Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2016 CF Industries Holdings Earnings Conference Call. My name is Carmen, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of the presentation. I would like to turn the presentation over to the host for today, Mr. Martin Jarosick with CF Investor Relations. Sir, please proceed.

Good morning, and thanks for joining us on this conference call for CF Industries Holdings, Inc. I'm Martin Jarosick, Vice President of Investor Relations for CF. With me today are Tony Will, our President and Chief Executive Officer; Dennis Kelleher, our Senior Vice President and Chief Financial Officer; Bert Frost, our Senior Vice President of Sales, Market Development and Supply Chain; and Chris Bohn, our Senior Vice President of Manufacturing and Distribution. CF Industries Holdings, Inc. reported its fourth quarter 2016 results yesterday afternoon, as did Terra Nitrogen Company, L.P. On this call, we will review the CF Industries' results in detail and discuss our outlook, referring to several slides that are posted on our website. At the end of the call, we'll host a question-and-answer session related to the company's financial results for the quarter. As you review the news releases posted on the Investor Relations section of our website at cfindustries.com and as you listen to this conference call, please recognize that they contain forward-looking statements as defined by federal securities laws. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including those detailed on slide 2 of the accompanying presentation and from time to time in the company's Securities and Exchange Commission filings. These forward-looking statements are made as of today, and the company assumes no obligation to update any forward-looking statements. This conference call will include a discussion of certain non-GAAP financial measures. In each case, a presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and coinciding reconciliation of the non-GAAP financial measure to the most directly comparable financial measure calculated and presented in accordance with GAAP is provided in the earnings release and the slides for this webcast presentation on the company's website at cfindustries.com. Now, let me introduce Tony Will, our President and CEO.

Thanks, Martin, and good morning, everyone. Last night, we posted our financial results for the fourth quarter and full year 2016 in which we generated adjusted EBITDA of $133 million and $858 million respectively, after taking into account the items detailed in our earnings release. Bert and Dennis will cover our fourth quarter, full year and near-term outlook in more detail later. What I'd like to do is offer a longer-term perspective on our industry and why we believe our strategic position makes us the company best situated to capitalize on the emerging sector recovery. For the past 12 months, we have experienced some of the most challenging conditions the nitrogen industry has faced in over a decade. Global feedstock and ocean freight costs fell as capacity additions came online, driving prices to unsustainable lows. The dramatic decline in nitrogen prices as demonstrated by U.S. Gulf urea fallen by more than $170 per ton or roughly 50% from 2015 to the middle of 2016 impacted our results more than most because we are a pure-play nitrogen production company. The converse should also prove to be true as prices rebound with price increases going directly to our bottom line, because we are one of the world's largest producers of nitrogen products and enjoy among the very lowest costs, nitrogen price recovery should haven't amplify the impact on our financial results. We believe that 2016 represented the low point of the cycle. The unsustainably low prices of 2016 led to the very predictable outcome of plant curtailments and permanent shutdowns in higher cost regions. In China alone, approximately 9 million metric tons of urea capacity were permanently closed and the industry as a whole ended the year running at only about 50% of remaining effective capacity. Nitrogen prices at the U.S. Gulf…

Thanks, Tony. At the end of the third quarter, we discussed our fundamental economics would continue to pressure high-cost producers and result in higher nitrogen prices globally. Additionally, we expected North American customers to increase buying headed into 2017 after delaying purchases in 2016. Both dynamics are playing out today as we enter the spring season in the United States. I want to start with the demand side of the story. During 2016, many customers believe prices would continue to fall as additional nitrogen capacity came online because they did not want to take the price risk associated with buying early, many stayed on the sidelines and only purchased minimal volumes. Domestic and international suppliers both chased what demand materialized. This resulted in weak pricing in North America that was not only below international parity, much of the year, but also well below cash costs for many high-cost producers. Not surprisingly, this made it difficult for foreign producers to send product economically to North America. Indeed, imports of urea and UAN were approximately 33% lower in the second half of 2016 compared to the same period in 2015. Demand was also lower than expected during the fall ammonia season, due to weather and farm level economic decisions. Unfavorable weather in the fall limited the application window as soil temperatures in many areas were too high at the start of the season and then cold temperatures and snow developed too quickly. Farm level economic considerations especially declining year-over-year farmer disposable income, due to a low corn and wheat prices negatively impacted decisions to purchase and apply ammonia. Additionally, future prices favored soybeans over corn for the first time since 2008. Historically, relatively favorable returns on beans have coincided with weaker fall ammonia applications as growers deferred fertilizer and planting decisions until…

