10-Q

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2010
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 office)	(Zip Code)

Registrant's telephone number, including area code: (847) 405-2400

        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. ý 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. o Yes    o No

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

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

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

        At the close of business on November 5, 2010 there were 18,501,576 Common Units outstanding.

TERRA NITROGEN COMPANY, L.P.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Balance Sheets	3
		Consolidated Statements of Operations	4
		Consolidated Statements of Cash Flows	5
		Consolidated Statements of Partners' Capital	6
		Notes to the Consolidated Financial Statements	7
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
	Item 4.	Controls and Procedures	22
PART II—OTHER INFORMATION
	Item 5.	Other Information	24
	Item 6.	Exhibits	24

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TERRA NITROGEN COMPANY, L.P.

PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(in millions, except for units)

			(unaudited) September 30, 2010			December 31, 2009
ASSETS
Current assets:
	Cash and cash equivalents		$	101.1		$	24.8
	Due from affiliate			—			3.8
	Accounts receivable, less allowance for doubtful accounts of $0.0 and $0.8			23.1			23.9
	Inventories, net			23.4			29.5
	Prepaid expenses and other current assets			0.8			5.4
		Total current assets		148.4			87.4
	Property, plant and equipment, net			83.2			79.1
	Plant turnarounds, net			14.0			8.4
	Other assets			7.2			6.9
		Total assets	$	252.8		$	181.8
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
	Accounts payable and accrued liabilities		$	36.5		$	23.4
	Due to affiliate			2.9			—
	Customer prepayments			33.6			16.4
		Total current liabilities		73.0			39.8
Noncurrent liabilities				0.4			0.7
Contingency (Note 12)
Partners' capital:
	Limited partners' interests, 18,501,576 Common Units authorized and outstanding			186.1			152.8
	Limited partners' interests, 184,072 Class B Common Units authorized and outstanding			0.3			(0.1	)
	General partner's interest			(7.0	)		(14.6	)
	Accumulated other comprehensive income			—			3.2
	Total partners' capital			179.4			141.3
	Total liabilities and partners' capital		$	252.8		$	181.8

See Accompanying Notes to the Unaudited Consolidated Financial Statements.

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TERRA NITROGEN COMPANY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per unit amounts)

(unaudited)

		Three Months Ended September 30,						Nine Months Ended September 30,
		2010			2009			2010			2009
Revenues:
	Product revenues	$	136.0		$	101.4		$	421.3		$	409.1
	Other income		—			0.1			0.4			0.5
	Total revenues		136.0			101.5			421.7			409.6
Costs and expenses:
	Cost of goods sold		96.8			79.7			273.5			274.7
	Gross margin		39.2			21.8			148.2			134.9
	Selling, general and adminstrative expenses		3.8			4.5			12.1			13.9
	Earnings from operations		35.4			17.3			136.1			121.0
	Interest expense		(0.3	)		(0.1	)		(0.4	)		(0.3	)
	Interest income		0.1			0.1			0.1			0.7
Net earnings		$	35.2		$	17.3		$	135.8		$	121.4
Allocation of net earnings:
General Partner		$	9.0		$	5.2		$	34.6		$	42.8
Class B Common Units			0.3			0.2			1.3			1.2
Common Units			25.9			11.9			99.9			77.4
Net earnings		$	35.2		$	17.3		$	135.8		$	121.4
Net earnings per Common Unit		$	1.40		$	0.64		$	5.40		$	4.18

See Accompanying Notes to the Unaudited Consolidated Financial Statements.

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TERRA NITROGEN COMPANY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

				Nine Months Ended September 30,
				2010			2009
Operating Activities
	Net earnings			$	135.8		$	121.4
	Adjustments to reconcile net earnings to net cash flows from operating activities:
		Depreciation and amortization			11.9			12.4
		Non-cash loss (gain) on derivatives			6.7			(0.2	)
		Changes in operating assets and liabilities:
			Receivables		0.8			19.1
			Due to/from affiliate		6.7			—
			Inventories		6.1			35.6
			Accounts payable and customer prepayments		24.1			(21.9	)
			Other assets and liabilities		0.7			(6.2	)
	Net cash provided by operating activities				192.8			160.2
Investing Activities
	Additions to property, plant and equipment and plant turnaround expenditures				(21.4	)		(23.7	)
	Net cash used in investing activities				(21.4	)		(23.7	)
Financing Activities
	Partnership distributions paid				(94.5	)		(220.5	)
	Debt origniation fees				(0.6	)		—
	Net cash used in financing activities				(95.1	)		(220.5	)
	Increase/(decrease) to cash and cash equivalents				76.3			(84.0	)
Cash and cash equivalents at beginning of year					24.8			154.7
Cash and cash equivalents at end of period				$	101.1		$	70.7

See Accompanying Notes to the Unaudited Consolidated Financial Statements.

5

TERRA NITROGEN COMPANY, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL

(in millions)

(unaudited)

		Common Units			Class B Common Units			General Partner's Interests			Accumulated Other Comprehensive Income			Total Partners' Capital			Comprehensive Income
Partners' capital at January 1, 2010		$	152.8		$	(0.1	)	$	(14.6	)	$	3.2		$	141.3
Net earnings			99.9			1.3			34.6						135.8		$	135.8
Change in fair value of derivatives												(3.2	)		(3.2	)		(3.2	)
	Comprehensive income														—		$	132.6
Distributions			(66.6	)		(0.9	)		(27.0	)					(94.5	)
Partners' capital at September 30, 2010		$	186.1		$	0.3		$	(7.0	)	$	—		$	179.4

		Common Units			Class B Common Units			General Partners' Interests			Accumulated Other Comprehensive Income			Total Partners' Capital			Comprehensive Income
Partners' capital at January 1, 2009		$	217.9		$	1.0		$	39.2		$	(30.8	)	$	227.3
Net earnings			77.4			1.2			42.8						121.4		$	121.4
Change in fair value of derivatives												31.8			31.8			31.8
	Comprehensive income														—		$	153.2
Distributions			(135.0	)		(2.1	)		(83.4	)					(220.5	)
Partners' capital at September 30, 2009		$	160.3		$	0.1		$	(1.4	)	$	1.0		$	160.0

See Accompanying Notes to the Unaudited Consolidated Financial Statements.

