LSB Industries Inc. (NYSE: LXU) announced an agreement with Lapis Carbon Solutions to acquire 100% ownership of Project Blue, a carbon capture and sequestration project at its El Dorado, Arkansas facility.

The transaction requires no upfront cash payment at closing. LSB will make investments tied to development, permitting, construction, commissioning and operational milestones. Total consideration and remaining completion capital is estimated at approximately $95 million, assuming all milestones are achieved.

The company expects the project to generate between $25 million and $30 million of annual earnings and cash flow when fully operational. The project is designed to capture and sequester between 400,000 and 500,000 metric tons of CO2 per year and is scheduled 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. The project will enable LSB to produce between 305,000 and 380,000 metric tons per year of low carbon ammonia.

Lapis will continue managing Class VI permitting and regulatory engagement with the Environmental Protection Agency. The EPA is currently reviewing the company's Class VI injection well permit application, with approval expected later this year. LSB plans to use a stratigraphic well completed in June 2025 for CO2 injections.

LSB Industries manufactures ammonia and ammonia-related products at facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma, and operates a facility in Baytown, Texas. The project was initially announced in April 2022.