OKLAHOMA CITY--LSB Industries, Inc. (NYSE: LXU) today updated the status of its Pryor, Oklahoma Facility, which was shut-down on March 15, 2012 for unplanned maintenance at the ammonia plant. As stated in our April 2, 2012 update, the ammonia plant resumed production on March 22 and has produced approximately 600 tons per day, which production is being sold directly into the fertilizer market. However, the repair undertaken at the urea plant which began on February 27, 2012, which produces urea ammonium nitrate (UAN) and uses ammonia as a feedstock, is not complete. As a result, the Pryor Facility has not produced UAN since February 27, 2012. The repair period is expected to extend approximately 60 more days because we have determined that the damaged portion of the urea reactor, which is the reactor's stainless steel liner, is non-repairable and the liner has to be replaced. The Company will announce when UAN production resumes.
Risk Factors contained in our 2011 Form 10-K.
For the month of March, the Company estimates that the downtime resulting from the attempted repair of the urea reactor will result in approximately $4 million less operating income than otherwise would have been expected. In addition, in March, the Company accrued $3 million for probable losses for UAN tons that were pre-sold at firm sales prices, subject to make-whole terms, but not delivered due to the extended urea plant downtime.
Subsequent to March and until the urea plant is back in production, the Company estimates the downtime will result in approximately $900,000 per week less operating income than if the urea plant was in production. The Company has made a claim with its insurance carriers for repair costs and lost profits, less applicable deductible.
LSB is a manufacturing and marketing company. LSB's principal business activities consist of the manufacture and sale of commercial and residential climate control products, such as geothermal and water source heat pumps, hydronic fan coils and modular geothermal chillers, and large custom air handlers; and the manufacture and sale of chemical products for the agricultural, mining, and industrial markets.