Diversification away from coal helped Natural Resource Partners in 2014

Coal landholder Natural Resource Partners L.P. (NYSE: NRP) on Feb. 12 reported 2014 revenues and other income of $399.8m compared to $358.1m for 2013.

Net income attributable to the limited partners for 2014 was $106.7m, versus $168.6m for 2013. Results for 2014 included a non-cash charge of $26.2m for the impairment of several coal and aggregates properties.

For the fourth quarter of 2014, revenues totaled $137.3m compared to $94.7m reported for the same period in 2013. The increase in revenues was principally due to contributions from the VantaCore construction aggregates business and producing oil and gas properties in the Sanish Field, both of which were acquired during the fourth quarter. Net income attributable to the limited partners for the fourth quarter was $8.5m, compared to $46m for the fourth quarter 2013. Results for the quarter included a non-cash charge of $20.6m for the impairment of several coal and aggregates properties.

“In this challenging commodity price environment, our 2014 financial and operational results met or exceeded our guidance,” said Wyatt Hogan, President of NRP. “Our performance in 2014 is a testament not only to our NRP team and the quality and diversity of our assets, but also to the exceptional efforts of our coal lessees, oil and gas operators, OCI Wyoming soda ash operations and our recently acquired VantaCore construction aggregates business.  In 2014, we made two significant acquisitions that have established NRP as a diversified natural resource company. Nevertheless, as we look forward to 2015, the markets for coal and oil and gas remain difficult, and we will continue to manage our business with a long-term perspective through this cycle.”

Total revenues and other income for 2014 increased 12% to $399.8m from the same period of 2013 due to significant increases in aggregates related revenues, oil and gas related revenues and equity income from NRP’s soda ash business. These increases, mainly due to acquisitions that occurred in both 2013 and 2014, more than offset the $47.5m decline in coal related revenues. Coal related revenues decreased mainly due to decreases in prices for both metallurgical and thermal coal equating to a 9% reduction in average coal royalty revenue per ton; a 5% decline in coal production volumes; and a gain on sale of assets recorded in 2013. Metallurgical coal represented 32% of coal production and 40% of coal royalty revenues for 2014.

NRP expects its coal business to be down slightly from 2014 results and expects its soda ash business to improve over 2014. NRP’s aggregates-related revenues in 2015 are expected to increase substantially over 2014 due to the VantaCore acquisition made in the fourth quarter. NRP’s interests in oil and natural gas properties remain a small portion of NRP’s business, and oil and gas revenues are expected to remain flat as compared to 2014, with increased production offset by significantly lower prices. NRP will continue to monitor the development programs of the operators of its Williston Basin non-operated working interest properties and manage the capital expenditures associated with these properties by only participating in wells that are expected to provide acceptable economic returns.

Natural Resource Partners is a master limited partnership headquartered in Houston, Texas. It is a diversified natural resource company that owns interests in oil and gas, coal, aggregates and industrial minerals across the United States. A large percentage of NRP’s revenues are generated from royalties and other passive income. In addition, NRP owns an equity investment in OCI Wyoming, a trona/soda ash operation, owns non-operated working interests in oil and gas properties and owns VantaCore, a construction aggregates business, making NRP ranked as one of the top 25 aggregates producers in the United States.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.