Natural Resource Partners LP 10-Q for FY2022 Q3
Natural Resource Partners LP (NRP)
About this 10-Q
Natural Resource Partners LP filed this 10-Q on November 3, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).
Headline figures
Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $81.38M
- up 70.0% from $47.88M a year earlier
- Net income
- $74.56M
- up 152.7% from net income of $29.5M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
| Washington, D.C. 20549 |
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
| Commission file number: | | |||
| NATURAL RESOURCE PARTNERS LP | ||
| (Exact name of registrant as specified in its charter) | ||
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| | | |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of "accelerated filer", "large accelerated filer", "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | | ☒ | |
| Non-accelerated Filer | ☐ | Smaller Reporting Company | ||
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
NATURAL RESOURCE PARTNERS, L.P.
TABLE OF CONTENTS
| Page |
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| Part I. Financial Information |
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| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Part II. Other Information |
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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| (In thousands, except unit data) | 2022 | 2021 | ||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Other current assets, net | ||||||||
| Total current assets | $ | $ | ||||||
| Land | ||||||||
| Mineral rights, net | ||||||||
| Intangible assets, net | ||||||||
| Equity in unconsolidated investment | ||||||||
| Long-term contract receivable, net | ||||||||
| Other long-term assets, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND CAPITAL | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Accrued interest | ||||||||
| Current portion of deferred revenue | ||||||||
| Current portion of long-term debt, net | ||||||||
| Total current liabilities | $ | $ | ||||||
| Deferred revenue | ||||||||
| Long-term debt, net | ||||||||
| Other non-current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and contingencies (see Note 12) | ||||||||
| Class A Convertible Preferred Units ( and units issued and outstanding at September 30, 2022 and December 31, 2021, respectively, at $ par value per unit; liquidation preference of $ per unit at September 30, 2022 and December 31, 2021) | $ | $ | ||||||
| Partners’ capital | ||||||||
| Common unitholders’ interest ( and units issued and outstanding at September 30, 2022 and December 31, 2021, respectively) | $ | $ | ||||||
| General partner’s interest | ||||||||
| Warrant holders’ interest | ||||||||
| Accumulated other comprehensive income | ||||||||
| Total partners’ capital | $ | $ | ||||||
| Total liabilities and partners' capital | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| (In thousands, except per unit data) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Revenues and other income | ||||||||||||||||
| Royalty and other mineral rights | $ | $ | $ | $ | ||||||||||||
| Transportation and processing services | ||||||||||||||||
| Equity in earnings of Sisecam Wyoming | ||||||||||||||||
| Gain on asset sales and disposals | ||||||||||||||||
| Total revenues and other income | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| Operating and maintenance expenses | $ | $ | $ | $ | ||||||||||||
| Depreciation, depletion and amortization | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Asset impairments | ||||||||||||||||
| Total operating expenses | $ | $ | $ | $ | ||||||||||||
| Income from operations | $ | $ | $ | $ | ||||||||||||
| Other expenses, net | ||||||||||||||||
| Interest expense, net | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ||||||||||||
| Total other expenses, net | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Less: income attributable to preferred unitholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income attributable to common unitholders and the general partner | $ | $ | $ | $ | ||||||||||||
| Net income attributable to common unitholders | $ | $ | $ | $ | ||||||||||||
| Net income attributable to the general partner | ||||||||||||||||
| Net income per common unit (see Note 4) | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Comprehensive income (loss) from unconsolidated investment and other | ( | ) | ||||||||||||||
| Comprehensive income | $ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(Unaudited)
| Accumulated | ||||||||||||||||||||||||
| Other | Total | |||||||||||||||||||||||
| Common Unitholders | General | Warrant | Comprehensive | Partners' | ||||||||||||||||||||
| (In thousands) | Units | Amounts | Partner | Holders | Income | Capital | ||||||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Net income (1) | — | — | — | |||||||||||||||||||||
| Distributions to common unitholders and the general partner | — | ( | ) | ( | ) | — | — | ( | ) | |||||||||||||||
| Distributions to preferred unitholders | — | ( | ) | ( | ) | — | — | ( | ) | |||||||||||||||
| Issuance of unit-based awards | — | — | — | — | — | |||||||||||||||||||
| Unit-based awards amortization and vesting, net | — | ( | ) | — | — | — | ( | ) | ||||||||||||||||
| Capital contribution | — | — | — | — | ||||||||||||||||||||
| Comprehensive income from unconsolidated investment and other | — | — | — | — | ||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Net income (1) | — | — | — | |||||||||||||||||||||
| Distributions to common unitholders and the general partner | — | ( | ) | ( | ) | — | — | ( | ) | |||||||||||||||
| Distributions to preferred unitholders | — | ( | ) | ( | ) | — | — | ( | ) | |||||||||||||||
| Unit-based awards amortization and vesting | — | — | — | — | ||||||||||||||||||||
| Comprehensive loss from unconsolidated investment and other | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2022 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Net income (1) | — | |||||||||||||||||||||||
| Distributions to common unitholders and the general partner | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Distributions to preferred unitholders | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Unit-based awards amortization and vesting | — | |||||||||||||||||||||||
| Comprehensive income from unconsolidated investment and other | — | |||||||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | $ | $ | |||||||||||||||||||
| (1) |
Net income includes $7.5 million of income attributable to preferred unitholders that accumulated during the period, of which $7.4 million is allocated to the common unitholders and $0.2 million is allocated to the general partner. |
The accompanying notes are an integral part of these consolidated financial statements.
NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(Unaudited)
| Accumulated | ||||||||||||||||||||||||
| Other | Total | |||||||||||||||||||||||
| Common Unitholders | General | Warrant | Comprehensive | Partners' | ||||||||||||||||||||
| (In thousands) | Units | Amounts | Partner | Holders | Income | Capital | ||||||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Net income (1) | — | — | — | |||||||||||||||||||||
| Distributions to common unitholders and the general partner | — | ( | ) | ( | ) | — | — | ( | ) | |||||||||||||||
| Distributions to preferred unitholders | — | ( | ) | ( | ) | — | — | ( | ) | |||||||||||||||
| Issuance of unit-based awards | — | — | — | — | — | |||||||||||||||||||
| Unit-based awards amortization and vesting, net | — | — | — | — | ||||||||||||||||||||
| Capital contribution | — | — | — | — | ||||||||||||||||||||
| Comprehensive income from unconsolidated investment and other | — | — | — | — | ||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Net income (2) | — | — | — | |||||||||||||||||||||
| Distributions to common unitholders and the general partner | — | ( | ) | ( | ) | — | — | ( | ) | |||||||||||||||
| Distributions to preferred unitholders | — | ( | ) | ( | ) | — | — | ( | ) | |||||||||||||||
| Unit-based awards amortization and vesting | — | — | — | — | ||||||||||||||||||||
| Comprehensive income from unconsolidated investment and other | — | — | — | — | ||||||||||||||||||||
| Balance at June 30, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Net income (3) | — | |||||||||||||||||||||||
| Distributions to common unitholders and the general partner | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Distributions to preferred unitholders | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Unit-based awards amortization and vesting | — | |||||||||||||||||||||||
| Comprehensive income from unconsolidated investment and other | — | |||||||||||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||
| (1) |
Net income includes $7.7 million of income attributable to preferred unitholders that accumulated during the period, of which $7.6 million is allocated to the common unitholders and $0.2 million is allocated to the general partner. |
| (2) | Net income includes $7.8 million of income attributable to preferred unitholders that accumulated during the period, of which $7.7 million is allocated to the common unitholders and $0.2 million is allocated to the general partner. |
| (3) | Net income includes $8.0 million of income attributable to preferred unitholders that accumulated during the period, of which $7.8 million is allocated to the common unitholders and $0.2 million is allocated to the general partner. |
The accompanying notes are an integral part of these consolidated financial statements.
NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Nine Months Ended September 30, |
||||||||
| (In thousands) |
2022 |
2021 |
||||||
| Cash flows from operating activities |
||||||||
| Net income |
$ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities of continuing operations: |
||||||||
| Depreciation, depletion and amortization |
||||||||
| Distributions from unconsolidated investment |
||||||||
| Equity earnings from unconsolidated investment |
( |
) | ( |
) | ||||
| Gain on asset sales and disposals |
( |
) | ( |
) | ||||
| Loss on extinguishment of debt |
||||||||
| Asset impairments |
||||||||
| Bad debt expense |
||||||||
| Unit-based compensation expense |
||||||||
| Amortization of debt issuance costs and other |
||||||||
| Change in operating assets and liabilities: |
||||||||
| Accounts receivable |
( |
) | ( |
) | ||||
| Accounts payable |
||||||||
| Accrued liabilities |
( |
) | ( |
) | ||||
| Accrued interest |
||||||||
| Deferred revenue |
( |
) | ( |
) | ||||
| Other items, net |
||||||||
| Net cash provided by operating activities |
$ | $ | ||||||
| Cash flows from investing activities |
||||||||
| Proceeds from asset sales and disposals |
$ | $ | ||||||
| Return of long-term contract receivable |
||||||||
| Capital expenditures |
( |
) | ||||||
| Net cash provided by investing activities |
$ | $ | ||||||
| Cash flows from financing activities |
||||||||
| Debt repayments |
$ | ( |
) | $ | ( |
) | ||
| Distributions to common unitholders and the general partner |
( |
) | ( |
) | ||||
| Distributions to preferred unitholders |
( |
) | ( |
) | ||||
| Acquisition of non-controlling interest in BRP |
( |
) | ||||||
| Redemption of preferred units paid-in-kind |
( |
) | ||||||
| Other items, net |
( |
) | ( |
) | ||||
| Net cash used in financing activities |
$ | ( |
) | $ | ( |
) | ||
| Net increase (decrease) in cash and cash equivalents |
$ | ( |
) | $ | ||||
| Cash and cash equivalents at beginning of period |
||||||||
| Cash and cash equivalents at end of period |
$ | $ | ||||||
| Supplemental cash flow information: |
||||||||
| Cash paid for interest |
$ | $ | ||||||
| Non-cash investing and financing activities: |
||||||||
| Preferred unit distributions paid-in-kind |
||||||||
The accompanying notes are an integral part of these consolidated financial statements.
NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Nature of Business
Natural Resource Partners L.P. (the "Partnership") engages principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and owns a non-controlling
Principles of Consolidation and Reporting
The accompanying unaudited Consolidated Financial Statements of the Partnership have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2021 and notes thereto included in the Partnership's Annual Report on Form 10-K, which was filed with the SEC on March 15, 2022.
2. Revenues from Contracts with Customers
The following table presents the Partnership's Mineral Rights segment revenues by major source:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| (In thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Coal royalty revenues | $ | $ | $ | $ | ||||||||||||
| Production lease minimum revenues | ||||||||||||||||
| Minimum lease straight-line revenues | ||||||||||||||||
| Carbon neutral initiative revenues (1) | ||||||||||||||||
| Property tax revenues | ||||||||||||||||
| Wheelage revenues | ||||||||||||||||
| Coal overriding royalty revenues | ||||||||||||||||
| Lease amendment revenues | ||||||||||||||||
| Aggregates royalty revenues | ||||||||||||||||
| Oil and gas royalty revenues | ||||||||||||||||
| Other revenues | ||||||||||||||||
| Royalty and other mineral rights revenues | $ | $ | $ | $ | ||||||||||||
| Transportation and processing services revenues (2) | ||||||||||||||||
| Total Mineral Rights segment revenues | $ | $ | $ | $ | ||||||||||||
| (1) | Included within carbon neutral initiative revenues are payments that are recognized at a point in time upon satisfaction of NRP's performance obligation. |
| (2) | Transportation and processing services revenues from contracts with customers as defined under ASC 606 was $ |
The following table details the Partnership's Mineral Rights segment receivables and liabilities resulting from contracts with customers:
| September 30, | December 31, | |||||||
| (In thousands) | 2022 | 2021 | ||||||
| Receivables | ||||||||
| Accounts receivable, net | $ | $ | ||||||
| Other current assets, net (1) | ||||||||
| Other long-term assets, net (2) | ||||||||
| Contract liabilities | ||||||||
| Current portion of deferred revenue | $ | $ | ||||||
| Deferred revenue | ||||||||
| (1) | Other current assets, net includes short-term notes receivables from contracts with customers. |
| (2) | Other long-term assets, net includes long-term lease amendment fee receivables from contracts with customers. |
The following table shows the activity related to the Partnership's Mineral Rights segment deferred revenue:
| For the Nine Months Ended | ||||||||
| September 30, | ||||||||
| (In thousands) | 2022 | 2021 | ||||||
| Balance at beginning of period (current and non-current) | $ | $ | ||||||
| Increase due to minimums and lease amendment fees | ||||||||
| Recognition of previously deferred revenue | ( | ) | ( | ) | ||||
| Balance at end of period (current and non-current) | $ | $ | ||||||
The Partnership's non-cancelable annual minimum payments due under the lease terms of its coal and aggregates royalty leases are as follows as of September 30, 2022 (in thousands):
| Lease Term (1) | Weighted Average Remaining Years | Annual Minimum Payments | |||||
| 0 - 5 years | $ | ||||||
| 5 - 10 years | |||||||
| 10+ years | |||||||
| Total | $ | ||||||
| (1) | Lease term does not include renewal periods. |
3. Common and Preferred Unit Distributions
The Partnership makes cash distributions to common and preferred unitholders on a quarterly basis, subject to approval by the Board of Directors of GP Natural Resource Partners LLC (the "Board of Directors"). NRP recognizes both common unit and preferred unit distributions on the date the distribution is declared.
Distributions made on the common units and the general partner's general partner ("GP") interest are made on a pro-rata basis in accordance with their relative percentage interests in the Partnership. The general partner is entitled to receive
Income available to common unitholders and the general partner is reduced by preferred unit distributions that accumulated during the period. NRP reduced net income available to common unitholders and the general partner by $
The following table shows the cash distributions declared and paid to common and preferred unitholders during the nine months ended September 30, 2022 and 2021, respectively:
| Cash Distributions | Paid-in-kind Distributions | |||||||||||||||
| Common Units | Preferred Units | |||||||||||||||
| Total Distribution (1) | Total Distribution | Total Distribution | ||||||||||||||
| Month Paid | Period Covered by Distribution | Distribution per Unit | (In thousands) | Distribution per Unit | (In thousands) | (In units) | ||||||||||
| 2022 | ||||||||||||||||
| February 2022 | October 1 - December 31, 2021 | $ | $ | $ | $ | |||||||||||
| May 2022 | January 1 - March 31, 2022 | |||||||||||||||
| August 2022 | April 1 - June 30, 2022 | |||||||||||||||
| 2021 | ||||||||||||||||
| February 2021 | October 1 - December 31, 2020 | $ | $ | $ | $ | |||||||||||
| May 2021 | January 1 - March 31, 2021 | |||||||||||||||
| August 2021 | April 1 - June 30, 2021 | |||||||||||||||
| (1) | Totals include the amount paid to NRP's general partner in accordance with the general partner's general partner interest. |
Basic net income per common unit is computed by dividing net income, after considering income attributable to preferred unitholders and the general partner’s general partner interest, by the weighted average number of common units outstanding. Diluted net income per common unit includes the effect of NRP's preferred units, warrants, and unvested unit-based awards if the inclusion of these items is dilutive.
The dilutive effect of the preferred units is calculated using the if-converted method. Under the if-converted method, the preferred units are assumed to be converted at the beginning of the period, and the resulting common units are included in the denominator of the diluted net income per unit calculation for the period being presented. Distributions declared in the period and undeclared distributions on the preferred units that accumulated during the period are added back to the numerator for purposes of the if-converted calculation. The calculation of diluted net income per common unit for the three and nine months ended September 30, 2022 and 2021 includes the assumed conversion of the preferred units.