Thanks, Bert. In the fourth quarter of 2016, the company reported an EBITDA loss of $135 million and a net loss per diluted share of $1.38. After taking into account the items detailed in our press release, our adjusted EBITDA for the fourth quarter was $133 million and our adjusted net loss per diluted share was $0.39. I will cover the two largest adjustments here. First, we announced during the fourth quarter we completed the refinancing of the private placement notes with maturity dates of 2022, 2025 and 2027 to put in place financing more consistent with the current business structure and operating environment. The make-whole payment associated with the early refinancing of those notes was approximately $170 million. However, as a result of the refinancing, we were able to reduce the average coupon rate of the debt from 4.9% to 4.1%. Second, during the fourth quarter of 2016, the company recognized an impairment charge of $134 million relating to its equity method investment in Point Lisas Nitrogen Limited in Trinidad. This was due to projected longer-term challenges with gas availability, and potential price increases from the government-controlled gas supplier. With the completion of the capacity expansion projects, you will see a number of line items in our P&L return to more normal levels. There will be no startup costs in 2017. Capitalized interest, which was $166 million in 2016, is expected to be less than $5 million in 2017. As a result, interest expense will be approximately $320 million this year. New capital expenditures for 2017 are expected to be in the range of approximately $400 million to $450 million for sustaining and other, which is a level that continues the company's commitment to safe, reliable, and compliant operations. Actual cash expenditures will also reflect amounts accrued but not paid in 2016. At December 31, 2016, approximately $225 million was accrued related to activities that occurred in 2016. Finally, depreciation expense in 2017 will reflect that all new capacity expansion assets will be in service for the full year. We expect total depreciation expense to rise to approximately $875 million. This will impact gross margin per ton for all the applicable segments. With the expansion projects behind us and an improving environment ahead of us, we will continue our prudent approach to managing the balance sheet in order to be in a position to retire $800 million of debt coming due in 2018. The 2018 debt retirement will largely be funded by the federal and state tax refunds we expect to receive in the third quarter of 2017 of approximately $800 million. With that, Tony will provide some closing remarks before we open the call to Q&A.

Thanks, Dennis. Before we move to your questions, I want to add some commentary to one of the last items Dennis mentioned, the $800 million tax refund we expect later this year. As you know, this is a one-time benefit due primarily to accelerated, or bonus, tax depreciation on our multibillion dollar investment in the United States. In 2018 and thereafter, we expect our cash tax rate to be close to the 35% statutory tax rate. So, we are actively participating in the debate on tax reform. While discussions are still in early stages and many of the details are yet to be worked out, the house tax reform framework looks very promising. A reduction in the corporate tax rate levels the competitive playing field with the rest of the world and generates earnings and cash flow that drops straight to our bottom-line. Further, the border adjustment tax is a concept that mirrors barriers we confront today. We face import taxes and tariffs for our products into Europe, China, and other geographies while foreign producers, who sell into the U.S. market, face no such import tax or tariff. This concept would also help to level the competitive global playing field. Further, it could also provide a benefit to our company, given both our significant manufacturing presence in the United States and our capability to export. We believe the house framework for tax reform would be good for America, good for CF Industries, its employees, and its shareholders. In closing, I want to thank all of our employees, who've stayed focused on executing our business during a challenging year. They've kept their eyes on what's most important, operating safely, and serving our customers well. All of us appreciate their contributions and we're looking forward to the improving environment we see ahead. With that, operator, we'll open the call to questions.

Thank you. One moment for our first question, is coming from the line of Chris Parkinson with Credit Suisse. Please go ahead. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC: Thank you. Given your outlook for 5 million tons to 6 million tons of Chinese urea exports as you can speak to that versus 8.9 million tons last year, how do you view the marginal cost of the new export level versus the past two years given Chinese own internal cost curve and some of the higher cost tons now being shut-in. Do you think that the FOB price will be roughly the same or potentially higher or lower?