6

TERRA NITROGEN COMPANY, L.P.

Notes to Consolidated Financial Statements (Unaudited)

1. Background and Basis of Presentation

        Terra Nitrogen Company, L.P. (TNCLP, our, we, or us) is a manufacturer of nitrogen fertilizer products. TNCLP and its operating partnership subsidiary, Terra Nitrogen, Limited Partnership (Operating Partnership), are referred to herein, collectively, as the "Partnership." Our principal products are anhydrous ammonia (ammonia) and urea ammonium nitrate solutions (UAN), which we manufacture at our facility in Verdigris, Oklahoma. We operate in one principal industry segment—Nitrogen Products, which is based upon the guidance provided in the Segment Reporting topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (Codification).

        Terra Nitrogen GP Inc., the Partnership's general partner (the General Partner), is a wholly-owned subsidiary of Terra Industries Inc. (Terra). On April 15, 2010, Terra became an indirect, wholly-owned subsidiary of CF Industries Holdings, Inc. (CF) pursuant to an agreement and plan of merger between CF and Terra, dated as of March 12, 2010. As a result of the acquisition, the General Partner became a wholly-owned subsidiary of CF. CF's acquisition of Terra has not impacted the recorded basis of any of the assets or liabilities of the Partnership.

        The accompanying unaudited interim consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the year ended December 31, 2009, in accordance with accounting principles generally accepted in the United States for interim financial reporting. In the opinion of management, these statements reflect all adjustments, consisting only of normal and recurring adjustments that are necessary for the fair representation of the information for the periods presented. The unaudited interim consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Operating results for any period presented apply to that period only and are not necessarily indicative of results for any future period.

        The preparation of the unaudited interim financial statements requires management to make use of estimates and assumptions that affect the reported amount of assets and liabilities, revenue and expenses and certain financial statement disclosures. Actual results could differ from these estimates. Significant estimates in these consolidated financial statements include net realizable value of inventories, environmental remediation liabilities, environmental and litigation contingencies, the cost of sales incentives, useful lives of property, the evaluation of impairments of property and allowances for doubtful accounts receivable.

2. Summary of Significant Accounting Policies

        For a complete discussion of the Partnership's significant accounting policies, refer to the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2009, filed with the SEC on March 3, 2010.

3. New Accounting Standards

        Following are summaries of accounting pronouncements that either were adopted recently or may become applicable to our consolidated financial statements. It should be noted that the accounting standards references provided below reflect the FASB Accounting Standards Codification, and related Accounting Standards Updates (ASU).

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TERRA NITROGEN COMPANY, L.P.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

3. New Accounting Standards (Continued)

Recently Adopted Pronouncements

        In June 2009, the FASB issued an accounting standard that revises the rules for consolidating variable interest entities (ASU No. 2009-17). This standard changes how a reporting entity determines when to consolidate an entity that is insufficiently capitalized or is not controlled through voting (or similar rights). The determination is based on, among other things, the other entity's purpose and design and the reporting entity's ability to direct the activities of the other entity that most significantly impact the other entity's economic performance. The standard also requires a company to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. We adopted this standard as of January 1, 2010. The adoption of this standard did not have a material impact on our consolidated financial statements.

        In June 2009, the FASB issued a standard that amends the requirements for transfers of financial assets (ASU No. 2009-16). This standard removes the concept of a qualifying special-purpose entity and removes the exception from applying these rules to qualifying special purpose entities. It also changes the requirements for de-recognizing financial assets and requires additional disclosures about a transferor's continuing involvement in financial assets. We adopted this standard as of January 1, 2010. The adoption of this standard did not have a material impact on our consolidated financial statements.

        In January 2010, the FASB issued a standard pertaining to fair value disclosures (ASU No. 2010-6) that requires a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers, and to disclose separately certain additional information about purchases, sales, issuances, and settlements of Level 3 fair value measurements. This standard also requires an entity to provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 items. The standard is effective for interim and annual reporting periods beginning after December 15, 2009, except for the Level 3 disclosure of activity, which is effective for fiscal years beginning after December 15, 2010. We adopted the effective portions of this standard as of March 31, 2010. The adoption of the effective portions of this standard did not have a material impact on our consolidated financial statements.

4. Agreement of Limited Partnership

        We make quarterly distributions to our partners based on "Available Cash" for the quarter (as defined in our Agreement of Limited Partnership). Available Cash is defined generally as all cash receipts less all cash disbursements, adjusted for changes in certain reserves established as the General Partner determines in its reasonable discretion to be necessary. In the nine months ended September 30, 2010 and 2009, we paid partnership distributions of $94.5 million and $220.5 million, respectively.

        We receive 99% of the Available Cash from the Operating Partnership and 1% is distributed to its general partner (who is also our General Partner). Cash distributions from the Operating Partnership generally represent the Operating Partnership's Available Cash from operations. Our cash distributions are made 99.975% to Common Unitholders and Class B Common Unitholders and 0.025% to our General Partner except when cumulative distributions of Available Cash exceed specified target levels above the Minimum Quarterly Distribution (MQD) of $0.605 per unit. Under such circumstances, our

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TERRA NITROGEN COMPANY, L.P.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

4. Agreement of Limited Partnership (Continued)

General Partner is entitled, as an incentive, to larger percentage interests or Incentive Distribution Rights (IDRs).

        On November 4, 2010, we announced a $1.40 cash distribution per common limited partnership unit, payable on November 29, 2010 to holders of record as of November 15, 2010. In the third quarter, we exceeded the cumulative MQD amounts and will distribute Available Cash as summarized in the following table:

	Income and Distribution Allocation
	Target Limit		Target Increment		Common Units			Class B Common Units			General Partner			Total
Minimum Quarterly Distributions	$	0.605	$	0.605		98.990	%		0.985	%		0.025	%		100.00	%
First Target		0.715		0.110		98.990	%		0.985	%		0.025	%		100.00	%
Second Target		0.825		0.110		85.859	%		0.985	%		13.156	%		100.00	%
Third Target		1.045		0.220		75.758	%		0.985	%		23.257	%		100.00	%
Final Target and Beyond		1.045		—		50.505	%		0.985	%		48.510	%		100.00	%

        The General Partner is required to remit the majority of cash distributions it receives from the Partnership, in excess of its 1% Partnership equity interest, to an affiliated company.

