expenditures; therefore, it does not include the net increase (decrease) in amounts accrued for capital expenditures, which were $0.6 million, $1.8 million and $(2.2) million for the years ended December 31, 2017, 2016 and 2015, respectively.

Losses on the disposal of certain machinery and equipment were zero, $0.1 million and $2.0 million for the years ended December 31, 2017, 2016 and 2015, respectively, and are included in other general and administrative expenses in 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 capitalized plant turnaround costs:

	Year ended December 31,
	2017			2016			2015
	(in millions)
Net capitalized turnaround costs:
Beginning balance	$	26.6		$	37.8		$	16.7
Additions	2.3			4.9			33.6
Depreciation	(14.2		)	(16.1		)	(12.5		)
Ending balance	$	14.7		$	26.6		$	37.8

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.

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10.   Related Party Transactions

TNCLP and TNGP have no employees. We have entered into several agreements with subsidiaries 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.

Product Sales

Pursuant to the Services and Offtake Agreement, which is accounted for as an operating lease, the Partnership sells all of its fertilizer products to affiliates of the General Partner at prices based on market prices for the Partnership's nitrogen fertilizer products. Also, pursuant to the Services and Offtake Agreement, selling prices are determined monthly and are equal to the volume weighted average net invoice price for third party sales (that is, sales by the affiliates of the General Partner to their customers) of product during each month. These selling prices are reduced by any freight or other transportation charges and incentives paid by the affiliates of the General Partner. Title and risk of loss transfer to affiliates of the General Partner as the product is shipped from the plant gate. The Services and Offtake Agreement was effective initially for a one-year term and is extended automatically for successive one-year terms unless terminated by one of the parties prior to renewal. The Services and Offtake Agreement is accounted for as an operating lease comprised entirely of variable lease payments associated with the sale of our products.

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 benefit costs, such as health insurance and pension costs, are incurred by an affiliate of the General Partner and directly charged to us. Payroll, payroll-related expenses and other employee-related benefit costs directly charged to us were $27.9 million for each of the years ended December 31, 2017, 2016 and 2015. We report these expenses as services provided by affiliates of the General Partner in cost of goods sold in our consolidated statements of operations.

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 in each of the years ended December 31, 2017, 2016 and 2015 were $15.9 million, $15.7 million and $15.7 million, respectively. We report these expenses as selling, general and administrative services provided by affiliates of the General Partner in our consolidated statements of operations.

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 labor and other services from affiliates of the General Partner, the affiliates of the General Partner continue to be both debtors and creditors to us. As of December 31, 2017 and 2016, we had a net balance due from (to) affiliates of the General Partner of $12.9 million and $(0.1) 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 with affiliates of CF Industries 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.

Other 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.

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We also have leased certain of our rail cars to an affiliate of the General Partner for quarterly 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.

In each of the years ended December 31, 2017, 2016 and 2015, we recognized rental income of $0.6 million. We report this income as other income from an affiliate of the General Partner in our consolidated statements of operations.

11.   Asset Retirement Obligations

Asset retirement obligations (AROs) are legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development or normal operation of such assets. AROs are initially recognized as incurred when sufficient information exists to estimate fair value. We have unrecorded AROs at our Verdigris facility that are conditional upon cessation of operations. These AROs include certain decommissioning and pond closure activities, and the removal and disposal of certain chemicals, waste materials, structures, equipment, vessels, piping and storage tanks. The most recent estimate of the aggregate cost of these AROs expressed in 2017 dollars is $4.0 million. We have not recorded a liability for these conditional AROs as of December 31, 2017 because we do not believe there is currently a reasonable basis for estimating a date or range of dates of cessation of operations at this facility, which is necessary in order to estimate fair value. In reaching this conclusion, we considered the historical performance of the facility and have taken into account factors such as planned maintenance, asset replacements and upgrades of plant and equipment, which if conducted as in the past, can extend the physical lives of the facility indefinitely, as well as the possibility of changes in technology, risk of obsolescence and availability of raw materials in arriving at our conclusion.

12.   Commitments

The Operating Partnership is committed to various non-cancelable operating leases for land, buildings and equipment. Total minimum rental payments for operating leases are insignificant for 2018 and all subsequent years.

Rent expense under non-cancelable operating leases for the years ended December 31, 2017, 2016 and 2015 was insignificant.

13.   Quarterly Financial Data (Unaudited)

Summarized quarterly financial data are as follows:

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Full Year
	(in millions, except per unit amounts)
2017
Net sales	$	119.0	$	96.1	$	84.6	$	97.5	$	397.2
Gross margin	46.6		43.5		27.2		39.4		156.7
Net earnings (1)	42.2		39.5		22.8		49.4		153.9
Net earnings per Common Unit (1) (2)	2.10		1.48		0.92		1.44		5.93
2016
Net sales	$	108.0	$	126.7	$	90.2	$	93.4	$	418.3
Gross margin	43.1		102.7		32.8		48.2		226.8
Net earnings	37.7		98.7		28.8		44.1		209.3
Net earnings per Common Unit (2)	1.44		3.22		1.04		1.85		7.56

⁽¹⁾  The fourth quarter of 2017 includes a gain of $14.3 million for the sale of our 50% joint venture interest in Oklahoma CO2 Partnership (OKCO2). See Note 14—Sale of Equity Method Investment.

⁽²⁾  The sum of the four quarters is not necessarily the same as the total for the year.

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14.   Sale of Equity Method Investment

On October 2, 2017, we sold our 50% interest in OKCO2, a joint venture that owns a carbon dioxide liquefaction and purification facility, to the joint venture partner. Prior to the sale, we had accounted for this interest as an equity method investment. We received proceeds of $16.3 million for the sale and recorded a gain of $14.3 million after the completion of certain customary closing and working capital adjustments in the fourth quarter of 2017. The proceeds were included in the determination of Available Cash for the fourth quarter of 2017.

15.  Subsequent Event

On February 7, 2018, TNCLP announced that, in accordance with Section 17.1 of the TNCLP Partnership Agreement, TNGP elected to exercise the right, assigned to TNGP by TNCLP, to purchase all of the issued and outstanding common units representing limited partner interests in TNCLP not already owned by TNGP or its affiliates (the Public Units).

TNGP will purchase the Public Units on April 2, 2018 for a cash purchase price of $84.033 per Public Unit. The purchase price was determined in accordance with Section 17.1 of the TNCLP Partnership Agreement as the average of the daily closing prices per common unit for the 20 consecutive trading days beginning with January 5, 2018 and ending with February 2, 2018.

As of April 2, 2018, all rights of the holders of the Public Units will cease, except for the right to receive payment of the purchase price. Upon completion of the purchase on April 2, 2018, TNGP will own 100 percent of the Public Units and will be entitled to all of the benefits resulting from the Public Units. As a result of TNGP’s exercise of the right to purchase the Public Units, there will be no further cash distributions on the common units after the distribution payable February 28, 2018.

In addition, upon completion of the purchase, the common units representing limited partner interests in TNCLP will cease to be publicly traded or listed on the NYSE.

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ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A.    CONTROLS AND PROCEDURES.

(a)    Disclosure Controls and Procedures.    TNGP's management, with the participation of TNGP's Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, TNGP's Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective in (i) ensuring that information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (ii) ensuring that information required to be disclosed by the Partnership in the reports that it files or submits under the Exchange Act is accumulated and communicated to TNGP's management, including TNGP's Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Management's Report on Internal Control over Financial Reporting.

TNGP's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, for the Partnership. Under the supervision and with the participation of TNGP's senior management, including TNGP's Principal Executive Officer and Principal Financial Officer, we assessed the effectiveness of our internal control over financial reporting as of December 31, 2017, using the criteria set forth in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that our internal control over financial reporting is effective as of December 31, 2017. KPMG LLP, the independent registered public accounting firm that audited the Partnership's consolidated financial statements, has issued an attestation report on the Partnership's internal control over financial reporting as of December 31, 2017, a copy of which appears on the following page.

(c)    Changes in Internal Control over Financial Reporting.    There have not been any changes in the Partnership's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION.

None.

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Report of Independent Registered Public Accounting Firm

The Partners and Common Unit Holders

Terra Nitrogen Company, L.P.:

Opinion on Internal Control Over Financial Reporting

We have audited Terra Nitrogen Company, L.P.’s (a Limited Partnership) (the Partnership) internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2017 and 2016, the related consolidated statements of operations, partners’ capital, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes (collectively, the consolidated financial statements), and our report dated February 22, 2018 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Chicago, Illinois

February 22, 2018

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Part III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The General Partner acts as the manager of TNCLP and the Operating Partnership. Unitholders do not direct or participate in the management or control of either TNCLP or the Operating Partnership. The General Partner does not intend to establish an advisory board or similar body to which the unitholders would be entitled to elect representatives.

We have no directors or executive officers. Set forth below is certain information concerning the directors and executive officers of TNGP, the General Partner. The ages of the directors and executive officers are as of February 15, 2018. The sole stockholder of the General Partner elects the directors of the General Partner. All directors hold office until their successors are duly elected and qualified or their resignation or removal. All officers of the General Partner serve at the discretion of the directors.

The TNGP Board of Directors independence determination described below under the headings "Audit Committee" and "Nominating and Corporate Governance Committee" and "Corporate Governance Matters" was based on information provided by the General Partner's directors and discussions among the General Partner's officers and directors. The Nominating and Corporate Governance Committee of the Board of Directors of the General Partner reviews and designates director-nominees in accordance with the policies and principles of its charter and the General Partner's Corporate Governance Guidelines.

Directors
Coleman L. Bailey (age 67)	Mr. Bailey has been a director of TNGP (or its predecessor) since July 2005. He was Chairman of the Board of Mississippi Chemical Corporation from 1988 to 2004 and Chief Executive Officer of Mississippi Chemical Corporation in 2004. The TNGP Board of Directors selected Mr. Bailey as a director, among other reasons, because of the extensive industry experience he gained while serving as the Chief Executive Officer and Chairman of the Board of Directors of Mississippi Chemical Corporation, a company which was acquired by Terra in 2004, and because of his extensive agricultural industry experience.
Douglas C. Barnard (age 59)	Mr. Barnard has been a director of TNGP since June 2010 and Chairman of the TNGP Board of Directors since February 2016. He has served as CF Industries' Senior Vice President, General Counsel and Secretary since January 2012 and was previously CF Industries' Vice President, General Counsel, and Secretary from January 2004 to December 2011. Prior to joining CF Industries in January 2004, Mr. Barnard had been an Executive Vice President and General Counsel of Bcom3 Group, Inc., an advertising and marketing communication services group. Earlier in his career, Mr. Barnard was a partner in the law firm of Kirkland & Ellis LLP and, prior to that, a Vice President, General Counsel, and Secretary of LifeStyle Furnishings International Ltd., a manufacturer and distributor of residential furniture and decorative fabrics. Mr. Barnard has also taught as a lecturer at the University of Chicago Law School, and serves as a member of the Massachusetts Institute of Technology (M.I.T.) Corporation Development Committee. The TNGP Board of Directors selected Mr. Barnard as a director, among other reasons, because of his knowledge of the nitrogen fertilizer industry, his extensive legal and corporate governance experience, and his expertise with public company reporting.
Christopher D. Bohn (age 50)	Mr. Bohn has been a director of TNGP since February 2016. He has served as CF Industries' Senior Vice President, Manufacturing and Distribution, since May 2016 and was previously CF Industries' Senior Vice President, Manufacturing, from January 2016 to May 2016, Senior Vice President, Supply Chain, from January 2015 to December 2015, Vice President, Supply Chain, from January 2014 to December 2014, Vice President, Corporate Planning, from October 2010 to January 2014 and Director, Corporate Planning and Analysis, from September 2009 to October 2010. Prior to joining CF Industries, Mr. Bohn served as Chief Financial Officer for Hess Print Solutions from August 2007 to September 2009. Earlier in his career, Mr. Bohn was Vice President, Global Financial Planning and Analysis, for Merisant Worldwide, Inc. The TNGP Board of Directors selected Mr. Bohn as a director, among other reasons, because of his knowledge of the nitrogen fertilizer industry, his extensive financial expertise and his experience as an executive overseeing manufacturing operations.

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Richard A. Hoker (age 53)	Mr. Hoker has been a director of TNGP since January 2014. He previously served as a director of TNGP from September 2010 until August 2011. Mr. Hoker has served as CF Industries' Vice President and Corporate Controller since November 2007. Before joining CF Industries, Mr. Hoker spent over 11 years with Sara Lee Corporation, where he served most recently as Vice President and Controller from January 2007 to November 2007 and Principal Accounting Officer from July 2007 to November 2007. Prior to being named Controller, Mr. Hoker held other financial management positions of increasing responsibility at Sara Lee. Prior to joining Sara Lee, Mr. Hoker was a member of the financial advisory services consulting group at Coopers & Lybrand LLP in Chicago (now PricewaterhouseCoopers) and previously led teams in the firm's audit practice. He is also a certified public accountant. The TNGP Board of Directors selected Mr. Hoker as a director, among other reasons, because of his knowledge of the nitrogen fertilizer industry, his expertise with public company financial reporting and his extensive financial and accounting expertise.
Dennis P. Kelleher (age 53)	Mr. Kelleher has been a director of TNGP since August 2011. He has served as CF Industries' Senior Vice President and Chief Financial Officer since August 2011. Before joining CF Industries, Mr. Kelleher served as Vice President, Portfolio Strategy for BP PLC's upstream business. From 2007 to 2010, Mr. Kelleher served as Chief Financial Officer for Pan American Energy LLC. From 2005 to 2007, Mr. Kelleher served as Vice President, Planning and Performance Management for BP PLC's upstream business. Mr. Kelleher was employed as a senior accountant at Arthur Andersen & Co. early in his career. He is a certified public accountant. The TNGP Board of Directors selected Mr. Kelleher as a director, among other reasons, because of his knowledge of the nitrogen fertilizer industry and his extensive financial and accounting expertise.
Michael A. Jackson (age 63)	Mr. Jackson has been a director of TNGP (or its predecessor) since February 2002. Mr. Jackson founded Jackson & Associates Consulting, LLC in October 2014 and serves as its Chief Executive Officer. Jackson & Associates provides strategic and marketing services to its agribusiness and life sciences clients. Prior to founding Jackson & Associates, Mr. Jackson served as Chief Marketing and Strategy Officer of Trupointe Cooperative from September 2011 to October 2014. Previously, Mr. Jackson served as the Chief Executive Officer and President of Adayana, Inc. from April 2008 to May 2011 and served as Chief Operating Officer of Adayana, Inc. from February 2006 to April 2008. Mr. Jackson was Chief Executive Officer and President of Agri Business Group, Inc., which he founded in 1979, until its merger with Adayana, Inc. in October 2005. The TNGP Board of Directors selected Mr. Jackson as a director, among other reasons, because of his extensive knowledge of and experience in the agricultural industry, gained while serving as the Chief Marketing and Strategy Officer of Trupointe Cooperative and as President and Chief Executive Officer of Agri Business Group, Inc. and Adayana, Inc. Mr. Jackson is also a director of Renewable Energy Group, Inc.
Anne H. Lloyd (age 56)	Ms. Lloyd has been a director of TNGP since May 2009. She served as Executive Vice President, Chief Financial Officer of Martin Marietta Materials, Inc. from 2013 to 2017; Executive Vice President, Chief Financial Officer and Treasurer from 2009 to 2013; Senior Vice President, Chief Financial Officer and Treasurer from 2006 to 2009; Senior Vice President and Chief Financial Officer from 2005 to 2006; Chief Accounting Officer from 1999 to 2005; and Vice President and Controller from 1998 to 1999. The TNGP Board of Directors selected Ms. Lloyd as a director, among other reasons, because of her significant experience gained in a variety of positions with a public company, particularly her expertise with public company financial reporting, enabling her to qualify as an "audit committee financial expert" as that term has been defined by the Securities and Exchange Commission (SEC). Ms. Lloyd is also a director of Highwoods Properties, Inc.

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Executive Officers
W. Anthony Will (age 52)	Mr. Will has been President and Chief Executive Officer of TNGP since January 2014. He has served as President and Chief Executive Officer and a director of CF Industries since January 2014. Mr. Will served as a director of TNGP from June 2010 until February 2016 and as Chairman of the TNGP Board of Directors from January 2014 to February 2016. Mr. Will was previously Senior Vice President, Manufacturing and Distribution of TNGP, from January 2012 to January 2014, and Vice President, Manufacturing and Distribution of TNGP from April 2010 to January 2012. He was previously CF Industries' Senior Vice President, Manufacturing and Distribution, from January 2012 to January 2014, CF Industries' Vice President, Manufacturing and Distribution, from March 2009 to December 2011 and CF Industries' Vice President, Corporate Development, from April 2007 to March 2009. Before joining CF Industries, Mr. Will was a partner at Accenture Ltd., a global management consulting, technology services, and outsourcing company. Earlier in his career, he held positions as vice president, business development at Sears, Roebuck and Company and vice president, strategy and corporate development at Fort James Corporation. Prior to that, Mr. Will was a manager with the Boston Consulting Group, a global management consulting firm. Mr. Will holds a B.S. degree in electrical engineering from Iowa State University and an M.M. degree (M.B.A.) from the Kellogg Graduate School of Management at Northwestern University.
Dennis P. Kelleher (age 53)	Mr. Kelleher has been Senior Vice President and Chief Financial Officer of TNGP since August 2011. He has served as Senior Vice President and Chief Financial Officer of CF Industries since August 2011. Before joining CF Industries, Mr. Kelleher served as Vice President, Portfolio Strategy for BP PLC's upstream business. From 2007 to 2010, Mr. Kelleher served as Chief Financial Officer for Pan American Energy LLC. From 2005 to 2007, Mr. Kelleher served as Vice President, Planning and Performance Management for BP PLC's upstream business. Mr. Kelleher was employed as a senior accountant at Arthur Andersen & Co. early in his career. He holds a B.S. degree in accountancy from the University of Illinois and an M.M. degree (M.B.A.) from the Kellogg Graduate School of Management at Northwestern University. He is a certified public accountant.
Douglas C. Barnard (age 59)	Mr. Barnard has been Senior Vice President, General Counsel, and Secretary of TNGP since January 2012 and was previously Vice President, General Counsel, and Secretary of TNGP from April 2010 to January 2012. He has served as CF Industries' Senior Vice President, General Counsel and Secretary since January 2012 and was previously CF Industries' Vice President, General Counsel, and Secretary from January 2004 to December 2011. Prior to joining CF Industries in January 2004, Mr. Barnard had been an Executive Vice President and General Counsel of Bcom3 Group, Inc., an advertising and marketing communication services group. Earlier in his career, Mr. Barnard was a partner in the law firm of Kirkland & Ellis LLP and, prior to that, was a Vice President, General Counsel, and Secretary of LifeStyle Furnishings International Ltd., a manufacturer and distributor of residential furniture and decorative fabrics. He holds a B.S. degree from M.I.T., a J.D. degree from the University of Minnesota, and an M.B.A. degree from the University of Chicago. Mr. Barnard has also taught as a lecturer at the University of Chicago Law School, and serves as a member of the M.I.T. Corporation Development Committee.
Christopher D. Bohn (age 50)	Mr. Bohn has been Senior Vice President, Manufacturing and Distribution, of TNGP since July 2016 and was previously Senior Vice President, Manufacturing, of TNGP from January 2016 to July 2016, Senior Vice President, Supply Chain, of TNGP from February 2015 to December 2015, Vice President, Supply Chain, of TNGP from January 2014 to February 2015 and Vice President, Corporate Planning, of TNGP from October 2010 to January 2014. He has served as CF Industries' Senior Vice President, Manufacturing and Distribution, since May 2016 and was previously CF Industries' Senior Vice President, Manufacturing, from January 2016 to May 2016, Senior Vice President, Supply Chain, from January 2015 to December 2015, Vice President, Supply Chain, from January 2014 to December 2014, Vice President, Corporate Planning, from October 2010 to January 2014 and Director, Corporate Planning and Analysis, from September 2009 to October 2010. Prior to joining CF Industries, Mr. Bohn served as Chief Financial Officer for Hess Print Solutions from August 2007 to September 2009. Earlier in his career, Mr. Bohn was Vice President, Global Financial Planning and Analysis, for Merisant Worldwide, Inc. He holds a B.S. degree in finance from Indiana University and an M.M. degree (M.B.A.) from the Kellogg Graduate School of Management at Northwestern University.

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Bert A. Frost (age 53)	Mr. Frost has been Senior Vice President, Sales, Market Development, and Supply Chain of TNGP since July 2016 and was previously Senior Vice President, Sales, Distribution and Market Development, of TNGP from April 2015 to July 2016, Senior Vice President, Sales and Market Development, of TNGP from January 2012 to April 2015, and Vice President, Sales and Market Development, of TNGP from April 2010 to January 2012. He has served as CF Industries' Senior Vice President, Sales, Market Development, and Supply Chain, since May 2016 and was previously CF Industries' Senior Vice President, Sales, Distribution, and Market Development, from May 2014 to May 2016, Senior Vice President, Sales and Market Development, from January 2012 to May 2014, and Vice President, Sales and Market Development from January 2009 to December 2011. Before joining CF Industries in November 2008, Mr. Frost spent over 13 years with Archer Daniels Midland Company, where he served most recently as Managing Director—International Fertilizer/Inputs from June 2008 to November 2008 and Director—Fertilizer, Logistics and Ports Divisions, ADM—Brazil from April 2000 to June 2008. Earlier in his career, Mr. Frost held positions of increasing responsibility at Archer Daniels Midland and Koch Industries, Inc. He holds a B.S. degree from Kansas State University and is a graduate of Harvard Business School's Advance Management Program.
Adam Hall (age 43)	Mr. Hall has been Vice President, Corporate Development, of TNGP since June 2013. He has also served as CF Industries' Vice President, Corporate Development, since June 2013. Before joining CF Industries, Mr. Hall spent 4 years with Bunge Limited, where he served as executive director, corporate strategy and development, from August 2010 to May 2013, where he led global strategy, mergers and acquisitions and the development of new growth initiatives, and director of global strategy and business development, sugar and bioenergy, from August 2009 to August 2010. Prior to his most recent role with Bunge, he worked in a number of countries in positions with several international companies, including, as a manager at Bain & Company, a global management consulting firm, from January 2008 to August 2009, and as a consultant at LEK Consulting, a global strategy consulting firm, from February 1999 to May 2002. Mr. Hall began his career as a corporate attorney with the law firm of Clayton Utz in Perth, Australia. He earned undergraduate degrees in law and commerce from the University of Western Australia and an M.B.A. degree from Harvard Business School.
Richard A. Hoker (age 53)	Mr. Hoker has been Vice President and Corporate Controller of TNGP since April 2010. He has served as CF Industries' Vice President and Corporate Controller since November 2007. Before joining CF Industries, Mr. Hoker spent over 11 years with Sara Lee Corporation, where he served most recently as Vice President and Controller from January 2007 to November 2007 and Principal Accounting Officer from July 2007 to November 2007. Prior to being named Controller, Mr. Hoker held other financial management positions of increasing responsibility at Sara Lee. Prior to joining Sara Lee, Mr. Hoker was a member of the financial advisory services consulting group at Coopers & Lybrand LLP in Chicago (now PricewaterhouseCoopers) and previously led teams in the firm's audit practice. Mr. Hoker holds a B.S. degree in accounting from DePaul University and an M.B.A. degree in finance and accounting from the University of Chicago. He is also a certified public accountant.
Susan L. Menzel (age 52)	Ms. Menzel has been Senior Vice President, Human Resources, of TNGP since October 2017.  She has also served as Senior Vice President, Human Resources of CF Industries since October 2017.  Prior to joining CF Industries, Ms. Menzel served as executive vice president, human resources, for CNO Financial Group, Inc. from May 2005 to September 2017. Prior to CNO Financial Group, she served as senior vice president, human resources for APAC Customer Services, Inc., and in roles of increasing responsibility for Sears, Roebuck & Company and Montgomery Ward, Inc. Ms. Menzel holds a bachelor's degree in business administration and economics from Augustana College.

Except for any employment described above with CF Industries, of which TNGP is an indirect, wholly-owned subsidiary, no occupation carried on by any director or executive officer of TNGP during the past five years was carried on with any corporation or organization that is a parent, subsidiary or other affiliate of TNGP. There are no family relationships among any of the directors and any executive officer of TNGP, nor is there any arrangement or understanding between any director, executive officer and any other person pursuant to which that director or executive officer was selected as a director or executive officer of TNGP, as the case may be.

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Meetings of the Board

The TNGP Board of Directors held four regular meetings in 2017. Each director attended 100 percent of the total meetings of the TNGP Board of Directors.

Audit Committee

In 2017, the Audit Committee of the TNGP Board of Directors met five times and each member of the committee attended 100 percent of the meetings of the committee. The Audit Committee is currently composed of Ms. Lloyd (Chairman) and Messrs. Bailey and Jackson. Each audit committee member is a non-employee director and meets the independence requirements as set forth in the New York Stock Exchange (NYSE) listing standards. The Audit Committee has authority to review policies and practices of TNGP dealing with various matters relating to the financial condition and auditing procedures of the Partnership. The TNGP Board of Directors has further determined that Ms. Lloyd meets the requirements to be named "audit committee financial expert" as the term has been defined by the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002. The current Audit Committee Charter was adopted by the TNGP Board of Directors on October 27, 2015, and is reviewed annually by the Audit Committee. A copy of the charter can be viewed on CF Industries' Internet website at www.cfindustries.com by selecting "Investors" and "Terra Nitrogen Investors" and "IR Menu" and "Corporate Profile" and "Governance Documents." The charter is also available in print upon request. All such requests should be made in accordance with directions contained in Item 1, Business—Overview, of this Annual Report on Form 10-K.

Nominating and Corporate Governance Committee

In 2017, the Nominating and Corporate Governance Committee of the TNGP Board of Directors met three times and each member of the committee attended 100 percent of the meetings of the committee. The Nominating and Corporate Governance Committee is currently composed of Messrs. Bailey (Chairman) and Jackson, and Ms. Lloyd. Each of these committee members is a non-employee director and meets the independence requirements as set forth in the NYSE listing standards. The purpose of the Nominating and Corporate Governance Committee is to assist the TNGP Board of Directors in fulfilling its responsibilities to unitholders by shaping the corporate governance of the Partnership and enhancing the quality and independence of the nominees to the TNGP Board of Directors. The General Partner's Corporate Governance Guidelines establish that potential director candidates shall be selected on the basis of broad experience; wisdom; integrity; ability to make independent analytical inquiries; understanding of TNGP's business environment and willingness to devote adequate time and energy to the TNGP Board of Directors' duties. The General Partner's Corporate Governance Guidelines also establishes that the TNGP Board of Directors will consider directors of diverse backgrounds, in terms of both the individuals involved and their various experiences and areas of expertise.

The TNGP Board of Directors has determined that the above mentioned policy has been implemented appropriately when, and has been effective in, determining the qualifications of potential director candidates to the TNGP Board of Directors.

The current Nominating and Corporate Governance Committee Charter was adopted by the TNGP Board of Directors on October 27, 2015, and is reviewed annually by the Nominating and Corporate Governance Committee. A copy can be viewed on CF Industries' Internet website at www.cfindustries.com by selecting "Investors" and "Terra Nitrogen Investors" and "IR Menu' and "Corporate Profile" and "Governance Documents." The charter is also available in print upon request as described in Item 1, Business—Overview, of this Annual Report on Form 10-K.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 (Exchange Act) requires the Partnership's executive officers, directors and greater than 10 percent beneficial owners to file initial reports of ownership and reports of changes in beneficial ownership with the SEC and the NYSE. TNCLP and the Operating Partnership have no executive officers, directors, or employees. Therefore, the executive officers and directors of TNGP are required by SEC regulations to furnish the Partnership with copies of reports of ownership and changes in ownership of our common units they file. Based solely on a review of the copies of such forms furnished to the Partnership and written representations from TNGP's executive officers and directors, we believe all of the Partnership's officers, directors and greater than 10 percent beneficial owners made all required filings during and with respect to 2017 in a timely manner.

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Corporate Governance Matters

TNGP has adopted Corporate Governance Guidelines which meet the requirements of the NYSE. Because TNGP is a wholly-owned subsidiary of CF Industries whose officers are all officers of CF Industries, the CF Industries' Code of Corporate Conduct applies to TNGP's executive officers (including its principal executive officer and principal financial officer) and other officers. In addition, the CF Industries' Code of Corporate Conduct applies to TNGP's non-management directors in the same fashion as it applies to CF Industries' non-management directors. The CF Industries Code of Corporate Conduct also meets the requirements of the NYSE. A copy of the General Partner's Corporate Governance Guidelines and CF Industries' Code of Corporate Conduct can be viewed on CF Industries' Internet website at www.cfindustries.com by selecting "Investors" and "Terra Nitrogen Investors" and "IR Menu" and "Corporate Profile" and "Governance Documents." A copy of each is also available in print upon request by following the directions contained in Item 1, Business—Overview, of this Annual Report on Form 10-K. We intend to disclose on CF Industries' Internet website any amendment to any provision of the CF Industries Code of Corporate Conduct that relates to any element of the definition of "code of ethics" enumerated in Item 406(b) of Regulation S-K under the Exchange Act and any waiver from any such provision granted to TNGP's principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.

The TNGP Board of Directors has affirmatively determined that Messrs. Bailey and Jackson, and Ms. Lloyd each meet the criteria for independence required by the NYSE listing standards. Following its evaluation, the TNGP Board of Directors concluded that none of these directors were involved in any transaction, relationship or arrangement not otherwise disclosed that would impair his or her independence.

