LXU: Acquiring full ownership of El Dorado CCS a low-risk, good-return project with future optionality

研报英文原文证据摘录

LXU: Acquiring full ownership of El Dorado CCS a low-risk, good-return project with future optionality

EQUITY RESEARCH QUICK TAKE

RBC Dominion Securities Inc.

Andrew D. Wong (Analyst)

Ali Mecklai (Associate)

Saad Khan (Associate)

May 19, 2026

LSB Industries, Inc.

Acquiring full ownership of El Dorado CCS a low-risk, good-return project with future

optionality

NYSE: LXU | USD 13.88 | Sector Perform | Price Target USD 15.00

Sentiment: Positive

Our view: We view LSB's acquisition of the El Dorado CCS project from Lapis favourably as a low-risk, good-return project that

provides greater future flexibility, while the milestone-based payment structure mitigates execution risk and preserves near term

financial flexibility.

Summary: LSB is acquiring 100% ownership of Project Blue, the El Dorado CCS project, for approximately $95M in milestone-based

payments. Under the original arrangement, Lapis was to retain ownership of the equipment and 45Q tax credits, with LSB receiving

fees of ~$15M annually. The revised arrangement effectively shifts the asset and credits to LSB, generating total annual cash flows

of $25-30M, translating to an incremental $10-15M with the new deal. The implied IRR on the incremental $95M investment for

$10-15M additional annualized cash flows is low-to-mid teens.

Moreover, LSB gains operational control and strategic optionality to expand the facility in the future to accommodate any potential

de-bottlenecks at El Dorado, which would materially improve project returns over time. The milestone-based payment structure

ties capital deployment to actual project progress, which also reduces execution risk for LSB.

The project is on track for completion by late-2026/early-2027, with EPA Class VI permitting expected to conclude by year-end.