The dilutive effect of the warrants is calculated using the treasury stock method, which assumes that the proceeds from the exercise of these instruments are used to purchase common units at the average market price for the period. The calculation of diluted net income per common unit for the three and nine months ended September 30, 2022 includes the net settlement of warrants to purchase
The following tables reconcile the numerator and denominator of the basic and diluted net income per common unit computations and calculates basic and diluted net income per common unit:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| (In thousands, except per unit data) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Allocation of net income | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Less: income attributable to preferred unitholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income attributable to common unitholders and the general partner | $ | $ | $ | $ | ||||||||||||
| Less: net income attributable to the general partner | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income attributable to common unitholders | $ | $ | $ | $ | ||||||||||||
| Basic net income per common unit | ||||||||||||||||
| Weighted average common units—basic | ||||||||||||||||
| Basic net income per common unit | $ | $ | $ | $ | ||||||||||||
| Diluted net income per common unit | ||||||||||||||||
| Weighted average common units—basic | ||||||||||||||||
| Plus: dilutive effect of preferred units | ||||||||||||||||
| Plus: dilutive effect of warrants | ||||||||||||||||
| Plus: dilutive effect of unvested unit-based awards | ||||||||||||||||
| Weighted average common units—diluted | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Less: income attributable to preferred unitholders | ||||||||||||||||
| Diluted net income attributable to common unitholders and the general partner | $ | $ | $ | $ | ||||||||||||
| Less: diluted net income attributable to the general partner | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Diluted net income attributable to common unitholders | $ | $ | $ | $ | ||||||||||||
| Diluted net income per common unit | $ | $ | $ | $ | ||||||||||||
The Partnership's segments are strategic business units that offer distinct products and services to different customers in different geographies within the U.S. and that are managed accordingly. NRP has the following
Mineral Rights—consists of mineral interests and other subsurface rights across the United States. NRP's ownership provides critical inputs for the manufacturing of steel, electricity and basic building materials, as well as opportunities for carbon sequestration and renewable energy. The Partnership is working to strategically redefine its business as a key player in the transitional energy economy in the years to come.
Soda Ash—consists of the Partnership's
Direct segment costs and certain other costs incurred at the corporate level that are identifiable and that benefit the Partnership's segments are allocated to the operating segments accordingly. These allocated costs generally include salaries and benefits, insurance, property taxes, legal, royalty, information technology and shared facilities services and are included in operating and maintenance expenses on the Partnership's Consolidated Statements of Comprehensive Income.
Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment and are included in general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income.
The following table summarizes certain financial information for each of the Partnership's business segments:
| Operating Segments | ||||||||||||||||
| (In thousands) | Mineral Rights | Soda Ash | Corporate and Financing | Total | ||||||||||||
| For the Three Months Ended September 30, 2022 | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Gain on asset sales and disposals | ||||||||||||||||
| Operating and maintenance expenses | ||||||||||||||||
| Depreciation, depletion and amortization | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Asset impairments | ||||||||||||||||
| Other expenses, net | ||||||||||||||||
| Net income (loss) | ( | ) | ||||||||||||||
| For the Three Months Ended September 30, 2021 | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Gain on asset sales and disposals | ||||||||||||||||
| Operating and maintenance expenses | ||||||||||||||||
| Depreciation, depletion and amortization | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Asset impairments | ||||||||||||||||
| Other expenses, net | ||||||||||||||||
| Net income (loss) | ( | ) | ||||||||||||||
| For the Nine Months Ended September 30, 2022 | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Gain on asset sales and disposals | ||||||||||||||||
| Operating and maintenance expenses | ||||||||||||||||
| Depreciation, depletion and amortization | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Asset impairments | ||||||||||||||||
| Other expenses, net | ||||||||||||||||
| Net income (loss) | ( | ) | ||||||||||||||
| For the Nine Months Ended September 30, 2021 | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Gain on asset sales and disposals | ||||||||||||||||
| Operating and maintenance expenses | ||||||||||||||||
| Depreciation, depletion and amortization | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Asset impairments | ||||||||||||||||
| Other expenses, net | ||||||||||||||||
| Net income (loss) | ( | ) | ||||||||||||||
The Partnership accounts for its
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| (In thousands) |
2022 |
2021 |
2022 |
2021 |
||||||||||||
| Balance at beginning of period |
$ | $ | $ | $ | ||||||||||||
| Income allocation to NRP’s equity interests |
||||||||||||||||
| Amortization of basis difference |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other comprehensive income (loss) |
( |
) | ||||||||||||||
| Distribution |
( |
) | ( |
) | ( |
) | ||||||||||
| Balance at end of period |
$ | $ | $ | $ | ||||||||||||
The following table represents summarized financial information for Sisecam Wyoming as derived from their respective unaudited financial statements for the three and nine months ended September 30, 2022 and 2021:
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| (In thousands) |
2022 |
2021 |
2022 |
2021 |
||||||||||||
| Net sales |
$ | $ | $ | $ | ||||||||||||
| Gross profit |
$ | |||||||||||||||
| Net income |
$ | |||||||||||||||
The Partnership’s mineral rights consist of the following:
| September 30, 2022 | December 31, 2021 | |||||||||||||||||||||||
| (In thousands) | Carrying Value | Accumulated Depletion | Net Book Value | Carrying Value | Accumulated Depletion | Net Book Value | ||||||||||||||||||
| Coal properties | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Aggregates properties | ( | ) | ( | ) | ||||||||||||||||||||
| Oil and gas royalty properties | ( | ) | ( | ) | ||||||||||||||||||||
| Other | ( | ) | ( | ) | ||||||||||||||||||||
| Total mineral rights, net | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
Depletion expense related to the Partnership’s mineral rights is included in depreciation, depletion and amortization on its Consolidated Statements of Comprehensive Income and totaled $
During the three and nine months ended September 30, 2022 the Partnership recorded $
The Partnership's debt consists of the following:
| September 30, | December 31, | |||||||
| (In thousands) | 2022 | 2021 | ||||||
| NRP LP debt: | ||||||||
| % senior notes, with semi-annual interest payments in June and December, due June 2025, issued at par ("2025 Senior Notes") | $ | $ | ||||||
| Opco debt: | ||||||||
| Revolving credit facility | $ | $ | ||||||
| Senior Notes | ||||||||
| % with semi-annual interest payments in June and December, with annual principal payments in June, due June 2023 | $ | $ | ||||||
| % with semi-annual interest payments in June and December, with annual principal payments in December, due December 2023 | ||||||||
| % with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024 | ||||||||
| % with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024 | ||||||||
| % with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026 | ||||||||
| % with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026 | ||||||||
| Total Opco Senior Notes | $ | $ | ||||||
| Total debt at face value | $ | $ | ||||||
| Net unamortized debt issuance costs | ( | ) | ( | ) | ||||
| Total debt, net | $ | $ | ||||||
| Less: current portion of long-term debt | ( | ) | ( | ) | ||||
| Total long-term debt, net | $ | $ | ||||||
NRP LP Debt
2025 Senior Notes
In October 2022, NRP redeemed the outstanding $
The 2025 Senior Notes were issued under an Indenture dated as of April 29, 2019 (the "2025 Indenture"), bear interest at
The 2025 Senior Notes are the senior unsecured obligations of NRP. The 2025 Senior Notes rank equal in right of payment to all existing and future senior unsecured debt of NRP and senior in right of payment to any of NRP's subordinated debt. The 2025 Senior Notes are effectively subordinated in right of payment to all future secured debt of NRP to the extent of the value of the collateral securing such indebtedness and are structurally subordinated in right of payment to all existing and future debt and other liabilities of our subsidiaries, including the Opco Credit Facility and each series of Opco’s existing senior notes. "Opco" refers to NRP (Operating) LLC, a wholly owned subsidiary of NRP, and its subsidiaries. None of NRP's subsidiaries guarantee the 2025 Senior Notes. As of September 30, 2022 and December 31, 2021, NRP was in compliance with the terms of the Indenture relating to their 2025 Senior Notes.
Opco Debt
All of Opco’s debt is guaranteed by its wholly owned subsidiaries and is secured by certain of the assets of Opco and its wholly owned subsidiaries, other than BRP LLC and NRP Trona LLC. As of September 30, 2022 and December 31, 2021, Opco was in compliance with the terms of the financial covenants contained in its debt agreements.
Opco Credit Facility
In August 2022, the Partnership entered into the Fifth Amendment (the "Fifth Amendment) to the Opco Credit Facility (the "Opco Credit Facility"). The Fifth Amendment extended the term of the Opco Credit Facility until August 2027. Lender commitments under the Opco Credit Facility increased to $
| • | A leverage ratio of consolidated indebtedness to EBITDDA (in each case as defined in the Opco Credit Facility) not to exceed x; provided, and |
| • | an interest coverage ratio of consolidated EBITDDA to the sum of consolidated interest expense and consolidated lease expense (in each case as defined in the Opco Credit Facility) of not less than |
During the three and nine months ended September 30, 2022 and 2021, the Partnership did not have any borrowings outstanding under the Opco Credit Facility and had $
The Opco Credit Facility is collateralized and secured by liens on certain of Opco’s assets with carrying values of $
Opco Senior Notes
Opco has issued several series of private placement senior notes (the "Opco Senior Notes") with various interest rates and principal due dates. As of September 30, 2022 and December 31, 2021, the Opco Senior Notes had cumulative principal balances of $
The
Fair Value of Financial Assets and Liabilities
The Partnership’s financial assets and liabilities consist of cash and cash equivalents, a contract receivable and debt. The carrying amounts reported on the Consolidated Balance Sheets for cash and cash equivalents approximate fair value due to their short-term nature. The Partnership uses available market data and valuation methodologies to estimate the fair value of its debt and contract receivable.