During 2017, in accordance with the General Partner's Corporate Governance Guidelines, the independent directors met at regularly scheduled executive sessions of the TNGP Board of Directors without management or management directors. The executive sessions are held at TNGP Board of Directors meetings and the independent directors choose one of the independent directors to lead the discussion and preside at each such meeting.

Communication

Interested parties who wish to communicate a message to the TNGP Board of Directors, the independent directors, or any committee may do so by contacting Ms. Anne H. Lloyd, Chairman of the Audit Committee, Terra Nitrogen GP Inc., 4 Parkway North, Suite 400, Deerfield, IL 60015-2590.

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ITEM 11.    EXECUTIVE COMPENSATION.

Compensation Discussion and Analysis

We do not have any executive officers or employees. Instead, we are managed by the General Partner, TNGP, the executive officers of which are officers of CF Industries or its subsidiaries. CF Industries indirectly owns approximately 75.1% of the outstanding common units and all of the outstanding Class B common units representing our limited partnership interests and CF Industries is also the indirect 100% owner of TNGP. The executive officers of TNGP are provided compensation and benefits directly from subsidiaries of CF Industries. The compensation committee of the Board of Directors of CF Industries is responsible for the compensation decisions relating to the executive officers of TNGP. The TNGP Board of Directors does not have a compensation committee and does not make any decisions with respect to the compensation of TNGP's executive officers. For more discussion regarding the compensation provided to the executive officers of TNGP by CF Industries, see the Schedule 14A definitive proxy statement of CF Industries, which will be filed with the SEC when available (the Proxy Statement).

Since neither TNCLP nor TNGP provides any compensation directly to TNGP's executive officers and neither has any involvement in determining their compensation, we have concluded that a discussion of the compensation awarded to, earned by and paid to TNGP's named executive officers, as contemplated by Item 402(b) of Regulation S-K, would not be meaningful. Therefore, our Compensation Discussion and Analysis does not resemble that of most public companies. Instead, we think it is more meaningful to describe the arrangement pursuant to which we receive services from CF Industries.

Since we have no executive officers or employees, all employment-related functions, including production planning, manufacturing management, logistics, accounting, legal, risk management, investor relations and other general and administrative functions are provided to us by employees of subsidiaries of CF Industries.

We reimburse subsidiaries of CF Industries for a portion of the compensation expenses incurred with respect to TNGP's executive officers and other employees of CF Industries and its affiliates who provide services to us. Compensation expenses for production and manufacturing services are charged directly to us based on actual costs. Compensation expenses for selling, general and administrative related functions, including the compensation of the TNGP's executive officers, are reimbursed based on a quarterly fixed fee arrangement.

Further discussion of our arrangements with subsidiaries of CF Industries can be found in Note 10—Related Party Transactions, of the Notes to the Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Compensation Committee Report

TNCLP has no directors or executive officers and the TNGP Board of Directors serves as TNCLP's governing body. TNGP does not have a compensation committee. Therefore, the full TNGP Board of Directors reviewed and discussed the Compensation Discussion and Analysis with TNGP's management. Based on such review and discussions, the TNGP Board of Directors recommended that the Compensation Discussion and Analysis be included in TNCLP's Annual Report on Form 10-K.

Respectfully submitted,

Douglas C. Barnard, Chairman

Coleman L. Bailey

Christopher D. Bohn

Richard A. Hoker

Michael A. Jackson

Dennis P. Kelleher

Anne H. Lloyd

SUMMARY COMPENSATION TABLE

Pursuant to the SEC's executive compensation disclosure rules, a required table may be omitted if there has been no compensation awarded to, earned by or paid to any named executive officer that is required to be reported in that table. Therefore, we have not included a Summary Compensation Table or any other table (or any of the corresponding narrative disclosures) regarding compensation paid to named executive officers, because we have no employees, and, as such, no compensation was paid to any named executive officer by either TNGP or us during 2017. Similarly, there is no potential compensation to disclose with respect to a potential termination of employment of any named executive officer.

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2017 Pay Ratio

Under new SEC rules, companies are required to disclose the ratio of the total annual compensation of their principal executive officer to their median employee’s total annual compensation. As described above, we do not have any executive officers or employees, and did not have any executive officers or employees during our fiscal year 2017, and therefore we had no compensation from which to derive pay ratio disclosure pursuant to such new SEC rules.

DIRECTOR COMPENSATION

TNCLP has no directors. The following table summarizes the compensation of each non-employee director of the TNGP Board of Directors for the fiscal year ended December 31, 2017.

Name	Fees Earned or Paid in Cash ($)(1)		Stock Awards ($)(2)		Total
Coleman L. Bailey	$	62,500	$	116,449	$	178,949
Michael A. Jackson	$	60,000	$	114,427	$	174,427
Anne H. Lloyd	$	70,000	$	104,042	$	174,042

_______________________________________________________________________________

⁽¹⁾  For information about the nature of fees earned during the fiscal year, see the narrative accompanying this table.

⁽²⁾  This column represents the fair value under Financial Accounting Standards Board Accounting Standards Codification 718, Stock Compensation, with respect to TNCLP phantom units granted to each non-employee director of the TNGP Board of Directors in 2017, including additional phantom units received in connection with quarterly distributions to TNCLP common unitholders during the year on phantom units held by the director. The phantom unit awards granted to directors in 2017 will settle in cash based upon the average closing price per common unit for the 20-trading-day period that immediately precedes the vesting date (unless deferred pursuant to the terms of the TNGP Phantom Unit Program). Additional information with respect to the TNGP Phantom Unit Program is set forth below under "Director Phantom Unit Awards."

Director Fees Paid in Cash

In 2017, each non-employee director of the TNGP Board of Directors received an annual retainer of $60,000 (paid quarterly). We do not pay meeting fees to our non-employee directors. Ms. Lloyd received an additional annual cash retainer of $10,000 (paid quarterly) for serving as Chairman of the Audit Committee. Mr. Bailey received an additional annual cash retainer of $2,500 (paid quarterly) for serving as Chairman of the Nominating and Corporate Governance Committee. In 2017, Messrs. Barnard, Bohn, Kelleher and Hoker served on the TNGP Board of Directors and were employees of CF Industries, and therefore receive no additional compensation for serving on the TNGP Board of Directors.

Director Ownership Guidelines

The TNGP Board of Directors has established a minimum ownership guideline for non-employee directors of 2,000 common units (the Ownership Guide). Newly elected directors have a period of five years to satisfy the Ownership Guide. The Ownership Guide may be satisfied by ownership of common units, accrual of phantom units under TNGP Board of Directors-approved compensation programs or any combination of the two.

Director Phantom Unit Awards

Non-employee directors of the TNGP Board of Directors receive compensation in the form of TNCLP phantom units. A phantom unit entitles the holder to a cash payment equal to the value of a TNCLP common unit at the time of vesting. In addition, each phantom unit entitles the holder to additional phantom units when quarterly cash distributions are made to TNCLP common unitholders. Non-employee directors receive an annual award of a number of phantom units determined by dividing a value fixed by the TNGP Board of Directors by the average month-end closing price of TNCLP common units for the six-month period preceding the date of grant. The grant date value of the annual award is currently fixed at $90,000. The annual awards are granted upon the first meeting of the TNGP Board of Directors each year.

The annual awards are governed by the Terra Nitrogen GP Inc. Non-Employee Director Phantom Unit and Deferred Compensation Plan (the TNGP Phantom Unit Program). Each phantom unit granted pursuant to the TNGP Phantom Unit Program is unvested on the date of grant. Each phantom unit vests automatically on the earlier of (i) a director's separation from service that is other than a removal for cause or (ii) the date of the first meeting of the TNGP Board of Directors of the calendar

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year following the date of grant of the award. Unless a director elected to defer phantom units (as described below), upon vesting, the director will receive a cash payment in respect of the phantom units (including any additional phantom units received in connection with quarterly distributions to TNCLP common unitholders following the date of grant). The amount paid with respect to each such phantom unit will be equal to the average closing price per common unit for the 20-trading-day period immediately preceding the vesting date.

Under the TNGP Phantom Unit Program, directors may elect to defer receipt of phantom units granted pursuant to the TNGP Phantom Unit Program. Each non-employee director may elect in writing, prior to December 31 of any year, to defer receipt of payment with respect to all or a portion (but not less than 25%) of phantom units that may be awarded during the following year. Phantom units (including any additional phantom units received in connection with quarterly distributions to TNCLP common unitholders following the date of the grant) that a non-employee director elects to defer are credited to an unfunded deferred compensation account. Deferred phantom units are generally required to be held in an unfunded deferred compensation account until the date of the director's departure from the TNGP Board of Directors. Pursuant to the terms of the TNGP Phantom Unit Program, amounts credited to a director's deferred compensation account shall be deemed to be invested in TNCLP common units or in such form of alternative unit as the director designates from among the options made available from time to time by TNGP. Upon departure, the deferred compensation account value is paid out in cash based on the average closing price of TNCLP common units or alternative unit, as applicable, for the 20-trading-day period immediately following departure. However, in the event of a sale of TNCLP (including by merger or other corporate transaction) or a sale of substantially all of TNCLP's assets, the value of deferred phantom units will be paid in a lump sum upon consummation of the transaction.

In 2005, the TNGP Board of Directors adopted a phantom unit program (the 2005 Phantom Unit Program) which entitled each non-employee director of TNGP to an annual grant of 1,250 TNLP phantom units. All phantom unit awards granted pursuant to the 2005 Phantom Unit Program are generally required to be held in an unfunded deferred compensation account until the date of the director's departure from the TNGP Board of Directors. Amounts credited to a director's deferred compensation account shall be deemed to be invested in TNCLP common units or in such form of alternative unit as the director designates from among the options made available from time to time by TNGP. Upon departure, the deferred compensation account value is paid out in cash based on the average closing price of TNCLP common units or alternative units, as applicable, for the 20-trading-day period immediately following departure. However, in the event of a sale of TNCLP (including by merger or other corporate transaction) or a sale of substantially all of TNCLP's assets, the value of the deferred phantom units will be paid in a lump sum upon consummation of the transaction.

The following table sets forth the number of phantom units held by each non-employee director as of February 15, 2018, and awards vested in 2017.

				Number of Phantom Units Currently Held
	Number of Phantom Units Vested in 2017	Value Realized on Vesting ($)
Name				Vested	Unvested
Coleman L. Bailey	919.06	$	99,957	4,467.01	1,116.63
Michael A. Jackson	919.06	$	99,957	4,932.82	1,116.63
Anne H. Lloyd	919.06	$	99,957	2,561.04	1,116.63

Other Director Compensation

TNGP reimburses all directors for reasonable travel and other necessary business expenses incurred in the performance of their services for TNGP and TNCLP. Non-employee directors do not receive any additional payments or perquisites.

Compensation Committee Interlocks and Insider Participation

TNGP does not have a compensation committee. The Compensation Committee of the Board of Directors of CF Industries has made executive officer compensation decisions with respect to those TNGP executive officers who are also key employees of CF Industries. The Compensation Committee of CF Industries is composed of the directors named as signatories to the "Report on Executive Compensation" as set forth in CF Industries' Proxy Statement. No such director has any direct or indirect material interest in or relationship with TNGP other than as related to his or her position as a director of CF Industries. During 2017, no officer of TNGP served on the board of directors of any other entity, where any officer or director of such other entity also served on the TNGP Board of Directors or CF Industries' Compensation Committee. None of the members of CF Industries' Compensation Committee are employees of CF Industries or its subsidiaries.

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ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

TNGP owns the entire general partner interest in both TNCLP and the Operating Partnership. TNGP's principal executive offices are located at 4 Parkway North, Suite 400, Deerfield, Illinois 60015-2590. CF Industries, Inc. is a direct wholly owned subsidiary of CF Industries Holdings, Inc., and CF Industries Enterprises, Inc., Terra Nitrogen GP, Inc., CF Industries Sales, LLC and Terra LP Holdings LLC are indirect wholly owned subsidiaries of CF Industries Holdings, Inc. CF Industries Enterprises, Inc. owns all the outstanding capital stock of TNGP. Terra LP Holdings LLC owned directly, as of February 15, 2018, 13,889,014 common units of TNCLP and all 184,072 of the Class B common units of TNCLP. CF Industries Holdings, Inc. and its subsidiaries are engaged in certain transactions with the Partnership described under the caption "Certain Relationships and Related Transactions" below.

The following table shows the ownership of TNCLP common units and CF Industries Holdings, Inc. common stock as of February 15, 2018 by (a) each person known to TNGP to be a beneficial owner of more than 5 percent of the TNCLP common units (based on information reported to the SEC by or on behalf of such persons), (b) each director of TNGP and (c) each executive officer of TNGP. Unless otherwise stated below, the address of each of the following persons is 4 Parkway North, Suite 400, Deerfield, Illinois 60015-2590.

Name	Number of TNCLP Common Units Beneficially Owned	Percent of Class		Number of CF Industries Holdings, Inc. Common Shares Beneficially Owned(1),(2)	Percent of Class
CF Industries Holdings, Inc.(3)(4)	18,501,576	100.0	%	—	—
CF Industries, Inc.(3)(4)	18,501,576	100.0	%	—	—
CF Industries Enterprises, Inc.(3)(4)	18,501,576	100.0	%	—	—
CF Industries Sales, LLC(3)	13,889,014	75.1	%	—	—
Terra LP Holdings LLC(3)	13,889,014	75.1	%	—	—
Terra Nitrogen GP Inc.(4)(5)	4,612,562	24.9	%	—	—
Coleman L. Bailey	—	—		—	—
Douglas C. Barnard	—	—		402,462	*
Christopher D. Bohn	—	—		189,150	*
Bert A. Frost	—	—		415,831	*
Adam Hall	—	—		110,399	*
Richard A. Hoker	—	—		156,467	*
Michael A. Jackson	—	—		—	—
Dennis P. Kelleher	—	—		373,462	*
Anne H. Lloyd	—	—		—	—
Susan L. Menzel	—	—		—	—
W. Anthony Will	—	—		1,037,890	*
All directors and executive officers as a group (11 persons)	—	—		2,685,661	*

_______________________________________________________________________________

* Represents less than 1% of class.

⁽¹⁾  Each person has sole voting and investment power of all the CF Industries Holdings, Inc. common shares indicated, either individually or jointly or in common with the individual’s spouse, subject to community property laws where applicable.

⁽²⁾  The shares indicated for Messrs. Barnard, Bohn, Frost, Hall, Hoker, Kelleher and Will include shares underlying stock options granted under CF Industries' equity and incentive plans that have already vested or that will vest within 60 days. The shares underlying these stock options cannot be voted. Except for shares underlying restricted stock units that vest within 60 days, the table does not include restricted stock units or performance vesting restricted stock units granted pursuant to CF Industries’ equity and incentive plans, as these awards cannot be voted during the vesting period. The table does not include “phantom” shares held by Messrs. Barnard, Hoker, and Will as a deemed investment under CF Industries’ Supplemental Benefit and Deferral Plan (a non-qualified benefits restoration and deferred compensation plan), as these phantom shares cannot be voted.

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⁽³⁾  By virtue of its ownership of all the outstanding equity of Terra LP Holdings LLC, CF Industries Sales, LLC may be deemed to possess indirect beneficial ownership of the common units beneficially owned by Terra LP Holdings LLC. By virtue of its ownership of all the outstanding equity of CF Industries Sales, LLC and Terra Nitrogen GP, Inc., CF Industries Enterprises, Inc. may be deemed to possess indirect beneficial ownership of the common units beneficially owned by Terra Nitrogen GP Inc., Terra LP Holdings LLC and CF Industries Sales, LLC. By virtue of its ownership of all the outstanding common stock of CF Industries Enterprises, Inc., CF Industries, Inc. may be deemed to possess indirect beneficial ownership of the common units beneficially owned by Terra Nitrogen GP Inc., Terra LP Holdings LLC, CF Industries Sales, LLC and CF Industries Enterprises, Inc. By virtue of its ownership of all the outstanding common stock of CF Industries, Inc., CF Industries Holdings, Inc. may be deemed to possess indirect beneficial ownership of the common units beneficially owned by Terra Nitrogen GP Inc., Terra LP Holdings LLC, CF Industries Sales, LLC, CF Industries Enterprises, Inc. and CF Industries, Inc.

⁽⁴⁾  Number of common units beneficially owned includes 4,612,562 common units deemed to be beneficially owned based on Terra Nitrogen GP Inc.'s right to acquire voting and investment power over such common units on April 2, 2018 as a result of the exercise of the call right.

⁽⁵⁾  Terra Nitrogen GP Inc., the General Partner, owns the entire general partner interest in the Partnership.

Equity Compensation Plan Information

The Partnership maintains no separate equity compensation plans. All equity compensation benefits awarded to TNGP executive officers who are also key employees of CF Industries Holdings, Inc. are awarded through CF Industries Holdings, Inc.'s equity compensation plans, all of which are described in CF Industries Holdings, Inc.'s filings with the SEC.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The TNCLP Partnership Agreement generally provides that whenever a potential conflict of interest exists or arises between the General Partner or any of its affiliates, on the one hand, and the Partnership or any partner or assignee, on the other hand, any resolution or course of action in respect of such conflict of interest shall be permitted and deemed approved by all partners, and shall not constitute a breach of the TNCLP Partnership Agreement, of any agreement contemplated therein, or of any duty stated or implied by law or equity, if the resolution or course of action is, or by operation of the TNCLP Partnership Agreement is deemed to be, fair and reasonable to TNCLP.

In connection with its resolution of any conflict of interest, the General Partner may consider:

• the relative interests of any party involved in such conflict or affected by such action, agreement, transaction or situation and the benefits and burdens relating to such interest;

• any customary or accepted General Partner and industry practices;

• any applicable generally accepted accounting practices or principles; and

• such additional factors as the General Partner determines in its sole discretion to be relevant, reasonable or appropriate under the circumstances.

Under the TNCLP Partnership Agreement, in the absence of bad faith by the General Partner, the resolution, action or terms so made, taken or provided by the General Partner with respect to any conflict of interest will not constitute a breach of the TNCLP Partnership Agreement or any agreement contemplated thereby or any standard of care or duty imposed in the TNCLP Partnership Agreement or such other agreements or under any law, rule or regulation.

Finally, the TNCLP Partnership Agreement provides that TNCLP may not lend funds to the General Partner or any of its affiliates (other than the Operating Partnership), except for short-term funds for management purposes.

Information with respect to certain relationships and related transactions is contained in Notes to the Consolidated Financial Statements, Note 10—Related Party Transactions, included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, and is incorporated herein by reference. Information with respect to director independence is set forth in Item 10. Directors, Executive Officers and Corporate Governance, and is incorporated herein by reference.

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ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES .

Principal Accountant Audit Fees and Services Fees

The following table describes fees for professional audit services rendered by KPMG LLP (KPMG) for the audit of the Partnership's annual financial statements for the years ended December 31, 2017 and 2016 and fees billed for other services rendered by KPMG during those periods.

Type of Fee	2017		2016
Audit fees(1)	$	321,000	$	311,750
Audit related fees	—		—
Total audit and audit related fees	321,000		311,750
Tax fees	—		—
All other fees	—		—
Total fees	$	321,000	$	311,750

_______________________________________________________________________________

⁽¹⁾  Audit fees include the aggregate fees paid by the Partnership during the fiscal year indicated for professional services rendered by KPMG for the audit of the Partnership's consolidated financial statements included in the Partnership's Annual Report on Form 10-K and review of consolidated financial statements included in the Partnership's quarterly reports on Form 10-Q.

Audit Committee Pre-Approval of Policies and Procedures

Pursuant to its charter, the Audit Committee of the TNGP Board of Directors is responsible for reviewing and approving, in advance, any audit and any permissible non-audit engagement or relationship between TNGP and its independent auditors. KPMG's engagement to conduct the audit of the Partnership's financial statements included herein was approved by the Audit Committee of the TNGP Board of Directors on February 3, 2017. Additionally, each permissible non-audit engagement or service performed by KPMG is required to be reviewed and approved in advance by the Audit Committee of the TNGP Board of Directors, as provided in its charter.

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Part IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)	Documents filed as part of this report:
	1.	The following financial statements are included in Part II, Item 8. Financial Statements and Supplementary Data.
		Report of Independent Registered Public Accounting Firm	35
		Consolidated Balance Sheets	36
		Consolidated Statements of Operations	37
		Consolidated Statements of Partners' Capital	38
		Consolidated Statements of Cash Flows	39
		Notes to the Consolidated Financial Statements	40
		Financial statement schedules are omitted because they are not applicable or the required information is included in the consolidated financial statements or notes thereto.
	2.	Exhibits:
		A list of exhibits filed with this Annual Report on Form 10-K (or incorporated by reference to exhibits previously filed or furnished) is provided in the Exhibit Index on page 70.

ITEM 16.    FORM 10-K SUMMARY.

None.

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EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
3.1	Certificate of Limited Partnership of Terra Nitrogen Company, L.P.
3.2	First Amended and Restated Agreement of Limited Partnership of Terra Nitrogen Company, L.P., dated as of September 1, 2005, filed as Exhibit 3.1 to Terra Nitrogen Company, L.P.'s Form 8-K filed on September 7, 2005 (File No. 033-43007), is incorporated herein by reference.
3.3	Amendment No.1 to First Amended and Restated Agreement of Limited Partnership of Terra Nitrogen Company, L.P., dated as of April 26, 2012, filed as Exhibit 3.1 to Terra Nitrogen Company, L.P.'s Form 8-K filed on May 2, 2012 (File No. 033-43007), is incorporated herein by reference.
3.4	Certificate of Incorporation of Terra Nitrogen GP Inc., dated August 29, 2005, filed as Exhibit 3.2 to Terra Nitrogen Company, L.P.'s Form 8-K filed on September 7, 2005 (File No. 033-43007), is incorporated herein by reference.
3.5	By-Laws of Terra Nitrogen GP Inc., filed as Exhibit 3.3 to Terra Nitrogen Company, L.P.'s Form 8-K filed on September 7, 2005 (File No. 033-43007), are incorporated herein by reference.
3.6	Certificate of Limited Partnership of Terra Nitrogen, Limited Partnership.
3.7	Amended and Restated Agreement of Limited Partnership of Terra Nitrogen, Limited Partnership, dated as of September 1, 2005, filed as Exhibit 10.3 to Terra Nitrogen Company, L.P.'s Form 8-K filed on September 7, 2005 (File No. 033-43007), is incorporated herein by reference.
3.8	Amendment No.1 to First Amended and Restated Agreement of Limited Partnership of Terra Nitrogen Limited Partnership, dated as of April 26, 2012, filed as Exhibit 3.8 to the Terra Nitrogen Company, L.P. Form 10-K for the fiscal year ended December 31, 2012 (File No. 033-43007), is incorporated herein by reference.
4.1	Deposit Agreement, dated as of December 4, 1991, by and among Terra Nitrogen Company, L.P., the Depositary and the Unitholders.
4.2	Form of Depositary Receipt for Common Units (included as Exhibit B to the Deposit Agreement filed as Exhibit 4.1 above).
4.3	Form of Transfer Application (included in Exhibit B to the Deposit Agreement filed as Exhibit 4.1 above).
10.1	Amended and Restated Terminal Lease agreement dated December 28, 2012, by and between Terra Nitrogen Company, L.P. and CF Industries, Inc., filed as Exhibit 10.1 to Terra Nitrogen Company, L.P.'s Form 8-K filed on December 28, 2012 (File No. 033-43007), is incorporated herein by reference.
10.2	Amendment to the General and Administrative Services and Product Offtake Agreement by and between CF Industries, Inc., Terra Industries Inc., Terra Nitrogen GP Inc. and Terra Nitrogen Company, L.P., dated September 28, 2010, filed as Exhibit 10.1 to Terra Nitrogen Company, L.P.'s Form 8-K filed on September 29, 2010 (File No. 033-43007), is incorporated herein by reference.
10.3	Tank Car Lease Agreement dated December 29, 2010, between Terra Nitrogen Company, L.P. and CF Industries, Inc., filed as Exhibit 10.2 to Terra Nitrogen Company, L.P.'s Form 8-K filed on December 30, 2010 (File No. 033-43007), is incorporated herein by reference.
10.4	Spare Parts Sharing Agreement, dated as of May 6, 2013, by and among CF Industries Nitrogen, LLC, Terra Nitrogen, Limited Partnership and Canadian Fertilizers Limited, filed as Exhibit 10.1 to the Terra Nitrogen Company, L.P. Form 10-Q for the quarterly period ended March 31, 2013 (File No. 033-43007), is incorporated herein by reference.
10.5	Form of Terra Nitrogen GP Inc. Non-Employee Director Phantom Unit Agreement, amended and restated October 27, 2015, filed as Exhibit 10.5 to the Terra Nitrogen Company, L.P. Form 10-K for the fiscal year ended December 31, 2015 (File No. 1-10877), is incorporated herein by reference.**
10.6	Form of Terra Nitrogen GP Inc. Non-Employee Director Phantom Unit and Deferred Compensation Plan, amended and restated October 27, 2015, filed as Exhibit 10.6 to the Terra Nitrogen Company, L.P. Form 10-K for the fiscal year ended December 31, 2015 (File No. 1-10877), is incorporated herein by reference.**
10.7	Form of Award Agreement under the Terra Nitrogen GP Inc. Non-Employee Director Phantom Unit and Deferred Compensation Plan, filed as Exhibit 10.7 to the Terra Nitrogen Company, L.P. Form 10-K for the fiscal year ended December 31, 2015 (File No. 1-10877), is incorporated herein by reference.**

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EXHIBIT NO.	DESCRIPTION
10.8	Assignment and Assumption Agreement, dated as of February 7, 2018, by and between Terra Nitrogen Company, L.P. and Terra Nitrogen GP Inc. filed as Exhibit 10.1 to Terra Nitrogen Company, L.P.'s Form 8-K filed on February 7, 2018 (File No. 033-43007), is incorporated herein by reference.
21	Subsidiaries of the Registrant.
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from Terra Nitrogen Company, L.P.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (1) Consolidated Balance Sheets, (2) Consolidated Statements of Operations, (3) Consolidated Statements of Partners' Capital, (4) Consolidated Statements of Cash Flows and (5) the Notes to the Consolidated Financial Statements.

_______________________________________________________________________________

** Management contract or compensatory plan or arrangement required to be filed (and/or incorporated by reference) as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(a)(3) of Form 10-K.

71

TERRA NITROGEN COMPANY, L.P.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Terra Nitrogen Company, L.P.
		By:	Terra Nitrogen GP Inc., as General Partner
Date:	February 22, 2018	By:	/s/ W. ANTHONY WILL
			W. Anthony Will President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant as of February 22, 2018 and in the capacities indicated.

Signature	Title
/s/ W. ANTHONY WILL	President and Chief Executive Officer of Terra Nitrogen GP Inc. (Principal Executive Officer)
W. Anthony Will
/s/ DENNIS P. KELLEHER	Director, Senior Vice President and Chief Financial Officer of Terra Nitrogen GP Inc. (Principal Financial Officer)
Dennis P. Kelleher
/s/ RICHARD A. HOKER	Director, Vice President and Corporate Controller of Terra Nitrogen GP Inc. (Principal Accounting Officer)
Richard A. Hoker
/s/ DOUGLAS C. BARNARD	Director and Chairman of the Board of Terra Nitrogen GP Inc.
Douglas C. Barnard
/s/ COLEMAN L. BAILEY	Director of Terra Nitrogen GP Inc.
Coleman L. Bailey
/s/ CHRISTOPHER D. BOHN	Director of Terra Nitrogen GP Inc.
Christopher D. Bohn
/s/ MICHAEL A. JACKSON	Director of Terra Nitrogen GP Inc.
Michael A. Jackson
/s/ ANNE H. LLOYD	Director of Terra Nitrogen GP Inc.
Anne H. Lloyd

72

EX-3.1

TERRA NITROGEN COMPANY, L.P.

Exhibit 3.1

CERTIFICATE OF LIMITED PARTNERSHIP

OF

TERRA NITROGEN COMPANY, L.P.

The following is a conformed copy of the Certificate of Limited Partnership of Terra Nitrogen Company, L.P. (the “Partnership”), reflecting: (i) the Certificate of Limited Partnership, filed with the Secretary of State of the State of Delaware on September 20, 1991, (ii) the Certificate of Amendment to the Certificate of Limited Partnership, filed with the Secretary of State of the State of Delaware on October 20, 1994, (iii) the Certificate of Amendment to the Certificate of Limited Partnership, filed with the Secretary of State of the State of Delaware on October 26, 2000 and (iv) the Certificate of Amendment to the Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware on September 6, 2005.

Article One

The name of the limited partnership formed hereby is Terra Nitrogen Company, L.P.

Article Two

The address of the registered office of the Partnership in the State of Delaware is 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, and the name and address of the registered agent for service of process on the Partnership in the State of Delaware is c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808.

Article Three

General Partner. The name and business address of the General Partner of the Partnership is Terra Nitrogen GP Inc., a Delaware corporation, Terra Centre, 600 Fourth Street, Sioux City, Iowa, 51102.

EX-3.6

TERRA NITROGEN COMPANY, L.P.

Exhibit 3.6

CERTIFICATE OF LIMITED PARTNERSHIP

OF

TERRA NITROGEN, LIMITED PARTNERSHIP

The following is a conformed copy of the Certificate of Limited Partnership of Terra Nitrogen, Limited Partnership (the “Partnership”), reflecting: (i) the Amended and Restated Certificate of Limited Partnership, filed with the Secretary of State of the State of Delaware on October 30, 1991, (ii) the Certificate of Amendment to the Certificate of Limited Partnership, filed with the Secretary of State of the State of Delaware on October 20, 1994, (iii) the Certificate of Amendment to the Certificate of Limited Partnership, filed with the Secretary of State of the State of Delaware on October 26, 2000 and (iv) the Certificate of Amendment to the Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware on September 6, 2005.

