Agrium Closes Acquisition of Unocal Agricultural Products Division.

Business Editors

CALGARY, Alberta--(BUSINESS WIRE)--Sept. 29, 2000

Agrium Inc. (TSE:AGU.)(NYSE:AGU)("Agrium") announced today that its acquisition of the Agricultural Products Division of Unocal Inc. has closed, effective September 30, 2000. The acquired assets are located in Alaska, Washington State and California.

"Since our initial public offering in 1993, Agrium has grown from its regional base to a position of leadership as a nutrient supplier to the global agricultural community," said Agrium President and CEO John M. Van Brunt. "The addition of the Unocal employees, products and facilities will enhance our ability to serve customers around the globe. Furthermore, this acquisition provides our new employees with the opportunity to grow within an organization focused on the fertilizer business. Combined with the startup of the Profertil nitrogen fertilizer complex in Argentina, this acquisition increases our nitrogen capacity by 60%, making Agrium one of the largest suppliers to the world nitrogen market."

This acquisition also enhances Agrium's existing North American natural gas position. The combination of natural gas hedges and fixed price contracts for the Alaskan production results in Agrium having approximately 70% of its North American natural gas requirements fixed at prices 62% below the NYMEX forward prices for the fourth quarter of 2000 and approximately 54% of calendar 2001 requirements fixed at prices 58% below the forward NYMEX prices. Including Agrium's production in Argentina, Agrium has 64% of its total calendar 2001 requirements fixed at prices 61% below the forward NYMEX prices.

Assets Acquired

* A world scale ammonia and urea production complex at Kenai, Alaska. The two ammonia and two urea plants have an annual production capacity of approximately 1.0 million tonnes of urea and 600,000 tonnes of net ammonia. The complex also contains 73,000 tonnes of ammonia storage, 118,000 tonnes of urea storage and a deep water ship loading facility. The Kenai facility is adjacent to the Cook Inlet natural gas production field and benefits from a long-term reserves-based natural gas supply contract that is internationally competitive.

"China's impending entry into the World Trade Organization is expected to reopen its huge market for urea imports, which will increase the strategic importance of Agrium's deep water shipping facilities at Kenai and in South America," said Mr. Van Brunt.

* A nitrogen fertilizer production complex near Kennewick, Washington, with an annual production capacity of approximately 190,000 tonnes of ammonia, 370,000 tonnes of nitric acid, 270,000 tonnes of ammonium nitrate and 500,000 tonnes of nitrogen solutions.

* The Hedges storage and distribution terminal at Kennewick, Washington, with 45,000 tonnes of ammonia storage capacity.

* A UAN upgrade facility and storage terminal at West Sacramento, California, with an annual production capacity of approximately 200,000 tonnes of UAN plus other products, 36,000 tonnes of ammonia storage, 29,000 tonnes of urea storage and 29,000 tonnes of UAN storage.

* An N-pHURIC production facility at Fresno, California, with an annual production capacity of 28,000 tonnes, and 1,100 tonnes of storage.

Personnel Considerations

Most of the employees joining Agrium with the transaction are from the operations group, along with key personnel from marketing. Provisions for the employees not joining Agrium will be managed by Unocal. Marketing, sales and support functions will be centralized in Agrium's Denver, Colorado office for US agricultural sales and in its Calgary, Alberta office for the international and industrial sales.

"We are very pleased that a high percentage of Unocal's Agricultural Products workforce will be joining us. The dedication and expertise that these highly skilled employees bring to the Company positions us well for future strategic growth, both in North America and internationally. Although a number of the Unocal employees will not be joining us as part of the transaction we would like to thank them for their contribution in building a strong business," Mr. Van Brunt said.

Financial Summary

The cost of the acquisition was US $321 million, including an estimated US $73 million in working capital, with US $246 million payable in cash, US $50 million of Agrium convertible preferred securities ("COPR's") and US $25 million of Agrium common stock (representing approximately 2.6 million shares). The convertible preferred securities are convertible at a premium into approximately 4.2 million common shares. The purchase agreement also includes a provision which allows Unocal to earn 35% of the excess of actual NOLA prices over certain "forecast" prices for the net ammonia and urea production volumes of the Kenai facility through the end of July 31, 2006.

Also included in the acquisition was the Rivergate ammonia and urea terminal at Portland, Oregon. This terminal and an 11 acre portion of the Hedges facility at Kennewick, including a 9,000 tonne urea warehouse, have subsequently been sold to The J. R. Simplot Company as a result of negotiations with the US Federal Trade Commission.

About Agrium

Agrium Inc. is a leading global producer and marketer of fertilizer and a major retail supplier of agricultural products and services in both North America and Argentina. The Corporation produces and markets four primary groups of fertilizers: nitrogen, phosphate, potash and sulphur. The Corporation's strategy is to grow through incremental expansion of its existing operations and acquisitions as well as the development, commercialization and marketing of new products and international opportunities.