        At September 30, 2010, the General Partner and its affiliates owned 75.3% of our outstanding units. When not more than 25% of our issued and outstanding units are held by non-affiliates of the General Partner, 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 units held by non-affiliated persons. If the General Partner elects to acquire all outstanding units, we are required to give at least 30 but not more than 60 days notice of our decision to purchase the outstanding units. The purchase price per unit will be the greater of (1) the average of the previous 20 trading days' closing prices as of the date five days before the purchase is announced and (2) the highest price paid by the General Partner or any of its affiliates for any unit within the 90 days preceding the date the purchase is announced.

5. Net Earnings per Common Unit

        Basic and diluted earnings per Common Unit is based on the weighted-average number of Common Units outstanding during the period. The following table provides a reconciliation for basic

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TERRA NITROGEN COMPANY, L.P.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

5. Net Earnings per Common Unit (Continued)

and diluted earnings per Common Unit for the three and nine month periods ended September 30, 2010 and 2009:

		Three Months Ended September 30,				Nine Months Ended September 30,
		2010		2009		2010		2009
		(in millions, except per-unit amounts)
Basic earnings per Common Unit:
	Net earnings	$	35.2	$	17.3	$	135.8	$	121.4
	Less: Net earnings allocable to Class B Common Units		0.3		0.2		1.3		1.2
	Less: Net earnings allocable to General Partner		9.0		5.2		34.6		42.8
	Net earnings allocable to Common Units	$	25.9	$	11.9	$	99.9	$	77.4
	Weighted average units outstanding		18.5		18.5		18.5		18.5
Net earnings per Common Unit		$	1.40	$	0.64	$	5.40	$	4.18

        There were no dilutive Common Units outstanding for the three and nine month periods ended September 30, 2010 and 2009.

6. Inventories, Net

        Inventories consisted of the following:

	September 30, 2010		December 31, 2009
	(in millions)
Materials and supplies	$	13.2	$	9.1
Finished goods		10.2		20.4
Total	$	23.4	$	29.5

7. Derivative Financial Instruments

        We enter into derivative financial instruments, including swaps, basis swaps, purchased put and call options and sold call options, to manage the volatility of in natural gas prices. We report derivatives on the balance sheet at fair value. If the derivative is not designated as a hedging instrument, changes in fair value are recognized in the statement of operations in the period of change. Cash flows related to natural gas derivatives are reported as operating activities.

        Prior to the acquisition of Terra by CF, we generally classified our natural gas derivatives as cash flow hedges if all of the following conditions were met: The item to be hedged exposed us to currency, interest or price risk; it was probable that the results of the hedge position substantially offset the effects of the risk; and the hedge designation occurred at the inception of the hedge. If the derivative was designated as a cash flow hedge, and to the extent such hedge was determined to be effective, changes in fair value were reported as a component of accumulated other comprehensive income (AOCI) in the period of change, and subsequently recognized in earnings in the period the offsetting hedged transaction occurred.

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TERRA NITROGEN COMPANY, L.P.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

7. Derivative Financial Instruments (Continued)

        In the second quarter of 2010, we discontinued hedge accounting in order to align our accounting policy with CF's. At that time, all open cash flow hedges were de-designated, resulting in changes in fair value thereafter being recognized in the statement of operations. The remaining balance in AOCI relating to derivatives that were originally designated as cash flow hedges was reclassified into earnings as derivatives settled during the three months ended June 30, 2010.

        The gross fair values of derivatives on our Consolidated Balance Sheets are shown below. At September 30, 2010, all balance sheet amounts arise from commodity derivatives that are not designated as hedging instruments. At December 31, 2009, all balance sheet amounts arose from commodity derivatives that were designated as cash flow hedges. For additional information on derivative fair values, see Note 8—Fair Value Measurements.

	September 30, 2010			December 31, 2009
	(in millions)
Unrealized gains in other current assets	$	—		$	3.4
Unrealized losses in other current liabilities		(7.1	)		—
Net unrealized derivative gains (losses)	$	(7.1	)	$	3.4

        At September 30, 2009, we determined that a portion of certain derivative contracts were ineffective for accounting purposes and, as a result, we recorded a $0.8 million charge to cost of sales for the nine month period ended September 30, 2009. At September 30, 2009, we excluded a portion of the loss on certain derivative contracts from the effectiveness assessment and, as a result, reported a $1.1 million credit to cost of sales.

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TERRA NITROGEN COMPANY, L.P.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

7. Derivative Financial Instruments (Continued)

        The following table presents the effect of our commodity derivative instruments on the Consolidated Statements of Operations for the three and nine months ended September 30, 2010 and 2009.

Three Months Ended September 30
						Amount of Gain (Loss) Reclassified from AOCI into Income
Amount of Gain (Loss) Recognized in OCI												Amount of Gain (Loss) Recognized in Income
					Location of Gain (Loss) Reclassified from AOCI into Income(a)						Location of Gain (Loss) Recognized in Income
2010		2009				2010		2009				2010			2009
(in millions)
$	—	$	(0.6	)	Cost of Sales	$	—	$	(2.7	)	Cost of Sales	$	(7.2	)	$	0.3

Nine Months Ended September 30
						Amount of Gain (Loss) Reclassified from AOCI into Income
Amount of Gain (Loss) Recognized in OCI												Amount of Gain (Loss) Recognized in Income
					Location of Gain (Loss) Reclassified from AOCI into Income(a)						Location of Gain (Loss) Recognized in Income
2010		2009				2010		2009				2010(b)			2009(c)
(in millions)
$	—	$	(15.1	)	Cost of Sales	$	3.2	$	(47.0	)	Cost of Sales	$	(6.7	)	$	0.3

(a)

Gain (loss) recognized in AOCI, net of amounts reclassified from AOCI into earnings. In the three months ended June 30, 2010, $4.0 million of losses were reclassified into earnings related to cash flow hedges that were de-designated as a result of the discontinuance of hedge accounting.