Article One

The name of the limited partnership formed and continued hereby is Terra Nitrogen, Limited Partnership.

Article Two

The address of the registered office of the Partnership in the State of Delaware is 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, and the name and address of the registered agent for service of process on the Partnership in the State of Delaware is c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808.

Article Three

General Partner. The name and business address of the General Partner of the Partnership is Terra Nitrogen GP Inc., a Delaware corporation, Terra Centre, 600 Fourth Street, Sioux City, Iowa, 51102.

EX-4.1

AGRICULTURAL MINERALS COMPANY, L.P., UNITED STATES TRUST COMPANY OF NEW YORK AND THE HOLDERS FROM TIME TO TIME OF UNITS AND DEPOSITARY RECEIPTS DESCRIBED HEREIN DEPOSIT AGREEMENT Dated as of December 4, 1991 TERRA NITROGEN COMPANY, L.P. Exhibit 4.1

ARTICLE I ARTICLE II Section Section Section Section Section Section ARTICLE III Section Section Section Section Section Section Section Section Section Section Section Section ARTICLE IV LX 1 03/2850F TABLE OF CONTENTS DEFINITIONS . ..................... I I • ' • I •• I • DEPOSIT OF CERTIFICATES; DEPOSIT ACCOUNT............................ 6 2.1 2.2 2.3 2.4 2.5 2.6 Deposit of Certificates............. 6 Documents Accompanying Deposit...... 6 Deposit Account..................... 6 Representations and Warranties of Each Depositor................. 6 Representations and Warranties of the Partnership................ 7 Representations and Warranties of the Depositary................. 7 DEPOSITARY RECEIPTS ....................... . 8 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3 .'12 Issuance............................ 8 Effect of Acceptance................ 8 Form; Denominations; Execution......................... 8 Numbering and Registration.......... 10 Combinations and Split-ups.......... 10 Lost Depositary Receipts ............ 11 Limitations on Execution and Delivery, Transfer, Split-up, Combination, Surrender and Exchange............ 11 Cancellation and Return of Surrendered Depositary Receipts. . . . . . . . . . . . . . . . . . . . . . . . . . 12 Supply of Depositary Receipts....... 12 Filing Proofs, Certificates and Other Information............. 12 Refusal of Deposit, Transfer, etc. . . . . . . . . . . . . . . . . . . . 12 Registrar; Transfer Agent........... 13 TRAN"SFER. 'I • I.' •••• I •••••• I •• I •• I • I •••• I • I I 13 Section 4.1 Section 4.2 Section 4.3 Transferability ..................... 13 Registration of Transfer............ 14 Effect of Execution of Transfer Application by Transferee. . . . . . . . . . . . . . . . . . . . . 14

Section 4.4 Section 4.5 ii Status of Transferee Prior to Admission as Limited Partner ................ 15 Filing Notice of Transfers with General Partner .............. 15 ARTICLE V CONVERSION .... I. I I I •• I ••••• I I •• I I I. I •• I. I.. 15 Section 5.1 Section 5.2 Section 5.3 Section 5.4 Conversion Privilege................ 15 Conversion Procedure ................ 15 Redemption or Purchase of Units................. 16 Redemption or Purchase Procedures ............... 16 ARTICLE VI WITHDRAWAL OF UNITS........................ 16 Section 6.1 Withdrawal of Units ................. 17 Section 6.2 Redeposit. . . . . . . . . . . . . . . . . . . . . . . . . . . 18 ARTICLE VII DUTIES OF DEPOSITARY....................... 18 Section 7.1 Section 7.2 Section 7.3 Section 7.4 section 7.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Lists of Record Holders............. 19 Maintenance of Offices, Agencies and Transfer Books....... 19 Other Obligations................... 20 Depositary's Agents ................. 20 ARTICLE VIII INFORMATION; DISTRIBUTIONS; Section 8.1 Section 8.2 Section 8.3 VOTING RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Duty to Furnish and Transmit Certain Information. . . . . . . . . . . . . . . . . . . . . . . 20 Distributions....................... 20 Voting......... . . . . . . . . . . . . . . . . . . . . . 21 ARTICLE IX STATUS AND OTHER ACTIVITIES OF DEPOSITARY; FORCE MAJEURE; , IMMUNITIES; INDEMNIFICATION.............. 22 ! Section 9.1 Depositary Not a Trustee, Issuer, etc. . . . . . . . . . . . . . . . . . . . . . 22 Section 9.2 Other Activities of Depositary. . . . . . . . . . . . . . . . . . . . . 22 Section 9.3 Force Majeure ........... ~ ........... 22

Section 9.4 Section 9.5 Section 9.6 iii Irrununi ties. . . . . . . . . . . . . . . . . . . . . . . . . . 23 Indemnification..................... 24 Tax Matters... . . . . . . . . . . . . . . . . . . . . . . 25 ARTICLE X CHARGES; FEES; EXPENSES.................... 26 Section Section Section Section Section 10.1 10.2 10.3 10.4 10.5 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Responsibility for Expenses and Charges.............. 26 Governmental Charges................ 26 Special Charges..................... 26 Notice Requirement.................. 26 ARTICLE XI RESIGNATION; REMOVAL; AMENDMENT; TERMINATION................... 27 Section 11.1 Section 11.2 Section 11.3 Resignation and Removal of Depositary; Appointment of Successor Depositary.............. 27 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 7 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE XII GENERAL PROVISIONS......................... 29 Section 12.1 Section 12.2 Section 12.3 Section 12.4 Section 12.5 Section 12.6 Section 12.7 Section 12.8 Section 12.9 Section 12.10 Section 12.11 Section 12.12 EXHIBIT A EXHIBIT B Counterparts........................ 29 Exclusive Benefit of Parties. . . . . . . . . . . . . . . . . . . . . . . . 29 Invalidity of Provisions............. 29 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Holders to Be Parties............... 30 P 1 ur a 1 s .................. : .. : . . . . . . . 3 0 Applicable Law...................... 30 Captions ............................ 30 Partnership Assets.................. 31 Further Action...................... 31 Binding Effect...................... 31 Waiver.............................. 31

10312850F DEPOSIT AGREEMENT This Agreement, entered into as of the 4th day of December, 1991, by and among Agricultural Minerals Company, L.P., a Delaware limited partnership, United States Trust Company of New York, as depositary, and Agricultural Minerals Corporation, a Delaware corporation, as attorney-in-fact for the holders from time to time of Units and Depositary Receipts. W I T N E S S E T H: WHEREAS, the Partnership is a Delaware limited partnership; and WHEREAS, the Partnership has a class of limited partner interests designated as Senior Preference Units (the "Senior Preference Units"); WHEREAS, upon the Senior Conversion Date (as described in the Partnership Agreement) the Senior Preference Units become convertible for a certain period into limited partner interests designated as Common Units (the "Common Units"); WHEREAS, the holders of Senior Preference Units of the Partnership desire to deposit their Units in a single convenient depositary institution for the purposes set forth in this Agreement and for the issuance under this Agreement of Depositary Receipts evidencing deposited Senior Preference Units; WHEREAS, the holders of the Senior Preference Units may from time to time wish to transfer their Senior Preference Units, and such transfers would be facilitated by having one institution act as depositary for such Senior Preference Units; WHEREAS, upon conversion of the Senior Preference Units, the hold-ers of Common Units may desire to deposit their Common Units for the issuance under this Agreement of Depositary Receipts representing Common Units; NOW, THEREFORE, in consideration of the premises and the promises hereinafter contained, it is agreed by and among the parties hereto as follows:

ARTICLE I Definitions Unless otherwise clearly indicated to the contrary, the following definitions shall be applied for all purposes to the terms used herein. "Affiliate" shall mean, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with, the Person in question. As used herein, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. "Agreement" shall mean this Deposit Agreement, as it may be amended or restated from time to time. "Assignee" shall mean a Person to whom one or more Units have been transferred, by assignment of a Depositary Receipt or otherwise in a manner permitted under this Agreement or the Partnership Agreement, and who has executed and delivered a Transfer Application, and who thereby owns a partnership interest equivalent to that of a Limited Partner but (a) limited to the rights and obligations appurtenant to a Unit to share in the allocations and distributions, including liquidating distributions, of the Partnership and (b) otherwise subject to the limitations under the Partnership Agreement on the rights of an assignee who has not become a Substituted Limited Partner. "Business Day" shall mean Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States or the State of New York shall not be regarded as a Business Day. "Certificate" shall mean a non-negotiable certificate (except to the extent that it is transferable to the Partnership or the General Partner) issued by the Partnership representing a partnership interest as a Limited Partner, including, without limitation, certificates representing Units. "Closing Price" of a Unit of any class for any day means the last sale price on such day, regular way, or, in 2

case no such sale takes place on such day, the average of the closing bid and asked prices on such day, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Units of a class are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal National Securities Exchange on which Units of such class are listed or admitted to trading or, if the Units of a class are not listed or admitted to trading on any National Securities Exchange, the last quoted price on such day or, if not so quoted, the average of the high bid and low asked prices on such day in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or such other system then in use, or, if on any such day the Units of a class are not quoted by any such organization, the average of the closing bid and asked prices on such day as furnished by a professional market maker making a market in the Units of such class selected by the Board of Directors of the General Partner, or, if on any such day no market maker is making a market in the Units of such class, the fair value of such Units on such day as determined reasonably and in good faith by the Board of Directors of the General Partner using any reasonable method of valuation. "Corporate Office" shall mean the corporate office of the Depositary or any other office it shall designate in New York, or for the purposes so designated, which on the date hereof is 770 Broadway, 7th Floor, Corporate Trust and Agency Services, New York, New York 10003. "Current Market Price" of a Unit as of any date shall mean the average of the daily Closing Prices per Unit for the twenty consecutive Trading Days immediately prior to, but not including, such date. ;'Delaware Act" shall mean the Delaware Revised Uniform Limited Partnership Act, as it may be amended and in effect from time to time, and any successor to such statute. "Departing Partner" means a former General Partner, as of the effective date of any withdrawal or removal of such former General Partner pursuant to the provisions of the Partnership Agreement. "Deposit Account" shall mean an account established by the Depositary pursuant to Section 2.3 hereof. 3 !'51

"Depositary" shall mean United States Trust Company of New York or any successor to it as depositary hereunder. "Depositary Receipt" shall mean a receipt, substantially in the form of Exhibit A or Exhibit B to this Agreement, issued by the Depositary or a Depositary Agent in accordance with this Agreement, evidencing ownership of one or more Certificates. "Depositary's Agent" shall mean an agent appointed by the Depositary pursuant to Section 7.5 hereof. "Depositor" shall mean a Limited Partner who deposits a Certificate hereunder. "General Partner" shall mean Agricultural Minerals Corporation, a corporation having its principal office at 5100 East Skelly Drive, Suite 800, Tulsa, Oklahoma 74135, or any successor to it under the Partnership Agreement. "Limited Partner" shall mean a limited partner of the Partnership as determined pursuant to the Partnership Agreement. "Partnership" shall mean Agricultural Minerals Company, L.P., a Delaware limited partnership, having its principal office at 5100 East Skelly Drive, Suite 800, Tulsa, Oklahoma 74135. "Partnership Agreement" shall mean the Agreement of Limited Partnership of the Partnership, as it may be further amended or restated from time to time. A copy of the Partnership Agreement as in effect on the date hereof is attached as Exhibit c hereto and made a part hereof for all purposes. "Person" shall mean an individual, corporation, partnership, trust, unincorporated organization, association or other entity. "Record Date" shall mean the date established by the General Partner for determining the identity of (a) the Limited Partner~ and Assignees entitled to receive notice of or vote at any meeting of Limited Partners or entitled to vote by ballot or to exercise rights in respect of any other lawful action of Limited Partners or (b) the Record Holders entitled to receive any report or distribution.

"Record Holder" shall mean the Person in whose name the Depositary Receipt evidencing a Unit is issued, and in whose name such Unit is registered on the books of the Depositary as of the close of business on the date of determination. "Registrar" shall mean the Depositary or any bank, trust company or other Person appointed by the Partnership to register the Certificates and Depositary Receipts pursuant to Section 3.12 hereof. "Registration Statement" shall mean the Registration Statement on Form S-1 (Registration No. 33-43007) as it has been or may be amended or supplemented from time to time, filed by the Partnership with the Securities and Exchange Commission under the Securities Act of 1933 to register the offering and sale of Senior Preference Units. "Subsidiary" means, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person. "Substituted Limited Partner" shall mean a Person who is admitted as a Limited Partner pursuant to the Partnership Agreement in place of and with all the rights of a Limited Partner and who is shown as a Limited Partner on the books and records of the Partnership. "Trading Day" shall mean a day on which the principal national securities exchange on which the Units of any class are listed or admitted to trading is open for the transaction of business or, if the Units of a class are not listed or admitted to trading on any National Securities Exchange, a day on which banking institutions in New York City generally are open. "Transfer Agent" shall mean the Depositary or any bank, trust company or other Person appointed by the Partnership to act as transfer agent for the Depositary Receipts pursuant to Section 3.12 hereof. ' "Tran~fer Application" shall mean an application and agreement for transfer of Units in the form set forth on the back of the Depositary Receipts or in a form substantially to the same effect in a separate instrument. 5 1'5'1

"Unit" shall mean (i) with respect to a partnership interest as a Limited Partner not on deposit with the Depositary pursuant hereto, a partnership interest as a Limited Partner evidenced by a Certificate and (ii) with respect to a partnership interest as a Limited Partner on deposit with the Depositary pursuant hereto, a Certificate evidenced by a Depositary Receipt, and shall include Common Units and Senior Preference Units. Capitalized terms used herein not otherwise defined herein shall have the meaning ascribed to them in the Partnership Agreement. ARTICLE II Deposit of Certificates; Deposit Account Section 2.1 Deposit of Certificates. Subject to the terms and conditions hereof, any Certificate may be deposited in the Deposit Account established by the Depositary pursuant to Section 2.3 hereof. Section 2.2 Documents Accompanying Deposit. A deposit of a Certificate shall be made by delivering such Certificate to the Depositary at its Corporate Office. Any Person presenting a Certificate for deposit shall file such information and execute such certifications as the Depositary may reasonably request. Section 2.3 Deposit Account. The Depositary may establish, at its Corporate Office, or at any other office or agency the Depositary may designate for such-purpose, an account or accounts, in a form and manner satisfactory to the Partnership, in which deposited Units, evidenced by Certificates, will be held. Section 2.4 Representations and Warranties of Each Depositor. Each Person depositing a Certificate hereunder represents and warrants that (a) such person is, or is duly authorized to act for, a Limited Partner and (b) such person is the owner of such Certificate, or is duly authorized by the owner thereof to make the deposit. The Depositary shall not be liable to the General Partner, the Partnership, any Limited Partner1 or any other Person for any expense or damage reasonably incurred as a result of any breach by a Depositor of these representations and warranties, which shall survive the deposit of a Certificate and the issuance of a Depositary Receipt. 6 l (.,. 0

Section 2.5 Representations and Warranties of the Partnership. The Partnership hereby represents and warrants that (a) it is a limited partnership duly formed and validly existing under the laws of the State of Delaware, with full power and authority to engage in its business and has the necessary power and authority to execute, deliver and perform this Agreement, (b) the Partnership will not at any time deposit or cause to be deposited any Senior Preference Units or Common Units unless such Senior Preference Units or Common Units were issued pursuant to an effective registration statement under the Securities Act of 1933, as amended, or in a transaction not requiring registration under such Act and (c) all of the Partnership Interests (as defined in the Partnership Agreement) represented by the Units are, and future issuances of such interests if issued in accordance with the terms of the Partnership Agreement will be, duly authorized, validly issued and, subject to the qualifications set forth in the following sentence, fully paid and non-assessable limited partner interests in the Partnership. Assuming that the Limited Partners, as Limited Partners, do not take part in the control of the business of the Partnership (within the meaning of the Delaware Act) and that they do no more than exercise their rights as Limited Partners, the Limited Partners, other than any Departing Partner, will have no liability in excess of their obligations to make contributions to the Partnership, their obligations to make other payments provided for in the Partnership Agreement and their share of the Partnership's assets and undistributed profits (subject to the obligation of a Limited Partner to repay to the Partnership, to the extent provided under the Delaware Act for a period of three years after the date of distribution, any funds wrongfully returned or distributed to it if the Limited Partner knew at the time of such distribution that the distribution was in violation of the Delaware Act). The Depositary shall not be liable to any Person for any expense or damage incurred as a result of any breach by the Partnership of these representations and warranties, which shall survive the deposit of Units and the issuance of Depositary Receipts. Section 2.6 Representations and Warranties of the Depositary. The Depositary hereby represents and warrants that it is a New York corporation duly organized and validly existing under the laws of the State of New York, with full power and authority to engage in its business and has the necessary power and authority to execute, deliver and perform this Agreement. The Partnership, the General Partner, any Limited Partner and any Assignee shall not be liable to any 7 i/o I

Person for any expense or damage incurred as a result of any breach by the Depositary of such representation and warranty, which shall survive the deposit of Units and the issuance of Depositary Receipts. ARTICLE III Depositary Receipts Section 3.1 Issuance. {a) Upon the deposit of a Certificate, accompanied by such other documents, if any, as required by the Depositary pursuant to Section 2.2 hereof, the payment of any tax or other governmental charge in respect of the deposit of a Certificate and the payment of any fee of the Depositary provided for in Article X hereof, the Depositary shall issue to the Depositor thereof one or more Depositary Receipts and shall deliver such Depositary Receipts to such Depositor or, subject to the requirements of Section 3.l(b) hereof, to a Person designated by such Depositor. One Depositary Receipt shall be issued in a denomination evidencing all of such Depositor's Units unless such Depositor elects to have depositary Receipts issued in smaller denominations, subject to Section 3.3(b) hereof. {b) If a Depositor wishes to have any of such Depositor's Units registered in the name of, and the Depositary Receipt therefor issued to, another Person designated by such Depositor, the transaction shall be treated as a transfer and shall be governed by the provisions of Article IV hereof, and such Depositor and such Person shall comply with such requirements as the Depositary or the Partnership may impose, including the requirement that such Person execute a Transfer Application. Section 3.2 Effect of Acceptance. By acceptance of a Depositary Receipt, a Depositor becomes a party to this Agreement, assents to all of its provisions and becomes bound by the terms and conditions of this Agreement and the Depositary Receipt. The effect of acceptance of a Depositary Receipt upon a Person designated by such Depositor pursuant to Section 3.l(b) hereof shall be as provided in Section 4.3 hereof in respect of a transferee. I Sectidn 3.3 Form; Denominations; Execution. (a) Definitive Depositary Receipts shall be engraved, printed or lithographed on steel-engraved borders and shall be substantially in the form of Exhibit A hereto with respect to Senior Preference Units and Exhibit B hereto with respect

to Common Units, with appropriate insertions, modifications and omissions as approved by the Partnership and the Depositary, as conclusively evidenced by the issuance thereof. Pending the preparation of definitive Depositary Receipts, the Depositary, upon the order of the Partnership, shall execute and deliver temporary Depositary Receipts that are printed, lithographed, typewritten, mimeographed or otherwise substantially of the tenor of the definitive Depositary Receipts in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as approved by the Partnership or the Depositary, as evidenced by the issuance of such Depositary Receipts. If temporary Depositary Receipts are issued, the Partnership and the Depositary will cause definitive Depositary Receipts to be prepared without unreasonable delay. After the preparation of definitive Depositary Receipts, the temporary Depositary Receipts shall be exchangeable for definitive Depositary Receipts upon surrender of the temporary Depositary Receipts at the Corporate Office, without charge to the holder. Upon surrender for cancellation of any one or more temporary Depositary Receipts, the Depositary shall execute and deliver in exchange therefor definitive Depositary Receipts evidencing the same number of Depositary Shares as are evidenced by the surrendered temporary Depositary Receipt or Depositary Receipts. Such exchange shall be made at the Partnership's expense and without any charge therefor. Until so exchanged, the temporary Depositary Receipts shall in all respects be entitled to the same benefits under this Agreement and with respect to the Units as definitive Depositary Receipts. (b) The Partnership may authorize the exchange of Depositary Receipts for other Depositary Receipts printed or engraved in such other manner as it shall determine. The Depositary Receipts shall conform to the requirements of any securities exchange upon which the Units are or may be listed or admitted to trading. (c) Depositary Receipts may be issued in denominations of any number of Units, except that no Depositary Receipt shall repr~sent a fraction of a Unit. (d) D·epositary Receipts may be endorsed with, or have incorporated in the text thereof, such legends or recitals not inconsistent with the provisions hereof as may be required to comply with the provisions of this Agreement or the Partnership Agreement, any applicable law or

regulation or the rules and regulations of any securities exchange upon which the Units are or may be listed or admitted to trading, to conform with any usage with respect thereto, to indicate any special limitation or restriction to which a Unit may be subject or for any other reason. (e) Each Depositary Receipt shall be signed on behalf of the Depositary by the manual signature of a duly authorized employee of the Depositary, except that such signature may be a facsimile if a Registrar who is a Person other than the Depositary has been appointed pursuant to Section 3.12 hereof and the Depositary Receipt is countersigned by the manual signature of a duly authorized employee of the Registrar. No Depositary Receipt shall be entitled to any benefits hereunder or shall be valid or obligatory for any purpose, unless it has been so signed or countersigned. Depositary Receipts bearing the facsimile signature of a Person who was at any time duly authorized to sign Depositary Receipts on behalf of the Depositary shall bind the Depositary, notwithstanding that such Person has ceased to be an employee prior to the manual signature by the Registrar and delivery of such Depositary Receipts or was not an employee at the date of issuance of such Depositary Receipts or the execution hereof. Section 3.4 Numbering and Registration. (a) All Depositary Receipts representing Senior Preference Units and Common Units issued by the Depositary shall be numbered consecutively within their respective classes. Each Record Holder shall be registered on the books of the Depositary and any Registrar or Transfer Agent in a manner permitting identification by Persons authorized to have access to the books of all Record Holders, their Depositary Receipts and the Units evidenced thereby. (b) The Depositary shall keep records to prepare -accurately such lists as the Partnership may request from time to time, including the list specified in Section 4.5 hereof, lists of the Record Holders of Common Units and Senior Preference Units subject to any special limitations or restrictions by, or stop transfer orders from, the Partnership and a list of the Record Holders of Common Units and Senior Preference Units listed or admitted to trading on a securities exchange. Section 3.5 Combinations and Sp~it-ups. Up?~ surrender of a Depositary Receipt tor spllt-up or como1nation of the Units evidenced thereby at the Corporate Office, and 10 lb~

subject to the terms and conditions hereof, the Depositary shall execute and deliver new Depositary Receipts bearing previously unassigned numbers, in authorized denominations evidencing the same aggregate number of Common Units or Senior Preference Units, as the case may be, as evidenced by the Depositary Receipt surrendered. Upon the request of the Partnership, the Depositary shall execute and deliver new Depositary Receipts bearing previously unassigned numbers in authorized denominations and shall take such other appropriate action as may be necessary if the outstanding Common Units or Senior Preference Units shall be divided into a greater number of Common Units or Senior Preference Units or shall be cancelled to be combined into a smaller number of Common Units or Senior Preference Units. Section 3.6 Lost Depositary Receipts. If any Depositary Receipt is mutilated, destroyed, lost or stolen, the Depositary shall execute and, upon its request, the Transfer Agent shall countersign and deliver, a Depositary Receipt bearing a previously unassigned number of like form and tenor in exchange and substitution for the mutilated, destroyed, lost or stolen Depositary Receipt; provided that the Depositary shall require the Record Holder of the Units evidenced by such Depositary Receipt to (a) furnish to the Depositary, in a form and manner satisfactory to the Depositary, proof by affidavit of the mutilation, destruction, loss or theft, and of such Record Holder's ownership of the Units, and (b) furnish reasonable indemnification (including the posting of an indemnity bond for the benefit of the Depositary, the Partnership and the General Partner) satisfactory to the Depositary and as may be required by the General Partner pursuant to the Partnership Agreement. Section 3.7 Limitations on Execution and Delivery, Transfer, Split-up, Combination, Surrender and Exchange. As a condition precedent to the execution and delivery, transfer, split-up, combination, surrender or exchange of any Unit or Depositary Receipt, the Depositary, any Transfer Agent or any Depositary's Agent may require (a) payment.of a sum sufficient for reimbursement of any tax or other governmental charge with respect thereto (including any such tax or charge with respect to Certificates or Units being deposited or withdrawn), (b) proof satisfactory to it as to the identity and genuineness of any signature or as to the due authorization of the action and (c) compliance with such regulations consistent herewith as the Depositary may reasonably establish. 11 tbS

Section 3.8 Cancellation and Return of Surrendered Depositary Receipts. All Depositary Receipts surrendered to the Depositary or any Depositary's Agent shall be cancelled. The Depositary shall return to the Partnership cancelled Depositary Receipts and shall retain or return to the Partnership other instruments, documents and records in accordance with the reasonable policies and regulations of the Depositary, any applicable law or regulation and the rules and regulations of any securities exchange upon which any class of Units is or may be listed or admitted to trading. Section 3.9 Supply of Depositary Receipts. The Partnership shall deliver to the Depositary from time to time such quantities of Depositary Receipts as the Depositary may request to enable the Depositary to perform its obligations hereunder. Section 3.10 Filing Proofs, Certificates and Other Information. Any Person presenting a Certificate for deposit or any Record Holder may be required from time to time to execute such certificates and make such representations and warranties as the Depositary may reasonably request in order to carry out the purposes hereof. The Depositary may withhold the delivery, transfer or exchange of any Depositary Receipt or any distribution in respect thereof until such certificates are executed or such representations and warranties are made. Section 3.11 Refusal of Deposit, Transfer, etc. (a) The deposit of Certificates and the transfer of Units Ula..r be refused, and the delivery, surrender or exchange of Depositary Receipts may be suspended, during any period when any register of Record Holders is closed, or if such action is reasonably deemed necessary or advisable by.the Depositary, any Depositary's Agent or the Partnership at any time or from time to time because of any applicable law or regulation, the rules and regulations of any securities exchange upon which the Units are listed or admitted to trading, any government or governmental body or commission or any provision hereof. Without limitation of the foregoing, the Depositary shall not knowingly issue or deliver Depositary Receipts in connection with a registration of transfer of Units, if to the knowledge of the Depositary (i) such transfer i's required to be registered under the Securities Act of 1933, as amended, or applicable securities laws of any state and (ii) such registration requirements have not been met . · 12 \ (.,b

(b) The Partnership may give written instructions to the Depositary to place an appropriate legend on any Depositary Receipts pursuant to Section 3.3(c) hereof. The Partnership may deliver a stop transfer order to the Depositary in writing, specifying the name of the Record Holder and the number of Common Units or Senior Preference Units so restricted. The Depositary may rely upon such legend or stop transfer order until instructed in writing by the Partnership to remove such legend or to lift such stop transfer order. Section 3.12 Registrar; Transfer Agent. (a) The Partnership may, and to the extent required by any applicable law or regulations of any securities exchange on whica any class of Units is listed or admitted to trading shall, appoint one or more Registrars and one or more Transfer Agents for the Units. The Depositary is hereby initially appointed as Registrar and as Transfer Agent with respect to the Senior Preference Units and the Common Units. A Registrar or Transfer Agent may be removed and a substitute appointed by the Partnership. (b) The Depositary shall, at the request of the Partnership, arrange for such facilities for the delivery, transfer, surrender and exchange of the Units and Depositary Receipts as may be required by any applicable law or regulation or the rules and regulations of any securities exchange upon which any class of Units is or may be listed or admitted to trading. ARTICLE IV Transfer Section 4.1 Transferability. Units are investment - securities and are transferable in accordance with the laws governing transfers of investment securities. In addition to the other rights acquired upon transfer, the transferor shall give a transferee who executes and delivers a Transfer Application pursuant to Section 4.2 hereof the right to request admission as a Limited Partner in respect of the transferred Units. A Record Holder shall have the authority to convey to a ,transferee who does not properly execute and deliver a Transfer Application only (a) the right to assign the Units to a purchaser or other transferee and (b) the right to transfer the right to request admission as a Limited Partner with respect to such Units. A transferee, by acceptance of a Depositary Receipt, (x) becomes a party to 13 tbr

this Agreement, thereby assenting to all of its provisions, (y) agrees to be bound by the terms and conditions of this Agreement and the Depositary Receipt and (z) agrees that such transferor's duty to provide such transferee with any requisite information necessary to obtain registration of the transfer of the units shall exclude any duty by the transferor to deliver an executed Transfer Application. It is a condition of the Depositary Receipt, and every successive holder thereof by acceptance of a Depositary Receipt consents and agrees, that, until a Unit has been transferred on the books of the Depositary or a Transfer Agent pursuant to Section 4.2 hereof, the Depositary, any Transfer Agent and the Partnership, notwithstanding any notice to the contrary or any notation or other writing on the Depositary Receipt, may treat the Record Holder at such time as the absolute owner of the Unit for all purposes. Section 4.2 Registration of Transfer. Subject to the terms and conditions hereof, the Depositary shall transfer Units on its books, from time to time, upon surrender of the Depositary Receipt evidencing such Units by the Record Holder, in person or by duly authorized attorney, to the Depositary at the Corporate Office. Such Depositary Receipt shall be properly endorsed or accompanied by an executed instrument of transfer and accompanied by an executed Transfer Application. The Depositary shall then issue or cause to be issued a new Depositary Receipt evidencing the same aggregate number of Common or Senior Preference Units, as the case may be, as evidenced by the Depositary Receipt surrendered and shall deliver the new Depositary Receipt to or upon the order of the Person entitled thereto. A Transfer Application may be executed on behalf of a transferee by (i) an attorney, executor, administrator, personal representative, trustee, attorney-in-fact or guardian, and, if so executed, the person executing said transfer application must give his or her full title in such capacity, and proper evidence of authority to act in such capacity or (ii) a member of the National Association of Securities Dealers, Inc. who is registered with a national securities exchange and who has obtained from the transferee authority to act in such capacity. In the case of (ii) above the agent will not be required to obtain evidence of the, signatory's authority to execute the Transfer Application on behalf of the transferee. Section 4.3 Effect of Execution of Transfer Application by Transferee. The Depositary shall not register the transfer of Units unless the transferee has delivered an

executed Transfer Application as required by Section 4.2 hereof. Section 4.4 Status of Transferee Prior to Admission as Limited Partner. The Record Holder of a Unit, unless and until admitted as a Limited Partner pursuant to the Partnership Agreement, has the rights of an Assignee in respect of such Unit as set forth in the Partnership Agreement. The rights of such Record Holder as an Assignee or a Limited Partner are subject to and shall be governed by the Partnership Agreement. Section 4.5 Filing Notice of Transfers with General Partner. The Depositary shall prepare, as of the close of business on the last Business Day of each month, a list or other appropriate evidence, in such form as may be requested by the General Partner, setting forth transfers of Depositary Units registered by all Transfer Agents since the last Business Day of the preceding month and the Business Day on which each Limited Partner was admitted to the Partnership. As promptly as practicable after the last Business Day of each month, the Depositary shall submit such transfer record to the General Partner. ARTICLE V Conversion Section 5.1 Conversion Privilege. Subject to the conditions and in accordance with the procedures set forth in the Partnership Agreement, a Record Holder of a Senior Preference Unit may convert any and all of such Record Holder's Senior Preference Units into Common Units. Section 5.2 Conversion Procedure. (a) To convert a Senior Preference Unit, a Record Holder must (i) complete and sign the conversion notice on the reverse side of the Depositary Receipt representing such Senior Preference Unit or Units;· ( i i) surrender the Depositary Receipt or Certificate to the Depositary; (iii) furnish a Transfer Application, if required; and (iv) pay any tax which is due because the Common Units are issued in a name other than the Record Holder's,; provided that all such actions must be satisfied within 90 days after the mailing of notice of the Senior Conversion Date. (b) Effective prior to the close of business on the Senior Conversion Date, the Record Holders of Senior 15 lb'1

