Key Transaction Details:

  • LSB Industries to acquire 100% ownership and control of the El Dorado CCS project
  • No upfront cash payment required at closing
  • Investment to be made in stages tied to key milestones, with consideration focused on development, permitting, construction, commissioning and operational milestones
  • Total consideration and remaining completion capital, assuming all milestones achieved, currently estimated at approximately $95 million
  • Milestone-based structure aligns the Company's capital deployment with project advancement and limits upfront capital exposure
  • Full ownership expected to provide enhanced commercial flexibility to optimize the asset and evaluate future expansion opportunities
  • The Company expects the project to generate between $25 million and $30 million of annual earnings and cash flow, net of any operating costs associated with CCS operations when fully operational

Initially announced in April 2022, the project is expected to permanently capture and sequester between 400,000 and 500,000 metric tons of CO2 per year and is on track for completion by the end of 2026 or early 2027. The sequestered CO2 will qualify for federal tax credits of $85 per metric ton under Internal Revenue Code Section 45Q. In addition, the project will enable LSB to produce between 305,000 and 380,000 metric tons per year of low carbon ammonia, which provides the company opportunities for additional revenue. This includes generating premiums for low carbon products or potentially selling the environmental attributes generated through CO2 sequestration.

Lapis will continue to manage Class VI permitting and regulatory engagement with the Environmental Protection Agency ("EPA") on behalf of the Company. The EPA is currently reviewing the company's Class VI injection well permit application. Once the project receives EPA approval, expected later this year, the company intends to use a stratigraphic well drilled and completed in June 2025, for its CO2 injections. Lapis will continue working with the Company on the project throughout the completion of construction and commissioning.