The Company was formed in 1968 as an Oklahoma corporation and became a Delaware
corporation in 1977. We are a manufacturer and distributor of nitrogen fertilizer
and other nitrogen products principally in North America. Our principal customers
are cooperatives, independent fertilizer distributors, farmers and industrial
users. Our principal nitrogen products are:
ammonia, fertilizer grade ammonium nitrate (“AN” and “HDAN”),
urea ammonia nitrate (“UAN”), and AN solution for agricultural applications,
high purity and commercial grade ammonia, high purity AN, sulfuric acids, concentrated,
blended and regular nitric acid, mixed nitrating acids, carbon dioxide, and
diesel exhaust fluid for industrial applications, and
industrial grade AN (“LDAN”) and 83% AN solution (“AN solution”)
for the mining industry.
We manufacture and distribute our products in four facilities: three owned facilities
located in El Dorado, Arkansas (the “El Dorado Facility”), Cherokee,
Alabama (the “Cherokee Facility”), and Pryor, Oklahoma (the “Pryor
Facility”), and one facility we operate on behalf of Covestro AG (“Covestro”)
in Baytown, Texas (the “Baytown Facility”).
We pursue a strategy of balancing the sale of product as fertilizer into the
agriculture markets at spot prices and developing industrial and mining customers
that purchase substantial quantities of products, primarily under contractual
obligations and/or pricing arrangements that provide for the pass through of
raw material and other manufacturing costs. We believe that this product and
market diversification strategy allows us to have consistent levels of production
and helps mitigate the volatility risk inherent in the prices of our raw material
feedstocks and/or the changes in demand for our products.
The strategy of developing industrial and mining customers is to moderate the
risk inherent in the agricultural markets where spot sales prices of our agricultural
products may not have a correlation to the natural gas feedstock costs but rather
reflect market conditions for like and competing nitrogen sources. This volatility
of sales pricing in our agricultural products can compromise our ability to
recover our full cost to produce the product in this market. Additionally, the
lack of sufficient non-seasonal agricultural sales volume to operate our manufacturing
facilities at optimum levels can preclude us from balancing production and storage
capabilities. Looking forward, we are pursuing profitable growth. Our strategy
calls for continued emphasis on the agricultural sector, while remaining committed
to further developing industrial customers who assume the volatility risk associated
with the raw material costs and mitigate the effects of seasonality in the agricultural
sector.
Our strategy also includes evaluating investment in expansion projects, along
with reliability and efficiency improvement projects, that we believe will generate
the best returns for our stockholders taking into consideration the risk and
return on investment. This strategy motivated our decision to build the ammonia
plant at the El Dorado Facility and to construct a new nitric acid plant and
concentrator at the El Dorado Facility. All three projects have been completed.
We believe that we will benefit from these projects through reduced feedstock
costs, expanded capacity, improved efficiency and enhanced product mix flexibility.