Good morning, Chris. This is Bert. And so, looking at China, each year we've seen so many changes to their structure and their economic structure as well as the drivers of their business that we have to continue to stay on top of what's happening over there. And we have been taking a look at that. Looking first to the feedstock costs and what's going on with coal, as you know, they've restricted coal operating rates last year and then released that to move back up to 330 days. We've seen reports today from Bloomberg where they're looking to restrict that back to the 276 days. That one impact had our cost driving impact on the price of coal. And so, you look at the buildup to their structural costs being coal, energy, internal freight and just operating costs, we estimate that the marginal anthracite producer was in the range in 2016 of $215 per ton to maybe $220 per ton of cost, even today that's probably $20 higher on a total structural cost basis. What that doesn't take into account is the fact that again through industry reports, there were losses estimated to be as high as RMB9.2 billion last year in China. And so, we had prices fall as low as, let's say, $180, $190 metric ton FOB China. Today, again losing all that money and a structural cost differential, the floor price has to be significantly higher than it was last year. Coupled with ocean freight cost of at least $10 per ton to arrive in the United States, that total cost structure is probably closer to $30. That doesn't even take into account the catastrophe that they are experiencing today with pollution issues. We monitor different cities per day on the particulate matter that is in…

Yeah. Looking at – I'm uncomfortable giving a long-term outlook because it's – we've moved from $500 to $200 and some dollars back up to $320 today. And so, you've got different cost structures driving some of that. Today, you've got gas costs in the $6 range in Eastern Europe, and what we're seeing at our own operation in the UK, and you can see our gas costs are below $3. So, you do have a structural cost advantage in the United States, but as we articulated about our Trinidadian issues with the lack of gas, there's a significant amount of ammonia coming out of Trinidad that we believe will be constrained going forward. And so, these things are all in flux right now with where supply will be. And then, the issue with Togliatti that took place late last year with the shutdown of the pipe and loading out of the Black Sea, and the operation of the OPZ plant in Ukraine, all of those factors impacted seaborne ammonia trade. I think that some of those factors will be mitigated a little bit, but that doesn't mean that long-term you can supply coming out of the Black or the Baltic that number is this low. And so, I would expect you're going to see a moderating price on ammonia going forward in establishing a new normal. The LNG coming into Europe, there is a significant amount of LNG and that structural cost is in line with where gas is supplied today. And then you've got your Russian ruble revaluing and so the cost structure for that gas is going to be higher also. So, we think these are positives going into the longer term. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC: Great. Thank you very much.

And our next question comes from the line of Vincent Andrews with Morgan Stanley. Vincent S. Andrews - Morgan Stanley & Co. LLC: (23:40) and good morning, everyone. We all seen the import data into the U.S. and it's obviously below prior year and below what is expected to be necessary for urea, but we also see that the prices continue to lag import netbacks. Why do you think that is and is your expectation if that's going to change in the coming weeks and I'm just curious because we've seen sort of a downtick in urea prices this week in the Gulf? So, any color there would be helpful?

Yeah. When I'm dreaming at night, I think of urea prices, it's always going up because it's not reality in life. And so, we do have moderating factors just like the stock market goes up and down, and people have retrenching times or repositioning times that happens also in urea, we have seen that this week where it sell into the $230s and so, significantly below the international market. We are trending lower year-on-year for imports of both UAN and urea and that's natural. We have additional production capacity at Donaldsonville and Port Neal, that's fully operating today. And so, looking at spring, there are a lot of factors and each spring is different. Last year, we had a raise-up through margin than a fall all the way through to August where the flow was established. Previous years have been different in different structures. What is looking like this year is an early spring. We're seeing activity today on ammonia and that probably bodes well for early planting and earlier applications. But if the end market isn't buying and some of those retailers and farmers have not, then the stuff that's on the water today and barges have to be cleared and a clearing price has to be established. We think that's a temporary small blip and a retrenchment and then we're going to see prices moderate up into March and probably through spring. But we do need less imports than previous years. And that's either going to come through price or people not purchasing and bringing here, because other markets are more attractive, both those scenarios are in place today. Vincent S. Andrews - Morgan Stanley & Co. LLC: And it's like, just to ask a follow-ups of a higher-level question something that we're debating a lot here. Which store scenario would you prefer, a high global capacity utilization, but a flatter cost curve or a lower global capacity utilization, but a very steep cost curve?