The following table shows the carrying value and estimated fair value of the Partnership's debt and contract receivable:
| September 30, 2022 | December 31, 2021 | |||||||||||||||||
| Fair Value | Carrying | Estimated | Carrying | Estimated | ||||||||||||||
| (In thousands) | Hierarchy Level | Value | Fair Value | Value | Fair Value | |||||||||||||
| Debt: | ||||||||||||||||||
| NRP 2025 Senior Notes | 1 | $ | $ | $ | $ | |||||||||||||
| Opco Senior Notes (1) | 3 | |||||||||||||||||
| Opco Credit Facility | 3 | |||||||||||||||||
| Assets: | ||||||||||||||||||
| Contract receivable, net (current and long-term) (2) | 3 | $ | $ | $ | $ | |||||||||||||
| (1) | The fair value of the Opco Senior Notes are estimated by management using quotations obtained for the NRP 2025 Senior Notes on the closing trading prices near period end, which were at |
| (2) | The fair value of the Partnership's contract receivable is determined based on the present value of future cash flow projections related to the underlying asset at a discount rate of |
NRP has embedded derivatives in the preferred units related to certain conversion options, redemption features and the change of control provision that are accounted for separately from the preferred units as assets and liabilities at fair value on the Partnership's Consolidated Balance Sheets. Level 3 valuation of the embedded derivatives are based on numerous factors including the likelihood of the event occurring. The embedded derivatives are revalued quarterly and changes in their fair value would be recorded in other expenses, net on the Partnership's Consolidated Statements of Comprehensive Income. The embedded derivatives had
10. Related Party Transactions
Affiliates of our General Partner
The Partnership’s general partner does not receive any management fee or other compensation for its management of NRP. However, in accordance with the partnership agreement, the general partner and its affiliates are reimbursed for services provided to the Partnership and for expenses incurred on the Partnership’s behalf. Employees of Quintana Minerals Corporation ("QMC") and Western Pocahontas Properties Limited Partnership ("WPPLP"), affiliates of the Partnership, provide their services to manage the Partnership's business. QMC and WPPLP charge the Partnership the portion of their employee salary and benefits costs related to their employee services provided to NRP. These QMC and WPPLP employee management service costs are presented as operating and maintenance expenses and general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income. NRP also reimburses overhead costs incurred by its affiliates, including Quintana Infrastructure Development ("QID"), to manage the Partnership's business. These overhead costs include certain rent, information technology, administration of employee benefits and other corporate services incurred by or on behalf of the Partnership’s general partner and its affiliates and are presented as operating and maintenance expenses and general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income.
Direct general and administrative expenses charged to the Partnership by QMC, WPPLP and QID are included on the Partnership's Consolidated Statement of Comprehensive Income as follows:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| (In thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Operating and maintenance expenses | $ | $ | $ | $ | ||||||||||||
| General and administrative expenses | ||||||||||||||||
The Partnership had accounts payable on its Consolidated Balance Sheets of $
During the three months ended September 30, 2022 and 2021, the Partnership recognized $
Corbin J. Robertson, Jr. owns
Revenues from customers that exceeded 10 percent of total revenues for any of the periods presented below are as follows:
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||||||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
|||||||||||||||||||||||||||||
| (In thousands) |
Revenues |
Percent |
Revenues |
Percent |
Revenues |
Percent |
Revenues |
Percent |
||||||||||||||||||||||||
| Foresight Energy Resources LLC ("Foresight") (1) (2) |
$ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| Alpha Metallurgical Resources, Inc. (1) |
$ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||
| (1) |
Revenues from Foresight and Alpha Metallurgical Resources, Inc. are included within the Partnership's Mineral Rights segment. |
| (2) |
Revenues from Foresight in 2021 were fixed as a result of the lease amendment the Partnership entered into with Foresight pursuant to which Foresight agreed to pay NRP fixed cash payments to satisfy all obligations arising out of the existing various coal mining leases and transportation infrastructure fee agreements between the Partnership and Foresight. Revenues from Foresight in 2022 represent traditional royalty and minimum payments. |
12. Commitments and Contingencies
NRP is involved, from time to time, in various legal proceedings arising in the ordinary course of business. While the ultimate results of these proceedings cannot be predicted with certainty, Partnership management believes these ordinary course matters will not have a material effect on the Partnership’s financial position, liquidity or operations.
The Partnership's unit-based awards granted in 2022 and 2021 were valued using the closing price of NRP's common units as of the grant date. The grant date fair value of these awards granted during the nine months ended September 30, 2022 and 2021 were $
A summary of the unit activity in the outstanding grants during 2022 is as follows:
| (In thousands) |
Common Units |
Weighted Average Grant Date Fair Value per Common Unit |
||||||
| Outstanding at January 1, 2022 |
$ |
|||||||
| Granted |
$ |
|||||||
| Fully vested and issued |
( |
) | $ |
|||||
| Outstanding at September 30, 2022 |
$ |
|||||||
The Partnership owns rail loadout and associated infrastructure at the Sugar Camp mine in the Illinois Basin operated by a subsidiary of Foresight. The infrastructure at the Sugar Camp mine is leased to a subsidiary of Foresight and is accounted for as a financing transaction (the "Sugar Camp lease"). The Sugar Camp lease expires in 2032 with renewal options for up to
The Partnership is exposed to credit losses through collection of its short-term trade receivables resulting from contracts with customers and a long-term receivable resulting from a financing transaction with a customer. The Partnership records an allowance for current expected credit losses on these receivables based on the loss-rate method. NRP assessed the likelihood of collection of its receivables utilizing historical loss rates, current market conditions that included the estimated impact of the global COVID-19 pandemic, industry and macroeconomic factors, reasonable and supportable forecasts and facts or circumstances of individual customers and properties. Examples of these facts or circumstances include, but are not limited to, contract disputes or renegotiations with the customer and evaluation of short and long-term economic viability of the contracted property. For its long-term contract receivable, management reverts to the historical loss experience immediately after the reasonable and supportable forecast period ends.
As of September 30, 2022 and December 31, 2021, NRP had the following current expected credit loss (“CECL”) allowance related to its receivables and long-term contract receivable:
| September 30, 2022 |
December 31, 2021 |
|||||||||||||||||||||||
| (In thousands) |
Gross |
CECL Allowance |
Net |
Gross |
CECL Allowance |
Net |
||||||||||||||||||
| Receivables |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Long-term contract receivable |
( |
) | ( |
) | ||||||||||||||||||||
| Total |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
NRP recorded $
NRP has procedures in place to monitor its ongoing credit exposure through timely review of counterparty balances against contract terms and due dates, account and financing receivable reconciliation, bankruptcy monitoring, lessee audits and dispute resolution. The Partnership may employ legal counsel or collection specialists to pursue recovery of defaulted receivables.
The following represents material events that have occurred subsequent to September 30, 2022 through the time of the Partnership’s filing of its Quarterly Report on Form 10-Q with the SEC:
Common Unit and Preferred Unit Distributions
In November 2022, the Board of Directors declared a distribution of $
Redemption of 2025 Senior Notes
In October 2022, NRP redeemed the outstanding $
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following review of operations for the three and nine month periods ended September 30, 2022 and 2021 should be read in conjunction with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements included in this Form 10-Q and with the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Management’s Discussion and Analysis included in the Natural Resource Partners L.P. Annual Report on Form 10-K for the year ended December 31, 2021.
As used herein, unless the context otherwise requires: "we," "our," "us" and the "Partnership" refer to Natural Resource Partners L.P. and, where the context requires, our subsidiaries. References to "NRP" and "Natural Resource Partners" refer to Natural Resource Partners L.P. only, and not to NRP (Operating) LLC or any of Natural Resource Partners L.P.’s subsidiaries. References to "Opco" refer to NRP (Operating) LLC, a wholly owned subsidiary of NRP, and its subsidiaries. NRP Finance Corporation ("NRP Finance") is a wholly owned subsidiary of NRP and a co-issuer with NRP on the 9.125% senior notes due 2025 (the "2025 Senior Notes").