(b)

For the nine months ended September 30, 2010, the amount of gain (loss) recognized in earnings includes a $4.0 million loss in the second quarter related to reclassification from AOCI into earnings following the discontinuance of hedge accounting. Amounts representing the ineffective portion of the hedging relationships and amounts excluded from the assessment of hedge effectiveness prior to the discontinuance of hedge accounting were insignificant.

(c)

For the nine months ended September 30, 2009, the amount of gain (loss) recognized in earnings represents ($0.8) million related to the ineffective portion of the hedging relationships and $1.1 million related to amounts excluded from the assessment of hedge effectiveness.

        At September 30, 2010, we had open derivative contracts for 10.4 million MMBtus of natural gas. For the nine months ended September 30, 2010, we used derivatives to cover approximately 55% of our natural gas consumption.

        We purchase natural gas at market prices to meet production requirements at our manufacturing facility. Natural gas market prices are volatile and we effectively hedge a portion of our natural gas production requirements through the use of swaps and options. These contracts reference physical natural gas prices or approximate NYMEX futures contract prices. Contract prices are frequently based on prices at the Henry Hub in Louisiana, the most common and financially liquid location of reference for financial derivatives related to natural gas. However, we purchase natural gas for our manufacturing facility at locations other than Henry Hub, which often creates a location basis differential between the contract price and the physical price of natural gas. Accordingly, the use of financial derivatives may

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TERRA NITROGEN COMPANY, L.P.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

7. Derivative Financial Instruments (Continued)

not exactly offset the changes in the price of physical gas. The contracts are traded in months forward and settlement dates are scheduled to coincide with gas purchases during that future period.

        Our derivatives do not have credit risk related contingent features that would require us to settle the derivatives or post collateral upon the occurrence of a credit event.

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 sheet that are recognized at fair value on a recurring basis, and indicates the fair value hierarchy utilized to determine such fair value as of September 30, 2010 and December 31, 2009.

		Balance as of September 30, 2010			Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
		(in millions)
Cash and cash equivalents		$	101.1		$	101.1	$	—		$	—
	Total assets at fair value	$	101.1		$	101.1	$	—		$	—
Unrealized losses on natural gas derivatives		$	(7.1	)	$	—	$	(7.1	)	$	—
	Total liabilities at fair value	$	(7.1	)	$	—	$	(7.1	)	$	—

		Balance as of December 31, 2009		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(in millions)
Cash and cash equivalents		$	24.8	$	24.8	$	—	$	—
Unrealized gains on natural gas derivatives			3.4		—		3.4		—
	Total assets at fair value	$	28.2	$	24.8	$	3.4	$	—

        Following is a summary of the valuation techniques for assets and liabilities recorded in our consolidated balance sheet at fair value on a recurring basis:

Cash and Cash Equivalents

        As of September 30, 2010 and December 31, 2009, our cash and cash equivalents consisted primarily of U.S. Treasury Bills with original maturities of three months or less and money market mutual funds that invest in U.S. government obligations.

Natural Gas Derivatives

        The derivative instruments that we currently use are primarily natural gas swap contracts. These contracts settle using NYMEX futures prices, which represent fair value at any given time. The contracts are traded in months forward and settlements are scheduled to coincide with anticipated gas purchases during those future periods. Quoted market prices from NYMEX are used to determine the

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TERRA NITROGEN COMPANY, L.P.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

8. Fair Value Measurements (Continued)

fair value of these instruments. See Note 7—Derivative Financial Instruments for additional information.

9. Property, Plant and Equipment, Net

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

	September 30, 2010		December 31, 2009
	(in millions)
Land	$	1.6	$	1.6
Building and improvements		6.9		6.9
Plant and equipment		251.9		246.5
Construction in progress		11.5		4.6
		271.9		259.6
Less: Accumulated depreciation, depletion and amortization		188.7		180.5
	$	83.2	$	79.1

10. Plant Turnarounds, Net

        Plant turnarounds—Scheduled inspections, replacements and overhauls of plant machinery and equipment at our continuous process manufacturing facility are referred to as plant turnarounds. The expenditures related to turnarounds are capitalized when incurred. The following is a summary of plant turnaround activity for the nine months ended September 30, 2010 and 2009:

	Nine months ended September 30,
	2010			2009
	(in millions)
Net capitalized turnaround costs:
Beginning balance	$	8.4		$	5.2
Additions		9.1			7.4
Depreciation		(3.5	)		(5.0	)
Ending balance	$	14.0		$	7.6

        Scheduled replacements and overhauls of plant 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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TERRA NITROGEN COMPANY, L.P.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

11. Revolving Credit Facility

        Effective September 28, 2010, we terminated our $50 million revolving credit facility (the facility). Under the facility interest was charged at a variable rate plus a fixed margin (London Interbank Offer Rate (LIBOR) plus 300 basis points). Under the facility, available borrowing was generally based on eligible cash balances, 85% of eligible accounts receivable and 60% of eligible finished goods inventory, less outstanding letters of credit. Borrowings under the credit facility were secured by substantially all of our working capital. The facility also required us to adhere to certain limitations on additional debt, capital expenditures, acquisitions, liens, asset sales, investments, prepayments of subordinated indebtedness, changes in lines of business and transactions with affiliates. At September 28, 2010, there were no amounts outstanding under the facility.

12. Contingency

        In October 2007, a request for information was received from the U.S. Environmental Protection Agency (EPA) pursuant to Section 114 of the Clean Air Act with respect to CF's (formerly Terra's) nitric acid plant at Port Neal, Iowa. Subsequently, a proposal was made to the EPA to resolve a number of potential Clean Air Act violations associated with prior modifications at nine of the nitric acid plants, including our Verdigris facility. Negotiations with the EPA have been ongoing since May 2008 with respect to a proposed consent decree that, if finalized, will require compliance with significantly lower nitrogen oxide emission standards. It is expected that compliance with these emission limits will require new or upgraded selective catalytic reduction systems and continuous emission monitors at our facility. Although agreement in principle has been reached with the EPA with respect to the standards and modifications, the final terms of the consent decree to resolve this matter are continuing to be negotiated.