I think it's got to be the second one, Vincent. That is really the situation that largely existed through kind of the big run-up from 2010 through 2013 and into 2014 which was – there was ample production capacity out there, but it was a very steep curve and it was just the incremental plants that would be bid into the marketplace based on where demand settled for those years and that's clearly our preference. We believe that hydrocarbon cost will strengthen, freight cost will continue to come back and the spread between our U.S. delivered cost basis and what is going to take to get imported tons into the Gulf and up into the Midwest will provide us a very healthy return on our asset base. So, we're – especially as we look forward where based on kind of our analysis of the new production coming up or going to be trending closer towards a supply driven market – from a supply driven into more of a demand driven marketplace bidding on some of those higher cost tons as you get out into 2018, 2019 and 2020, because they are just as not enough new steel being put in the ground to satisfy ongoing demand growth for these products. So, we're very optimistic about what the longer term holds. Vincent S. Andrews - Morgan Stanley & Co. LLC: Okay. Thanks very much. I appreciate it.

And our next question is from the line of Don Carson with Susquehanna Financial. Please go ahead.

Thank you. For the question on your outlook for the inland price premium for nitrogen products, especially as new capacity comes up there both your own and competitors, how do you see that unfolding? And I assume that this more aggressive export shipment pattern you have now is an attempt to kind of drain the Corn Belt of excess products. So, if you could just describe your outlook for that inland price premium and your export activity going forward?

Good morning. So, the – when you look at the premium as you stair-step outside or up from NOLA into the Southwest, the Midwest and the Northern Plains, the premium is built on transportation costs. And so, you can barge up through St. Louis or up to Minneapolis and then truck out or rail out, and we do each of those activities; and that's a cost. And so, to do that, you're going to want to be paid more for it. If you have better options available, you're going to take those different options. The second part of your question on exports, the exports to us are attractive because it's a timing issue. With North America consumption largely based on April – March, April, May, the preponderance of our exports occur in Q3 and Q4. And so, we have significant level of capacity in Donaldsonville and, as I've mentioned, the ability to load it quickly, we're able to achieve fairly attractive economics. And that, parallel with what customers were unwilling to commit to in Q3 and Q4, made exports attractive for us. If that changes, if buyer behavior changes and reverts to how it was in, let's say, the 2007 to 2015 period, then the North American market will be more attractive. And so, we have to balance each of that with our asset base and what – to keep our asset base running at full capacity, that's why we utilize the exports. We do fully anticipate the inland premium to hold and to make imports attractive. We still will be an import market going forward and we'll need to bid those tons in.

Don, the other thing I would point out, back to Bert's comment about when buyers step into the marketplace is, in hindsight, I think buyers would've been much better off stepping in during the third quarter fill program that we normally offer, because they would have realized average prices well below where they are today. And they were completely unwilling to take that inventory price risk, and so you get what you got, right? And so, I think Bert's approach here is the right one, which is if there's – if they're not buying here, we're going to take it to where they are. And then, people in the U.S. are going to have to bid those tons back in, again, in the future. So, I think it sets up well in terms of our ability to export in the way that Bert's executing our strategy here.

Just to follow up on those exports, so would you anticipate sort of a 500,000 ton quarterly run rate or is that above normal? And how do those netbacks on exports compare to your normal NOLA netbacks?

It's a developing issue, because when we looked at the capacity coming online several years ago, we started the work on the export program, developing the customer base and travelling and looking for options – new options, and that's what we've developed in Brazil, Chile, Colombia and have grown our base in Argentina. We also have contracts into Belgium and France, and now looking to leverage our position in the UK. So, I don't really want to put a specific number. I was surprised myself that it was 1 million tons – over 1 million tons of UAN in 2016. But I think we're economically driven, and if the economics are there and it makes more sense for the company, I would not put 500,000 tons per quarter. That was just a pretty large quarter for us.