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Statements included in this 10-Q may constitute forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such forward-looking statements include, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on our common and preferred units; our business strategy; our liquidity and access to capital and financing sources; our financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected production levels by our lessees; Sisecam Wyoming LLC’s ("Sisecam Wyoming's") trona mining and soda ash refinery operations; distributions from our soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving us, and of scheduled or potential regulatory or legal changes; and global and U.S. economic conditions.
These forward-looking statements speak only as of the date hereof and are made based upon our current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. You should not put undue reliance on any forward-looking statements. See "Item 1A. Risk Factors" included in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2021 for important factors that could cause our actual results of operations or our actual financial condition to differ.
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) less equity earnings from unconsolidated investment; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. For a description of Opco's debt agreements, see Note 8. Debt, Net in the Notes to Consolidated Financial Statements included herein as well as in "Item 8. Financial Statements and Supplementary Data—Note 11. Debt, Net" in our Annual Report on Form 10-K for the year ended December 31, 2021. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.
Distributable Cash Flow
Distributable cash flow ("DCF") represents net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from asset sales and disposals, including sales of discontinued operations, and return of long-term contract receivables; less maintenance capital expenditures. DCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. DCF may not be calculated the same for us as for other companies. In addition, DCF presented below is not calculated or presented on the same basis as distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. DCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to asses our ability to make cash distributions and repay debt.
Free Cash Flow
Free cash flow ("FCF") represents net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivables; less maintenance and expansion capital expenditures and cash flow used in acquisition costs classified as investing or financing activities. FCF is calculated before mandatory debt repayments. FCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. FCF may not be calculated the same for us as for other companies. FCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.
Introduction
The following discussion and analysis presents management's view of our business, financial condition and overall performance. Our discussion and analysis consists of the following subjects:
• Executive Overview
• Results of Operations
• Liquidity and Capital Resources
• Off-Balance Sheet Transactions
• Related Party Transactions
• Summary of Critical Accounting Estimates
• Recent Accounting Standards
Executive Overview
We are a diversified natural resource company engaged principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and own a non-controlling 49% interest in Sisecam Wyoming, a trona ore mining and soda ash production business. Our common units trade on the New York Stock Exchange under the symbol "NRP." Our business is organized into two operating segments:
Mineral Rights—consists of approximately 13 million acres of mineral interests and other subsurface rights across the United States. If combined in a single tract, our ownership would cover roughly 20,000 square miles. Our ownership provides critical inputs for the manufacturing of steel, electricity and basic building materials, as well as opportunities for carbon sequestration and renewable energy. We are working to strategically redefine our business as a key player in the transitional energy economy in the years to come.
Soda Ash—consists of our 49% non-controlling equity interest in Sisecam Wyoming, a trona ore mining and soda ash production business located in the Green River Basin of Wyoming. Sisecam Wyoming mines the trona and processes it into soda ash that is sold both domestically and internationally into the glass and chemicals industries.
Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment.
Our financial results by segment for the nine months ended September 30, 2022 are as follows:
| Operating Segments |
||||||||||||||||
| (In thousands) |
Mineral Rights |
Soda Ash |
Corporate and Financing |
Total |
||||||||||||
| Revenues and other income |
$ | 247,871 | $ | 44,036 | $ | — | $ | 291,907 | ||||||||
| Net income (loss) |
$ | 204,548 | $ | 43,931 | $ | (43,205 | ) | $ | 205,274 | |||||||
| Adjusted EBITDA (1) |
$ | 221,987 | $ | 33,950 | $ | (14,037 | ) | $ | 241,900 | |||||||
| Cash flow provided by (used in) continuing operations |
||||||||||||||||
| Operating activities |
$ | 194,475 | $ | 33,934 | $ | (30,459 | ) | $ | 197,950 | |||||||
| Investing activities |
$ | 1,837 | $ | — | $ | (59 | ) | $ | 1,778 | |||||||
| Financing activities |
$ | (614 | ) | $ | — | $ | (273,697 | ) | $ | (274,311 | ) | |||||
| Distributable cash flow (1) |
$ | 196,312 | $ | 33,934 | $ | (30,518 | ) | $ | 199,728 | |||||||
| Free cash flow (1) |
$ | 195,613 | $ | 33,934 | $ | (30,518 | ) | $ | 199,029 | |||||||
| (1) |
See "—Results of Operations" below for reconciliations to the most comparable GAAP financial measures. |
Current Results/Market Commentary
Business Outlook and Quarterly Distributions
We generated $199.0 million of free cash flow during the nine months ended September 30, 2022 and ended the quarter with $190.9 million of liquidity consisting of $60.9 million of cash and cash equivalents and $130.0 million of borrowing capacity under our Opco Credit Facility. During the third quarter of 2022 we refinanced, upsized, and extended our Opco Credit Facility to $130 million due 2027. Also during the third quarter, we permanently retired an additional $60.5 million of 2025 Senior Notes, bringing our total 2025 Senior Note repurchases through the third quarter of 2022 to $178.6 million. These notes were purchased on the open market at a weighted average price of 102.436%, a discount to the redemption price at the time of 104.563%. In October 2022, we redeemed the outstanding $121.4 million 2025 Senior Notes at a redemption price of 102.281% using cash on hand and $70 million in borrowings under our Opco Credit Facility. These debt repurchases and the redemption of our outstanding 2025 Senior Notes will save approximately $27.4 million annually in interest costs. As of September 30, 2022 our leverage ratio was 0.8x.
In November 2022, the Board of Directors declared a cash distribution of $0.75 per common unit of NRP with respect to the third quarter of 2022. The Board of Directors also declared a $7.5 million cash distribution on the preferred units with respect to the third quarter. Future distributions on our common and preferred units will be determined on a quarterly basis by the Board of Directors. The Board of Directors considers numerous factors each quarter in determining cash distributions, including profitability, cash flow, debt service obligations, market conditions and outlook, estimated unitholder income tax liability and the level of cash reserves that the Board determines is necessary for future operating and capital needs.
Mineral Rights Business Segment
Metallurgical and thermal coal prices remain supported by ongoing tightness in the supply-demand balance for coal. Many operators are limited in their ability to increase production due to ongoing labor shortages, global supply chain interruptions, and access to capital. Thermal coal prices are further supported by the European Union's ban on Russian coal due to the war in Ukraine, as well as increased natural gas prices and demand for electricity. While metallurgical markets are seeing weakened demand for steel, and thermal markets continue to face ongoing environmental and political pressures, supply constraints should provide continued support for metallurgical and thermal coal prices for the foreseeable future. Our lessees sold 24.2 million tons of coal from our properties in the first nine months of 2022, and we derived approximately 75% of our coal royalty revenues and approximately 45% of our coal royalty sales volumes from metallurgical coal during the same period.
We continue to identify alternative revenue sources across our large portfolio of land and mineral assets. We own the rights to sequester carbon dioxide ("CO2") on approximately 3.5 million acres of pore space in the southern United States. As announced previously, in the first quarter of 2022 we executed our first subsurface CO2 sequestration lease on 75,000 acres of underground pore space we own in southwest Alabama with the potential to store over 300 million metric tons of CO2. In October of 2022, we announced our second subsurface CO2 transaction with the execution of a lease for approximately 65,000 acres of pore space we control near southeast Texas with estimated storage capacity of at least 500 million metric tons of CO2. In total, we have approximately 140,000 acres of pore space under lease for carbon sequestration with estimated CO2 storage capacity of 800 million metric tons. While the timing and likelihood of additional cash flows being realized from these activities is uncertain, we believe our large ownership footprint throughout the United States will provide additional opportunities to create value in this regard and position us as a key beneficiary of the transitional energy economy with minimal capital investment.
Soda Ash Business Segment
Revenues and other income in the first nine months of 2022 were higher by $32.8 million compared to the prior year period primarily as a result of increased international sales prices. Free cash flow in the first nine months of 2022 increased $30.1 million as compared to the prior year period due to Sisecam Wyoming reinstating its regular quarterly cash distributions beginning in the fourth quarter of 2021.