Preference Units with respect to which the conversion notice has been sent shall cease to be Record Holders with respect to the converted Senior Preference Units and the Person or Persons entitled to receive the Common Units upon conversion shall be treated for all purposes as having become the Record Holders of such Common Units as of the close of business on the Senior Conversion Date, except for the purpose of determining the Senior Preference Units entitled to receive distributions with respect to periods ending on or prior to the Senior Conversion Date. Section 5.3 Redemption or Purchase of Units. Subject to the conditions and in accordance with the terms and procedures set forth in the Partnership Agreement, the Partnership may (a) at any time on or after the Senior Conversion Date redeem Senior Preference Units and (b) at any time not more than 25% of the total outstanding Units of any class are held by Persons other than the General Partner and its Affiliates, may call or assign to the General Partner or its Affiliates the right to acquire all of such Units. Section 5.4 Redemption or Purchase Procedures. If, on or before the redemption or purchase date specified by the General Partner, as the case may be, all funds necessary for such redemption or purchase have been deposited with the Transfer Agent for the benefit of the holders of the Units to be redeemed or purchased, so as to be and continue to be available therefor, and the holders of such Units do not surrender such Units for redemption or purchase, as the case may be, all as provided for in the Partnership Agreement, then upon and after the date of redemption or purchase, as the case may be, such holders of Units to whom notice has been given in accordance with the Partnership Agreement shall cease to be Partners with respect to such Units and shall have no interest in, or right in or claim against the Partnership by virtue thereof, and shall have no voting -~ights or other rights with respect to such Units except as set forth in the following sentence. At any time from and after the date of redemption or purchase, as the case may be, such holders of outstanding Units subject to redemption or purchase as provided in the Partnership Agreement may surrender their Depositary Receipts or Certificates evidencing such Units to the Transfer Agent in exchange for payment of the iredemption or purchase price, as the case may be, therefor without interest thereon, as provided in the Partnership Agreement. 16 110

ARTICLE VI Withdrawal of Units Section 6.1 Withdrawal of Units. (a) A Record Holder may not withdraw Units from deposit unless such Record Holder is a Limited Partner. Subject to terms and conditions of this Agreement and the Partnership Agreement, at the written request of a Limited Partner for withdrawal of Units from deposit hereunder, and upon surrender of the Depositary Receipt evidencing such Common Units or Senior Preference Units to the Depositary at the Corporate Office, accompanied by proof satisfactory to the Depositary and the Partnership that the Person surrendering the Depositary Receipt is such Record Holder or a Person duly authorized to act for such Record Holder, the Depositary shall deliver a Certificate to and in the name of such Record Holder or shall forward it to such place as may be specified by such Record Holder, at the risk and expense of such Record Holder. In satisfying its obligation to deliver a Certificate, subject to Sections 3.7 hereof and 3.11 hereof, Article X hereof and the other terms and conditions hereof, (i) if the Depositary has on deposit a Certificate in the appropriate denomination in the name of such Record Holder, the Depositary shall deliver such Certificate to such Record Holder, and (ii) if the Depositary has no such Certificate on deposit, the Depositary shall surrender to the Partnership a Certificate representing an adequate number of Common Units or Senior Preference Units and shall request the Partnership to issue and deliver at the Corporate Office, (A) a Certificate in the appropriate denomination in the name of such Record Holder and (B) if necessary, a Certificate in the appropriate denomination in the name of the Depositary or the Depositary's Agent, representing the difference between the denomination of the Certificate surrendered to the Partnership and the denomination of the Certificate issued in the name of such Record Holder pursuant to clause (A). The Depositary shall give notice of any withdrawal pursuant to this Section 6.1 to the Partnership, any Registrar or Transfer Agent other than the Depositary and any securities exchange upon which the units are or may be listed or admitted to trading. Units withdrawn from deposit shall not be transferable, except to the Partnership or the General Partner, or by death or operation of law. i (b) The Depositary may require that a Depositary Receipt surrendered pursuant to Section 6.1(a) hereof be 17 111

properly endorsed in blank or accompanied by a properly executed instrument of transfer in blank, and that a Record Holder execute and deliver to the Depositary a written order directing the Depositary to cause the Certificate evidencing the Units being withdrawn to be delivered to or upon the written order of such Record Holder. (c) If a Record Holder withdrawing Units pursuant to Section 6.1(a} hereof desires to have any of such Units registered in the name of, and the Certificate therefor issued to, another Person designated by such Record Holder, he and such other Person shall comply with such requirements as the Partnership or the Depositary may impose, treating the transaction as a request for a transfer subject to the provisions of Article IV hereof. Section 6.2 Redeposit. (a} Units withdrawn from deposit may be redeposited pursuant to the terms hereof. Redeposit of Certificates evidencing Units that have been withdrawn shall be subject to receipt by the Depositary of 60 days' written notice and to such other conditions as may be prescribed in the Partnership Agreement, except that the Partnership and its Affiliates need not give any notice of redeposit. The Depositary shall promptly notify the Partnership of any redeposit of Certificates. (b) Upon each delivery to the Depositary of a Certificate to be redeposited, the Depositary shall, as soon as transfer and recordation can be accomplished, present such Certificate to the Partnership for transfer and recordation of the Units being deposited in the name of the Depositary or the Depositary's Agent. (c) Upon receipt from the Partnership of a Certificate in the name of a Depositor, the Depositary shall issue and deliver at its Corporate Office, to or upon the order of the Persons designated by such Depositor, a Depositary Receipt registered in the name and representing the number of Units requested, all at the risk and expense of such Depositor. ARTICLE VII Duties of Depositary Section 7.1 Reports. (a} The Depositary shall make available for inspection during normal business hours by Record Holders at its Corporate Office (and shall, upon the 18 l '1 1---

request of the Partnership and as required by applicable law or the rules and regulations of the Securities and Exchange Commission, furnish to the Securities and Exchange Commission) any report, financial statement or communication of or from the Partnership that is both received by the Depositary in its capacity as depositary and made generally available to Record Holders. (b) The Depositary shall keep all required records and, upon the request and at the expense of the Partnership, shall promptly furnish to or file with the Securities and Exchange Commission all materials or reports required by applicable law or the rules and regulations of the Securities and Exchange Commission to be filed or provided there~o under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, by virtue of the Depositary's agreement to act as depositary, Registrar and T~ansfer Agent hereunder. A copy of any material or report filed with the Securities and Exchange Commission shall be mailed to the Partnership within two Business Days after its filing. To the extent that such material or report requires inform~tion from the Partnership, such information shall be furnished to the Depositary by the Partnership in sufficient quantity and sufficient time in advance of the date on which the material or report is required to be filed to enable the Depositary to comply with the filing requirement. Section 7.2 Lists of Record Holders. As promptly as practicable upon request by the Partnership, the Depositary shall furnish to the Partnership a list of the names and addresses of all Record Holders and the number of Common or Senior Preference Units held by them as of the date requested by the Partnership. A Record Holder shall have the right with the consent of the General Partner and upon notifying the Depositary of a proper purpose related to such - Record Holder's interest in the Partnership, to have furnished to such Record Holder at such Record Holder's expense a list of the name and addresses of all Record Holders. Section 7.3 Maintenance of Offices, Agencies and Transfer Books. (a) The Depositary shall maintain at its Corporate Offic,e and at any other office the Depositary may designate, or as may be required by any securities exchange upon which any class of Units is or may be listed or admitted to trading, facilities for the execution and delivery, transfer, surrender and exchange of Common or Senior Preference Units and Depositary Receipts. 19 11?

(b) The Depositary shall keep books at its Corporate Office for the transfer of Units. Such books shall be open at all reasonable times for inspection by Record Holders with the consent of the General Partner; provided that such inspection shall not be for the purpose of communicating with Record Holders in the interest of a business or object other than the business of the Partnership or a matter related to this Agreement or the Units. Section 7.4 Other Obligations. In performing the services set forth herein, the Depositary shall comply with any additional requirements that may be imposed by virtue of its being deemed a transfer agent for Units or Depositary Receipts by any securities exchange upon which any class of Units are or may be listed or admitted to trading. Section 7.5 Depositary's Agents. The Depositary may from time to time, with the prior written consent of the Partnership, appoint agents that may include the General Partner, the Partnership and its Affiliates for the purposes hereof and may vary or terminate the appointment of such agents. ARTICLE VIII Information; Distributions; Voting Rights Section ·8.1 Duty to Furnish and Transmit Certain Information. The General Partner is required by the Partnership Agreement to furnish to Record Holders and Assignees certain reports and notices. If the Partnership elects to have the Depositary deliver such reports or notices, the General Partner shall furnish to the Depositary a sufficient quantity of each such report or notice for transmittal to the Record Holders. Upon receipt of any such report or notice from the General Partner, the Depositary shall mail such report or notice within five Business Days to the Record Holders as of the close of business on the last Business Day of the month preceding the month in which such report or notice is received by the Depositary, or as of such other date as the General Partner may specify. Section 8.2 Distributions. (a) To facilitate cash or other distr~butions made by the Partnership to Limited Partners and Record Holders, the Depositary shall, at the General Partner's request, furnish or cause to be furnished to the General Partner as promptly as practicable a list of the Record Holders and the number of Common or Senior 20 I '14

Preference Units held by them, as recorded on the books of the Depositary as of the close of business on the last Business Day of the month preceding the month in which such request is made, or as of such other date as the General Partner may specify as the Record Date. (b) The General Partner may request the Depositary to act as paying agent with respect to a cash or other distribution made by the Partnership. A request to serve in such capacity shall be made by the General Partner by giving notice of a proposed distribution, and a calculation of the amount of the proposed distribution to be allocated in respect of each Common or Senior Preference Unit, to the Depositary at least ten Business Days before the distribution is to be made. If cash is to be distributed, the General Partner shall deposit with the Depositary, on or before the date on which the distribution is to be made, funds sufficient to pay the distribution. The Depositary shall calculate the amount of the distribution to which each Record Holder and Assignee is entitled based upon the number of Common or Senior Preference Units registered in such Record Holder's or Assignee's name. On the date set by the General Partner for the distribution, the Depositary shall distribute the funds received from the General Partner to the Record Holders as of the Record Date selected by the General Partner. Such distributions shall be made to such Record Holders notwithstanding the length of time any such Record Holder has held any Common or Senior Preference Unit. (c) The Partnership may appoint a co-paying agent for purposes of this Section 8.2, including, without limitation, the General Partner or an Affiliate of the Partnership. (d) Any funds deposited with the Depositary by the General Partner for the payment of distributions shall remain subject .at all times to the instructions of the General Partner. Any.funds so deposited which have remained unclaimed· for a period of at least two years from the payment date set by the General Partner for a distribution shall be repaid to the Partnership by the Depositary. Such repayments, if any, shall be made annually on the last day of March of each year. Thereafter, any Person entitled to payment of such distribution shall look only to the Partnership for payment thereof. Section 8.3 Voting. Upon receipt from the Partnership of notice of any meeting at which Limited 21 11?

Partners are entitled to vote or of which they are entitled to notice, the Depositary shall, at the request of the Partnership, mail to each Limited Partner and Assignee who directs the General Partner how to vote as of the Record Date specified in the notice of the meeting a copy of such notice. The Partnership shall furnish sufficient copies of such notice to accomplish the foregoing. The right of a Limited Partner or an Assignee to vote on any matter concerning the Partnership shall be governed solely by the terms of the Partnership Agreement and applicable law. ARTICLE IX Status and Other Activities of Depositary; Force Majeure; Immunities; Indemnification Section 9.1 Depositary Not a Trustee, Issuer, etc. Neither the Depositary nor any Depositary's Agent shall be deemed a trustee. Neither the Depositary nor any Depositary's Agent shall have any legal or equitable title to the Units deposited hereunder. The Depositary shall have no right or power to sell, invest in, pledge, mortgage or borrow against any Units deposited hereunder (except for a possessory lien that may be imposed by the Depositary upon books, records, documents or other properties for nonpayment of fees or expenses hereunder). Neither the Depositary nor any Depositary's Agent shall have any right by virtue hereof to vote in meetings of, receive distributions from or have any interest in, the Partnership. Neither the Depositary nor any Depositary's Agent shall be liable for assessments by the Partnership. It is the intention of the parties hereto that neither the Depositary nor any Depositary's Agent shall be deemed to be an "issuer" of securities under the federal securities laws or applicable state securities laws, and the parties hereto expressly agree hereby that the Depositary and the Depositary's Agents are acting hereunder only in a -ministerial capacity as depositary for the Units. Section 9.2 Other Activities of Depositary. The Depositary and any Depositary's Agent may own and deal in, and may act as registrar or transfer agent for, any class of securities of the General Partner, their Affiliates or the Partnership, including the Corrmon or Senior Preference Units and Depositary 'Receipts. Section 9.3 Force Maieure. None of the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership shall 22 Ilk>

incur any liability to any holder of a Common or Senior Preference Unit or Depositary Receipt if, by reason of any present or future law or regulation thereunder of the federal government or any other governmental authority (or, in the case of the Depositary or any Depositary's Agent, by reason of any provision, present or future, of the Partnership Agreement), or by reason of any act of God, war or other circumstances beyond its control, the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership is prevented or forbidden from doing or performing any act or thing required by the terms hereof to be done or performed; nor shall the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership incur any liability to any holder of a Unit or Depositary Receipt by reason of any nonperformance or delay caused as aforesaid in the performance of any act or thing required by the terms hereof to be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for herein. Section 9.4 Immunities. (a) None of the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership assumes hereby any obligation or shall be subject to any liability hereunder to any holder of a Unit or Depositary Receipt other than a duty to use its best judgment and good faith in the performance of such duties as are expressly set forth herein. (b) None of the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of the Units or Depositary Receipts that in its opinion may involve expense or liability, unless indemnity, in addition to that provided pursuant to Section 9.5 hereof, satisfactory to it against such expense and liability has been furnished. (c) None of the Depositary, any Depositary's Agent,. the General Partner (or its shareholders, directors or · officers) or the Partnership shall be liable for any action or nonaction bj it in reasonable reliance upon the advice of or information received from legal counsel, accountants, any Depositor, any holder of a Unit or Depositary Receipt or any other Person believed by it to be competent to give such advice or information. The Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or 23 111

officers) and the Partnership may rely and shall be protected in acting upon any written notice, request, direction or other document believed by them to be genuine and to have been signed or presented by the proper Person. (d) None of the Depositary (or its officers, directors, employees or agents) nor the Depositary's Agent makes hereby any representation or shall have any responsibility as to the validity of the Units, the Partnership Agreement, any registration statement filed under the Securities Act of 1933, as amended, related to such Units or any instruments referred to herein or therein, or as to the correctness of any statements made herein or therein; provided that the Depositary shall be responsible for (i) its representations in this Agreement and (ii) the validity of any action taken or required to be taken by the Depositary in connection herewith. Section 9.5 Indemnification. (a) The Depositary shall indemnify the General Partner (and its shareholders, directors, officers, employees, partners and agents) and the Partnership (and its Partners, Assignees and agents) against, and hold each of them harmless from, all claims, liabilities, losses, damages, judgments, fines, settlements, costs and expenses (including all reasonable legal costs and expenses relating thereto, including reasonable attorneys' fees) arising out of acts performed or omitted in respect hereof by the Depositary or any Depositary's Agent {other than an Affiliate of the Partnership) due to the gross negligence, bad faith or intentional misconduct of the Depositary or such Depositary's agent. {b) The Partnership shall indemnify the Depositary and any Depositary's Agent (other than an Affiliate of the Partnership) against, and hold each of them harmless from, all claims, liabilities, losses, damages, judgments, fines, settlements, costs and expenses {including all reasonable legal costs and expenses relating thereto, including reasonable attorneys' fees) arising out of {i) acts performed or omitted in respect hereof by the Depositary or any such Depositary's Agent, except for any such claim, liability, loss, damage, judgment, fine, settlement, cost or expense due to the negligence, gross negligence, bad faith or-intentional misconduct of the Depositary or such Depositary's Agent or (ii) the breach by the Partnership of its representations, warranties and covenants set forth herein. 24 l '7~

{c) In case any proceeding shall be instituted involving any person in respect of which indemnity may be sought pursuant to any of Sections 9.5{a) and {b), such person {hereinafter called the "indemnified party") shall promptly notify the person against whom such indemnity may be sought {hereinafter called the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any other parties the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless {i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding {including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. In the case of the retention of any such separate counsel for the indemnified party, such counsel shall be designated in writing by the indemnified party. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. Section 9.6 Tax Matters. The Depositary shall have no duty, obligation or liability with respect to {a) the allocation of federal tax benefits related to federal tax matters with respect to the Partnership, the General Partner, the Limited Partners or the Assignees or (b) any income or other tax reporting obligations imposed upon the Partnership, the General Partners or any Limited Partner by the Internal Revenue Service or any other federal, state or local taxing authority. 25 1'1~

ARTICLE X Charges; Fees; Expenses Section 10.1 General. The charges, fees or reimbursements for services provided hereunder shall be determined by mutual agreement of the Depositary and the Partnership. Section 10.2 Responsibility for Expenses and Charges. The Partnership shall pay all charges, fees and reimbursements of the Depositary, other than those expressly provided herein to be paid by other Persons. Section 10.3 Governmental Charges. If any tax or other governmental charge becomes payable with respect to a Certificate, Unit or Depositary Receipt, or with respect to the deposit, transfer or withdrawal of any of the foregoing, such tax or governmental charge shall be payable by the holder of such Certificate, Unit or Depositary Receipt or by the transferee in the case of a transfer. Transfer or withdrawal of Units may be refused until such payment is made, and any cash or other distribution may be withheld and applied to payment of such tax or other governmental charge, with such holder or transferee to remain liable for any deficiency. Section 10.4 Special Charges. If at the request of the holder or transferee of a Certificate, Unit or Depositary Receipt, any delivery or communication from the Depositary is made by telegram, telex or similar record telecommunication mode, or if the Depositary incurs any charge or expense for which it is not otherwise liable hereunder, such holder or transferee shall be liable for such charge or expense. Section 10.5 Notice Requirement. The Depositary shall give notice of the imposition of any charge or fee, other than the charges described in Sections 10.3 hereof and 10.4 hereof, upon holders or transferees of Certificates, Units or Depositary Receipts, or any change therein, to any securities exchange upon which any class of Units is or may be listed or a~~itted to trading, or in the absence of such listing by publication in a newspaper of general circulation in the Borough ·of Manhattan, New York, and shall also give notice thereof 1in writing to all Record Holders. The imposition of or a change in any such charge or fee shall not become effective until 90 days after the date of such notice, unless it becomes effective in the form of an amendment pursuant to Section 11.2 hereof. 26 ~~~

ARTICLE XI Resignation; Removal; Amendment; Termination Section 11.1 Resignation and Removal of Depositary; Appointment of Successor Depositary. (a) The Depositary may at any time resign as depositary hereunder by written notice delivered to the Partnership. Such resignation shall be effective upon the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided. (b) The Depositary may at any time be removed as depositary hereunder by the Partnership by written notice delivered to the Depositary. Such removal shall be effective upon the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided. (c) If the Depositary resigns or is removed, the Partnership shall, within 30 days after the delivery of the notice of resignation or removal, as the case may be, appoint a successor depositary, which shall be a bank or trust company having a combined capital and surplus of at least $50,000,000. If within 30 days after the delivery of such notice of resignation or removal, as the case may be, no successor depositary has been appointed, the General Partner shall act as the depositary until the Partnership appoints a successor depositary. Any successor depositary shall execute and deliver to its predecessor and the Partnership an instrument in writing accepting its appointment, and thereupon such successor depositary, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor. The predecessor, upon payment of all sums due it and upon the written request of the Partnership, shall execute and deliver an instrument transferring to the successor depositary all of its rights and powers hereunder, shall duly transfer all Certificates on deposit to the successor depositary and shall deliver to the successor depositary a list of all Record Holders and all other records and materials. Any successor depositary shall promptly mail notice of its appointment to all Record Holders. (d) Any corporation-into or with which the Depositary may be merged or consolidated or to which the Depositary shall transfer all or substantially all of its shareholder services business shall be the successor of the Depositary without the execution or filing of any document or any further act. Section 11.2 Amendment. (a) Any provision hereof, including the form of Depositary Receipt and the Transfer Application, may at any time and from time to time be amended by agreement between the Partnership and the Depositary in 27 I&\

any respect deemed necessary or desirable by them and in a manner consistent with the fiduciary standards set forth in the Partnership Agreement. A Record Holder at the time any such amendment hereof becomes effective shall be deemed; by continuing to hold Units, to consent to the amendment and to agree to be bound by this Agreement as amended thereby. (b) The Depositary shall give notice of any material amendment hereof to any securities exchange upon which the Units are or may be listed or admitted to trading, or in the absence of such listing by publication in a newspaper of general circulation in the Borough of Manhattan, New York, and shall also give notice thereof in writing to all Record Holders and Assignees. In the discretion of the Depositary, the text or substance of any amendment may be incorporated into the Depositary Receipts issued after its adoption. (c) No amendment hereof shall impair the right of a Limited Partner to withdraw any or all of his Units pursuant to Section 6.1 hereof. Notwithstanding anything herein to the contrary, no amendment hereto shall override or supersede the terms and provisions of the Partnership Agreement. Section 11.3 Termination. (a) Whenever directed by the Partnership, the Depositary shall terminate this Agreement by mailing notice of termination to the Record Holders at least 30 days before the date fixed in such notice for termination. (b) Upon termination hereof, the Depositary shall discontinue the transfer of Units, shall suspend the distribution of reports, notices and disbursements to Record Holders and shall not give any further notices (other than notice of such termination) or perform any further acts hereunder, except that the Depositary shall continue to _deliver Certificates, together with any distributions received with respect thereto, pursuant to Section 6.1. Upon request of the Partnership, the Depositary shall deliver all books, records, Certificates, Depositary Receipts and other documents respecting the subject matter hereof to the Partnership. I (c) Upon termination hereof, the Partnership and the holders of Units and Depositary Receipts shall be discharged from all obligations hereunder, except for the obligations of the Partnership pursuant to Section 9.5 hereof and Article X hereof. 28 I e,-z._

ARTICLE XII General Provisions Section 12.1 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. Copies hereof shall be filed with the Depositary and any Depositary's Agent and shall be open to inspection during business hours at the Corporate Office by any Record Holder. Section 12.2 Exclusive Benefit of Parties. This Agreement is for the exclusive benefit of the parties hereto and their respective successors and assigns and shall not be deemed to give any legal or equitable right, remedy or claim to any other person. Section 12.3 Invalidity of Provisions. If any provision of this Agreement or the Depositary Receipts is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall not be affected thereby. Section 12.4 Notices. (a) Any notice to be given to the parties hereto shall be deemed to have been duly given if personally delivered or sent by mail, or by telegram or telex confirmed by letter, addressed to each of the parties in the manner and at the address shown below, or at such address as each of the parties has specified in a notice given in accordance with this Section 12.4. To the Partnership: Agricultural Minerals Company, L.P. 5100 East Skelly Drive, Suite 800 Tulsa, Oklahoma 74135 Attn: John A. Molenaar To the Depositary: United States Trust Company of New York 7;70 Broadway, 7th Floor New York, New York 10003 Attn: Corporate Trust and Agency Services

To the General Partner: Agricultural Minerals Corporation 5100 East Skelly Drive, Suite 800 Tulsa, Oklahoma 74135 Attn: John A. Molenaar (b) Any notice to be given to any Record Holder shall be deemed to have been duly given if personally delivered or sent by mail, or by telegram or telex confirmed by letter, addressed to such Record Holder at such Record Holder's address as it appears on the books of the Depositary, or, if he has filed with the Depositary a written request that notices intended for such Record Holder be mailed to some other address, at the address designated in such request. (c) Delivery of a notice sent by mail or by telegraph or telex shall be deemed to be effected at the time when a duly addressed letter containing the same (or a confirmation thereof in the case of a telegram or telex) is deposited, postage prepaid, in a post office letter box. The Depositary and the Partnership may, however, act upon any telegram or telex received by them from any of the parties hereto. Section 12.5 Holders to Be Parties. The holders from time to time of Units and Depositary Receipts shall be parties hereto and shall be bound by all of the terms and conditions of this Agreement and the Depositary Receipts by acceptance thereof. Section 12.6 Plurals. Whenever the context may require, the singular form of nouns, pronouns and·verbs shall include the plural and vice versa. Section 12.7 Applicable Law. This Agreement and the rights, duties, obligations and immunities of the Depositary hereunder or in respect of the Depositary Receipts shall be governed by and construed in accordance with the laws of the State of New York. -Section 12.8 Captions. The headings of articles and sections in' this Agreement and in the forms of Depositary Receipt set forth as Exhibit A and Exhibit B hereto have been inserted for convenience only and shall not be regarded as a part of this Agreement or the Depositary Receipt or to have any bearing upon the meaning or interpretation of any provision contained in this Agreement or the Depositary Receipt. 30 I P; . ..}

Section 12.9 Partnership Assets. Liability for the obligations of the Partnership hereunder shall be without recourse to the assets of the General Partner (or its shareholders, directors or officers) other than its partnership interest in the Partnership, whether or not distributed. Section 12.10 Further Action. The parties shall execute and deliver all documents, provide all information and take or refrain from taking all action as may be necessary or advisable to achieve the purposes hereof. Section 12.11 Binding Effect. Subject to the provisions hereof, each and all of the covenants, terms, provisions and agreements herein contained shall be binding upon and shall inure to the benefit of the successors and assigns of the parties hereto. Section 12.12 Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition hereof or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement or condition. IN WITNESS WHEREOF, the Partnership, the Depositary and the General Partner, as attorney-in-fact of the holders from time to time of Units and Depositary Receipts, have duly executed this Agreement as of the day and year first above set forth. AGRICULTURAL MINERALS COMPANY, L.P. By: Agricultural Minerals Co~~ion, General Partner By: ~i Name: John A. Molenaar Title: Senior Vice President UNITED STATES TRUST COMPANY OF NEW YORK By: 1 . ' . ( . iYf_ r.,-'-- '---::-' C--/~ (,., .1 'L. Name:,_'C·/'--T·f-.-· ~-:-~/! .'--:._, Tit 1 e : .- .: .-__ ~_ __: .-. --"' ~ . ·... 1 ~ •