Thank you.

And our next question comes from the line of P.J. Juvekar with Citigroup. Please go ahead.

Hey, good morning, guys. This is Dan Jester on for P.J. So, turning to the U.S. demand outlook, I think that you said that you think the corn acres are going to be down this year, wheat acres are going to be down, but that overall nitrogen demand kind of would be flattish. So, is that just that the delayed ammonia application from last year get pushed into 2017 or is there something else that you think that can make up for some of that differential?

Yes, actually. So, we do anticipate there were 200,000 tons to 400,000 tons of ammonia that did not go down in the fall that will need to be pushed into the spring. So, that's a total end number that just shifts to a March, April, May application. But, yes, corn acres were at 89,500 (32:58) and some others were a little bit higher than that, and so it's a decrease in corn acres. We do say a decrease in wheat acres, stock-to-use ratios on wheat are exceptionally high; corn not necessarily so. When you look at the world, the world, rest of the world, when you take out China, is at historical averages for stock-to-use ratio. So, we think it's a correcting issue in China for corn, but for the rest of the world business as usual. But how that impacts nitrogen demand is, you're going to see those acres shift and we're expecting a canola increase in Canada as well as a sorghum increase in the United States, and probably some barley. And so, when you look at the total acres, it's – or I should say total consumption based on acreage, it's a de minimis amount that – if it were to be a decrease. But today, with corn being over $4.00, corn is going to probably everyday be an attractive option for farmers as we roll into spring; so, more to come.

Thank you. And then, can you just talk about what your – the impairment of the Trinidad assets and it looks like ammonia production in Trinidad is lower than it has been in the past, but it has stabilized. So, what do you think in terms of the outlook for the gas situation in Trinidad and the ability of that country to sort of recover some of that lost ammonia production? Thanks.

Yeah. I mean, I think Trinidad present some problems out there for the government because it's pretty clear that the producers, gas producers on the island are unwilling to continue to invest in their E&P activities based on the current gas contracts that have been promised to the users of gas within point leases. And you've seen as those contracts have rolled off companies trying to renegotiate new contracts, but those tend to be at higher and higher prices. And as you look forward, the price that again this being paid doesn't warrant additional exploration and production of new gas. So, in order to incent the gas production, gas prices on the island have to rise and with our expectation that North American gas cost is not going up, that really puts Trinidad in a pretty marginal production place on the supply curve from a cost perspective. And so, it was the combination of challenges that we're having getting gas from the natural – or from NGC, Natural Gas Company, which is the government-controlled gas supplier and the likelihood that gas prices will go up that made us reevaluate our – the value of that asset and as such we took the decision that an impairment was in order given what our expectations are for the future of Trinidad and that's reflected in our financials.

Great. That's helpful. Thanks very much.

Which, I'll just add, Dan, by the way I think that's a helpful development for the global SNB (36:28) balance on nitrogen, honestly, and it certainly is better for us because we have only one half of one ammonia plant in Trinidad and the rest of our 19 million tons of production sit elsewhere. So, to the extent you take a block out of the lower cost region and move it up to the high marginal cost region, that's good for everything else that sits down at the low end.

And our next question comes from the line of Steve Byrne with Bank of America Merrill Lynch.

Yes. Thank you. Bert, if you had to estimate what fraction of the amount of nitrogen that will be consumed in the U.S., let's just say, to the first half that is either sitting in retail channel inventory right now or that you have sold forward versus the amount that you will sell spot, where would you put that split right now and how would that compare to a year ago level for mid-February?

Well, I would put it exactly where I think it is and where we wanted to be which is where we have seen significant tonnage still to sell into Q2 and we're preparing for that. As I said earlier, we're utilizing our inventory and our options and running the plants at full speed. And so, where exactly the total is, I can't give you a specific number. We think the inventory position is lower and that coupled with an early spring, we look to possibly having an issue going into March of supply availability at the farm gate. And so, we're working to move tons into position and working with our customers both at being the retailer to have those into position for spring. Again, going back to the low fall ammonia season, you still need to get those tons down, and that's we're seeing ammonia, as I said earlier, in Texas, Kansas and Oklahoma and Missouri going pretty full and pretty fast. And that could be another 10 days. And so, it allows farmers to get out and plant earlier and that probably will be in March in that region then you'll just stair-step up to the Upper Midwest. So, we're pretty positive for the spring.