Supply interruptions in China and input cost inflation which significantly increased the global marginal cost of soda ash production led to historically high soda ash prices in the third quarter of 2022. Though soda ash demand weakened in many parts of the world during the third quarter due to slowing global economic growth and lower construction activity in China, Sisecam Wyoming remained sold-out as it took advantage of its low-cost position to profitably export soda ash. Consequently, Sisecam Wyoming delivered strong financial results in the third quarter of 2022.
Results of Operations
Third Quarter of 2022 and 2021 Compared
Revenues and Other Income
The following table includes our revenues and other income by operating segment:
| For the Three Months Ended September 30, |
Percentage |
|||||||||||||||
| Operating Segment (In thousands) |
2022 |
2021 |
Increase |
Change |
||||||||||||
| Mineral Rights |
$ | 87,702 | $ | 50,123 | $ | 37,579 | 75 | % | ||||||||
| Soda Ash |
14,556 | 6,672 | 7,884 | 118 | % | |||||||||||
| Total |
$ | 102,258 | $ | 56,795 | $ | 45,463 | 80 | % | ||||||||
The changes in revenues and other income are discussed for each of the operating segments below:
Mineral Rights
The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income:
| For the Three Months Ended September 30, |
Increase |
Percentage |
||||||||||||||
| (In thousands, except per ton data) |
2022 |
2021 |
(Decrease) |
Change |
||||||||||||
| Coal sales volumes (tons) |
||||||||||||||||
| Appalachia |
||||||||||||||||
| Northern |
440 | 422 | 18 | 4 | % | |||||||||||
| Central |
3,503 | 3,199 | 304 | 10 | % | |||||||||||
| Southern |
498 | 642 | (144 | ) | (22 | )% | ||||||||||
| Total Appalachia |
4,441 | 4,263 | 178 | 4 | % | |||||||||||
| Illinois Basin |
3,490 | 2,689 | 801 | 30 | % | |||||||||||
| Northern Powder River Basin |
835 | 1,047 | (212 | ) | (20 | )% | ||||||||||
| Gulf Coast |
188 | 13 | 175 | 1346 | % | |||||||||||
| Total coal sales volumes |
8,954 | 8,012 | 942 | 12 | % | |||||||||||
| Coal royalty revenue per ton |
||||||||||||||||
| Appalachia |
||||||||||||||||
| Northern |
$ | 6.74 | $ | 7.18 | $ | (0.44 | ) | (6 | )% | |||||||
| Central |
9.04 | 5.74 | 3.30 | 57 | % | |||||||||||
| Southern |
9.78 | 11.61 | (1.83 | ) | (16 | )% | ||||||||||
| Illinois Basin |
2.57 | 2.33 | 0.24 | 10 | % | |||||||||||
| Northern Powder River Basin |
4.56 | 3.71 | 0.85 | 23 | % | |||||||||||
| Gulf Coast |
0.59 | 0.54 | 0.05 | 9 | % | |||||||||||
| Combined average coal royalty revenue per ton |
5.85 | 4.87 | 0.98 | 20 | % | |||||||||||
| Coal royalty revenues |
||||||||||||||||
| Appalachia |
||||||||||||||||
| Northern |
$ | 2,965 | $ | 3,031 | $ | (66 | ) | (2 | )% | |||||||
| Central |
31,680 | 18,357 | 13,323 | 73 | % | |||||||||||
| Southern |
4,872 | 7,452 | (2,580 | ) | (35 | )% | ||||||||||
| Total Appalachia |
39,517 | 28,840 | 10,677 | 37 | % | |||||||||||
| Illinois Basin |
8,967 | 6,261 | 2,706 | 43 | % | |||||||||||
| Northern Powder River Basin |
3,805 | 3,881 | (76 | ) | (2 | )% | ||||||||||
| Gulf Coast |
111 | 7 | 104 | 1486 | % | |||||||||||
| Unadjusted coal royalty revenues |
52,400 | 38,989 | 13,411 | 34 | % | |||||||||||
| Coal royalty adjustment for minimum leases |
(19 | ) | (6,557 | ) | 6,538 | 100 | % | |||||||||
| Total coal royalty revenues |
$ | 52,381 | $ | 32,432 | $ | 19,949 | 62 | % | ||||||||
| Other revenues |
||||||||||||||||
| Production lease minimum revenues |
$ | 1,885 | $ | 3,235 | $ | (1,350 | ) | (42 | )% | |||||||
| Minimum lease straight-line revenues |
4,778 | 4,808 | (30 | ) | (1 | )% | ||||||||||
| Carbon neutral initiative revenues |
8,600 | — | 8,600 | 100 | % | |||||||||||
| Wheelage revenues |
2,977 | 1,964 | 1,013 | 52 | % | |||||||||||
| Property tax revenues |
1,360 | 1,466 | (106 | ) | (7 | )% | ||||||||||
| Coal overriding royalty revenues |
1,367 | 757 | 610 | 81 | % | |||||||||||
| Lease amendment revenues |
759 | 1,519 | (760 | ) | (50 | )% | ||||||||||
| Aggregates royalty revenues |
884 | 429 | 455 | 106 | % | |||||||||||
| Oil and gas royalty revenues |
6,170 | 1,154 | 5,016 | 435 | % | |||||||||||
| Other revenues |
218 | 120 | 98 | 82 | % | |||||||||||
| Total other revenues |
$ | 28,998 | $ | 15,452 | $ | 13,546 | 88 | % | ||||||||
| Royalty and other mineral rights |
$ | 81,379 | $ | 47,884 | $ | 33,495 | 70 | % | ||||||||
| Transportation and processing services revenues |
5,969 | 2,171 | 3,798 | 175 | % | |||||||||||
| Gain on asset sales and disposals |
354 | 68 | 286 | 421 | % | |||||||||||
| Total Mineral Rights segment revenues and other income |
$ | 87,702 | $ | 50,123 | $ | 37,579 | 75 | % | ||||||||
Coal Royalty Revenues
Approximately 65% of coal royalty revenues and approximately 40% of coal royalty sales volumes were derived from metallurgical coal during the three months ended September 30, 2022. Total coal royalty revenues increased $19.9 million as compared to the prior year quarter. The discussion by region is as follows:
| • |
Appalachia: Coal royalty revenues increased $10.7 million primarily due to increased coal sales prices and volumes in Central Appalachia during the three months ended September 30, 2022, as compared to the prior year quarter. |
| • |
Illinois Basin: Coal royalty revenues increased $2.7 million primarily due to increased sales volumes and prices during the three months ended September 30, 2022 as compared to the prior year quarter. Revenues recognized from Foresight in 2021 were fixed as a result of the lease amendment the Partnership entered into with Foresight pursuant to which Foresight agreed to pay NRP fixed cash payments to satisfy all obligations arising out of the existing various coal mining leases and transportation infrastructure fee agreements between the Partnership and Foresight. Revenues from Foresight in 2022 represent traditional royalty and minimum payments. |
| • |
Northern Powder River Basin: Coal royalty revenues decreased $0.1 million primarily due to decreased sales volumes as our lessee mined less on our property during the third quarter of 2022 as compared to the prior year quarter in accordance with its mine plan. |
Other Revenues
Total other revenues increased $13.5 million during the three months September 30, 2022 as compared to the prior year quarter primarily due to an $8.6 million increase in carbon neutral initiatives and a $5.0 million increase in oil and gas royalty revenues. The increase in carbon neutral initiatives is due to the recognition of revenue related to carbon neutral transactions including subsurface CO2 storage and geothermal. The increase in oil and gas royalty revenues is primarily related to new wells and increased natural gas prices as compared to the prior year period.
Transportation and Processing Services Revenues
Transportation and processing services revenues increased $3.8 million during the three months ended September 30, 2022 as compared to the prior year period primarily due to the lease amendment with Foresight whereas transportation and processing revenues were based on the recognition of a fixed amount in 2021. Revenues from Foresight in 2022 represent traditional royalty and minimum payments and were greater than the fixed revenue from 2021.
Soda Ash
Revenues and other income related to our Soda Ash segment increased $7.9 million compared to the prior year quarter primarily as a result of increased international sales prices.