13. Related Parties

        On September 29, 2010, we entered into an Amendment to the General and Administrative Services and Product Offtake Agreement (the Amendment) with CF Industries, Inc. (CF Industries), Terra and the General Partner.

        Effective as of July 1, 2010, the Amendment changes the Amended and Restated General and Administrative Services Agreement among Terra , the General Partner and TNCLP, dated as of October 23, 2007 (the Terra Services Agreement), to assign all of Terra's rights and obligations under the Terra Services Agreement to CF Industries and amend the cost of the services to be provided to TNCLP by CF Industries by replacing the prior variable cost allocation with a fixed quarterly fee of $3.5 million, subject to annual inflation adjustment. The fixed quarterly fee is in addition to costs and expenses incurred by CF Industries that are directly attributable to TNCLP.

        Also, pursuant to the Amendment, beginning at a future effective date to be agreed by the parties and announced at a later date, TNCLP will sell all of its fertilizer products to CF Industries at prices to be determined based on the then current market prices for TNCLP products as defined in the Amendment. The Amendment is effective for a one-year term from the effective date and will renew automatically for successive one-year terms unless terminated by any of the parties.

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TERRA NITROGEN COMPANY, L.P.

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

        You should read the following discussion and analysis in conjunction with our Unaudited Condensed Consolidated Financial Statements and the related Notes thereto contained in Part I, Item 1 of this report. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our Common Units. We urge you to review carefully and consider the various disclosures made by us in this report and in our other reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2009 and subsequent reports on Form 8-K and Form 10-Q, which discuss our business in greater detail.

        The section entitled "Risk Factors" contained in Part II, Item 1A of our Quarterly Report on Form 10-Q filed with the SEC on August 6, 2010, and similar discussions in our other SEC filings, describe some of the important risk factors that may affect our business, financial condition, results of operations and/or liquidity. You should carefully consider those risks, in addition to the other information in this report and in our other filings with the SEC.

        Terra Nitrogen GP Inc., the Partnership's general partner (TNGP or the General Partner), is a wholly-owned subsidiary of Terra Industries Inc. (Terra). On April 15, 2010, Terra became an indirect, wholly-owned subsidiary of CF Industries Holdings, Inc. (CF) pursuant to an agreement and plan of merger between CF and Terra, dated as of March 12, 2010. As a result of the acquisition, the General Partner became a wholly-owned subsidiary of CF. CF's acquisition of Terra did not impact the recorded basis of any of the assets or liabilities of the Partnership.

Dependence on CF

        We are dependent on CF in a number of respects. CF provides all of our management, natural gas purchasing and hedging, selling and administrative services and operates our facilities through the General Partner. CF and its wholly-owned subsidiaries, have more debt and debt service requirements than we do. Although CF is affected by most of the factors that affect us, CF's higher level of debt could put them at greater risk than us in the event of adverse business conditions. Our results of operations and financial condition might be materially adversely affected by financial difficulties at CF, default by it or its subsidiaries on their debt or their bankruptcy. For additional information concerning CF, refer to CF's filings with the Securities and Exchange Commission on Form 10-K, Form 10-Q and current reports on Form 8-K.

Introduction

        In this discussion and analysis, we explain our business in the following areas:

•

Company Overview;

•

Results of Operations; and

•

Liquidity and Capital Resources

Company Overview

        Terra Nitrogen Company, L.P. (TNCLP, we, our, or us) is a Delaware limited partnership that produces and distributes nitrogen fertilizer products primarily to the agriculture industry. We conduct our business through an operating partnership, Terra Nitrogen, Limited Partnership (TNLP or the

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TERRA NITROGEN COMPANY, L.P.

Operating Partnership, and collectively with TNCLP, the Partnership). The General Partner is the general partner of both TNLCP and TNLP and owns a consolidated 0.05 percent general partner interest in the Partnership. The General Partner is an indirect, wholly-owned subsidiary of CF. We are a leading nitrogen producer in North America serving agricultural and industrial customers, by producing approximately 1.0 million tons of anhydrous ammonia (ammonia) annually, of which approximately 0.7 million tons are upgraded into approximately 1.9 million tons of 32% urea ammonium nitrate solutions (UAN).

        Our principal products are ammonia and UAN, which we manufacture at our Verdigris, Oklahoma facility. Verdigris is the second largest UAN production facility in North America. Our location is well suited to serve customers in the Cornbelt. Our plant has a natural gas basis advantage as compared to producers who obtain natural gas priced at Henry Hub. The plant is served by the OneOK (Panhandle) gas pipeline.

Results of Operations

Consolidated Results

        We reported net earnings for the three months ended September 30, 2010 of $35.2 million on revenues of $136.0 million compared with net earnings for the three months ended September 30, 2009 of $17.3 million, on revenues of $101.5 million. Net earnings per Common Unit for the three months ended September 30, 2010 was $1.40 compared with $0.64 for the three months ended September 30, 2009.

        We also reported net earnings for the nine months ended September 30, 2010 of $135.8 million, on revenues of $421.7 million, compared with net earnings for the nine months ended September 30, 2009 of $121.4 million, on revenues of $409.6 million. Net earnings per Common Unit for the nine months ended September 30, 2010 was $5.40 compared with $4.18 for the nine months ended September 30, 2009.

        The following table shows the results of operations for the three and nine month periods ended September 30, 2010 and 2009:

	Three months ended September 30,												Nine months ended September 30,
(in millions, except per unit amounts)	2010			2009			Change			Percent			2010			2009			Change			Percent
Net sales	$	136.0		$	101.5		$	34.5			34	%	$	421.7		$	409.6		$	12.1			3	%
Cost of goods sold		96.8			79.7			17.1			21	%		273.5			274.7			(1.2	)		0	%
Gross margin		39.2			21.8			17.4			80	%		148.2			134.9			13.3			10	%
Gross margin percentage		28.8	%		21.5	%		7.3	%		34	%		35.1	%		32.9	%		2.2	%		7	%
Selling, general and administrative expenses		3.8			4.5			(0.7	)		(16	)%		12.1			13.9			(1.8	)		(13	)%
Operating earnings		35.4			17.3			18.1			105	%		136.1			121.0			15.1			12	%
Interest income (expense), net		(0.2	)		—			(0.2	)		NM			(0.3	)		0.4			(0.7	)		(175	)%
Net earnings	$	35.2		$	17.3		$	17.9			103	%	$	135.8		$	121.4		$	14.4			12	%
Net earnings allocable to Common Units	$	25.9		$	11.9		$	14.0			118	%	$	99.9		$	77.4		$	22.5			29	%
Net earnings per Common Unit	$	1.40		$	0.64		$	0.76			119	%	$	5.40		$	4.18		$	1.22			29	%

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TERRA NITROGEN COMPANY, L.P.