But, Bert, I mean, I think, it's fair to say right that we think we're well below or behind where last year was, a combination of lower tons that went down in the fall, lower imports thus far and the fact that the channel, we believe, is at a lower inventory rate suggests that there is an awful lot more buying and catching up that needs to happen in the first half of the year compared to what it's been historically at this time.

I agree.

And just about these new plants in construction in Iran, could you have any intelligence on where they are at, whether or not they're going to be able to get gas to run those plants, and what's your expectations for supply, export, material out of that area?

Yeah. New plants seem to get announced fairly regularly and new plants fairly regularly do not get built. So, there is an issue today, and that we're receiving information on about Iran and their ability to load some of the commitments they have today. And the gas is there. Clearly, it's there and the ability to build the plant is there today and is that an economic good decision to make in today's market, that's for them to decide. I think what the problem is, is some of the publications that come out or the industry publications aren't as diligent in their analysis of what's possible and what's profitable. We've seen that from CRU on some of the estimates that have come out with plants that they have two plants in Russia coming on both the same plant, the same company, which is with a different name. And so, you have to be really careful siphoning through some of these, again what's the reality based on what is not, and I think as we go forward in time, we're going to see fewer of these projected plants being built.

And, Steve, one thing I would point to is, again, page 15 of our materials, there was a big slug of production that came on in 2016 in Iran. And those were two plants the Shiraz plant and the Pardis #3, those were both kind of in excess of 1 million tons a year. And then we expect another plant coming online in 2018, that's about a 1.2 million, the Oregon plant. And so, we do expect ongoing development, but what you don't see is any kind of significant activity out in 2019 and 2020 or 2021 right now and again if you're not engaging on the EPC contracts and beginning to sort of put in place the plants to start building one, you're not going to have another new plant, whether it's Iran or anywhere else starting up before kind of 2021 at this point. And so, that's why as we look forward and the tail of new plants really falls off very quickly, we're pretty optimistic about the longer-term kind of enduring nature of the recovery here going forward.

Thank you.

And our next question is from the line of Jeff Zekauskas with JPMorgan.

Thanks very much. In the quarter, there was a nice premium in your ammonia prices to NOLA prices, but there really wasn't a premium in urea or UAN. Can you talk about why that might be the case?

Well, I'll focus on the urea and UAN. When we started the quarter, urea was at $180 FOB NOLA. As we roll through the quarter, I think it reached $240 at the end, but at the absolute end. And in the middle of that, we had the India tender and then the India cancellation of the tender. And so, urea was a pretty rocky story during the quarter, and our average price realization reflected that we had ton sold and committed as we rolled into the quarter. And we picked up some of that optionality as we finished the quarter. So, our average, I think, is appropriate. UAN, the same story. The market hit a low in the – probably $130 short ton NOLA and kind of rose through the quarter, but UAN because we produce 22,000 tons, 23,000 tons a day throughout our system, that's a one week, like to stay ahead of, and that's why you see us utilize the export option because we can load 40,000 tons at a time. But we were at least a month or two sold on that product. And so, our price realization there in reflection of how low NOLA was in the absence of North American purchasing was acceptable.

Yeah. Jeff, that's the point that I will highlight again as Bert just mentioned which is – which you didn't see is the end market customers or the channel really taking inventory positions in the quarter and we brought on our new UAN production which is 6,000 tons a day at Donaldsonville. And so, that plant is going to be generating NOLA kind of price realization for that production especially when we exported as much as we did. And so, I would expect as you start seeing the channel move into taking inventory positions here as we're moving into the first half of the year and more of that buying is taking place in market, you'll start seeing some of that in market premium develop. But given where that huge amount of new capacity was added to D'ville and it gives us export optionality, that product really will trade at kind of NOLA pricing going forward.

