Natural Resource Partners tightens belt, diversifies in face of tough coal markets

Coal landholder Natural Resource Partners LP (NYSE: NRP) on May 7 reported first quarter 2015 revenues of $109.7 million, resulting in net income per unit of $0.14 compared to $80.3 million in revenues and net income per unit of $0.29 reported for the first quarter 2014.

“As announced on April 22, we are in the initial stages of implementing a long-term strategic plan to reduce NRP’s debt and enhance our liquidity through this difficult commodity cycle,” said Wyatt Hogan, President and Chief Operating Officer. “During the implementation of this long-term plan, we will remain focused on actively managing our assets and operations in a cost-efficient manner. As demonstrated by our first quarter 2015 results, we have diversified our sources of revenue across a more balanced portfolio of coal royalties, construction aggregates, soda ash and oil and gas, and believe that we are on the right path to achieving our long-term objective of growing NRP while improving our financial profile.”

Coal related revenues decreased 6% to $49.5 million in this latest quarter, due to both decreases in coal production volumes by NRP’s lessees (9%) and decreases in average coal royalty revenue per ton (6%) as compared to the first quarter 2014. The decrease in coal royalty revenues resulted primarily from a decrease in Northern Appalachian revenues, where coal reserves were exhausted at one higher revenue mine, and also lower sales volumes in the Illinois Basin. Metallurgical coal represented 33% of coal production and 40% of coal royalty revenues for the first quarter of 2015.

Net income to the limited partners decreased 40% to $17.1 million and net income per unit decreased 42% to $0.14 in the first quarter before considering impairments taken in the fourth quarter. This decrease was mainly due to seasonally lower aggregates income, lower oil and gas prices, and lower coal production.

On April 22, NRP announced its long-term strategic plan to strengthen its balance sheet and enhance liquidity. This plan set forth goals to reduce debt and improve various credit metrics by the end of 2017.

Natural Resource Partners is a master limited partnership headquartered in Houston, Texas. NRP 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 income from operations is 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, making NRP 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.