Sales Volumes and Prices

        The following table shows our ammonia and UAN sales volumes and prices for the three and nine month periods ended September 30, 2010 and 2009:

	Three months ended September 30,								Nine months ended September 30,
	2010				2009				2010				2009
	Volumes (000 tons)		Unit Price ($/ton)(2)		Volumes (000 tons)		Unit Price ($/ton)(2)		Volumes (000 tons)		Unit Price ($/ton)(2)		Volumes (000 tons)		Unit Price ($/ton)(2)
Ammonia		87	$	366		58	$	249		240	$	342		246	$	394
UAN(1)		485	$	181		517	$	136		1,499	$	193		1,295	$	208
Cost of natural gas ($ per MMBtu)(3)		—	$	4.29		—	$	3.53		—	$	4.67		—	$	4.97

(1)

The nitrogen content of UAN is 32% by weight.

(2)

After deducting outbound freight costs of $16.3 million and $16.5 million for the third quarters of 2010 and 2009, respectively, and $48.8 million and $41.9 million for the first nine months of 2010 and 2009, respectively.

(3)

Includes the cost of natural gas purchases and realized gains and losses on natural gas derivatives.

Third Quarter of 2010 Compared to the Third Quarter of 2009

        Our net sales for the third quarter of 2010 were $136.0 million, an increase of $34.5 million, or 34%, from the third quarter of 2009 net sales of $101.5 million. The increase was due to increases in average UAN and ammonia sales prices of 33% and 47%, respectively, and an increase in ammonia sales volume of 50%, partially offset by a decline in UAN sales volume of 6%.

        Our gross margin was $39.2 million in the third quarter of 2010 compared to $21.8 million in the third quarter of 2009. Gross margin as compared to prior year increased due to the realization of higher fertilizer prices, partially offset by an increase in natural gas prices. The third quarter natural gas unit costs, net of derivative gains and losses, increased from $3.53 per MMBtu in 2009 to $4.29 per MMBtu in 2010. The gross margin as a percent of sales increased to 28.8% from 21.5%.

        We enter into forward sales commitments by utilizing forward pricing and prepayment programs with customers. We use derivative instruments to hedge a portion of our natural gas requirements. The use of these derivative instruments is designed to fix natural gas costs for production required for forward sales commitments. Effective in the second quarter, we discontinued the use of hedge accounting for derivative instruments. This change has not affected our gas purchasing decisions, hedging approach or cash flows. For the three months ended September 30, 2010, we recognized an unrealized mark-to-market loss of $7.2 million due to a decline in forward natural gas prices while our forward positions increased during the quarter.

        Selling, general and administrative costs were $3.8 million in the third quarter of 2010, a decline of $0.7 million from the third quarter of 2009. The decline is primarily due to lower corporate expenses allocated from our General Partner.

        Interest expense increased in the third quarter of 2010 due to fees we incurred to extend the waiver on our revolving credit facility through September 28, 2010.

        Our net earnings were $35.2 million in the third quarter of 2010, an increase of $17.9 million, or 103%, as compared to $17.3 million in the third quarter of 2009. Net earnings increased primarily due to higher gross margin and lower selling, general and administrative expenses in the quarter.

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TERRA NITROGEN COMPANY, L.P.

Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009

        Our net sales for the nine months ended September 30, 2010 were $421.7 million, an increase of $12.1 million, or 3%, from the nine months ended September 30, 2009 net sales of $409.6 million. The increase was primarily due to a 16% increase in UAN sales volume, partially offset by 7% and 13% declines, respectively, in UAN and ammonia average sales prices as compared to the first nine months of 2009.

        Our gross margin was $148.2 million for the nine months ended September 30, 2010 compared to $134.9 million for the nine months ended September 30, 2009. Natural gas unit costs for the first nine months of 2010, net of derivative gains and losses, decreased 6% from $4.97 per MMBtu in 2009 to $4.67 per MMBtu in 2010. The decrease in natural gas prices, plus the impact of higher volumes in UAN were partially offset by the impact of lower selling prices and unrealized mark to market losses of $6.7 million, which increased gross margin as compared to the prior year. The gross margin as a percent of sales increased to 35.1% from 32.9%.

        Selling, general and administrative costs were $12.1 million for the nine months ended September 30, 2010, a decrease of $1.8 million as compared to the same period in 2009. This is primarily due to lower corporate expenses and lower expenses allocated from the General Partner since we entered into an amended services agreement, effective July 1, 2010. See Note 13 to the Notes to Unaudited Consolidated Financial Statements included herein.

        Interest income decreased for the nine months ended June 30, 2010 due a reduction of the average investment balance as compared to the nine months ended September 30, 2009.

        Our net earnings increased to $135.8 million for the nine months ended September 30, 2010, an increase of $14.4 million, or 12%, as compared to $121.4 million for the nine months ended September 30, 2009. Net earnings increased primarily due to higher gross margin and lower selling, general and administrative expenses.

Liquidity and Capital Resources

        Our principal uses of cash are for operating expenses, working capital, capital expenditures and quarterly distributions. Cash and cash equivalents were $101.1 million at September 30, 2010. During the first nine months of 2010, cash and cash equivalents increased by $76.3 million from December 31, 2009.

        Our cash receipts are generally collected by CF. Cash receipts, net of cash payments made by CF, are transferred to us weekly. Because of this cash collection and distribution arrangement, CF is a creditor to us.

Cash Flows

        The following table summarizes our cash flows from operating, investing and financing activities for the nine months ended September 30, 2010 and 2009:

Total cash provided by (used in)(dollars in millions):	2010			2009
Operating activities	$	192.8		$	160.2
Investing activities		(21.4	)		(23.7	)
Financing activities		(95.1	)		(220.5	)
Increase (decrease) in cash and cash equivalents	$	76.3		$	(84.0	)

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TERRA NITROGEN COMPANY, L.P.