That's clear. In your outlook, you talked about the U.S. still meeting 7 million nutrient tons of imported nitrogen. How many nutrient tons of UAN do you think the U.S. now needs?

It's a good question. We believe UAN is a wonderful product with optionality and versatility for a farmer for many different crops. I say that, because we think it's going to continue to grow and use. And so, when you look at the total picture, imports, our exports, and production flexibility that we often talk about that we can move between urea, ammonia and UAN and ammonia nitrate in Yazoo City. I do think the U.S. will continue to be an importing country of UAN. That volume will move from the – by peak of over 3 million tons to probably under or right at 1 million tons going forward. And where that will come from, a lot of it today is coming from Russia, Trinidad and like that.

So, if you think somewhere around a million tons to 1.5 million tons, you're talking something like 300,000 nutrient tons to 500,000 nutrient tons is in the UAN.

Yeah. Okay, good. Thank you so much.

And our next question comes from the line of John Roberts with UBS.

Thank you and welcome to Martin Jarosick.

Indeed. Welcome, Martin, we're delighted to have you.

Thanks, John.

And since you're growing your international business through exports, let me just ask about the reports that Yara has pulled out of the deal to buy Vale's nitrogen assets. Is it safe to say that doesn't fit with your strategy and even if it did, your balance sheet really doesn't allow you that flexibility?

Yeah. I mean, I won't – or can't comment on what Yara is deciding to do, but we don't have a lot of interest in buying the production assets in Brazil. I think it's a very fair statement to say that it doesn't fit with our strategy.

Okay. And then, you highlighted the risk to the second half of 2017. Is it the risk of a narrow weather window, again, as the biggest risk or is it Chinese coal prices declining? Maybe you could just prioritize the risk for us, because I think we all know the capacity that will be there in the second half. So, what are the things that you think frame the scenarios?

Well, I mean, I think the risk really comes in a couple of different flavors, one of which is, although it's not nearly to the same extent as happened in 2015 and 2016, we do believe that 2017 represents the last year where you end up with a little bit of excess new capacity coming online versus the normal demand growth. And as you said, we all kind of understand the capacity situation. The other risk that's in there is what happens with North American buyer behavior and do they exhibit the same sitting-on-their-hands situation in 2017 that they did in the third quarter of 2016, or have they learned something from what happened this year and will they get back in and actually buy at what amounts to be favorable pricing during the fill (48:29) season. And so, I think it's really a question of when do you realize that value? Do you get it in the third quarter or in the fourth quarter, or do we get it in the first quarter and second quarter of 2018? And that's why we're just a little bit uncertain in terms of – or think there is some risk out there around the back half of the year.

Thank you.

And our next question comes from the line of Ben Isaacson with Scotiabank.

This is Oliver Rowe on for Ben. Thanks for taking my question. One of your peers recently hedged a portion of their gas play over the next few years and I know you've been reluctant to hedge since the last program. Just wondering if your stance on this has softened at all or what it would take to get you to restart hedging?

Yeah. So, I mean, our understanding is that – if you're talking about Agrium, our understanding is they were hedging Ecogas, which is at or below $2 per MMBtu. And look, Medicine Hat is one of the cheapest production assets that we have because it buys Ecogas. And we do look at whether it's hedging basis or doing other things like that around those plants. But we are big believers in the supply response in North America, the ability to deploy rigs and bring new supply on very quickly, and so when you saw gas prices spike during the fourth quarter, we were up in, what, almost $4.00 at one point; $3.93, I think, is where January settled. Today, natural gas is below $3.00, back at $2.91. And so, as you look at that, our need to get out there and really try to take a long-term hedge position when you know you're paying sort of an embedded vig is not – our appetite really isn't that high right now. Rig counts up 40% since the fourth quarter and I just – we feel very good about where North America sits in terms of its ability to bring on a lot of gas at a very attractive price for us.

Does that answer your question, Ben (sic) [Oliver]?

Yes. Thank you.

And our next question comes from the line of Mark Connelly with CLSA. Please go ahead.

Thank you. Two questions, Tony. Do you think the value of pipelines is incrementally higher or lower than it was when we needed more imports? I'm just – I mean, obviously, you have the value of flexibility. But if we need to get less product into the Corn Belt, do you think that the value of a pipe is going down? And second, do you think your UK assets can be profitable in 2017?