Exhibit A to Deposit Agreement TRANSFER OF FULL RIGHTS OF OWNERSHIP OF DEPOSITARY UNITS EVIDENCED BY THIS DEPOSITARY RECEIPT MAY BE MADE ONLY TO PERSONS WHO PROPERLY EXECUTE A TRANSFER APPLICATION. SEE PARAGRAPHS 3 AND 6 HEREOF AND THE TRANSFER APPLICATION ON THE REVERSE SIDE. DEPOSITARY RECEIPT evidencing SENIOR PREFERENCE UNITS REPRESENTING LIMITED PARTNER INTERESTS in AGRICULTURAL MINERALS COMPANY, L.P. {a limited partnership under the laws of Delaware) This Depositary Receipt is Transferable in New York, New York No. Senior Preference Units 1. United States Trust Company of New York as Depositary hereby certifies that is the registered owner of Depositary Units, consisting of Senior Preference Units representing limited partner interests in Agricultural Minerals Company, L.P., a Delaware limited partnership ("Senior Preference Units"}, on deposit with the Depositary pursuant to the Deposit Agreement {the "Deposit Agreement") dated as of December 4, 1991, among the Partnership, the Depositary and Agricultural Minerals Corporation, as attorney-in-fact for the holders from time to time of Senior Preference Units and Depositary Receipts. 2. Depositary Receipts, Deposit Agreement. Depositary Receipts, of which this Depositary Receipt is one, are issued upon the terms and conditions set forth in the Deposit Agreement. The Deposit Agreement and the Partnership Agreement under which the Partnership was formed and is existing, copies of which are on file at the Depositary's Corporate Office, set forth the rights of holders of Senior Preference Units and Depositary Receipts, each of whom becomes a party to the Deposit Agreement by acceptance of a Depositary Receipt, and the rights and duties of the Depositary in respect of the Senior Preference Units and all other property and cash from time to time held pursuant to the Deposit Agreement. The statements made on the face and the reverse of this Depositary Receipt are summaries of

certain prov1s1ons of the Deposit Agreement and are subject to the detailed provisions thereof, to which reference is hereby made for all purposes. 3. Transfers, Split-ups, Combinations. The Senior Preference Units evidenced by this Depositary Receipt are transferable on the books of the Depositary or a Transfer Agent upon surrender of this Depositary Receipt by the Record Holder hereof, in person or by such Record Holder's duly authorized attorney, to the Depositary at its Corporate Office. This Depositary Receipt shall be properly endorsed or accompanied by a properly executed instrument of transfer and accompanied by a properly executed Transfer Application. Upon such transfer the Depositary shall issue or cause to be issued and shall deliver a new Depositary Receipt to or upon the order of the Person entitled thereto, subject to the provisions of the Deposit Agreement and the Partnership Agreement. This Depositary Receipt may be split into other Depositary Receipts, or combined with other Depositary Receipts into one Depositary Receipt, in each case evidencing the same aggregate number of Senior Preference Units as the Depositary Receipt(s) surrendered. 4. Limitations on Execution and Delivery, Transfer, Split-up, Combination, Surrender and Exchange. As a condition precedent to the execution and delivery, transfer, split-up, combination, surrender or exchange of this Depositary Receipt or the Senior Preference Units evidenced hereby, the Depositary, any Transfer Agent or any Depositary's Agent may require (a) payment of a sum sufficient for reimbursement of any tax or other governmental charge with respect thereto (including any such tax or charge with respect to Certificates or Senior Preference Units being deposited or withdrawn), (b) proof satisfactory as to the identity and genuineness of any signature or as to the due authorization to execute the appropriate documents and (c) compliance with such regulations as it may reasonably establish pursuant to the Deposit Agreement. Any Depositor or any Record Holder may be required to execute such certificates, and to make such representations and warranties, as the Depositary may request. 5. Refusal of Deposit, Transfer, etc. The deposit of Certificates or the transfer of Senior Preference Units may be refused, and the delivery, surrender or exchange of this Depositary Receipt may be suspended, during any period when any register of Record Holders is closed, or if such 2 1~1

action is reasonably deemed necessary or advisable by the Depositary, any Depositary's Agent or the Partnership at any time or from time to time because of any applicable law or regulation, the rules and regulations of any securities exchange upon which the Senior Preference Units are listed or admitted to trading, any government or governmental body or commission or any provision of the Deposit Agreement. 6. Effect of Acceptance and Transfer of Depositary Receipts. A Record Holder shall have the authority to convey to a transferee who does not properly execute and deliver a Transfer Application only (a) the right to assign the Senior Preference Units to a purchaser or other transferee and (b) the right to transfer the right to request admission as a Limited Partner in respect of such Senior Preference Units. A transferee, by acceptance of this Depositary Receipt, (x) becomes a party to the Deposit Agreement, thereby assenting to all of its provisions, (y) agrees to be bound by the terms and conditions of the Deposit Agreement and of this Depositary Receipt and (z) agrees that his transferor's duty to provide him with any requisite information necessary to obtain registration of the transfer of the Senior Preference Units shall exclude any duty by the transferor to deliver an executed Transfer Application. A transferee who properly executes a Transfer Application (i) requests admission to the Partnership as a Limited Partner, (ii) agrees to comply with and be bound by the terms and conditions of, and executes, the Deposit Agreement and the Partnership Agreement, (iii) represents that such transferee has authority to enter into the Deposit Agreement and the Partnership Agreement, (iv) grants a power of attorney to the General Partner and, if a liquidator shall be appointed, the liquidator of the Partnership and (v) makes the consents and waivers contained in the Partnership Agreement and the Deposit Agreement. 1. Status of Record Holder. The Record Holder of a Senior Preference Unit, unless and until admitted as a Limited Partner pursuant to the Partnership Agreement, has the rights of an Assignee in respect of such Senior Preference Unit. 8. Requirements of Execution. This Depositary Receipt shall not be entitled to any benefits under the Deposit Agreement and shall not be valid or obligatory for any purpose, unless it has been signed on behalf of the

Depositary by the manual signature of a duly authorized employee of the Depositary, except that such signature may be a facsimile if a Registrar who is a person other than the Depositary has been appointed and this Depositary Receipt is countersigned by the manual signature of a duly authorized employee of the Registrar. Dated: UNITED STATES TRUST COMPANY OF NEW YORK Depositary, Transfer Agent and Registrar By: Authorized Signature Further Conditions and Agreement Forming Part of this Depositary Receipt Appear on the Reverse Side

REVERSE SIDE Further Conditions and Agreements Forming Part of this Depositary Receipt 9. Surrender of Depositary Receipts and Withdrawal of Senior Preference Units. Upon surrender of this Depositary Receipt to the Depositary at its Corporate Office and subject to the terms and conditions of the Deposit Agreement and the Partnership Agreement, a Record Holder of this Depositary Receipt who is a Limited Partner is entitled to delivery of a nontransferable Certificate evidencing the Senior Preference Units evidenced hereby. 10. Governmental Charges. If any tax or other governmental charge becomes payable with respect to this Depositary Receipt or the Senior Preference Units evidenced hereby, such tax or governmental charge shall be payable by the holder of this Depositary Receipt or by the transferee hereof in the case of a transfer. Transfer or withdrawal of the Senior Preference Units evidenced hereby may be refused until such payment is made, and any cash or other distribution may be withheld and applied to payment of such tax or other governmental charge, with the holder or transferee hereof to remain liable for any deficiency. 11. Representations and Warranties of Depositor. Each Person depositing a Certificate under the Deposit Agreement shall be deemed thereby to represent and warrant that (a) such Person is, or is duly authorized to act for, a Limited Partner and (b) such Person is the owner of such Certificates, or is duly authorized by the owner thereof to make the deposit. 12. Amendment. Any provision of the Deposit Agreement, including the form of Depositary Receipt and the Transfer Application, may at any time and from time to time be amended by agreement between the Partnership and the Depositary in any respect deemed necessary or desirable by them, subject to the fiduciary responsibility of the General Partner as set forth in the Partnership Agreement. A Record Holder at the time any amendment to the Deposit Agreement becomes effective shall be deemed, by continuing to hold Senior Preference Units, to consent to the amendment and to agree to be bound by the Deposit Agreement as amended thereby. Notwithstanding the foregoing, no arnen~"ent shall impair the right of a Limited Partner described in Paragraph 9. The Depositary will give written notice of any material amendment to the Deposit Agreement to all Record Holders and Assignees. l &:! 0

13. Charges of Depositary. The Partnership shall pay all charges, fees and reimbursements of the Depositary, except for (a) taxes and other governmental charges and (b) such telegram, telex, delivery and other charges as are expressly provided in the Deposit Agreement to be paid by other Persons. 14. Title to Depositary Receipts. The Senior Preference Units evidenced hereby are transferable in accordance with the laws governing transfers of investment securities. It is a condition of this Depositary Receipt, and every successive holder hereof by acceptance hereof consents and agrees, that, until a Senior Preference Unit has been transferred on the books of the Depositary or a Transfer Agent pursuant to the Deposit Agreement, the Depositary, any Transfer Agent and the Partnership, notwithstanding any notice to the contrary or any notation or other writing on the Depositary Receipt, may treat the Record Holder at such time as the absolute owner of the Senior Preference Unit for all purposes. 15. Distributions. Whenever the Depositary receives from the Partnership any cash distributable to Record Holders, the Depositary shall, subject to the provisions of the Deposit Agreement, make such distribution to the Record Holders on the Record Date based upon the number of Senior Preference Units registered in such Record Holder's name; provided that the amounts distributed may be reduced by any amount required to be withheld by the Partnership or the Depositary on account of taxes. 16. Reports. The Depositary shall make available for inspection by Record Holders at its Corporate Office during normal business hours any report, financial statement or communication of or from the Partnership that is both received by the Depositary in its capacity as depositary and made generally available to Limited Partners or Record Holders. 17. Transfer Books. The Depositary shall keep books at its Corporate Office for the transfer of Senior Preference Units. Such books shall be open at all reasonable times for inspection by the Record Holders with the consent of the General Partner; provided that such inspection shall not be for the purpose of communicating with Record Holders in the interest of a business or object other than the business of the Partnership or a matter related to the Deposit Agreement or the Senior Preference Units. With the 2 I"! \

consent of the General Partner, a Record Holder shall have the right, upon notifying the Depositary of a proper purpose related to such Record Holder's interest in the Partnership, to have furnished to such Record Holder at such Record Holder's expense a list of names and addresses of all Record Holders. 18. Liability of Depositary, Depositary's Agents, General Partner and Partnership. None of the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership shall incur any liability to any holder of this Depositary Receipt if, by reason of any present or future law or regulation thereunder of the federal government or any other governmental authority (or, in the case of the Depositary or any Depositary's Agent, by reason of any provision, present or future, of the Partnership Agreement), or by reason of any act of God, war or other circumstance beyond its control, if the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership is prevented or forbidden from doing or performing any act or thing required by the terms of the Deposit Agreement to be done or performed; nor shall the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership incur any liability to the holder of this Depositary Receipt by reason of any nonperformance or delay caused as aforesaid in the performance of any act or thing required by the terms of the Deposit Agreement to be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement. 19. Immunities of Depositary, Depositary's Agents, General Partner and Partnership. None of the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership (a) assumes any obligation or shall be subject to any liability under the Deposit Agreement to any holder of this Depositary Receipt other than a duty to use its best judgment and good faith in the performance of such duties as are expressly set forth in the Deposit Agreement, (b) shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of this Depositary Receipt that in its opinion may involve expense or liability, unless indemnity satisfactory to it against such expense or liability has been furnished, or (c) shall be liable for any action or nonaction by it in reasonable reliance upon the advice of or information from legal counsel, accountants, any Depositor, any holder of this Depositary Receipt or any other Person

believed by it to be competent to give such advice or information. The Depositary, any Depositary's Agent, the General Partner (and its shareholders, directors or officers) and the Partnership may rely and shall be protected in acting upon any written notice, request, direction or other document believed by them to be genuine and to have been signed or presented by the proper Person. 20. Indemnification. Subject to the provisions of the Deposit Agreement, the Depositary shall indemnify the General Partner (and its shareholders, directors, officers, employees, partners and agents) and the Partnership (and its Partners, Assignees and agents) against, and hold each of them harmless from, all claims, liabilities, losses, damages, judgments, fines, settlements, costs and expenses (including all reasonable legal costs and expenses relating thereto, including reasonable attorneys' fees) arising out of acts performed or omitted in respect of the Deposit Agreement by the Depositary or any Depositary's Agent (other than an Affiliate of the Partnership) due to the gross negligence, bad faith or intentional misconduct of the Depositary or such Depositary's Agent. Subject to the provisions of the Deposit Agreement, the Partnership shall indemnify the Depositary and any Depositary's Agent (other than an Affiliate of the Partnership) against, and hold each of them harmless from, all claims, liabilities, losses, damages, judgments, fines, settlements, costs and expenses (including all reasonable legal costs and expenses relating thereto, including reasonable attorneys' fees) arising out of (a) acts performed or omitted in respect of the Deposit Agreement by the Depositary or any such Depositary's Agent, except for any such claim, liability, loss, damage, judgment, fine, settlement, cost or expense due to the negligence, gross negligence, bad faith or intentional misconduct of the Depositary or such Depositary's Agent, or (b) the breach by the Partnership of its representations, warranties and covenants set forth in the Deposit Agreement. 21. Registration and Removal of Depositary. The Depositary may at any time (a) resign as depositary under the Deposit Agreement by written notice delivered to the Partnership, effective upon the appointment of a successor depositary and its acceptance of such appointment, or (b) be removed as depositary under the Deposit Agreement by the Partnership, effective upon the appointment of a successor depositary and its acceptance of such appointment.

22. Termination of Deposit Agreement. Whenever directed by the Partnership, the Depositary shall terminate the Deposit Agreement by mailing notice of termination to the Record Holders at least 30 days before the date fixed in such notice for termination. The Depositary shall then discontinue all functions and be discharged from all obligations with respect to the Deposit Agreement, except as specifically provided therein. Upon termination of the Deposit Agreement, the Partnership shall be discharged from all obligations thereunder, except for its obligations to the Depositary with respect to indemnification, charges and expenses. 23. Applicable Law. The Deposit Agreement, and the rights, duties, obligations and immunities of the Depositary thereunder or in respect of the Depositary Receipts, shall be governed by and construed in accordance with the laws of the State of New York. 24. Defined Terms. Any capitalized term not defined herein shall have the meaning assigned it in the Deposit Agreement. The following abbreviations, when used in the inscription on the face of this Depositary Receipt, shall be construed as follows according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - Custodian (Cust) (Minor) under Uniform Gifts to Minors Act Additional abbreviations may also be used, though not in the above list. FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and tr;ansfers unto Social Security or other identifying number of Assignee Print or type Name and Address of Assignee

the within Depositary Receipt and all rights and interest represented thereby, and irrevocably constitutes and appoints ~~--~~~~~ his attorney, to transfer the same on the books of the Depositary, with full power of substitution in the premises. Dated: Signature: Signature guaranteed: Note: The signature to any endorsement hereon must correspond with the name as written upon the face of the Depositary Receipt, in every particular, without alteration or enlargement or any change whatever. If the endorsement is executed by an attorney, executor, administrator, trustee or guardian, the person executing the endorsement must give his full title in such capacity, and proper evidence of authority to act in such capacity, if not on file with the Depositary, must be forwarded with this Depositary Receipt. The signature must be guaranteed by an authorized employee of a bank, trust company or member of a national securities exchange.

Exhibit 1 No transfer of the Senior Preference Units evidenced by this Depositary Receipt will be registered on the books of the Depositary or of the Partnership unless an Application for Transfer of Units has been executed by a transferee either (a) on the form set forth below or (b) on a separate application that the Depositary or the Partnership will furnish on request without charge. A transferor of the Senior Preference Units evidenced by this Depositary Receipt has no duty to a transferee to deliver an executed transfer application in order for such transferee to obtain registration of the transfer of such Senior Preference Units evidenced by this Depositary Receipt. APPLICATION FOR TRANSFER OF UNITS The undersigned ("Assignee") hereby applies for transfer to the name of the Assignee of the Senior Preference Units evidenced by this Depositary Receipt. The Assignee (a} agrees to comply with and be bound by the terms and conditions of, and hereby executes, the Deposit Agreement, (b) requests admission as a Substituted Limited Partner and agrees to comply with and be bound by the terms and conditions of, and hereby executes, the Agreement of Limited Partnership of Agricultural Minerals Company, L.P. (the "Partnership"), as amended or restated to the date hereof (the "Partnership Agreement"), (c) represents and warrants that the Assignee has all right, power and authority and, if an individual, the capacity necessary to enter into the Partnership Agreement and the Deposit Agreement, (d) appoints the General Partner and, if a liquidator shall be appointed, the liquidator of the Partnership, his attorney to execute, swear to, acknowledge and file any document, including the Partnership Agreement, any amendment to the Partnership Agreement and the Certificate of Limited __ Partnership of the Partnership, necessary or appropriate for the Assignee's admission as a Substituted Limited Partner and as a party to the Partnership Agreement and the Deposit Agreement, (e) gives the powers of attorney provided for in the Partnership Agreement and the Deposit Agreement and (f) makes the consents and waivers and gives the approvals contained in the Partnership Agreement and the Deposit Agreement. Capitalized terms not defined herein have the meaning assigned to such terms in the Partnership Agreement.

The Assignee has acquired an interest in the Partnership, whose taxpayer identification number is 73-1389684. On behalf of the Partnership, Agricultural Minerals Corporation has applied to the Internal Revenue Service for a tax shelter registration number. The Internal Revenue Service has issued the Partnership the following tax shelter registration number If there is no number in the blank in the preceding sentence, the number will be furnished to the Assignee when it is received. The Assignee must report this registration number to the Internal Revenue Service if the Assignee claims any deduction, loss, credit or other tax benefit or reports any income by reason of the Assignee's investment in the Partnership. The Assignee must report the registration number (as well as the name and taxpayer identification number of the Partnership) on Form 8271. FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH THE ASSIGNEE CLAIMS THE DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORTS ANY INCOME. ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE INTERNAL REVENUE SERVICE. Dated: Social Security or other identifying number of Assignee Purchase Price (including commissions, if any) Type of Entity (Check One): Individual __ Partnership __ Corporation Nationality (Check One): Signature of Assignee Print or Type Name and Address of Assignee Trust Other (specify): __ u.s. Citizen, Resident or Domestic Entity Foreign Corporation, or __ Non-resident alien 2 !'11

If the u.s. Citizen, Resident or Domestic Entity box is checked, the following certification must be completed. Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the "Code"), the Partnership must withhold tax with respect to certain transfers of property if a holder of an interest in the Partnership is a foreign person. To inform the Partnership that no withholding is required with respect to the undersigned interest-holder's interest in it, the undersigned hereby certifies the following (or, if applicable, certifies the following on behalf of the interest-holder). Complete Either A or B: A. Individual Interest-Holder 1. I am not a non-resident alien for purposes of u.s. income taxation. 2. My U.S. taxpayer identifying number (Social Security Number) is 3. My home address is B. Partnership, Corporate or Other Interest-Holder 1. is not a foreign (Name of Interest-Holder) corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Code and Treasury Regulations). 2. The interest-holder's U.S. employer identification number is 3. The interest-holder's office address and place of incorporation (if applicable) is The interest-holder agrees to notify the_Partnership within sixty ( 6.0) days of the date the interest-holder becomes a foreign person.

The interest-holder understands that this certification may be disclosed to the Internal Revenue Service by the Partnership and that any false statement contained herein could be punishable by fine, imprisonment or both. Under penalties of perjury, I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete and, if applicable, I further declare that I have authority to sign this document on behalf of (Name of Interest-Holder) Signature and Date Title (if applicable) Note: If the Assignee is a broker, dealer, bank, trust company, clearing corporation, other nominee holder or an agent of any of the foregoing, and is holding for the account of any other Person, this application should be completed by an officer thereof or, in the case of a broker or dealer, by a registered representative who is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., or, in the case of any other nominee holder, a Person performing a similar function. If the Assignee is a broker, dealer, bank, trust company, clearing corporation, other nominee holder or an agent of any of the foregoing, the above certification as to any Person for whom the Assignee will hold the Senior Preference Units shall be made to the best of the Assignee's knowledge. Note: This Transfer Application may be executed on behalf of a transferee by an attorney, executor, administrator, personal representative, trustee, attorney-in-fact or guardian, and, if so executed, the person executing this Transfer Application must give his or her full title in such capacity, and proper evidence of authority to act in such capacity, if not on file with the Depositary, must be forwarded with this Receipt.

Exhibit B to Deposit Agreement TRANSFER OF FULL RIGHTS OF OWNERSHIP OF DEPOSITARY UNITS EVIDENCED BY THIS DEPOSITARY RECEIPT MAY BE MADE ONLY TO PERSONS WHO PROPERLY EXECUTE A TRANSFER APPLICATION. SEE PARAGRAPHS 3 AND 6 HEREOF AND THE TRANSFER APPLICATION ON THE REVERSE SIDE. DEPOSITARY RECEIPT evidencing COMMON UNITS REPRESENTING LIMITED PARTNER INTERESTS in AGRICULTURAL MINERALS COMPANY, L.P. (a limited partnership under the laws of Delaware) This Depositary Receipt is Transferable in New York, New York No. Common Units 1. United States Trust Company as Depositary hereby certifies that is the registered owner of Depositary Units, which represent Common Units consisting of limited partner interests in Agricultural Minerals Company, L.P., a Delaware limited partnership ("Common Units"), on deposit with the Depositary pursuant to the Deposit Agreement (the "Deposit Agreement") dated as of December 4, 1991, among the Partnership, the Depositary and Agricultural Minerals Corporation, as attorney-in-fact for the holders from time to time of Common Units and Depositary Receipts. 2. Depositary Receipts, Deposit Agreement. Depositary Receipts, of which this Depositary Receipt is one, are issued upon the terms and conditions set forth in the Deposit Agreement. The Deposit Agreement and the Partnership Agreement under which the Partnership was formed and is existing, copies of which are on file at the Depositary's Corporate Office, set forth the rights of holders of Common Units and Depositary Receipts, each of whom becomes a party to the Deposit Agreement by acceptance of a Depositary Receipt, and the rights and duties of the Depositary in respect of the Common Units and all other property and cash from time to time held pursuant to the Deposit Agreement. The statements made on the face and the reverse of this Depositary Receipt are summaries of certain provisions of the

Deposit Agreement and are subject to the detailed prov~s~ons thereof, to which reference is hereby made for all purposes. 3. Transfers, Split-ups, Combinations. The Common Units evidenced by this Depositary Receipt are transferable on the books of the Depositary or a Transfer Agent upon surrender of this Depositary Receipt by the Record Holder hereof, in person or by such Record Holder's duly authorized attorney, to the Depositary at its Corporate Office. This Depositary Receipt shall be properly endorsed or accompanied by a properly executed instrument of transfer and accompanied by a properly executed Transfer Application. Upon such transfer the Depositary shall issue or cause to be issued and shall deliver a new Depositary Receipt to or upon the order of the Person entitled thereto, subject to the provisions of the Deposit Agreement and the Partnership Agreement. This Depositary Receipt may be split into other Depositary Receipts, or combined with other Depositary Receipts into one Depositary Receipt, in each case evidencing the same aggregate number of Common Units as the Depositary Receipt(s) surrendered. 4. Limitations on Execution and Delivery, Transfer, Split-up, Combination, Surrender and Exchange. As a condition precedent to the execution and delivery, transfer, split-up, combination, surrender or exchange of this Depositary Receipt or the Common Units evidenced hereby, the Depositary, any Transfer Agent or any Depositary's Agent may require (a) payment of a sum sufficient for reimbursement of any tax or other governmental charge with respect thereto (including any such tax or charge with respect to Certificates or Common Units being deposited or withdrawn), (b) proof satisfactory as to the identity and genuineness of any signature or as to the due authorization to execute the appropriate documents and (c) compliance with such regulations as it may reasonably establish pursuant to the Deposit Agree~ent. Any Depositor or any Record Holder may be required to execute such certificates, and to make such representations and warranties, as the Depositary may request. 5. Refusal of Deposit, Transfer, etc. The deposit of Certificates. or the transfer of Common Units may be refused, and the delivery, surrender or exchange of this Depositary Receipt may be suspended, during any period when any register of Record Holders is closed, or if such action is reasonably deemed necessary or advisable by the Depositary, any Depositary's Agent or the Partnership at any 2

time or from time to time because of any applicable law or regulation, the rules and regulations of any securities exchange upon which the Common Units are listed or admitted to trading, any government or governmental body or commission or any provision of the Deposit Agreement. 6. Effect of Acceptance and Transfer of Depositary Receipts. A Record Holder shall have the authority to convey to a transferee who does not properly execute and deliver a Transfer Application only (a) the right to assign the Common Units to a purchaser or other transferee and (b) the right to transfer the right to request admission as a Limited Partner in respect of such Common Units. A transferee, by acceptance of this Depositary Receipt, (x) becomes a party to the Deposit Agreement, thereby assenting to all of its provisions, (y) agrees to be bound by the terms and conditions of the Deposit Agreement and of this Depositary Receipt and (z) agrees that his transferor's duty to provide him with any requisite information necessary to obtain registration of the transfer of the Common Units shall exclude any duty by the transferor to deliver an executed Transfer Application. A transferee who properly executes a Transfer Application (i) requests admission to the Partnership as a Limited Partner, (ii) agrees to comply with and be bound by the terms and conditions of, and executes, the Deposit Agreement and the Partnership Agreement, (iii) represents that such transferee has authority to enter into the Deposit Agreement and the Partnership Agreement, (iv) grants a power of attorney to the General Partner and, if a liquidator shall be appointed, the liquidator of the Partnership and (v) makes the consents and waivers contained in the Partnership Agreement and the Deposit Agreement. 7. Status of Record Holder. The Record Holder of a Common Unit, unless and until admitted as a Limited Partner pursuant to the Partnership Agreement, has the rights of an Assignee in respect of such Common Unit. 8. Requirements of Execution. This Depositary Receipt shall not be entitled to any benefits under the Deposit Agreement and shall not be valid or obligatory for any purpose, unless it has been signed on behalf of the Depositary by the manual signature of a duly authorized employee of the Depositary, except that such signature may be

a facsimile if a Registrar who is a person other than the Depositary has been appointed and this Depositary Receipt is countersigned by the manual signature of a duly authorized employee of the Registrar. Dated: UNITED STATES TRUST COMPANY OF NEW YORK Depositary, Transfer Agent and Registrar By: Authorized Signature Further Conditions and Agreement Forming Part of this Depositary Receipt Appear on the Reverse Side

REVERSE SIDE Further Conditions and Agreements Forming Part of this Depositary Receipt 9. Surrender of Depositary Receipts and Withdrawal of Common Units. Upon surrender of this Depositary Receipt to the Depositary at its Corporate Office and subject to the terms and conditions of the Deposit Agreement and the Partnership Agreement, a Record Holder of this Depositary Receipt who is a Limited Partner is entitled to delivery of a nontransferable Certificate evidencing the Common Units evidenced hereby. 10. Governmental Charges. If any tax or other governmental charge becomes payable with respect to this Depositary Receipt or the Common Units evidenced hereby, such tax or governmental charge shall be payable by the holder of this Depositary Receipt or by the transferee hereof in the case of a transfer. Transfer or withdrawal of the Common Units evidenced hereby may be refused until such payment is made, and any cash or other distribution may be withheld and applied to payment of such tax or other governmental charge, with the holder or transferee hereof to remain liable for any deficiency. 11. Representations and Warranties of Depositor. Each Person depositing a Certificate under the Deposit Agreement shall be deemed thereby to represent and warrant that (a) such Person is, or is duly authorized to act for, a Limited Partner and (b) such Person is the owner of such Certificates, or is duly authorized by the owner thereof to make the deposit. · · 12. Amendment. Any provision of the Deposit Agreement, including the form of Depositary Receipt and the Transfer Application, may at any time and from time to time be amended by agreement between the Partnership and the Depositary in any respect deemed necessary or desirable by them, subject to the fiduciary responsibility of the General Partner as set forth in the Partnership Agreement. A Record Holder at the time any amendment to the Deposit Agreement becomes effective shall be deemed, by continuing to hold Common Units, to consent to the amendment and to agree to be bound by the Deposit Agreement as amended thereby. Notwithstanding the foregoing, no amendment shall impair the right of a Limited Partner described in Paragraph 9. The Depositary will give written notice of any material amendment to the Deposit Agreement to all Record Holders and Assignees.