Operating and Other Expenses
The following table presents the significant categories of our consolidated operating and other expenses:
| For the Three Months Ended September 30, |
Increase |
Percentage |
||||||||||||||
| (In thousands) |
2022 |
2021 |
(Decrease) |
Change |
||||||||||||
| Operating expenses |
||||||||||||||||
| Operating and maintenance expenses |
$ | 7,898 | $ | 8,354 | $ | (456 | ) | (5 | )% | |||||||
| Depreciation, depletion and amortization |
6,850 | 5,182 | 1,668 | 32 | % | |||||||||||
| General and administrative expenses |
4,518 | 4,052 | 466 | 12 | % | |||||||||||
| Asset impairments |
812 | 57 | 755 | 1325 | % | |||||||||||
| Total operating expenses |
$ | 20,078 | $ | 17,645 | $ | 2,433 | 14 | % | ||||||||
| Other expenses, net |
||||||||||||||||
| Interest expense, net |
$ | 5,141 | $ | 9,652 | $ | (4,511 | ) | (47 | )% | |||||||
| Loss on extinguishment of debt |
2,484 | — | 2,484 | 100 | % | |||||||||||
| Total other expenses, net |
$ | 7,625 | $ | 9,652 | $ | (2,027 | ) | (21 | )% | |||||||
Total operating expenses increased $2.4 million primarily due to increased depreciation, depletion and amortization expense as a result of higher Illinois Basin coal royalty sales volumes during the three months ended September 30, 2022, as compared to the prior year period.
Total other expenses, net decreased $2.0 million primarily due to a $4.5 million decrease in interest expense, net as a result of less debt outstanding as compared to the prior year period, partially offset by a $2.5 million loss on early extinguishment of debt related to the premiums and fees incurred and write-off of debt issuance costs associated with the retirement of the 2025 Senior Notes during the three months ended September 30, 2022.
Adjusted EBITDA (Non-GAAP Financial Measure)
The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment:
| Operating Segments |
||||||||||||||||
| For the Three Months Ended (In thousands) |
Mineral Rights |
Soda Ash |
Corporate and Financing |
Total |
||||||||||||
| September 30, 2022 |
||||||||||||||||
| Net income (loss) |
$ | 72,173 | $ | 14,525 | $ | (12,143 | ) | $ | 74,555 | |||||||
| Less: equity earnings from unconsolidated investment |
— | (14,556 | ) | — | (14,556 | ) | ||||||||||
| Add: total distributions from unconsolidated investment |
— | 10,339 | — | 10,339 | ||||||||||||
| Add: interest expense, net |
— | — | 5,141 | 5,141 | ||||||||||||
| Add: loss on extinguishment of debt |
— | — | 2,484 | 2,484 | ||||||||||||
| Add: depreciation, depletion and amortization |
6,850 | — | — | 6,850 | ||||||||||||
| Add: asset impairments |
812 | — | — | 812 | ||||||||||||
| Adjusted EBITDA |
$ | 79,835 | $ | 10,308 | $ | (4,518 | ) | $ | 85,625 | |||||||
| September 30, 2021 |
||||||||||||||||
| Net income (loss) |
$ | 36,606 | $ | 6,596 | $ | (13,704 | ) | $ | 29,498 | |||||||
| Less: equity earnings from unconsolidated investment |
— | (6,672 | ) | — | (6,672 | ) | ||||||||||
| Add: total distributions from unconsolidated investment |
— | — | — | — | ||||||||||||
| Add: interest expense, net |
— | — | 9,652 | 9,652 | ||||||||||||
| Add: loss on extinguishment of debt |
— | — | — | — | ||||||||||||
| Add: depreciation, depletion and amortization |
5,182 | — | — | 5,182 | ||||||||||||
| Add: asset impairments |
57 | — | — | 57 | ||||||||||||
| Adjusted EBITDA |
$ | 41,845 | $ | (76 | ) | $ | (4,052 | ) | $ | 37,717 | ||||||
Adjusted EBITDA increased $47.9 million primarily due to a $38.0 million increase in Adjusted EBITDA within our Mineral Rights segment as a result of higher revenues and other income as discussed above, in addition to a $10.4 million increase in Adjusted EBITDA within our Soda Ash segment due to Sisecam Wyoming reinstating its regular quarterly cash distributions beginning in the fourth quarter of 2021 as discussed above.
Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)
The following table presents the three major categories of the statement of cash flows by business segment:
| Operating Segments |
||||||||||||||||
| For the Three Months Ended (In thousands) |
Mineral Rights |
Soda Ash |
Corporate and Financing |
Total |
||||||||||||
| September 30, 2022 |
||||||||||||||||
| Cash flow provided by (used in) continuing operations |
||||||||||||||||
| Operating activities |
$ | 75,948 | $ | 10,309 | $ | (3,761 | ) | $ | 82,496 | |||||||
| Investing activities |
928 | — | (59 | ) | 869 | |||||||||||
| Financing activities |
— | — | (81,784 | ) | (81,784 | ) | ||||||||||
| September 30, 2021 |
||||||||||||||||
| Cash flow provided by (used in) continuing operations |
||||||||||||||||
| Operating activities |
$ | 33,968 | $ | (36 | ) | $ | (3,873 | ) | $ | 30,059 | ||||||
| Investing activities |
614 | — | — | 614 | ||||||||||||
| Financing activities |
— | — | (9,592 | ) | (9,592 | ) | ||||||||||
The following table reconciles net cash provided by (used in) operating activities of continuing operations (the most comparable GAAP financial measure) by business segment to DCF and FCF:
| Operating Segments |
||||||||||||||||
| For the Three Months Ended (In thousands) |
Mineral Rights |
Soda Ash |
Corporate and Financing |
Total |
||||||||||||
| September 30, 2022 |
||||||||||||||||
| Net cash provided by (used in) operating activities of continuing operations |
$ | 75,948 | $ | 10,309 | $ | (3,761 | ) | $ | 82,496 | |||||||
| Add: proceeds from asset sales and disposals |
353 | — | — | 353 | ||||||||||||
| Add: return of long-term contract receivable |
575 | — | — | 575 | ||||||||||||
| Less: maintenance capital expenditures |
— | — | (59 | ) | (59 | ) | ||||||||||
| Distributable cash flow |
$ | 76,876 | $ | 10,309 | $ | (3,820 | ) | $ | 83,365 | |||||||
| Less: proceeds from asset sales and disposals |
(353 | ) | — | — | (353 | ) | ||||||||||
| Free cash flow |
$ | 76,523 | $ | 10,309 | $ | (3,820 | ) | $ | 83,012 | |||||||
| September 30, 2021 |
||||||||||||||||
| Net cash provided by (used in) operating activities of continuing operations |
$ | 33,968 | $ | (36 | ) | $ | (3,873 | ) | $ | 30,059 | ||||||
| Add: proceeds from asset sales and disposals |
74 | — | — | 74 | ||||||||||||
| Add: return of long-term contract receivable |
540 | — | — | 540 | ||||||||||||
| Distributable cash flow |
$ | 34,582 | $ | (36 | ) | $ | (3,873 | ) | $ | 30,673 | ||||||
| Less: proceeds from asset sales and disposals |
(74 | ) | — | — | (74 | ) | ||||||||||
| Free cash flow |
$ | 34,508 | $ | (36 | ) | $ | (3,873 | ) | $ | 30,599 | ||||||
DCF and FCF increased $52.7 million and $52.4 million, respectively, primarily due to the following:
| • |
Mineral Rights Segment |
| ◦ |
DCF and FCF increased $42.3 million and $42.0 million, respectively, primarily due to the segment's increase in revenues and other income as discussed above. |
| • |
Soda Ash Segment |
| ◦ |
DCF and FCF increased $10.3 million as a result of Sisecam Wyoming reinstating its regular quarterly cash distributions beginning in the fourth quarter of 2021 as discussed above. |
Results of Operations
First Nine Months of 2022 and 2021 Compared
Revenues and Other Income
The following table includes our revenues and other income by operating segment:
| For the Nine Months Ended September 30, |
Percentage |
|||||||||||||||
| Operating Segment (In thousands) |
2022 |
2021 |
Increase |
Change |
||||||||||||
| Mineral Rights |
$ | 247,871 | $ | 121,210 | $ | 126,661 | 104 | % | ||||||||
| Soda Ash |
44,036 | 11,246 | 32,790 | 292 | % | |||||||||||
| Total |
$ | 291,907 | $ | 132,456 | $ | 159,451 | 120 | % | ||||||||
