Coal landholder Natural Resource Partners declares loss for Q3 2015

Natural Resource Partners LP (NYSE: NRP), a major coal landholder, on Nov. 5 reported a net loss attributable to the limited partners for the third quarter of 2015 of $586.0 million, compared with net income attributable to the limited partners of $35.5 million a year earlier.

Results for the third quarter of 2015 were negatively impacted by $614.3 million of non-cash impairment charges attributable to the limited partners, as the market value of certain of the partnership’s assets were impacted by continued deterioration of the coal markets and the significant decline in oil prices.

“Although our soda ash and aggregates businesses performed well again in the third quarter, low commodity prices and challenging markets continued to pressure our coal and oil and gas businesses,” said Wyatt Hogan, President and Chief Operating Officer. “In this difficult operating environment, NRP remains steadfastly focused on achieving its deleveraging target of a Consolidated Debt-to-EBITDA ratio of 3.5x by the end of 2017. We believe the actions taken this year will better position the partnership to navigate this difficult commodity price period and become a stronger company for the future.”

The company’s coal properties produced 11.4 million tons this past quarter, down from 13.4 million tons in the third quarter of 2014. For the first nine months of this year, coal production from its properties came in at 36.5 million tons, down from 37.5 million tons in the same period of 2014.

To date in 2015, NRP has taken the following steps to achieve the financial objectives outlined in the April 2015 strategic plan:

  • reduced quarterly unitholder distribution by 87% from $0.35 to $0.045 per common unit, which is expected to provide about $150 million of cash annually for debt repayment in future periods;
  • extended the maturity of Opco’s revolving credit facility until Oct. 1, 2017;
  • reduced net debt by $66 million, having repaid $56 million in principal on Opco’s senior notes, repaid the $75 million Opco term loan in full using borrowings under Opco’s revolving credit facility, and repaid $25 million under the NRP Oil and Gas revolving credit facility, of which $15 million was paid following the end of the third quarter;
  • announced plans to close three regional offices and reduce NRP’s coal-related workforce by 15%, and implemented other steps to reduce overhead costs; and
  • commenced processes, including the engagement of advisors, to sell assets in order to raise cash to help NRP stay on track to achieve its deleveraging objectives in spite of a difficult commodity environment.

At Sept. 30, 2015, NRP had $76 million of liquidity, consisting of $61 million in cash and $15 million available for borrowing under its revolving credit facilities. Since the end of the quarter, the NRP Oil and Gas revolving credit facility borrowing base redetermination was completed and the borrowing base was reduced from $105 million to $88 million. NRP subsequently paid off $15 million of borrowings, leaving $85 million of debt outstanding under the facility.

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 revenues are generated from royalties and other passive income. In addition, NRP owns an equity investment in Ciner Wyoming LLC (formerly OCI Wyoming LLC), a trona/soda ash operation, owns non-operated working interests in oil and gas properties and owns VantaCore, a construction aggregates business, 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.