13. Charges of Depositary. The Partnership shall pay all charges, fees and reimbursements of the Depositary, except for (a) taxes and other governmental charges and (b) such telegram, telex, delivery and other charges as are expressly provided in the Deposit Agreement to be paid by other Persons. 14. Title to Depositary Receipts. The Common Units evidenced hereby are transferable in accordance with the laws governing transfers of investment securities. It is a condition of this Depositary Receipt, and every successive holder hereof by acceptance hereof consents and agrees, that, until a Common Unit has been transferred on the books-of the Depositary or a Transfer Agent pursuant to the Deposit Agreement, the Depositary, any Transfer Agent and the Partnership, notwithstanding any notice to the contrary or any notation or other writing on the Depositary Receipt, may treat the Record Holder at such time as the absolute owner of the Common Unit for all purposes. 15. Distributions. Whenever the Depositary receives from the Partnership any cash distributable to Record Holders, the Depositary shall, subject to the provisions of the Deposit Agreement, make such distribution to the Record Holders on the Record Date based upon the number of Common Units registered in such Record Holder's name; provided that the amounts distributed may be reduced by any amount required to be withheld by the Partnership or the Depositary on account of taxes. 16. Reports. The Depositary shall make available for inspection by Record Holders at its Corporate Office during normal business hours any report, financial statement or communication of or from the Partnership that is both received by the Depositary in its capacity as depositary and made generally available to Limited Partners or Record Holders. 17. Transfer Books. The Depositary shall keep books at its Corporate Office for the transfer of Common Units. Such books shall be open at all reasonable times for inspection by the Record Holders with the consent of the General Partner; provided that such inspection shall not be for the purpose of communicating with Record Holders in the interest of a business or object other than the business of the Partnership or a matter related to the Deposit Agreement or the Common Units. With the consent of the General Partner, a Record Holder shall have the right, upon notifying

the Depositary of a proper purpose related to such Record Holder's interest in the Partnership, to have furnished to such Record Holder at such Record Holder's expense a list of names and addresses of all Record Holders. 18. Liability of Depositary, Depositary's Agents, General Partner and Partnership. None of the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership shall incur any liability to any holder of this Depositary Receipt if, by reason of any present or future law or regulation thereunder of the federal government or any other governmental authority (or, in the case of the Depositary or any Depositary's Agent, by reason of any provision, present or future, of the Partnership Agreement), or by reason of any act of God, war or other circumstance beyond its control, if the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership is prevented or forbidden from doing or performing any act or thing required by the terms of the Deposit Agreement to be done or performed; nor shall the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership incur any liability to the holder of this Depositary Receipt by reason of any nonperformance or delay caused as aforesaid in the performance of any act or thing required by the terms of the Deposit Agreement to be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement. 19. Immunities of Depositary, Depositary's Agents, General Partner and Partnership. None of the Depositary, any Depositary's Agent, the General Partner (or its shareholders, directors or officers) or the Partnership (a) assumes any obligation or shall be subject to any liability under the Deposit Agreement to any holder of this Depositary Receipt other than a duty to use its best judgment and good faith in the performance of such duties as are expressly set forth in the Deposit Agreement, (b) shall be under any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of this Depositary Receipt that in its opinion may involve expense or liability, unless indemnity satisfactory td it against such expense and liability has been furnished, or (c) shall be liable for any action or nonaction by it in reasonable reliance upon the advice of or information from legal counsel, accountants, any Depositor, any holder of this Depositary Receipt or any other Person 3 'Z,..ob

believed by it to be competent to give such advice or information. The Depositary, any Depositary's Agent, the General Partner (and its shareholders, directors or officers) and the Partnership may rely and shall be protected in acting upon any written notice, request, direction or other document believed by them to be genuine and to have been signed or presented by the proper Person. 20. Indemnification. Subject to the prov1s1ons of the Deposit Agreement, the Depositary shall indemnify the General Partner (and its shareholders, directors, officers, employees, partners and agents) and the Partnership (and its Partners, Assignees and agents) against, and hold each of them harmless from, all claims, liabilities, losses, damages, judgments, fines, settlements, costs and expenses (including all reasonable legal costs and expenses relating thereto, including reasonable attorneys' fees) arising out of acts performed or omitted in respect of the Deposit Agreement by the Depositary or any Depositary's Agent (other than an Affiliate of the Partnership) due to the gross negligence, bad faith or intentional misconduct of the Depositary or such Depositary's Agent. Subject to the provisions of the Deposit Agreement, the Partnership shall indemnify the Depositary and any Depositary's Agent (other than an Affiliate of the Partnership) against, and hold each of them harmless from, all claims, liabilities, losses, damages, judgments, fines, settlements, costs and expenses (including all reasonable legal costs and expenses relating thereto, including reasonable attorneys' fees) arising out of (a) acts performed or omitted in respect of the Deposit Agreement by the Depositary or any such Depositary's Agent, except for any such claim, liability, loss, damage, judgment, fine, settlement, cost or expense due to the negligence, gross negligence, bad faith or intentional misconduct of the Depositary or such Depositary's Agent, or (b) the breach by the Partnership of its representations, warranties and covenants set~forth in the Deposit Agreement. 21. Registration and Removal of Depositary. The Depositary may at any time (a) resign as depositary under the Deposit Agreement by written notice delivered to the Partnership, ef,fective upon the appointment of a successor depositary and iits acceptance of such appointment, or (b) be removed as depositary under the Deposit Agreement by the Partnership, effective upon the appointment of a successor depositary and its acceptance of such appointment. 4 ~or

22. Termination of Deposit Agreement. Whenever directed by the Partnership, the Depositary shall terminate the Deposit Agreement by mailing notice of termination to the Record Holders at least 30 days before the date fixed in such notice for termination. The Depositary shall then discontinue all functions and be discharged from all obligations with respect to the Deposit Agreement, except as specifically provided therein. Upon termination of the Deposit Agreement, the Partnership shall be discharged from all obligations thereunder, except for its obligations to the Depositary with respect to indemnification, charges and expenses. 23. Applicable Law. The Deposit Agreement, and the rights, duties, obligations and immunities of the Depositary thereunder or in respect of the Depositary Receipts, shall be governed by and construed in accordance with the laws of the State of New York. 24. Defined Terms. Any capitalized term not defined herein shall have the meaning assigned it in the Deposit Agreement. The following abbreviations, when used in the inscription on the face of this Depositary Receipt, shall be construed as follows according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - Custodian (Cust) (Minor) under Uniform Gifts to Minors Act Additional abbreviations may also be used, though not in the above list. FOR VALUE RECEIVED, the undersigned hereby sells, assigns and trahsfers unto Social Security or other identifying number of Assignee Print or type Name and Address of Assignee

the within Depositary Receipt and all rights and interest represented thereby, and irrevocably constitutes and appoints his attorney, to transfer the same on the books of the Depositary, with full power of substitution in the premises. Dated: Signature: Signature guaranteed: Note: The signature to any endorsement hereon must correspond with the name as written upon the face of the Depositary Receipt, in every particular, without alteration or enlargement or any change whatever. If the endorsement is executed by an attorney, executor, administrator, trustee or guardian, the person executing the endorsement must give his full title in such capacity, and proper evidence of authority to act in such capacity, if not on file with the Depositary, must be forwarded with this Depositary Receipt. The signature must be guaranteed by an authorized employee of a bank, trust company or member of a national securities exchange.

Exhibit 1 No transfer of the Common Units evidenced by this Depositary Receipt will be registered on the books of the Depositary or of the Partnership unless an Application for Transfer of Units has been executed by a transferee either (a) on the form set forth below or (b) on a separate application that the Depositary or the Partnership will furnish on request without charge. A transferor of the Common Units evidenced by this Depositary Receipt has no duty to a transferee to deliver an executed transfer application in order for such transferee to obtain registration of the transfer of such Common Units evidenced by this Depositary Receipt. APPLICATION FOR TRANSFER OF UNITS The undersigned ("Assignee") hereby applies for transfer to the name of the Assignee of the Common Units evidenced by this Depositary Receipt. The Assignee (a) agrees to comply with and be bound by the terms and conditions of, and hereby executes, the Deposit Agreement, (b) requests admission as a Substituted Limited Partner and agrees to comply with and be bound by the terms and conditions of, and hereby executes, the Agreement of Limited Partnership of Agricultural Minerals Company, L.P. (the "Partnership"), as amended or restated to the date hereof (the "Partnership Agreement"), (c) represents and warrants that the Assignee has all right, power and authority and, if an individual, the capacity necessary to enter into the Partnership Agreement and the Deposit Agreement, (d) appoints the General Partner and, if a liquidator shall be appointed, the liquidator of the Partnership as his attorney to execute, swear to, acknowledge and file any document, including the Partnership Agreement, any amendment to the Partnership Agreement and the Certificate of Limited Partnership of the Partnership, necessary or appropriate for the Assignee's admission as a Substituted Limited Partner and as a party to the Partnership Agreement and the Deposit Agreement, (e) gives the powers of attorney provided for in the Partnership Agreement and the Deposit Agreement and (f) makes the consents and waivers and gives the approvals contained in the Partnership Agreement and the Deposit Agreement. Capitalized terms not defined herein have the meaning assign~ to such terms in the Partnership Agreement. The Assignee has acquired an interest in the Partnership, whose taxpayer identification number is i3-l389684. On behalf of the Partnership, Agricultural Minerals Corporation has applied to the Internal Revenue Service for a tax shelter registration number. The Internal Zto

Revenue Service has issued the Partnership the following tax shelter registration number . If there is no number in the blank in the preceding sentence, the number will be furnished to the Assignee when it is received. The Assignee must report this registration number to the Internal Revenue Service if the Assignee claims any deduction, loss, credit or other tax benefit or reports any income by reason of the Assignee's investment in the Partnership. The Assignee must report the registration number (as well as the name and taxpayer identification number of the Partnership) on Form 8271. FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH THE ASSIGNEE CLAIMS THE DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORTS ANY INCOME. ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE INTERNAL REVENUE SERVICE. Dated: Social Security or other identifying number of Assignee Purchase Price (including commissions, if any) Type of Entity (Check One): Signature of Assignee Print or Type Name and Address of Assignee Individual __ Partnership __ Corporation __ Trust Other (specify): __ Nationality (Check One): I u.s. Citizen, Resident or Domestic Entity __ Foreign Corporation, or __ Non-resident alien 2 '2- I I

If the u.s. Citizen, Resident or Domestic Entity box is checked, the following certification must be completed. Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the "Code"), the Partnership must withhold tax with respect to certain transfers of property if a holder of an interest in the Partnership is a foreign person. To inform the Partnership that no withholding is required with respect to the undersigned interest-holder's interest in it, the undersigned hereby certifies the following (or, if applicable, certifies the following on behalf of the interest-holder). Complete Either A or B: A. Individual Interest-Holder 1. I am not a non-resident alien for purposes of u.s. income taxation. 2. My U.S. taxpayer identifying number (Social Security Number) is 3. My home address is B. Partnership, Corporate or Other Interest-Holder 1. is not a foreign (Name of Interest-Holder) corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Code and Treasury Regulations). 2. The interest-holder's U.S. employer identification number is 3. The interest-holder's office address and place of incorporation (if applicable) is The in:terest-holder agrees to notify the Partnership within sixty (60) days of the date the interest-holder becomes a foreign person. The interest-holder understands that this certification may be disclosed to the Internal Revenue 3 '2-I'Z..

Service by the Partnership and that any false statement contained herein could be punishable by fine, imprisonment or both. Under penalties of perjury, I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete and, if applicable, I further declare that I have authority to sign this document on behalf of (Name of Interest-Holder) Signature and Date Title (if applicable) Note: If the Assignee is a broker, dealer, bank, trust company, clearing corporation, other nominee holder or an agent of any of the foregoing, and is holding for the account of any other Person, this application should be completed by an officer thereof or, in the case of a broker or dealer, by a registered representative who is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., or, in the case of any other nominee holder, a Person performing a similar function. If the Assignee is a broker, dealer, bank, trust company, clearing corporation, other nominee holder or an agent of any of the foregoing, the above certification as to any Person for whom the Assignee will hold the Common U~its shall be made to the best of the Assignee's knowledge. Note: This Transfer Application may be executed on behalf of a transferee by an atturney, executor, administrator, persona~ representative, trustee, attorney-in-fact or guardian, and, if so executed, the person executing this Transfer Application must give his or her full title in such capacity, and proper evidence of authority to act in such capacity, if not on file with the Depositary, must be forwarded with this Receipt.

EX-21

Exhibit 21

TERRA NITROGEN COMPANY, L.P.

SUBSIDIARIES

Name of Subsidiary	Jurisdiction of Incorporation or Organization	Percentage Held by TNCLP
Terra Nitrogen, Limited Partnership	Delaware	99	%

EX-31.1

TERRA NITROGEN COMPANY, L.P.

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, W. Anthony Will, certify that:

1. I have reviewed this Annual Report on Form 10-K of Terra Nitrogen Company, L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	February 22, 2018	/s/ W. ANTHONY WILL
		W. Anthony Will President and Chief Executive Officer of Terra Nitrogen GP Inc., general partner of Terra Nitrogen Company, L.P. (Principal Executive Officer)

EX-31.2

TERRA NITROGEN COMPANY, L.P.

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dennis P. Kelleher, certify that:

1. I have reviewed this Annual Report on Form 10-K of Terra Nitrogen Company, L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	February 22, 2018	/s/ DENNIS P. KELLEHER
		Dennis P. Kelleher Senior Vice President and Chief Financial Officer of Terra Nitrogen GP Inc., general partner of Terra Nitrogen Company, L.P. (Principal Financial Officer)

EX-32.1

TERRA NITROGEN COMPANY, L.P.

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Terra Nitrogen Company, L.P. (TNCLP) for the period ended December 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, W. Anthony Will, President and Chief Executive Officer of Terra Nitrogen GP Inc., the general partner of TNCLP, hereby certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of TNCLP.

/s/ W. ANTHONY WILL
W. Anthony Will President and Chief Executive Officer of Terra Nitrogen GP Inc., general partner of Terra Nitrogen Company, L.P. (Principal Executive Officer)
Date:	February 22, 2018

EX-32.2

TERRA NITROGEN COMPANY, L.P.

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Terra Nitrogen Company, L.P. (TNCLP) for the period ended December 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Dennis P. Kelleher, Senior Vice President and Chief Financial Officer of Terra Nitrogen GP Inc., the general partner of TNCLP, hereby certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of TNCLP.

/s/ DENNIS P. KELLEHER
Dennis P. Kelleher Senior Vice President and Chief Financial Officer of Terra Nitrogen GP Inc., general partner of Terra Nitrogen Company, L.P. (Principal Financial Officer)
Date:	February 22, 2018

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Feb. 21, 2018	Jun. 30, 2017
Document and Entity Information
Entity Registrant Name	TERRA NITROGEN CO L P /DE
Entity Central Index Key	0000879575
Document Type	10-K
Document Period End Date	Dec. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 396,034,573
Entity Common Stock, Shares Outstanding		18,501,576
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 81.5	$ 39.5
Due from affiliates of the General Partner	17.1	4.0
Accounts receivable	0.9	0.6
Inventories	5.3	8.6
Prepaid expenses and other current assets	0.3	7.9
Total current assets	105.1	60.6
Property, plant and equipment—net	290.2	301.3
Other assets	8.6	11.4
Total assets	403.9	373.3
Current liabilities:
Accounts payable and accrued expenses	27.4	27.8
Due to affiliates of the General Partner	4.2	4.1
Other current liabilities	3.2	0.0
Total current liabilities	34.8	31.9
Other liabilities	1.0	2.6
Partners' capital:
General partner's interest	64.8	50.3
Total partners' capital	368.1	338.8
Total liabilities and partners' capital	403.9	373.3
Common
Partners' capital:
Limited partners' interests, 18,501,576 Common Units authorized, issued and outstanding; 184,072 Class B Common Units authorized, issued and outstanding	301.2	286.7
Class B Common
Partners' capital:
Limited partners' interests, 18,501,576 Common Units authorized, issued and outstanding; 184,072 Class B Common Units authorized, issued and outstanding	$ 2.1	$ 1.8

XML

Consolidated Balance Sheets (Parenthetical) - shares	Dec. 31, 2017	Dec. 31, 2016
Common
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
Limited partners' interests, Common Units authorized	184,072	184,072
Common Units issued	184,072	184,072
Common Units outstanding	184,072	184,072

XML

Consolidated Statements Of Operations - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Net sales:
Other income	$ 0.5	$ 0.0	$ 0.9
Total	397.2	418.3	581.7
Cost of goods sold:
Materials, supplies and services	212.6	163.6	228.0
Gross margin	156.7	226.8	325.8
Other general and administrative expenses	1.7	1.9	3.2
Gain on sale of equity method investment	(14.3)	0.0	0.0
Operating Income (Loss)	153.4	209.2	306.9
Interest Income, Other	0.5	0.1	0.0
Net earnings	153.9	209.3	306.9
Allocation of net earnings:
Net earnings	$ 153.9	$ 209.3	$ 306.9
Net earnings per Common Unit (in dollars per unit)	$ 5.93	$ 7.56	$ 10.06
Affiliate of General Partner
Net sales:
Product sales to affiliates of the General Partner	$ 396.1	$ 417.7	$ 580.2
Other income	0.6	0.6	0.6
Cost of goods sold:
Services provided by affiliates of the General Partner	27.9	27.9	27.9
Selling, general and administrative services provided by affiliates of the General Partner	15.9	15.7	15.7
General Partner's Interest
Allocation of net earnings:
Net Income Allocated to General Partners	42.6	67.4	117.7
Common Units | Class B Common
Allocation of net earnings:
Net Income Allocated to Limited Partners	1.5	2.0	3.0
Common Units | Common units
Allocation of net earnings:
Net Income Allocated to Limited Partners	$ 109.8	$ 139.9	$ 186.2

XML

Consolidated Statements Of Partners' Capital - USD ($) $ in Millions	Total	General Partner's Interest	Common units Common Units	Class B Common Units Common Units
Partners' capital at Dec. 31, 2014	$ 374.9	$ 70.0	$ 302.7	$ 2.2
Increase (Decrease) in Partners' Capital
Net earnings allocated			186.2	3.0
Net Income Allocated to General Partners		117.7
Net earnings	306.9
Distributions	(294.8)	(111.5)	(180.4)	(2.9)
Partners' capital at Dec. 31, 2015	387.0	76.2	308.5	2.3
Increase (Decrease) in Partners' Capital
Net earnings allocated			139.9	2.0
Net Income Allocated to General Partners		67.4
Net earnings	209.3
Distributions	(257.5)	(93.3)	(161.7)	(2.5)
Partners' capital at Dec. 31, 2016	338.8	50.3	286.7	1.8
Increase (Decrease) in Partners' Capital
Net earnings allocated			109.8	1.5
Net Income Allocated to General Partners		42.6
Net earnings	153.9
Distributions	(124.6)	(28.1)	(95.3)	(1.2)
Partners' capital at Dec. 31, 2017	$ 368.1	$ 64.8	$ 301.2	$ 2.1

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Operating Activities:
Net earnings	$ 153.9	$ 209.3	$ 306.9
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	39.0	40.4	35.8
Unrealized loss (gain) on derivatives	10.6	(35.3)	24.3
Loss on disposal of property, plant and equipment	0.0	0.1	2.0
Gain on sale of equity method investment	(14.3)	0.0	0.0
Changes in operating assets and liabilities:
Accounts receivable	(0.3)	0.2	(0.4)
Inventories	3.3	2.0	(1.1)
Accounts payable and accrued expenses	(0.9)	2.5	(6.7)
Due to/from affiliates of the General Partner	(13.0)	6.0	15.1
Other assets and liabilities	(0.8)	(1.7)	(0.8)
Net cash provided by operating activities	177.5	223.5	375.1
Investing Activities:
Additions to property, plant and equipment	(27.2)	(33.1)	(87.8)
Proceeds from Sale of Property, Plant, and Equipment	0.0	0.2	0.9
Proceeds from sale of equity method investment	16.3	0.0	0.0
Net cash used in investing activities	(10.9)	(32.9)	(86.9)
Financing Activities:
Net cash used in financing activities	(124.6)	(257.5)	(294.8)
Increase (decrease) in cash and cash equivalents	42.0	(66.9)	(6.6)
Cash and cash equivalents at beginning of year	39.5	106.4	113.0
Cash and cash equivalents at end of year	81.5	39.5	106.4
Declared and paid partnership distributions	$ 124.6	$ 257.5	$ 294.8

XML

Background and Basis of Presentation

12 Months Ended

Dec. 31, 2017

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 solution (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). We own a 99% limited partner interest in the Operating Partnership, and Terra LP Holdings LLC (TLPH), an affiliate of the General Partner, owns a 0.975% limited partner interest. Terra Nitrogen GP Inc. (TNGP or the General Partner), a Delaware corporation, is the general partner of both TNCLP and TNLP and owns a 0.025% general partner interest in each of TNCLP and TNLP. The General Partner is an indirect, wholly owned subsidiary of CF Industries Holdings, Inc. (CF Industries), a Delaware corporation. Throughout this document, the term "affiliates of the General Partner" refers to consolidated subsidiaries of CF Industries, including TNGP. Ownership of TNCLP is composed of the general partner interest and the limited partner interests. The general partner interest in TNCLP is represented by 4,720 general partner units. Limited partner interests are represented by common units, which are listed for trading on the New York Stock Exchange (NYSE) under the symbol "TNH", and Class B common units. As of December 31, 2017, 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 75.1% of the total outstanding common units) and all of the Class B common units as of December 31, 2017. On February 7, 2018, TNCLP announced that, in accordance with Section 17.1 of TNCLP’s First Amended and Restated Agreement of Limited Partnership, as amended (the TNCLP Partnership Agreement), TNGP elected to exercise the right, assigned to TNGP by TNCLP, to purchase all of the issued and outstanding common units representing limited partner interests in TNCLP not already owned by TNGP or its affiliates (the Public Units). For additional information, see Note 15—Subsequent Event.

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 January 19, 2017, the Internal Revenue Service (IRS) issued final regulations on the types of income and activities that constitute or generate qualifying income of a MLP. For calendar year MLPs, the effective date of the regulations is January 1, 2018. The regulations have the effect of limiting the types of income and activities that qualify under the MLP rules, subject to certain transition provisions. The regulations define the activities that generate qualifying income from certain processing or refining and transportation activities with respect to any mineral or natural resource (including fertilizer) as activities that generate qualifying income, but the regulations reserve on specifics regarding fertilizer-related activities. However, the IRS has issued two private letter rulings to taxpayers in the fertilizer industry unrelated to TNCLP (one before and one after the issuance of the final regulations) which would indicate that each taxpayer's fertilizer manufacturing activities should produce qualifying income for purposes of determining whether 90% of the partnership's gross income is qualifying income under the final regulations. The entities to which these private letter rulings were issued would appear to operate nitrogen fertilizer manufacturing businesses that are similar to ours. While these private letter rulings provide some insight into the manner in which the IRS analyzed fertilizer manufacturing activities at the time these rulings were issued, these private letter rulings are specific to different entities. Thus, the IRS is not bound to follow them in respect of TNCLP, nor may we rely on them as precedent when determining whether we satisfy the MLP 90% gross income test. 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 consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP).

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements of TNCLP and the accompanying notes include the accounts of the Partnership. All intercompany transactions and balances have been eliminated. Income is allocated to the General Partner and the limited partners of TNCLP (Limited Partners) in accordance with the provisions of the TNCLP Partnership Agreement that provides for allocations of income between the Limited Partners and the General Partner in the same proportion as cash distributions related to such year. The 0.975% limited partner interest and the 0.025% general partner interest in the Operating Partnership held by TLPH and the General Partner, respectively, are included in the line labeled General Partner’s interest in the consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results could differ from these estimates. Significant estimates and assumptions are used for, but are not limited to, the net realizable value of inventories, environmental remediation liabilities, environmental and litigation contingencies, useful lives of property, plant and equipment, the assumptions used in the evaluation of potential impairments of property, plant and equipment and the allowance for doubtful accounts receivable.

Revenue Recognition

The primary products we sell are ammonia and UAN. Sales are made in accordance with the Amendment to the General and Administrative Services and Product Offtake Agreement (the Services and Offtake Agreement) we have with an affiliate of the General Partner under which affiliates of the General Partner purchase our products. We recognize revenue as products are shipped from the plant gate when title and risk of loss transfer to affiliates of the General Partner. The Services and Offtake Agreement is accounted for as an operating lease comprised entirely of variable lease payments associated with the sale of our products. The Services and Offtake Agreement is described in Note 10—Related Party Transactions.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less. The carrying value of cash and cash equivalents approximates fair value.

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 labor and other services from affiliates of the General Partner, the affiliates of the General Partner continue to be both debtors and creditors to us.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at face amounts less an allowance for doubtful accounts. The allowance is an estimate based on historical collection experience, current economic and market conditions, and a review of the current status of each customer's trade accounts receivable. A receivable is past due if payments have not been received within the agreed upon invoice terms. Account balances are charged-off against the allowance when management determines that it is probable the receivable will not be recovered.

Inventories

Inventories are reported at the lower of cost and net realizable value and are determined on a first-in, first-out (FIFO) and average cost basis. Inventories include the cost of materials, production labor and production overhead. Net realizable value is reviewed quarterly. Fixed production costs related to idle capacity are not included in the cost of inventories but are charged directly to cost of sales. On January 1, 2017, we adopted Accounting Standards Update (ASU) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, as discussed in Note 3—New Accounting Standards.

Property, Plant and Equipment

Property, plant and equipment are stated at cost and are subject to the Services and Offtake Agreement, which is accounted for as an operating lease, as described in Note 10—Related Party Transactions. Depreciation and amortization are computed using the straight-line method over the estimated useful life of the property, plant and equipment. Useful lives for property, plant, and equipment range from 10 to 40 years for buildings and 3 to 30 years for machinery and equipment. We periodically review these useful lives and change the estimates to reflect the results of those reviews.

Scheduled inspections, replacements and overhauls of machinery and equipment at our continuous process manufacturing facility are referred to as plant turnarounds. Plant turnarounds are accounted for under the deferral method, as opposed to the direct expense or built-in overhaul methods. Under the deferral method, expenditures related to turnarounds are capitalized when incurred and amortized to production costs on a straight-line basis over the period benefited, which is until the next scheduled turnaround in up to 5 years. If the direct expense method were used, all turnaround costs would be expensed as incurred. Internal employee costs and overhead amounts are not considered turnaround costs and are not capitalized. Turnaround costs are classified as investing activities in our consolidated statements of cash flows. For additional information, see Note 9—Property, Plant and Equipment—Net.

Recoverability of Long-Lived Assets

We review property, plant and equipment and other long-lived assets in order to assess recoverability based on expected future undiscounted cash flows whenever events or circumstances indicate that the carrying value may not be recoverable. If the sum of the expected future net cash flows is less than the carrying value, an impairment loss is recognized. The impairment loss is measured as the amount by which the carrying value exceeds the fair value of the asset.

Other Leases

Leases are classified as either operating leases or capital leases. Assets acquired under capital leases are depreciated on the same basis as property, plant and equipment. We currently do not have any capital leases. Rental payments, including rent holidays, leasehold incentives, and scheduled rent increases, if any, are expensed on a straight-line basis over the lease term.

Income Taxes

As a partnership, we are not subject to income taxes. For additional information, see Note 1—Background and Basis of Presentation. The income tax liability of the individual partners is not reflected in our consolidated financial statements.

Derivative Financial Instruments

Natural gas is the principal raw material used to produce nitrogen fertilizers. We use natural gas both as a chemical feedstock and as a fuel to produce ammonia and UAN. We manage the risk of changes in natural gas prices primarily through the use of derivative financial instruments. The derivative instruments that we use are primarily natural gas fixed price swaps and options traded in the over-the-counter markets. These derivatives reference NYMEX futures contract prices, which represent the basis for fair value at any given time. The derivatives are traded in months forward and settlements are scheduled to coincide with anticipated gas purchases during those future periods. We do not use derivatives for trading purposes and are not a party to any leveraged derivatives. We have elected to not apply hedge accounting to our derivatives; as a result, changes in the fair value of the derivatives are recorded in cost of goods sold in our consolidated statements of operations.

Derivatives are recognized in our consolidated balance sheets at fair value. Cash flows related to natural gas derivatives are reported as operating activities in our consolidated statements of cash flows. For additional information, see Note 7—Derivative Financial Instruments.

Asset Retirement Obligations

Asset retirement obligations (AROs) are legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development or normal operation of such assets. AROs are initially recognized as liabilities as incurred when sufficient information exists to estimate fair value. When initially recognized, the fair value based on discounted future cash flows is recorded both as a liability and an increase in the carrying amount of the related long-lived asset. In subsequent periods, depreciation of the asset and accretion of the liability are recorded. For additional information on AROs, see Note 11—Asset Retirement Obligations.

Environmental

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations are expensed. Expenditures that increase the capacity or extend the useful life of an asset, improve the safety or efficiency of the operations, or mitigate or prevent future environmental contamination are capitalized. Liabilities are recorded when it is probable that a liability has been incurred, the costs can be reasonably estimated, and the liability would not be discounted.

Litigation

From time to time, the Partnership is subject to ordinary, routine legal proceedings related to the usual conduct of its business. From time to time, the Partnership also is involved in legal proceedings regarding public utility and transportation rates, environmental matters, taxes and permits relating to the operations of its plant and facilities. Accruals for such contingencies are recorded to the extent management concludes their occurrence is probable and the financial impact of an adverse outcome is reasonably estimable. Disclosure for specific legal contingencies is provided if the likelihood of occurrence is at least reasonably possible and the exposure is considered material to the consolidated financial statements. In making determinations of likely outcomes of litigation matters, many factors are considered. These factors include, but are not limited to, past history, scientific and other evidence, and the specifics and status of each matter. If the assessment of various factors changes, the estimates may change. Predicting the outcome of claims and litigation, and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates and accruals. Legal fees are expensed as incurred and are included in selling, general, and administrative services provided by affiliates of the General Partner in our consolidated statements of operations.

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New Accounting Standards

12 Months Ended

Dec. 31, 2017

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Standards

New Accounting Standards

Recently Adopted Pronouncement

On January 1, 2017, we adopted ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. ASU No. 2015-11 changes the inventory measurement principle for entities using the FIFO or average cost methods. For entities utilizing one of these methods, the inventory measurement principle changed from the lower of cost or market to the lower of cost and net realizable value. We follow the FIFO and average cost methods, and the adoption of this ASU did not have a material effect on our consolidated financial statements.

Recently Issued Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers, (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 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, the costs to obtain and fulfill a contract, including assets to be recognized, are to be capitalized and such capitalized costs are to be disclosed. All of our nitrogen fertilizer production is sold to affiliates of the General Partner. The Services and Offtake Agreement, under which all of our nitrogen fertilizer products are sold, is accounted for as an operating lease comprised entirely of variable lease payments associated with the sale of our nitrogen fertilizer products, therefore, it does not meet the definition of a contract as defined by ASU No. 2014-09. As such, our adoption of ASU No. 2014-09 on January 1, 2018 did not have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the lease accounting requirements in ASC Topic 840, Leases. This ASU will require lessees to recognize the rights and obligations resulting from virtually all leases (other than leases that meet the definition of a short-term lease) on their balance sheets as right-of-use assets with corresponding lease liabilities. For lessors, ASU No. 2016-02 leaves the current lessor accounting in ASC Topic 840 largely unchanged. Quantitative and qualitative disclosures, including significant judgments made by management, will be required. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted, and requires the modified retrospective method of adoption. Under ASU No. 2016-02, and consistent with the current accounting treatment under ASC Topic 840, we expect that the Services and Offtake Agreement will continue to be accounted for as an operating lease. We expect the adoption of this ASU will not have a material impact on our consolidated financial statements.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedged items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted in any interim period. We do not expect the adoption of this ASU will have a material effect on our consolidated financial statements.