Operating Activities

        Net cash provided by operating activities for the first nine months of 2010 was $154.4 million and $38.4 million of working capital changes. The $154.4 million includes $135.8 million of net earnings, adjusted for non-cash expenses of $11.9 million of depreciation of property, plant and equipment and amortization of deferred plant turnaround costs and $6.7 million of mark to market losses on derivatives.

Investing Activities

        Our investing activities used $21.4 million of cash in the first nine of 2010 for additions to property, plant and equipment, and plant turnaround expenditures.

Financing Activities

        During the first nine months of 2010, we paid distributions of $94.5 million to our unit holders. The distributions paid are based on "Available Cash," as defined in our Agreement of Limited Partnership. See Note 4 to the Notes to Unaudited Consolidated Financial Statements included herein.

Revolving Credit Facility

        Effective September 28, 2010, we terminated our $50 million revolving credit facility (the facility). Under the facility interest was charged at a variable rate plus a fixed margin (London Interbank Offer Rate (LIBOR) plus 300 basis points). Under the facility, available borrowing was generally based on eligible cash balances, 85% of eligible accounts receivable and 60% of eligible finished goods inventory, less outstanding letters of credit. Borrowings under the credit facility were secured by substantially all of our working capital. The facility also required us to adhere to certain limitations on additional debt, capital expenditures, acquisitions, liens, asset sales, investments, prepayments of subordinated indebtedness, changes in lines of business and transactions with affiliates. At September 28, 2010, there were no amounts outstanding under the facility. In the absence of this facility, the General Partner believes that the Partnership has adequate available cash, short-term investments and cash from operations to fund its working capital needs.

General Partner

        The General Partner is an indirect, wholly-owned subsidiary of CF. 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 the General Partners' independent directors.

Partnership Distributions

        We make quarterly distributions to our partners based on "Available Cash" for the quarter, as defined in our Agreement of Limited Partnership. Available Cash is defined generally as all cash receipts less all cash disbursements, adjusted for changes in certain reserves established as the General Partner determines to be necessary in its reasonable discretion. We paid distributions of $94.5 million and $220.5 million in the nine months ended September 30, 2010 and 2009, respectively.

        We receive 99% of the Available Cash from the Operating Partnership and 1% is distributed to its General Partner. Cash distributions from the Operating Partnership generally represent our Available Cash from operations. Our cash distributions are made 99.975% to Common Unitholders and 0.025% to our General Partner, except when cumulative distributions of Available Cash exceed specified target levels above the Minimum Quarterly Distributions (MQD) of $0.605 per unit. Under such

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TERRA NITROGEN COMPANY, L.P.

circumstances, our General Partner is entitled, as an incentive, to larger percentage interests or Incentive Distribution Rights (IDRs). Pursuant to our Agreement of Limited Partnership, earnings allocable to the limited partners and General Partner is based upon the distributions of Available Cash for the year.

        On November 4, 2010, we announced a $1.40 cash distribution per common limited partnership unit, payable on November 29, 2010 to holders of record as of November 15, 2010. In the third quarter we exceeded the cumulative MQD amounts and will distribute Available Cash as summarized in the following table:

	Income and Distribution Allocation
	Target Limit		Target Increment		Common Units			Class B Common Units			General Partner			Total
Minimum Quarterly Distributions	$	0.605	$	0.605		98.990	%		0.985	%		0.025	%		100.00	%
First Target		0.715		0.110		98.990	%		0.985	%		0.025	%		100.00	%
Second Target		0.825		0.110		85.859	%		0.985	%		13.156	%		100.00	%
Third Target		1.045		0.220		75.758	%		0.985	%		23.257	%		100.00	%
Final Target and Beyond		1.045		—		50.505	%		0.985	%		48.510	%		100.00	%

        The General Partner is required to remit the majority of cash distributions it receives from the Partnership, in excess of its 1% Partnership equity interest, to an affiliated company.

General Partner Option to Effect Mandatory Redemption of Partnership Units

        At September 30, 2010, the General Partner and its affiliates owned 75.3% of our outstanding units. When not more than 25% of the issued and outstanding units are held by non-affiliates of the General Partner, as was the case at September 30, 2010, 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 units held by non-affiliated persons. If the General Partner elects to acquire all outstanding units, we are required to give at least 30 but not more than 60 days notice of our decision to purchase the outstanding units. The purchase price per unit will be the greater of (1) the average of the previous 20 trading days' closing prices as of the date five days before the purchase is announced and (2) the highest price paid by the General Partner or any of its affiliates for any unit within the 90 days preceding the date the purchase is announced.

Cash Transactions with Affiliates

        Our cash receipts are generally received by CF on our behalf and our cash disbursements are generally made by CF on our behalf. Cash receipts, net of cash payments made by CF, are transferred to us on a weekly basis. As a result of this cash collection and distribution arrangement, CF is a creditor to us.

Derivatives

        We account for derivatives under ASC 815—Derivatives and Hedging. Under this standard, derivatives are reported on the balance sheet at fair value. Prior to the second quarter of 2010, we generally classified our natural gas derivatives as cash flow hedges, whereby the effective portion of the change in fair value was reported as a component of accumulated comprehensive income and was subsequently recognized in earnings in the period the offsetting hedged transaction occurred. Beginning in the second quarter of 2010, we discontinued hedge accounting but continue to use derivatives as an

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TERRA NITROGEN COMPANY, L.P.

economic hedge of gas price risk. Accordingly, changes in the fair value of the derivatives are recorded in earnings as the changes occur. This change has increased volatility in reported earnings.

Contractual Obligations

        There were no material changes outside the ordinary course of business to the Partnership's contractual obligations, critical accounting policies or off-balance sheet arrangements presented in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the period ended December 31, 2009.

ITEM 3.    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 products. Because natural gas prices are volatile, we seek to protect against significant adverse natural gas price movements. We manage the risk of changes in natural gas prices through the use of physical gas supply contracts and derivative financial instruments covering a period not exceeding three years.

