NOVA Chemicals: Record Breaking Quarter Caps Record Breaking Year - Strength Continues

Business Wire, Jan 31, 2008

In the fourth quarter, Corunna co-product sales volumes were 21% lower than the third quarter due to the shift in the feedstock mix. The average co-product selling price was up 12% from last quarter, as higher industry crude oil costs drove up prices of energy co-products and chemical co-products such as propylene.

Corunna's average feedstock costs were higher in the fourth quarter than the third quarter. While the average WTI crude oil price increased 20%, NOVA Chemicals' average crude oil costs only increased 17% as a result of flow through of costs. Prices for other feedstocks such as propane, butane and condensate also rose with the price of crude oil.

Fourth Quarter 2007 Versus Fourth Quarter 2006

The Corunna Olefins segment reported adjusted EBITDA of $52 million in the fourth quarter of 2007, compared to $4 million in the same period one year ago. Results improved primarily due to higher margins. Selling prices for co-products, which were up 40%, outpaced the sharp increase in Corunna's crude oil costs, which were up 28% compared to the same period one year ago.

2007 Versus 2006

The Corunna Olefins segment reported adjusted EBITDA of $209 million for 2007 compared to $93 million in 2006. The improvement was due primarily to higher ethylene sales volume, which increased by 9%, and higher average selling prices for co-products which were up 15% compared to 2006. Despite the sharp rise in industry crude oil costs in the second half of 2007, Corunna's crude oil costs in 2007 were only 4% higher compared to 2006. Gains from NOVA Chemicals' feedstock purchasing program minimized the year-over-year increase in feedstock costs.

Polyethylene

Fourth Quarter 2007 Versus Third Quarter 2007

The Polyethylene segment reported adjusted EBITDA of $64 million in the fourth quarter of 2007 compared to $60 million in the third quarter. The quarter-over-quarter improvement was largely due to higher sales volume which offset higher operating costs. Margins were relatively steady as price increases mostly offset higher feedstock costs.

The North American benchmark butene liner polyethylene price averaged 75C/ per pound in the fourth quarter, up 8C/ per pound from the third quarter. Continued strong export sales and steady domestic demand enabled producers, including NOVA Chemicals, to operate at high utilization rates and increase prices during the quarter.

NOVA Chemicals' polyethylene sales volume of 914 million pounds in the fourth quarter was the highest in the Company's history, exceeding the Company's nameplate capacity. International sales volume represented approximately 23% of total sales, versus 17% in the third quarter. Continued strong international polyethylene pricing in the fourth quarter, driven by higher global production costs and robust demand, supported profitable export opportunities.

According to data reported by the American Chemistry Council, total sales and operating rates were 2% lower than the third quarter. However, NOVA Chemicals set a record for total sales of polyethylene for the fourth quarter and the full year 2007, driven mainly by export sales. NOVA Chemicals ended the fourth quarter with 18 days of polyethylene inventory, much lower than the industry average of 41 days.