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Agreement of Limited Partnership

12 Months Ended

Dec. 31, 2017

Distributions Made to Members or Limited Partners [Abstract]

Agreement of Limited Partnership

Agreement of Limited Partnership

Ownership of TNCLP is composed of the general partner interest and the limited partner interests (see Note 1—Background and Basis of Presentation). Holders of common units and Class B common units do not have preemptive rights. Holders of common units are entitled to one vote per common unit with respect to each matter on which holders of common units are entitled to vote. The Class B common units have no voting rights on any matter. Unitholders have only limited voting rights on matters affecting our business and, therefore, limited ability to influence management's decisions regarding our business. Unitholders have no right to elect the General Partner or the TNGP Board of Directors on an annual or other continuing basis. Furthermore, the General Partner may only be removed by a vote of the holders of at least 66 2/3% of our outstanding common units, including any common units held by the General Partner and its affiliates (including CF Industries). Given that the General Partner and its affiliates own approximately 75.1% of our outstanding common units, holders of our publicly traded common units are not able to remove the General Partner under any circumstances.

The General Partner and its affiliates own approximately 75.1% of our outstanding common units. When not more than 25% of our issued and outstanding common units are held by persons other than the General Partner and its affiliates (collectively, non-affiliated persons), as was the case at December 31, 2017, 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 common units held by non-affiliated persons.

On February 7, 2018, TNCLP announced that, in accordance with Section 17.1 of the TNCLP Partnership Agreement, TNGP elected to exercise the right, assigned to TNGP by TNCLP, to purchase all of the issued and outstanding common units representing limited partner interests in TNCLP not already owned by TNGP or its affiliates (the Public Units).

TNGP will purchase the Public Units on April 2, 2018 for a cash purchase price of $84.033 per Public Unit. The purchase price was determined in accordance with Section 17.1 of the TNCLP Partnership Agreement as the average of the daily closing prices per common unit for the 20 consecutive trading days beginning with January 5, 2018 and ending with February 2, 2018.

As of April 2, 2018, all rights of the holders of the Public Units will cease, except for the right to receive payment of the purchase price. Upon completion of the purchase on April 2, 2018, TNGP will own 100 percent of the Public Units and will be entitled to all of the benefits resulting from the Public Units. In addition, upon completion of the purchase, the common units representing limited partner interests in TNCLP will cease to be publicly traded or listed on the NYSE.

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 the TNCLP Partnership Agreement. 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 increases in the amount of cash invested in working capital items (such as increases in receivables or 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 years ended December 31, 2017, 2016 and 2015, we declared and paid partnership distributions of $124.6 million, $257.5 million and $294.8 million, respectively.

We receive 99% of the Operating Partnership's Available Cash (as defined in the Operating Partnership's agreement of limited partnership) and 1% of the Operating Partnership's Available Cash is distributed by the Operating Partnership to the General Partner and its affiliate, TLPH. Distributions recognized by the Operating Partnership with respect to the General Partner and TLPH were $1.2 million, $2.6 million and $2.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Pursuant to the TNCLP Partnership Agreement, distributions of our Available Cash are made 99.975% to common and Class B common unitholders and 0.025% to the General Partner except that the General Partner is entitled, as an incentive, to a larger percentage of our distribution of Available Cash to the extent that cumulative distributions of Available Cash exceed specified target levels above the Minimum Quarterly Distributions (MQD) of $0.605 per unit. The General Partner has assigned its right to receive such incentive distributions to an affiliate of the General Partner.

On February 7, 2018, we announced a cash distribution of $2.03 per common unit, payable on February 28, 2018 to holders of record as of February 16, 2018. As a result of TNGP’s exercise of the right to purchase the Public Units, there will be no further cash distributions on the common units after the distribution payable February 28, 2018.

In the fourth quarter of 2017, we exceeded the cumulative MQD amounts and will distribute Available Cash as summarized in the following table:

	Quarterly Income and Distribution Allocation
	Target Limit (per unit)		Target Increment (per unit)		Distribution Threshold (in millions) (1)		Common Units		Class B Common Units		General Partner (2)		Total
Minimum Quarterly Distributions	$	0.605	$	0.605	$	11.3	98.990	%	0.985	%	0.025	%	100	%
First Target	0.715		0.110		13.4		98.990	%	0.985	%	0.025	%	100	%
Second Target	0.825		0.110		15.4		85.859	%	0.985	%	13.156	%	100	%
Third Target	1.045		0.220		19.5		75.758	%	0.985	%	23.257	%	100	%
Final Target and Beyond	>1.045		—		> 19.5		50.505	%	0.985	%	48.510	%	100	%

_______________________________________________________________________________

⁽¹⁾  The Distribution Threshold represents the cumulative amount of Available Cash necessary to distribute the Target Limit per unit, as shown in the table above, to all unitholders and the General Partner based on the number of units outstanding as of December 31, 2017.

⁽²⁾  Reflects Minimum Quarterly Distributions and incentive distributions to the General Partner.  The General Partner has assigned its right to incentive distributions to an affiliate of the General Partner.

We paid distributions of $5.15, $8.74 and $9.75 per common unit during 2017, 2016 and 2015, respectively. We also paid distributions of $6.61, $13.64 and $15.61 per Class B common unit during 2017, 2016 and 2015, respectively.

The quarterly cash distributions to the unitholders and the General Partner declared to date in 2018 and during 2017 and 2016 are as follows:

Distribution		Common Units				Class B Common Units				General Partner		Total Distributions Declared
Declared in	Related to	Total		Per unit		Total		Per unit		Total
		(in millions, except per unit amounts)
First Quarter 2018	Fourth Quarter 2017	$	37.6	$	2.03	$	0.6	$	3.10	$	20.4	$	58.6
First Quarter 2017	Fourth Quarter 2016	$	22.6	$	1.22	$	0.3	$	1.52	$	5.7	$	28.6
Second Quarter 2017	First Quarter 2017	17.9		0.97		0.2		1.04		1.4		19.5
Third Quarter 2017	Second Quarter 2017	29.6		1.60		0.4		2.26		12.7		42.7
Fourth Quarter 2017	Third Quarter 2017	25.2		1.36		0.3		1.79		8.3		33.8
First Quarter 2016	Fourth Quarter 2015	$	53.3	$	2.88	$	0.9	$	4.78	$	36.0	$	90.2
Second Quarter 2016	First Quarter 2016	28.0		1.51		0.4		2.09		11.1		39.5
Third Quarter 2016	Second Quarter 2016	47.7		2.58		0.7		4.17		30.4		78.8
Fourth Quarter 2016	Third Quarter 2016	32.7		1.77		0.5		2.60		15.8		49.0

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Net Earnings per Common Unit

12 Months Ended

Dec. 31, 2017

Earnings Per Unit [Abstract]

Net Earnings per Common Unit

Net Earnings per Common Unit

Net income and net losses are allocated to the common units, Class B common units and the general partner interest in accordance with the provisions of the TNCLP Partnership Agreement. In general, the TNCLP Partnership Agreement provides that if the Partnership has a net profit for a year, net income (including any undistributed net earnings) will be allocated among the General Partner and limited partners in the same proportion that Available Cash for such year was declared among the General Partner and the limited partners. If the Partnership has a net loss for a year, the loss will be allocated among the General Partner and limited partners in the same proportion as any net income was allocated to such partners in prior years (beginning with the first year in which net income was allocated to the partners). Net earnings per common unit are calculated using the two-class method and 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 years ended December 31, 2017, 2016 and 2015:

	Year Ended December 31,
	2017			2016			2015
	(in millions, except per unit amounts)
Basic earnings per common unit:
Net earnings	$	153.9		$	209.3		$	306.9
Less distributions declared to:
Common units	110.3			130.9			187.4
Class B common units	1.5			1.9			3.1
General partner interest	42.8			63.1			118.4
(Distributions in excess of earnings) undistributed earnings	$	(0.7	)	$	13.4		$	(2.0	)
Allocation percentage for undistributed earnings or distributions in excess of earnings (1):
Common units	71.33		%	66.82		%	60.67		%
Class B common units	0.97		%	0.97		%	0.97		%
General partner interest	27.70		%	32.21		%	38.36		%
Allocation of (distributions in excess of earnings) undistributed earnings to:
Common units	$	(0.5	)	$	9.0		$	(1.2	)
Class B common units	—			0.1			(0.1		)
General partner interest	(0.2		)	4.3			(0.7		)
Total (distributions in excess of earnings) undistributed earnings	$	(0.7	)	$	13.4		$	(2.0	)
Net earnings allocable to General Partner (2)	$	42.6		$	67.4		$	117.7
Net earnings allocable to Class B common units	$	1.5		$	2.0		$	3.0
Net earnings allocable to common units	$	109.8		$	139.9		$	186.2
Weighted-average common units outstanding	18.5			18.5			18.5
Net earnings per common unit	$	5.93		$	7.56		$	10.06

⁽¹⁾  In accordance with the TNCLP Partnership Agreement, undistributed earnings or distributions in excess of earnings are allocated in the same percentage that Available Cash for such period was declared among the General Partner (including with respect to the embedded incentive distribution rights) and limited partners.

⁽²⁾  Net earnings allocable to the General Partner include net earnings allocated to the General Partner and TLPH from the Operating Partnership of $1.5 million, $2.1 million and $3.1 million for the years ended December 31, 2017, 2016 and 2015, respectively.

There were no dilutive TNCLP units outstanding for the years ended December 31, 2017, 2016 and 2015 and therefore basic and diluted net earnings per common unit are the same.

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Inventories

12 Months Ended

Dec. 31, 2017

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consisted of the following:

	December 31,
	2017		2016
	(in millions)
Finished goods	$	3.5	$	6.8
Raw materials, spare parts and supplies	1.8		1.8
Total	$	5.3	$	8.6

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Derivative Financial Instruments

12 Months Ended

Dec. 31, 2017

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. We enter into natural gas derivative contracts with respect to gas to be consumed by us in the future, and settlements of those 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.

The gross fair values of derivatives in 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 8—Fair Value Measurements.

	December 31,
	2017			2016
	(in millions)
Derivative Assets
Unrealized gains in other current assets	$	—		$	7.9
Unrealized gains in other assets	—			1.1
Total derivative assets	—			9.0
Derivative Liabilities
Unrealized losses in other current liabilities	(3.2		)	—
Unrealized losses in other liabilities	—			(1.6		)
Total derivative liabilities	(3.2		)	(1.6		)
Net derivative (liabilities) assets	$	(3.2	)	$	7.4

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.

	Year ended December 31,
	2017			2016			2015
	(in millions)
Unrealized net mark-to-market (losses) gains	$	(10.6	)	$	35.3		$	(23.1	)
Realized net losses	(3.0		)	(16.7		)	(10.6		)
Net derivative (losses) gains	$	(13.6	)	$	18.6		$	(33.7	)

As of December 31, 2017 and 2016, we had open natural gas derivative contracts for 8.4 million MMBtus (millions of British thermal units) of natural gas and 29.4 million MMBtus of natural gas, respectively. The derivative portfolio at December 31, 2017 includes natural gas derivatives that economically hedge a portion of anticipated natural gas purchases through December 2018. For the year ended December 31, 2017, we used derivatives to cover approximately 48% of our natural gas consumption.

The counterparties to our derivative contracts are multinational commercial banks, other major financial institutions and large energy companies. The derivatives are executed with several counterparties, generally under International Swaps and Derivatives Association (ISDA) agreements. The ISDA agreements are master netting arrangements commonly used for OTC derivatives that mitigate exposure to counterparty credit risk, in part, by creating contractual rights of netting and setoff, the specifics of which vary from agreement to agreement. These rights are described further below:

• Settlement netting generally allows the parties to net, into a single net payable or receivable, ordinary settlement obligations arising under the ISDA agreement on the same day, in the same currency, for the same types of derivative instruments, and through the same pairing of offices.

• Close-out netting rights are provided in the event of a default or other termination event (as defined in the ISDA agreements), including bankruptcy. Depending on the cause of early termination, the non-defaulting party may elect to terminate all or some transactions outstanding under the ISDA agreement. The values of all terminated transactions and certain other payments under the ISDA agreement are netted, resulting in a single net close-out amount payable to or by the non-defaulting party. Termination values may be determined using a mark-to-market approach or based on a party's good faith estimate of its loss. If the final net close-out amount is payable by the non-defaulting party, that party's obligation to make the payment may be conditioned on factors such as the termination of all derivative transactions between the parties or payment in full of all of the defaulting party's obligations to the non-defaulting party, in each case regardless of whether arising under the ISDA agreement or otherwise.

• Setoff rights are provided by certain of the ISDA agreements and generally allow a non-defaulting party to elect to set off, against the final net close-out payment, other matured and contingent amounts payable between the parties under the ISDA agreement or otherwise. Typically, these setoff rights arise upon the early termination of all transactions outstanding under an ISDA agreement following a default or specified termination event.

Most of the ISDA agreements contain credit-risk-related contingent features such as cross-default provisions and credit support thresholds that are dependent upon the credit ratings of the General Partner affiliate. In the event of certain defaults or a credit ratings downgrade of the General Partner affiliate, the counterparty may request early termination and net settlement of certain derivative trades or may require the General Partner affiliate to collateralize derivatives in a net liability position. The General Partner affiliate’s revolving credit agreement, at any time when it is secured, provides a cross collateral feature for those derivatives that are with counterparties that are party to, or affiliates of parties to, the revolving credit agreement so that no separate collateral would be required for those counterparties in connection with such derivatives. In the event the General Partner affiliate's revolving credit agreement becomes unsecured, the General Partner affiliate could be required to post separate collateral in connection with such derivatives. As of December 31, 2017 and 2016, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in a net liability position was $3.2 million and $1.6 million, respectively, which also approximates the fair value of the maximum amount of assets needed to settle the obligations if the credit-risk-related contingent features were triggered and the General Partner affiliate was unable to post collateral at the reporting dates. As of December 31, 2017 and 2016, we and the General Partner affiliate had no cash collateral on deposit for derivative contracts assigned to us. The credit support documents executed in connection with certain ISDA agreements generally provide the General Partner affiliate and the counterparties 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 December 31, 2017 and 2016:

				Gross amounts not offset in  consolidated balance sheets
	Gross and net amounts presented in consolidated balance sheets (1)			Financial instruments			Cash collateral received (pledged)		Net amount
	(in millions)
December 31, 2017
Total derivative assets	$	—		$	—		$	—	$	—
Total derivative liabilities	(3.2		)	—			—		(3.2		)
Net derivative liabilities	$	(3.2	)	$	—		$	—	$	(3.2	)
December 31, 2016
Total derivative assets	$	9.0		$	1.6		$	—	$	7.4
Total derivative liabilities	(1.6		)	(1.6		)	—		—
Net derivative assets	$	7.4		$	—		$	—	$	7.4

_______________________________________________________________________________

⁽¹⁾  We report the fair values of our derivative assets and liabilities on a gross basis in our consolidated balance sheets. As a result, the gross amounts recognized and net amounts presented herein are the same.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2017

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 December 31, 2017 and 2016:

	Balances as of December 31, 2017
	Total			Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Cash equivalents	$	80.5		$	80.5	$	—		$	—
Total assets at fair value	$	80.5		$	80.5	$	—		$	—
Unrealized losses on natural gas derivatives	$	(3.2	)	$	—	$	(3.2	)	$	—
Total liabilities at fair value	$	(3.2	)	$	—	$	(3.2	)	$	—

	Balances as of December 31, 2016
	Total			Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Cash equivalents	$	32.0		$	32.0	$	—		$	—
Unrealized gains on natural gas derivatives	9.0			—		9.0			—
Total assets at fair value	$	41.0		$	32.0	$	9.0		$	—
Unrealized losses on natural gas derivatives	$	(1.6	)	$	—	$	(1.6	)	$	—
Total liabilities at fair value	$	(1.6	)	$	—	$	(1.6	)	$	—

Cash Equivalents

As of December 31, 2017 and 2016, our cash equivalents consisted primarily of money market mutual funds that invest in U.S. treasuries and direct investments in U.S. treasuries with original maturities of three months or less.

Natural Gas Derivatives

The derivative instruments that we use are primarily natural gas fixed price swaps and options traded in the OTC markets with multinational 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 7—Derivative Financial Instruments for additional information.

Assets Measured at Fair Value on a Nonrecurring Basis

We also have assets that may be measured at fair value on a nonrecurring basis; that is, the assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. These include long-lived assets that may be written down to fair value as a result of impairment. We determined that these fair value measurements would rely primarily on Partnership-specific inputs and the Partnership's assumptions about the use of the assets. Since certain of the assumptions would involve inputs that are not observable, these fair values would reside within Level 3 of the fair value hierarchy.

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Property, Plant and Equipment, Net

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, Net

Property, Plant and Equipment—Net

Property, plant and equipment—net consisted of the following:

	December 31,
	2017		2016
	(in millions)
Land	$	1.4	$	1.4
Buildings and improvements	16.9		16.7
Machinery and equipment	568.3		562.3
Construction in progress	41.1		21.9
Property, plant and equipment	627.7		602.3
Less: Accumulated depreciation and amortization	337.5		301.0
Property, plant and equipment—net	$	290.2	$	301.3

Property, plant and equipment used to produce nitrogen fertilizer products are subject to the Services and Offtake Agreement with an affiliate of the General Partner, which is accounted for as an operating lease. See Note 10—Related Party Transactions for additional information.

Additions to property, plant and equipment included in our consolidated statements of cash flows represents cash outflows for capital expenditures; therefore, it does not include the net increase (decrease) in amounts accrued for capital expenditures, which were $0.6 million, $1.8 million and $(2.2) million for the years ended December 31, 2017, 2016 and 2015, respectively.

Losses on the disposal of certain machinery and equipment were zero, $0.1 million and $2.0 million for the years ended December 31, 2017, 2016 and 2015, respectively, and are included in other general and administrative expenses in 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 capitalized plant turnaround costs:

	Year ended December 31,
	2017			2016			2015
	(in millions)
Net capitalized turnaround costs:
Beginning balance	$	26.6		$	37.8		$	16.7
Additions	2.3			4.9			33.6
Depreciation	(14.2		)	(16.1		)	(12.5		)
Ending balance	$	14.7		$	26.6		$	37.8

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.

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Related Party Transactions

12 Months Ended

Dec. 31, 2017

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

TNCLP and TNGP have no employees. We have entered into several agreements with subsidiaries 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.

Product Sales

Pursuant to the Services and Offtake Agreement, which is accounted for as an operating lease, the Partnership sells all of its fertilizer products to affiliates of the General Partner at prices based on market prices for the Partnership's nitrogen fertilizer products. Also, pursuant to the Services and Offtake Agreement, selling prices are determined monthly and are equal to the volume weighted average net invoice price for third party sales (that is, sales by the affiliates of the General Partner to their customers) of product during each month. These selling prices are reduced by any freight or other transportation charges and incentives paid by the affiliates of the General Partner. Title and risk of loss transfer to affiliates of the General Partner as the product is shipped from the plant gate. The Services and Offtake Agreement was effective initially for a one-year term and is extended automatically for successive one-year terms unless terminated by one of the parties prior to renewal. The Services and Offtake Agreement is accounted for as an operating lease comprised entirely of variable lease payments associated with the sale of our products.

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 benefit costs, such as health insurance and pension costs, are incurred by an affiliate of the General Partner and directly charged to us. Payroll, payroll-related expenses and other employee-related benefit costs directly charged to us were $27.9 million for each of the years ended December 31, 2017, 2016 and 2015. We report these expenses as services provided by affiliates of the General Partner in cost of goods sold in our consolidated statements of operations.

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 in each of the years ended December 31, 2017, 2016 and 2015 were $15.9 million, $15.7 million and $15.7 million, respectively. We report these expenses as selling, general and administrative services provided by affiliates of the General Partner in our consolidated statements of operations.

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 labor and other services from affiliates of the General Partner, the affiliates of the General Partner continue to be both debtors and creditors to us. As of December 31, 2017 and 2016, we had a net balance due from (to) affiliates of the General Partner of $12.9 million and $(0.1) 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 with affiliates of CF Industries 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.

Other 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 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.

In each of the years ended December 31, 2017, 2016 and 2015, we recognized rental income of $0.6 million. We report this income as other income from an affiliate of the General Partner in our consolidated statements of operations.

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Asset Retirement Obligations

12 Months Ended

Dec. 31, 2017

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

Asset Retirement Obligations

Asset retirement obligations (AROs) are legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development or normal operation of such assets. AROs are initially recognized as incurred when sufficient information exists to estimate fair value. We have unrecorded AROs at our Verdigris facility that are conditional upon cessation of operations. These AROs include certain decommissioning and pond closure activities, and the removal and disposal of certain chemicals, waste materials, structures, equipment, vessels, piping and storage tanks. The most recent estimate of the aggregate cost of these AROs expressed in 2017 dollars is $4.0 million. We have not recorded a liability for these conditional AROs as of December 31, 2017 because we do not believe there is currently a reasonable basis for estimating a date or range of dates of cessation of operations at this facility, which is necessary in order to estimate fair value. In reaching this conclusion, we considered the historical performance of the facility and have taken into account factors such as planned maintenance, asset replacements and upgrades of plant and equipment, which if conducted as in the past, can extend the physical lives of the facility indefinitely, as well as the possibility of changes in technology, risk of obsolescence and availability of raw materials in arriving at our conclusion.

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Commitments

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments

Commitments

The Operating Partnership is committed to various non-cancelable operating leases for land, buildings and equipment. Total minimum rental payments for operating leases are insignificant for 2018 and all subsequent years.

Rent expense under non-cancelable operating leases for the years ended December 31, 2017, 2016 and 2015 was insignificant.

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (Unaudited)

Quarterly Financial Data (Unaudited)

Summarized quarterly financial data are as follows:

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Full Year
	(in millions, except per unit amounts)
2017
Net sales	$	119.0	$	96.1	$	84.6	$	97.5	$	397.2
Gross margin	46.6		43.5		27.2		39.4		156.7
Net earnings (1)	42.2		39.5		22.8		49.4		153.9
Net earnings per Common Unit (1) (2)	2.10		1.48		0.92		1.44		5.93
2016
Net sales	$	108.0	$	126.7	$	90.2	$	93.4	$	418.3
Gross margin	43.1		102.7		32.8		48.2		226.8
Net earnings	37.7		98.7		28.8		44.1		209.3
Net earnings per Common Unit (2)	1.44		3.22		1.04		1.85		7.56

⁽¹⁾  The fourth quarter of 2017 includes a gain of $14.3 million for the sale of our 50% joint venture interest in Oklahoma CO2 Partnership (OKCO2). See Note 14—Sale of Equity Method Investment.

⁽²⁾  The sum of the four quarters is not necessarily the same as the total for the year.

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Sale of Equity Method Investment (Notes)

12 Months Ended

Dec. 31, 2017

Subsidiary, Sale of Stock [Line Items]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

 Sale of Equity Method Investment

On October 2, 2017, we sold our 50% interest in OKCO2, a joint venture that owns a carbon dioxide liquefaction and purification facility, to the joint venture partner. Prior to the sale, we had accounted for this interest as an equity method investment. We received proceeds of $16.3 million for the sale and recorded a gain of $14.3 million after the completion of certain customary closing and working capital adjustments in the fourth quarter of 2017. The proceeds were included in the determination of Available Cash for the fourth quarter of 2017.

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Subsequent Event

12 Months Ended

Dec. 31, 2017

Subsequent Event [Line Items]

Subsequent Events [Text Block]

Subsequent Event

On February 7, 2018, TNCLP announced that, in accordance with Section 17.1 of the TNCLP Partnership Agreement, TNGP elected to exercise the right, assigned to TNGP by TNCLP, to purchase all of the issued and outstanding common units representing limited partner interests in TNCLP not already owned by TNGP or its affiliates (the Public Units).

TNGP will purchase the Public Units on April 2, 2018 for a cash purchase price of $84.033 per Public Unit. The purchase price was determined in accordance with Section 17.1 of the TNCLP Partnership Agreement as the average of the daily closing prices per common unit for the 20 consecutive trading days beginning with January 5, 2018 and ending with February 2, 2018.

As of April 2, 2018, all rights of the holders of the Public Units will cease, except for the right to receive payment of the purchase price. Upon completion of the purchase on April 2, 2018, TNGP will own 100 percent of the Public Units and will be entitled to all of the benefits resulting from the Public Units. As a result of TNGP’s exercise of the right to purchase the Public Units, there will be no further cash distributions on the common units after the distribution payable February 28, 2018.

In addition, upon completion of the purchase, the common units representing limited partner interests in TNCLP will cease to be publicly traded or listed on the NYSE.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Consolidation

Consolidation

The consolidated financial statements of TNCLP and the accompanying notes include the accounts of the Partnership. All intercompany transactions and balances have been eliminated. Income is allocated to the General Partner and the limited partners of TNCLP (Limited Partners) in accordance with the provisions of the TNCLP Partnership Agreement that provides for allocations of income between the Limited Partners and the General Partner in the same proportion as cash distributions related to such year. The 0.975% limited partner interest and the 0.025% general partner interest in the Operating Partnership held by TLPH and the General Partner, respectively, are included in the line labeled General Partner’s interest in the consolidated financial statements.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results could differ from these estimates. Significant estimates and assumptions are used for, but are not limited to, the net realizable value of inventories, environmental remediation liabilities, environmental and litigation contingencies, useful lives of property, plant and equipment, the assumptions used in the evaluation of potential impairments of property, plant and equipment and the allowance for doubtful accounts receivable.

Revenue Recognition

Revenue Recognition

The primary products we sell are ammonia and UAN. Sales are made in accordance with the Amendment to the General and Administrative Services and Product Offtake Agreement (the Services and Offtake Agreement) we have with an affiliate of the General Partner under which affiliates of the General Partner purchase our products. We recognize revenue as products are shipped from the plant gate when title and risk of loss transfer to affiliates of the General Partner. The Services and Offtake Agreement is accounted for as an operating lease comprised entirely of variable lease payments associated with the sale of our products. The Services and Offtake Agreement is described in Note 10—Related Party Transactions.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less. The carrying value of cash and cash equivalents approximates fair value.

Due to/from Affiliates of General Partner

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 labor and other services from affiliates of the General Partner, the affiliates of the General Partner continue to be both debtors and creditors to us.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at face amounts less an allowance for doubtful accounts. The allowance is an estimate based on historical collection experience, current economic and market conditions, and a review of the current status of each customer's trade accounts receivable. A receivable is past due if payments have not been received within the agreed upon invoice terms. Account balances are charged-off against the allowance when management determines that it is probable the receivable will not be recovered.

Inventories, net

Inventories

Inventories are reported at the lower of cost and net realizable value and are determined on a first-in, first-out (FIFO) and average cost basis. Inventories include the cost of materials, production labor and production overhead. Net realizable value is reviewed quarterly. Fixed production costs related to idle capacity are not included in the cost of inventories but are charged directly to cost of sales. On January 1, 2017, we adopted Accounting Standards Update (ASU) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, as discussed in Note 3—New Accounting Standards.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are stated at cost and are subject to the Services and Offtake Agreement, which is accounted for as an operating lease, as described in Note 10—Related Party Transactions. Depreciation and amortization are computed using the straight-line method over the estimated useful life of the property, plant and equipment. Useful lives for property, plant, and equipment range from 10 to 40 years for buildings and 3 to 30 years for machinery and equipment. We periodically review these useful lives and change the estimates to reflect the results of those reviews.

Scheduled inspections, replacements and overhauls of machinery and equipment at our continuous process manufacturing facility are referred to as plant turnarounds. Plant turnarounds are accounted for under the deferral method, as opposed to the direct expense or built-in overhaul methods. Under the deferral method, expenditures related to turnarounds are capitalized when incurred and amortized to production costs on a straight-line basis over the period benefited, which is until the next scheduled turnaround in up to 5 years. If the direct expense method were used, all turnaround costs would be expensed as incurred. Internal employee costs and overhead amounts are not considered turnaround costs and are not capitalized. Turnaround costs are classified as investing activities in our consolidated statements of cash flows. For additional information, see Note 9—Property, Plant and Equipment—Net.

Recoverability of Long-Lived Assets

Recoverability of Long-Lived Assets

We review property, plant and equipment and other long-lived assets in order to assess recoverability based on expected future undiscounted cash flows whenever events or circumstances indicate that the carrying value may not be recoverable. If the sum of the expected future net cash flows is less than the carrying value, an impairment loss is recognized. The impairment loss is measured as the amount by which the carrying value exceeds the fair value of the asset.

Lessee, Leases

Other Leases

Leases are classified as either operating leases or capital leases. Assets acquired under capital leases are depreciated on the same basis as property, plant and equipment. We currently do not have any capital leases. Rental payments, including rent holidays, leasehold incentives, and scheduled rent increases, if any, are expensed on a straight-line basis over the lease term.

Lessor, Leases

Other Leases

Leases are classified as either operating leases or capital leases. Assets acquired under capital leases are depreciated on the same basis as property, plant and equipment. We currently do not have any capital leases. Rental payments, including rent holidays, leasehold incentives, and scheduled rent increases, if any, are expensed on a straight-line basis over the lease term.

Income Taxes

Income Taxes

As a partnership, we are not subject to income taxes. For additional information, see Note 1—Background and Basis of Presentation. The income tax liability of the individual partners is not reflected in our consolidated financial statements.