        The derivative instruments that we have used are natural gas swaps and options. These contracts settle using NYMEX futures prices, which represents fair value at any given time. The contracts are entered into with respect to gas to be consumed in the future and settlements are scheduled to coincide with anticipated natural gas purchases during those future periods.

        As of September 30, 2010 and December 31, 2009, we had open derivative contracts for 10.4 million MMBtus and 6.1 million MMBtus, respectively, of natural gas, a substantial portion of which relate to sales that had been contracted to be sold at a fixed price in the future. An overall $1.00 per MMBtus change in the forward curve prices of natural gas would change the pre-tax unrealized mark-to-market gain/loss on our September 30, 2010 derivative positions by $10.4 million.

ITEM 4.    CONTROLS AND PROCEDURES

        Our Principal Executive Officer and Vice President and Corporate Controller (who is currently performing the functions of our principal financial officer) have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms.

Changes in Internal Control Over Financial Reporting

        Except as noted below, there was no change in our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

        In the second quarter of 2010, CF completed its merger of Terra and Terra Nitrogen GP Inc. with and into a wholly-owned subsidiary of CF Industries. We are currently integrating policies, processes, technology and operations for the combined company and will continue to evaluate our internal control over financial reporting as we develop and execute our integration plans. Until the companies are fully integrated, we will maintain the operational integrity of each company's legacy internal controls over financial reporting.

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TERRA NITROGEN COMPANY, L.P.

FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY

        Certain statements in this report may constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.

        Words such as "expects," "intends," "plans," "projects," "believes," "estimates," and similar expressions are used to identify these forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These risks, uncertainties and assumptions include, among others, statements relating to:

•

the volatile cost of natural gas;

•

the cyclical nature of our business;

•

the global commodity nature of our fertilizer products, the impact of global supply and demand on our selling prices, and the intense global competition in the consolidating markets in which we operate;

•

conditions in the U.S. agricultural industry;

•

weather conditions;

•

our inability to predict seasonal demand for our products accurately;

•

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

•

risks related to TNCLP's reliance on one production facility;

•

reliance on third party transportation providers;

•

potential liabilities and expenditures related to environmental and health and safety laws and regulations;

•

future regulatory restrictions and requirements related to GHG emissions, climate change or other environmental requirements;

•

acts of terrorism and regulations to combat terrorism;

•

the fact that CF and its affiliates are engaged in fertilizer manufacturing;

•

dependence on CF and its employees; and

•

deterioration of global market and economic conditions.

        Additional information as to these factors can be found in our 2009 Annual Report on Form 10-K and in our subsequent Quarterly Reports on Form 10-Q.

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TERRA NITROGEN COMPANY, L.P.

PART II. OTHER INFORMATION

ITEM 5.    OTHER INFORMATION.

        Richard A. Hoker, Vice President and Corporate Controller of the General Partner, is signing the certifications attached to this Quarterly Report on Form 10-Q and dated November 5, 2010, as the person performing the functions of the Company's principal financial officer. As previously announced, the General Partner's chief financial officer and principal financial officer resigned effective as of September 20, 2010, and the General Partner has not yet appointed a successor.

ITEM 6.    EXHIBITS

(a)   Exhibits:

10.1	Amendment to the General and Administrative Services and Product Offtake Agreement between CF Industries, Inc., a Delaware corporation, Terra Industries Inc., a Maryland corporation, Terra Nitrogen GP Inc., a Delaware corporation and Terra Nitrogen Company, L.P., a Delaware limited partnership, dated September 28, 2010. (incorporated by reference to Exhibit 10.1 to TNCLP's Form 8-K dated September 29, 2010 (Commission File No. 003-43007))
31.1	Certification of the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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TERRA NITROGEN COMPANY, L.P.

SIGNATURES

        Pursuant to the requirements 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: November 5, 2010	By:	/s/ STEPHEN R. WILSON Stephen R. Wilson President and Chief Executive Officer, Chairman of the Board (Principal Executive Officer)
Date: November 5, 2010	By:	/s/ RICHARD A. HOKER Richard A. Hoker Vice President and Corporate Controller (Principal Accounting Officer)

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EX-31.1

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TERRA NITROGEN COMPANY, L.P.

Exhibit 31.1

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

I, Stephen R. Wilson, certify that:

1.

I have reviewed this quarterly report on Form 10-Q 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: November 5, 2010

/s/ STEPHEN R. WILSON
Stephen R. Wilson
President and Chief Executive Officer,
Chairman of the Board of Terra Nitrogen GP Inc.,
general partner of Terra Nitrogen Company, L.P.
(Principal Executive Officer)

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Exhibit 31.1

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

EX-31.2

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TERRA NITROGEN COMPANY, L.P.

Exhibit 31.2

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

I, Richard A. Hoker, certify that:

1.

I have reviewed this quarterly report on Form 10-Q 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: November 5, 2010

/s/ RICHARD A. HOKER
Richard A. Hoker
Vice President and Corporate Controller of
Terra Nitrogen GP Inc., general partner of
Terra Nitrogen Company, L.P.
(Principal Financial Officer)

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Exhibit 31.2

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

EX-32.1

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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 Quarterly Report on Form 10-Q of Terra Nitrogen Company, L.P. (the Company) for the quarterly period ending September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Stephen R. Wilson, President of Terra Nitrogen GP Inc., the general partner of the Company, 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 the Company.

/s/ STEPHEN R. WILSON
Stephen R. Wilson
President and Chief Executive Officer,
Chairman of the Board of Terra Nitrogen GP Inc.,
general partner of Terra Nitrogen Company, L.P.
(Principal Executive Officer)

Dated: November 5, 2010

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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

EX-32.2

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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 Quarterly Report on Form 10-Q of Terra Nitrogen Company, L.P. (the Company) for the quarterly period ending September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Richard A. Hoker, Vice President of Terra Nitrogen GP Inc., the general partner of the Company, 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 the Company.

/s/ RICHARD A. HOKER
Richard A. Hoker
Vice President and Corporate Controller
of Terra Nitrogen GP Inc., general partner of
Terra Nitrogen Company, L.P.
(Principal Financial Officer)

Dated: November 5, 2010

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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