Yeah. I mean, our UK assets were profitable in 2016. What we look at is kind of what is the cash generation on that business and, really, it's adjusted EBITDA that we focused on in terms of the UK. And we're really happy with kind of both what's the gas cost is, what the forward looks like, gas, for the UK and where selling prices are for ammonium nitrate. We've also done a really good job over there of renegotiating a bunch of the industrial contracts that we had for both ammonia and nitric acid supply that have added a lot of value to us in terms of that business versus where they were in 2015 and 2016. So, we're really pleased with the performance in the UK. The – you were asking initially, Mark, about the value of pipeline capacity and what I'd say is – so, the inland pipeline is all ammonia. It's not UAN. And so, to the extent that farmers see value in terms of the discount per unit of nitrogen for applying ammonia, which they have historically done, then there will be ongoing value to be able to access and move ammonia into the interior and the pipeline is among the cheapest way to do that and the most secure way to do that. So, I think the pipeline network has ongoing significant value to the Ag sector in this country and we don't see that going away. And I know that with some of the upgrades that are going on at border entity in it, there may be less utilization on Magellan side of the pipe than there is on the NuStar, but the NuStar I think is pretty much full up. So, we don't really see any change – any real changes happening on the eastern pipe.

Yeah, Mark, I just want to make one more point about the ammonium nitrate business. If you look at ammonium nitrate business on an underlying basis and that's – both got stuck in the U.S. and also in the UK and you look at sort of gross margin, add back depreciation and amortization and also take out the effects of the derivatives. What you see is that the cash margin of that business is roughly around 20% for ammonium nitrate. If you look at the big three products, the same way over the past year in 2016, which obviously as we all know was a very challenging year, that cash margin sits well above 30%. And I think what that points up is that sitting where we sit on the cost curve, with the gas advantage that we have, even in very, very challenging years as 2016 was, that cost advantage comes through and from a cash perspective and economic perspective makes the business cash positive and very profitable.

That's really helpful. Thank you.

Thank you. And our next question is from the line of Joel Jackson with BMO Capital Markets. Please go ahead.

Hi, good morning. Can you give us a sense of what utilization the different Port Neal plants ran at in Q4 and in Q1 and then also generally in 2017? So, when you think you will reach full capacity at Port Neal? Thanks.

Yeah. So, the ammonia plant at Port Neal is running at a 110%-ish of nameplate right now. So, I would say we're well past full capacity at the moment. The urea plant has run about at – is running about at nameplate and it's a little bit like happened at Donaldsonville because it's a sister plant to the D'ville plant which is we brought it up to nameplate and then continued to step it up over the next couple of months and ultimately where the D'ville plant is currently operating is between about 10% and 15% above the nameplate. And so, we expect to get the same kind of performance out of the Port Neal urea plant here as we go through kind of the balance of the first quarter into the early second quarter. But that plant is fully operational and – at or above nameplate.

Thanks for that. So, is the strategy now I'm seeing your capital allocation the last few slide in your presentation, with the strategy to be here to basically sit on your big pile of cash here through the $800 million of debt maturities in May 2018, is that – and sort of ride it out and see what will happen next year. Is that basically the idea?

Well, I mean we do have the opportunity to do a natural kind of de-levering in 2018. I would say we have got roughly $800 million coming in from the tax refund that we expect due to bonus depreciation. We've got $800 million going out the door, so in a lot of way, in terms of the debt repayment. So, in a lot of ways that debt repayment has been kind of fully funded at this point, we just don't have the cash in the door yet. So, we certainly feel much better about what we see looking ahead than where we were in the third quarter and fourth quarter, but one of the things that we are focused on is maintaining investment grade metrics over the long-term. And so, we want to make sure that everything is sorted in the appropriate place before we start thinking too hard about future deployment.

Thanks.

And ladies and gentlemen, this is all the time we have for questions for today. I would like to turn the call back to Martin Jarosick for closing remarks.

That concludes our fourth quarter earnings call. If you have any follow-up questions, please reach out. Thanks for everyone's time today.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program and you may all disconnect.