Derivative Financial Instruments

Derivative Financial Instruments

Natural gas is the principal raw material used to produce nitrogen fertilizers. We use natural gas both as a chemical feedstock and as a fuel to produce ammonia and UAN. We manage the risk of changes in natural gas prices primarily through the use of derivative financial instruments. The derivative instruments that we use are primarily natural gas fixed price swaps and options traded in the over-the-counter markets. These derivatives reference NYMEX futures contract prices, which represent the basis for fair value at any given time. The derivatives are traded in months forward and settlements are scheduled to coincide with anticipated gas purchases during those future periods. We do not use derivatives for trading purposes and are not a party to any leveraged derivatives. We have elected to not apply hedge accounting to our derivatives; as a result, changes in the fair value of the derivatives are recorded in cost of goods sold in our consolidated statements of operations.

Derivatives are recognized in our consolidated balance sheets at fair value. Cash flows related to natural gas derivatives are reported as operating activities in our consolidated statements of cash flows. For additional information, see Note 7—Derivative Financial Instruments.

Asset Retirement Obligations

Asset Retirement Obligations

Asset retirement obligations (AROs) are legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development or normal operation of such assets. AROs are initially recognized as liabilities as incurred when sufficient information exists to estimate fair value. When initially recognized, the fair value based on discounted future cash flows is recorded both as a liability and an increase in the carrying amount of the related long-lived asset. In subsequent periods, depreciation of the asset and accretion of the liability are recorded. For additional information on AROs, see Note 11—Asset Retirement Obligations.

Environmental

Environmental

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations are expensed. Expenditures that increase the capacity or extend the useful life of an asset, improve the safety or efficiency of the operations, or mitigate or prevent future environmental contamination are capitalized. Liabilities are recorded when it is probable that a liability has been incurred, the costs can be reasonably estimated, and the liability would not be discounted.

Litigation

Litigation

From time to time, the Partnership is subject to ordinary, routine legal proceedings related to the usual conduct of its business. From time to time, the Partnership also is involved in legal proceedings regarding public utility and transportation rates, environmental matters, taxes and permits relating to the operations of its plant and facilities. Accruals for such contingencies are recorded to the extent management concludes their occurrence is probable and the financial impact of an adverse outcome is reasonably estimable. Disclosure for specific legal contingencies is provided if the likelihood of occurrence is at least reasonably possible and the exposure is considered material to the consolidated financial statements. In making determinations of likely outcomes of litigation matters, many factors are considered. These factors include, but are not limited to, past history, scientific and other evidence, and the specifics and status of each matter. If the assessment of various factors changes, the estimates may change. Predicting the outcome of claims and litigation, and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates and accruals. Legal fees are expensed as incurred and are included in selling, general, and administrative services provided by affiliates of the General Partner in our consolidated statements of operations.

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Agreement of Limited Partnership (Tables)

12 Months Ended

Dec. 31, 2017

Distributions Made to Members or Limited Partners [Abstract]

Summary of available cash distribution

In the fourth quarter of 2017, we exceeded the cumulative MQD amounts and will distribute Available Cash as summarized in the following table:

	Quarterly Income and Distribution Allocation
	Target Limit (per unit)		Target Increment (per unit)		Distribution Threshold (in millions) (1)		Common Units		Class B Common Units		General Partner (2)		Total
Minimum Quarterly Distributions	$	0.605	$	0.605	$	11.3	98.990	%	0.985	%	0.025	%	100	%
First Target	0.715		0.110		13.4		98.990	%	0.985	%	0.025	%	100	%
Second Target	0.825		0.110		15.4		85.859	%	0.985	%	13.156	%	100	%
Third Target	1.045		0.220		19.5		75.758	%	0.985	%	23.257	%	100	%
Final Target and Beyond	>1.045		—		> 19.5		50.505	%	0.985	%	48.510	%	100	%

Schedule of the quarterly cash distributions paid to the unitholders and the General Partner

The quarterly cash distributions to the unitholders and the General Partner declared to date in 2018 and during 2017 and 2016 are as follows:

Distribution		Common Units				Class B Common Units				General Partner		Total Distributions Declared
Declared in	Related to	Total		Per unit		Total		Per unit		Total
		(in millions, except per unit amounts)
First Quarter 2018	Fourth Quarter 2017	$	37.6	$	2.03	$	0.6	$	3.10	$	20.4	$	58.6
First Quarter 2017	Fourth Quarter 2016	$	22.6	$	1.22	$	0.3	$	1.52	$	5.7	$	28.6
Second Quarter 2017	First Quarter 2017	17.9		0.97		0.2		1.04		1.4		19.5
Third Quarter 2017	Second Quarter 2017	29.6		1.60		0.4		2.26		12.7		42.7
Fourth Quarter 2017	Third Quarter 2017	25.2		1.36		0.3		1.79		8.3		33.8
First Quarter 2016	Fourth Quarter 2015	$	53.3	$	2.88	$	0.9	$	4.78	$	36.0	$	90.2
Second Quarter 2016	First Quarter 2016	28.0		1.51		0.4		2.09		11.1		39.5
Third Quarter 2016	Second Quarter 2016	47.7		2.58		0.7		4.17		30.4		78.8
Fourth Quarter 2016	Third Quarter 2016	32.7		1.77		0.5		2.60		15.8		49.0

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Net Earnings per Common Unit (Tables)

12 Months Ended

Dec. 31, 2017

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 years ended December 31, 2017, 2016 and 2015:

	Year Ended December 31,
	2017			2016			2015
	(in millions, except per unit amounts)
Basic earnings per common unit:
Net earnings	$	153.9		$	209.3		$	306.9
Less distributions declared to:
Common units	110.3			130.9			187.4
Class B common units	1.5			1.9			3.1
General partner interest	42.8			63.1			118.4
(Distributions in excess of earnings) undistributed earnings	$	(0.7	)	$	13.4		$	(2.0	)
Allocation percentage for undistributed earnings or distributions in excess of earnings (1):
Common units	71.33		%	66.82		%	60.67		%
Class B common units	0.97		%	0.97		%	0.97		%
General partner interest	27.70		%	32.21		%	38.36		%
Allocation of (distributions in excess of earnings) undistributed earnings to:
Common units	$	(0.5	)	$	9.0		$	(1.2	)
Class B common units	—			0.1			(0.1		)
General partner interest	(0.2		)	4.3			(0.7		)
Total (distributions in excess of earnings) undistributed earnings	$	(0.7	)	$	13.4		$	(2.0	)
Net earnings allocable to General Partner (2)	$	42.6		$	67.4		$	117.7
Net earnings allocable to Class B common units	$	1.5		$	2.0		$	3.0
Net earnings allocable to common units	$	109.8		$	139.9		$	186.2
Weighted-average common units outstanding	18.5			18.5			18.5
Net earnings per common unit	$	5.93		$	7.56		$	10.06

⁽¹⁾  In accordance with the TNCLP Partnership Agreement, undistributed earnings or distributions in excess of earnings are allocated in the same percentage that Available Cash for such period was declared among the General Partner (including with respect to the embedded incentive distribution rights) and limited partners.

⁽²⁾  Net earnings allocable to the General Partner include net earnings allocated to the General Partner and TLPH from the Operating Partnership of $1.5 million, $2.1 million and $3.1 million for the years ended December 31, 2017, 2016 and 2015, respectively.

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Inventories (Tables)

12 Months Ended

Dec. 31, 2017

Inventory Disclosure [Abstract]

Schedule of inventories

Inventories consisted of the following:

	December 31,
	2017		2016
	(in millions)
Finished goods	$	3.5	$	6.8
Raw materials, spare parts and supplies	1.8		1.8
Total	$	5.3	$	8.6

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Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of the gross fair values of derivatives on balance sheet

The gross fair values of derivatives in 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 8—Fair Value Measurements.

	December 31,
	2017			2016
	(in millions)
Derivative Assets
Unrealized gains in other current assets	$	—		$	7.9
Unrealized gains in other assets	—			1.1
Total derivative assets	—			9.0
Derivative Liabilities
Unrealized losses in other current liabilities	(3.2		)	—
Unrealized losses in other liabilities	—			(1.6		)
Total derivative liabilities	(3.2		)	(1.6		)
Net derivative (liabilities) assets	$	(3.2	)	$	7.4

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.

	Year ended December 31,
	2017			2016			2015
	(in millions)
Unrealized net mark-to-market (losses) gains	$	(10.6	)	$	35.3		$	(23.1	)
Realized net losses	(3.0		)	(16.7		)	(10.6		)
Net derivative (losses) gains	$	(13.6	)	$	18.6		$	(33.7	)

Schedule of offsetting of derivative assets and liabilities

The following table presents amounts relevant to offsetting of our derivative assets and liabilities as of December 31, 2017 and 2016:

				Gross amounts not offset in  consolidated balance sheets
	Gross and net amounts presented in consolidated balance sheets (1)			Financial instruments			Cash collateral received (pledged)		Net amount
	(in millions)
December 31, 2017
Total derivative assets	$	—		$	—		$	—	$	—
Total derivative liabilities	(3.2		)	—			—		(3.2		)
Net derivative liabilities	$	(3.2	)	$	—		$	—	$	(3.2	)
December 31, 2016
Total derivative assets	$	9.0		$	1.6		$	—	$	7.4
Total derivative liabilities	(1.6		)	(1.6		)	—		—
Net derivative assets	$	7.4		$	—		$	—	$	7.4

_______________________________________________________________________________

⁽¹⁾  We report the fair values of our derivative assets and liabilities on a gross basis in our consolidated balance sheets. As a result, the gross amounts recognized and net amounts presented herein are the same.

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2017

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 December 31, 2017 and 2016:

	Balances as of December 31, 2017
	Total			Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Cash equivalents	$	80.5		$	80.5	$	—		$	—
Total assets at fair value	$	80.5		$	80.5	$	—		$	—
Unrealized losses on natural gas derivatives	$	(3.2	)	$	—	$	(3.2	)	$	—
Total liabilities at fair value	$	(3.2	)	$	—	$	(3.2	)	$	—

	Balances as of December 31, 2016
	Total			Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in millions)
Cash equivalents	$	32.0		$	32.0	$	—		$	—
Unrealized gains on natural gas derivatives	9.0			—		9.0			—
Total assets at fair value	$	41.0		$	32.0	$	9.0		$	—
Unrealized losses on natural gas derivatives	$	(1.6	)	$	—	$	(1.6	)	$	—
Total liabilities at fair value	$	(1.6	)	$	—	$	(1.6	)	$	—

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Property, Plant and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Schedule of property, plant and equipment, net

Property, plant and equipment—net consisted of the following:

	December 31,
	2017		2016
	(in millions)
Land	$	1.4	$	1.4
Buildings and improvements	16.9		16.7
Machinery and equipment	568.3		562.3
Construction in progress	41.1		21.9
Property, plant and equipment	627.7		602.3
Less: Accumulated depreciation and amortization	337.5		301.0
Property, plant and equipment—net	$	290.2	$	301.3

Summary of plant turnaround activity

The following is a summary of capitalized plant turnaround costs:

	Year ended December 31,
	2017			2016			2015
	(in millions)
Net capitalized turnaround costs:
Beginning balance	$	26.6		$	37.8		$	16.7
Additions	2.3			4.9			33.6
Depreciation	(14.2		)	(16.1		)	(12.5		)
Ending balance	$	14.7		$	26.6		$	37.8

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Summary of quarterly financial data

Summarized quarterly financial data are as follows:

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Full Year
	(in millions, except per unit amounts)
2017
Net sales	$	119.0	$	96.1	$	84.6	$	97.5	$	397.2
Gross margin	46.6		43.5		27.2		39.4		156.7
Net earnings (1)	42.2		39.5		22.8		49.4		153.9
Net earnings per Common Unit (1) (2)	2.10		1.48		0.92		1.44		5.93
2016
Net sales	$	108.0	$	126.7	$	90.2	$	93.4	$	418.3
Gross margin	43.1		102.7		32.8		48.2		226.8
Net earnings	37.7		98.7		28.8		44.1		209.3
Net earnings per Common Unit (2)	1.44		3.22		1.04		1.85		7.56

⁽¹⁾  The fourth quarter of 2017 includes a gain of $14.3 million for the sale of our 50% joint venture interest in Oklahoma CO2 Partnership (OKCO2). See Note 14—Sale of Equity Method Investment.

⁽²⁾  The sum of the four quarters is not necessarily the same as the total for the year.

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Background and Basis of Presentation (Details) - shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Common units and interest in the partnership
General Partners' Capital Account, Units Issued	4,720
Common
Common units and interest in the partnership
Common Units issued	18,501,576	18,501,576
Common Units outstanding	18,501,576	18,501,576
Class B Common Units
Common units and interest in the partnership
Common Units issued	184,072	184,072
Common Units outstanding	184,072	184,072
CF Industries Holdings Inc [Member] | Common
Common units and interest in the partnership
Common units owned through subsidiaries	13,889,014
Limited Liability Company or Limited Partnership, Members or Limited Partners, Ownership Interest	75.10%
Limited Partner [Member]
Common units and interest in the partnership
Ownership interest in the partnership (as a percent)	99.00%
General Partner's Interest
Common units and interest in the partnership
Ownership interest in the partnership (as a percent)	0.025%
Affiliate of General Partner | Limited Partner [Member] | Terra LP Holdings LLC [Member]
Common units and interest in the partnership
Ownership interest in the partnership (as a percent)	0.975%

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Summary of Significant Accounting Policies (Details)	12 Months Ended
	Dec. 31, 2017
Maximum
Property, Plant and Equipment
Turnaround period	5 years
Buildings | Minimum
Property, Plant and Equipment
Depreciable life	10 years
Buildings | Maximum
Property, Plant and Equipment
Depreciable life	40 years
Machinery and equipment | Minimum
Property, Plant and Equipment
Depreciable life	3 years
Machinery and equipment | Maximum
Property, Plant and Equipment
Depreciable life	30 years
Limited Partner [Member]
Property, Plant and Equipment
Ownership interest in the partnership (as a percent)	99.00%
General Partner's Interest
Property, Plant and Equipment
Ownership interest in the partnership (as a percent)	0.025%
Affiliate of General Partner | Terra LP Holdings LLC [Member] | Limited Partner [Member]
Property, Plant and Equipment
Ownership interest in the partnership (as a percent)	0.975%

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Agreement of Limited Partnership (Details)		3 Months Ended									12 Months Ended
	Feb. 07, 2018 $ / shares	Mar. 31, 2018 USD ($) $ / shares	Dec. 31, 2017 USD ($) $ / shares	Sep. 30, 2017 USD ($) $ / shares	Jun. 30, 2017 USD ($) $ / shares	Mar. 31, 2017 USD ($) $ / shares	Dec. 31, 2016 USD ($) $ / shares	Sep. 30, 2016 USD ($) $ / shares	Jun. 30, 2016 USD ($) $ / shares	Mar. 31, 2016 USD ($) $ / shares	Dec. 31, 2017 USD ($) trading_day $ / shares $ / Unit	Dec. 31, 2016 USD ($) $ / shares	Dec. 31, 2015 USD ($) $ / shares
Agreement of limited partnership
Declared and paid partnership distributions											$ 124,600,000	$ 257,500,000	$ 294,800,000
Available cash received from operating partnership (as a percent)											99.00%
Distribution Made to Limited and General Partners, Distributions Declared, Total			$ 33,800,000	$ 42,700,000	$ 19,500,000	$ 28,600,000	$ 49,000,000	$ 78,800,000	$ 39,500,000	$ 90,200,000
Number of average trading days' closing prices used to determine the purchase price of outstanding units of non-affiliates | trading_day											20
Minimum Quarterly Distributions
Agreement of limited partnership
Target Limit (per unit) | $ / Unit											0.605
Target Increment (per unit) | $ / Unit											0.605
Income and distribution allocation (as a percent)											100.00%
Minimum Quarterly Distributions | Maximum
Agreement of limited partnership
Incentive Distribution, Distribution											$ 11.3
First Target
Agreement of limited partnership
Target Limit (per unit) | $ / Unit											0.715
Target Increment (per unit) | $ / Unit											0.110
Income and distribution allocation (as a percent)											100.00%
First Target | Maximum
Agreement of limited partnership
Incentive Distribution, Distribution											$ 13.4
Second Target
Agreement of limited partnership
Target Limit (per unit) | $ / Unit											0.825
Target Increment (per unit) | $ / Unit											0.110
Income and distribution allocation (as a percent)											100.00%
Second Target | Maximum
Agreement of limited partnership
Incentive Distribution, Distribution											$ 15.4
Third Target
Agreement of limited partnership
Target Limit (per unit) | $ / Unit											1.045
Target Increment (per unit) | $ / Unit											0.220
Income and distribution allocation (as a percent)											100.00%
Third Target | Maximum
Agreement of limited partnership
Incentive Distribution, Distribution											$ 19.5
Final Target and Beyond
Agreement of limited partnership
Target Increment (per unit) | $ / Unit											0.000
Income and distribution allocation (as a percent)											100.00%
Final Target and Beyond | Minimum
Agreement of limited partnership
Target Limit (per unit) | $ / Unit											1.045
Incentive Distribution, Distribution											$ 19.5
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
Agreement of limited partnership
Declared and paid partnership distributions			$ 25,200,000	$ 29,600,000	$ 17,900,000	$ 22,600,000	$ 32,700,000	$ 47,700,000	$ 28,000,000	$ 53,300,000
Cash distribution declared per common limited partnership unit (in dollars per unit) | $ / shares			$ 1.36	$ 1.60	$ 0.97	$ 1.22	$ 1.77	$ 2.58	$ 1.51	$ 2.88	$ 5.15	$ 8.74	$ 9.75
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
Agreement of limited partnership
Declared and paid partnership distributions			$ 300,000	$ 400,000	$ 200,000	$ 300,000	$ 500,000	$ 700,000	$ 400,000	$ 900,000
Cash distribution declared per common limited partnership unit (in dollars per unit) | $ / shares			$ 1.79	$ 2.26	$ 1.04	$ 1.52	$ 2.60	$ 4.17	$ 2.09	$ 4.78	$ 6.61	$ 13.64	$ 15.61
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's Interest
Agreement of limited partnership
Declared and paid partnership distributions			$ 8,300,000	$ 12,700,000	$ 1,400,000	$ 5,700,000	$ 15,800,000	$ 30,400,000	$ 11,100,000	$ 36,000,000
Available cash distributed from operating partnership to General Partner (as a percent)											1.00%
General Partner Distributions											$ (1,200,000)	$ (2,600,000)	$ (2,900,000)
Cash distribution made, excluding when cumulative distribution is specified, (as a percent)											0.025%
Percentage of outstanding units owned by the General Partner and its affiliates			75.10%								75.10%
General Partner's Interest | 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%
General Partner's Interest | Minimum Quarterly Distributions
Agreement of limited partnership
Income and distribution allocation (as a percent)											0.025%
General Partner's Interest | First Target
Agreement of limited partnership
Income and distribution allocation (as a percent)											0.025%
General Partner's Interest | Second Target
Agreement of limited partnership
Income and distribution allocation (as a percent)											13.156%
General Partner's Interest | Third Target
Agreement of limited partnership
Income and distribution allocation (as a percent)											23.257%
General Partner's Interest | 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	$ 2.03
Distribution Made to Limited and General Partners, Distributions Declared, Total		$ 58,600,000
Subsequent Event | Common units
Agreement of limited partnership
Declared and paid partnership distributions		$ 37,600,000
Cash distribution declared per common limited partnership unit (in dollars per unit) | $ / shares		$ 2.03
Subsequent Event | Class B Common Units
Agreement of limited partnership
Declared and paid partnership distributions		$ 600,000
Cash distribution declared per common limited partnership unit (in dollars per unit) | $ / shares		$ 3.10
Subsequent Event | General Partner's Interest
Agreement of limited partnership
Declared and paid partnership distributions		$ 20,400,000
CF Industries Holdings Inc [Member] | Common units
Agreement of limited partnership
Limited Liability Company or Limited Partnership, Members or Limited Partners, Ownership Interest											75.10%
Terra Nitrogen GP Inc [Member] | Terra Nitrogen Company LP [Member] | Subsequent Event
Agreement of limited partnership
Business Acquisition, Share Price | $ / shares	$ 84.033

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Net Earnings per Common Unit (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Basic earnings per common unit:
Net earnings	$ 49.4	$ 22.8	$ 39.5	$ 42.2	$ 44.1	$ 28.8	$ 98.7	$ 37.7	$ 153.9	$ 209.3	$ 306.9
(Distributions in excess of earnings) undistributed earnings									$ (0.7)	$ 13.4	$ (2.0)
Weighted-average common units outstanding									18,500,000	18,500,000	18,500,000
Net earnings per common unit	$ 1.44	$ 0.92	$ 1.48	$ 2.10	$ 1.85	$ 1.04	$ 3.22	$ 1.44	$ 5.93	$ 7.56	$ 10.06
Dilutive TNCLP units outstanding									0	0	0
Common Units | Common units
Basic earnings per common unit:
Distributions declared									$ 110.3	$ 130.9	$ 187.4
Allocation percentage for undistributed earnings or distributions in excess of earnings									71.33%	66.82%	60.67%
Allocation of (distributions in excess of earnings) undistributed earnings									$ (0.5)	$ 9.0	$ (1.2)
Net earnings allocated									109.8	139.9	186.2
Common Units | Class B Common Units
Basic earnings per common unit:
Distributions declared									$ 1.5	$ 1.9	$ 3.1
Allocation percentage for undistributed earnings or distributions in excess of earnings									0.97%	0.97%	0.97%
Allocation of (distributions in excess of earnings) undistributed earnings									$ 0.0	$ 0.1	$ (0.1)
Net earnings allocated									1.5	2.0	3.0
General Partner's Interest
Basic earnings per common unit:
Distributions declared									$ 42.8	$ 63.1	$ 118.4
Allocation percentage for undistributed earnings or distributions in excess of earnings									27.70%	32.21%	38.36%
Allocation of (distributions in excess of earnings) undistributed earnings									$ (0.2)	$ 4.3	$ (0.7)
Net earnings allocable to General Partner (2)									42.6	67.4	117.7
General Partner and TLPH
Basic earnings per common unit:
Net earnings allocable to General Partner (2)									$ 1.5	$ 2.1	$ 3.1

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Inventories (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Finished goods	$ 3.5	$ 6.8
Raw materials, spare parts and supplies	1.8	1.8
Total	$ 5.3	$ 8.6

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Derivative Financial Instruments (Details) MMBTU in Millions	12 Months Ended
	Dec. 31, 2017 USD ($) MMBTU	Dec. 31, 2016 USD ($) MMBTU	Dec. 31, 2015 USD ($)
Effect of Derivatives on Consolidated Statement of Operations
Unrealized net mark-to-market gains (losses)	$ (10,600,000)	$ 35,300,000	$ (24,300,000)
Open derivative contracts for natural gas (in MMBtus) | MMBTU	8.4	29.4
Percentage of natural gas consumption covered by derivatives	48.00%
Aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability position	$ 3,200,000	$ 1,600,000
Cash Collateral for Borrowed Securities	0	0
Total derivative assets
Gross and net amounts presented in consolidated balance sheet	0	9,000,000
Gross amounts not offset in consolidated balance sheet
Financial instruments	0	1,600,000
Cash collateral received (pledged)	0	0
Net amount	0	7,400,000
Total derivative liabilities
Gross and net amounts presented in consolidated balance sheet	(3,200,000)	(1,600,000)
Gross amounts not offset in consolidated balance sheet
Financial instruments	0	(1,600,000)
Cash collateral received (pledged)	0	0
Net amount	(3,200,000)	0
Net assets (liabilities)
Gross and net amounts presented in consolidated balance sheet	(3,200,000)	7,400,000
Natural gas derivatives not designated as hedging instruments
Derivative financial instruments
Unrealized gains in other current assets	0	7,900,000
Derivative Asset, Noncurrent	0	1,100,000
Price Risk Derivative Instruments Not Designated as Hedging Instruments Asset, at Fair Value	0	9,000,000
Unrealized losses in other current liabilities	(3,200,000)	0
Unrealized losses in other liabilities	0	(1,600,000)
Price Risk Derivative Instruments Not Designated as Hedging Instruments Liability, at Fair Value	(3,200,000)	(1,600,000)
Net derivative (liabilities) assets	(3,200,000)	7,400,000
Effect of Derivatives on Consolidated Statement of Operations
Unrealized net mark-to-market gains (losses)	(10,600,000)	35,300,000	(23,100,000)
Realized net losses	(3,000,000)	(16,700,000)	(10,600,000)
Net derivative (losses) gains	$ (13,600,000)	$ 18,600,000	$ (33,700,000)

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Fair Value Measurements (Details) - Recurring basis - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Significant Observable Inputs
Fair value measurements
Cash Equivalents, at Fair Value	$ 0.0	$ 0.0
Unrealized gains on natural gas derivatives	0.0	9.0
Total assets at fair value	0.0	9.0
Unrealized losses on natural gas derivatives	(3.2)	(1.6)
Total liabilities at fair value	(3.2)	(1.6)
Total
Fair value measurements
Cash Equivalents, at Fair Value	80.5	32.0
Unrealized gains on natural gas derivatives	0.0	9.0
Total assets at fair value	80.5	41.0
Unrealized losses on natural gas derivatives	(3.2)	(1.6)
Total liabilities at fair value	(3.2)	(1.6)
Total | Quoted Market Prices in Active Markets (Level 1)
Fair value measurements
Cash Equivalents, at Fair Value	80.5	32.0
Unrealized gains on natural gas derivatives	0.0	0.0
Total assets at fair value	80.5	32.0
Unrealized losses on natural gas derivatives	$ 0.0	$ 0.0

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Property, Plant and Equipment, Net (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Property, plant and equipment, net
Gross property, plant and equipment	$ 627.7	$ 602.3
Less: Accumulated depreciation and amortization	337.5	301.0
Net property, plant and equipment	290.2	301.3
Construction in Progress Expenditures Incurred but Not yet Paid	0.6	1.8	$ (2.2)
Losses on Disposition of Property Plant Equipment	0.0	(0.1)	(2.0)
Net capitalized turnaround costs:
Beginning balance	26.6	37.8	16.7
Additions	2.3	4.9	33.6
Depreciation	(14.2)	(16.1)	(12.5)
Ending balance	14.7	26.6	$ 37.8
Land
Property, plant and equipment, net
Gross property, plant and equipment	1.4	1.4
Buildings and improvements
Property, plant and equipment, net
Gross property, plant and equipment	16.9	16.7
Machinery and equipment
Property, plant and equipment, net
Gross property, plant and equipment	568.3	562.3
Construction in progress
Property, plant and equipment, net
Gross property, plant and equipment	$ 41.1	$ 21.9

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Related Party Transactions (Details)	12 Months Ended
	Dec. 31, 2017 USD ($) Term $ / Car	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Affiliate of General Partner
Related party transactions
Payroll, payroll-related expenses and other employee related benefits	$ 27,900,000
Due from (to) affiliates of the General Partner, net	$ 12,900,000	$ (100,000)
Affiliate of General Partner | Services and Offtake Agreement
Related party transactions
Extended term of agreement	1 year
Affiliate of General Partner | Lease Agreements
Related party transactions
Rental income received	$ 600,000	600,000	$ 600,000
Affiliate of General Partner | Lease Agreements | Ammonia assets
Related party transactions
Term of agreement	5 years
Number of times lease term is automatically extended under agreement | Term	3
Base quarterly rent of leased asset	$ 100,000
Affiliate of General Partner | Lease Agreements | 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
CF Industries | Services and Offtake Agreement
Related party transactions
Allocated expenses	$ 15,900,000	$ 15,700,000	$ 15,700,000

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Asset Retirement Obligations (Details) $ in Millions	Dec. 31, 2017 USD ($)
Asset Retirement Obligation Disclosure [Abstract]
Estimated cost of AROs expressed in 2017 dollars	$ 4.0

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Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Oct. 02, 2017
Quarterly Financial Information Disclosure [Abstract]
Net sales	$ 97.5	$ 84.6	$ 96.1	$ 119.0	$ 93.4	$ 90.2	$ 126.7	$ 108.0	$ 397.2	$ 418.3	$ 581.7
Gross margin	39.4	27.2	43.5	46.6	48.2	32.8	102.7	43.1	156.7	226.8	325.8
Net earnings	$ 49.4	$ 22.8	$ 39.5	$ 42.2	$ 44.1	$ 28.8	$ 98.7	$ 37.7	$ 153.9	$ 209.3	$ 306.9
Net earnings per Common Unit (in dollars per unit)	$ 1.44	$ 0.92	$ 1.48	$ 2.10	$ 1.85	$ 1.04	$ 3.22	$ 1.44	$ 5.93	$ 7.56	$ 10.06
Gain on sale of equity method investment									$ (14.3)	$ 0.0	$ 0.0
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Oklahoma CO2 Partnership [Member]
Gain on sale of equity method investment	$ (14.3)
Partnership equity interest (as a percent)												50.00%

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Sale of Equity Method Investment (Details) - USD ($) $ in Millions		3 Months Ended	12 Months Ended
	Oct. 02, 2017	Dec. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule of Equity Method Investments [Line Items]
Proceeds from sale of equity method investment			$ 16.3	$ 0.0	$ 0.0
Gain on sale of equity method investment			$ (14.3)	$ 0.0	$ 0.0
Oklahoma CO2 Partnership [Member] | Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member]
Schedule of Equity Method Investments [Line Items]
Partnership equity interest (as a percent)	50.00%
Proceeds from sale of equity method investment	$ 16.3
Gain on sale of equity method investment		$ (14.3)

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Subsequent Event (Details)	12 Months Ended
	Dec. 31, 2017 trading_day	Feb. 07, 2018 $ / shares
Subsequent Event [Line Items]
Number of average trading days' closing prices used to determine the purchase price of outstanding units of non-affiliates | trading_day	20
Terra Nitrogen Company LP [Member] | Terra Nitrogen GP Inc [Member] | Subsequent Event
Subsequent Event [Line Items]
Business Acquisition, Share Price | $ / shares		$ 84.033