The changes in revenues and other income are discussed for each of the operating segments below:
Mineral Rights
The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income:
| For the Nine Months Ended September 30, |
Increase |
Percentage |
||||||||||||||
| (In thousands, except per ton data) |
2022 |
2021 |
(Decrease) |
Change |
||||||||||||
| Coal sales volumes (tons) |
||||||||||||||||
| Appalachia |
||||||||||||||||
| Northern |
1,260 | 947 | 313 | 33 | % | |||||||||||
| Central |
10,238 | 8,824 | 1,414 | 16 | % | |||||||||||
| Southern |
1,171 | 1,058 | 113 | 11 | % | |||||||||||
| Total Appalachia |
12,669 | 10,829 | 1,840 | 17 | % | |||||||||||
| Illinois Basin |
8,395 | 7,987 | 408 | 5 | % | |||||||||||
| Northern Powder River Basin |
2,772 | 2,291 | 481 | 21 | % | |||||||||||
| Gulf Coast |
324 | 13 | 311 | 2392 | % | |||||||||||
| Total coal sales volumes |
24,160 | 21,120 | 3,040 | 14 | % | |||||||||||
| Coal royalty revenue per ton |
||||||||||||||||
| Appalachia |
||||||||||||||||
| Northern |
$ | 9.48 | $ | 5.57 | $ | 3.91 | 70 | % | ||||||||
| Central |
10.85 | 4.91 | 5.94 | 121 | % | |||||||||||
| Southern |
14.28 | 9.82 | 4.46 | 45 | % | |||||||||||
| Illinois Basin |
2.30 | 2.13 | 0.17 | 8 | % | |||||||||||
| Northern Powder River Basin |
4.24 | 3.59 | 0.65 | 18 | % | |||||||||||
| Gulf Coast |
0.58 | 0.54 | 0.04 | 7 | % | |||||||||||
| Combined average coal royalty revenue per ton |
7.08 | 3.99 | 3.09 | 77 | % | |||||||||||
| Coal royalty revenues |
||||||||||||||||
| Appalachia |
||||||||||||||||
| Northern |
$ | 11,946 | $ | 5,272 | $ | 6,674 | 127 | % | ||||||||
| Central |
111,121 | 43,308 | 67,813 | 157 | % | |||||||||||
| Southern |
16,725 | 10,390 | 6,335 | 61 | % | |||||||||||
| Total Appalachia |
139,792 | 58,970 | 80,822 | 137 | % | |||||||||||
| Illinois Basin |
19,331 | 17,044 | 2,287 | 13 | % | |||||||||||
| Northern Powder River Basin |
11,751 | 8,222 | 3,529 | 43 | % | |||||||||||
| Gulf Coast |
187 | 7 | 180 | 2571 | % | |||||||||||
| Unadjusted coal royalty revenues |
171,061 | 84,243 | 86,818 | 103 | % | |||||||||||
| Coal royalty adjustment for minimum leases |
(286 | ) | (18,148 | ) | 17,862 | 98 | % | |||||||||
| Total coal royalty revenues |
$ | 170,775 | $ | 66,095 | $ | 104,680 | 158 | % | ||||||||
| Other revenues |
||||||||||||||||
| Production lease minimum revenues |
$ | 3,542 | $ | 10,241 | $ | (6,699 | ) | (65 | )% | |||||||
| Minimum lease straight-line revenues |
14,235 | 15,773 | (1,538 | ) | (10 | )% | ||||||||||
| Carbon neutral initiative revenues |
8,600 | — | 8,600 | 100 | % | |||||||||||
| Wheelage revenues |
11,073 | 5,589 | 5,484 | 98 | % | |||||||||||
| Property tax revenues |
4,527 | 4,522 | 5 | 0 | % | |||||||||||
| Coal overriding royalty revenues |
2,307 | 3,592 | (1,285 | ) | (36 | )% | ||||||||||
| Lease amendment revenues |
2,450 | 3,159 | (709 | ) | (22 | )% | ||||||||||
| Aggregates royalty revenues |
2,691 | 1,339 | 1,352 | 101 | % | |||||||||||
| Oil and gas royalty revenues |
10,890 | 3,420 | 7,470 | 218 | % | |||||||||||
| Other revenues |
705 | 692 | 13 | 2 | % | |||||||||||
| Total other revenues |
$ | 61,020 | $ | 48,327 | $ | 12,693 | 26 | % | ||||||||
| Royalty and other mineral rights |
$ | 231,795 | $ | 114,422 | $ | 117,373 | 103 | % | ||||||||
| Transportation and processing services revenues |
15,377 | 6,545 | 8,832 | 135 | % | |||||||||||
| Gain on asset sales and disposals |
699 | 243 | 456 | 188 | % | |||||||||||
| Total Mineral Rights segment revenues and other income |
$ | 247,871 | $ | 121,210 | $ | 126,661 | 104 | % | ||||||||
Coal Royalty Revenues
Total coal royalty revenues increased $104.7 million during the nine months ended September 30, 2022, as compared to the prior year period. The discussion by region is as follows:
| • |
Appalachia: Coal royalty revenues increased $80.8 million primarily due to increased coal sales prices and volumes during the nine months ended September 30, 2022, as compared to the prior year period. |
| • |
Illinois Basin: Coal royalty revenues increased $2.3 million primarily due to higher sales volumes and increased sales prices during the nine months ended September 30, 2022, as compared to the prior year period. Revenues recognized from Foresight in 2021 were fixed as a result of the lease amendment the Partnership entered into with Foresight pursuant to which Foresight agreed to pay NRP fixed cash payments to satisfy all obligations arising out of the existing various coal mining leases and transportation infrastructure fee agreements between the Partnership and Foresight. Revenues from Foresight in 2022 represent traditional royalty and minimum payments. |
| • |
Northern Powder River Basin: Coal royalty revenues increased $3.5 million primarily due to increased sales volumes as our lessee mined more on our property during the nine months ended September 30, 2022 as compared to the prior year period in accordance with its mine plan. |
Other Revenues
Other revenues increased $12.7 million during the nine months ended September 30, 2022 as compared to the prior year period primarily due to the following:
| • |
An $8.6 million increase in carbon neutral initiatives due to the recognition of revenue related to carbon neutral transactions including subsurface CO2 storage and geothermal. |
| • |
A $7.5 million increase in oil and gas royalty revenues primarily due to new wells and increased natural gas prices. |
| • |
A $5.5 million increase in wheelage revenues as a result of higher production in 2022 from the properties that pay us a wheelage fee as compared to the prior year period. |
These increases were partially offset by a $6.7 million decrease in production lease minimum revenues primarily as a result of breakage revenues recognized in the first nine months of 2021.
Transportation and Processing Services Revenues
Transportation and processing services revenues increased $8.8 million during the nine months ended September 30, 2022 as compared to the prior year period primarily due to the lease amendment with Foresight whereas transportation and processing revenues were based on the recognition of a fixed amount in 2021. Revenues from Foresight in 2022 represent traditional royalty and minimum payments and were greater than the fixed revenue from 2021.
Soda Ash
Revenues and other income related to our Soda Ash segment increased $32.8 million primarily as a result of increased international sales prices.
Operating and Other Expenses
The following table presents the significant categories of our consolidated operating and other expenses:
| For the Nine Months Ended September 30, |
Increase |
Percentage |
||||||||||||||
| (In thousands) |
2022 |
2021 |
(Decrease) |
Change |
||||||||||||
| Operating expenses |
||||||||||||||||
| Operating and maintenance expenses |
$ | 25,989 | $ | 19,076 | $ | 6,913 | 36 | % | ||||||||
| Depreciation, depletion and amortization |
16,565 | 15,145 | 1,420 | 9 | % | |||||||||||
| General and administrative expenses |
14,037 | 11,550 | 2,487 | 22 | % | |||||||||||
| Asset impairments |
874 | 4,116 | (3,242 | ) | (79 | )% | ||||||||||
| Total operating expenses |
$ | 57,465 | $ | 49,887 | $ | 7,578 | 15 | % | ||||||||
| Other expenses, net |
||||||||||||||||
| Interest expense, net |
$ | 22,636 | $ | 29,308 | $ | (6,672 | ) | (23 | )% | |||||||
| Loss on extinguishment of debt |
6,532 | — | 6,532 | 100 | % | |||||||||||
| Total other expenses, net |
$ | 29,168 | $ | 29,308 | $ | (140 | ) | (0 | )% | |||||||
Total operating expenses increased $7.6 million primarily due to a $6.9 million increase in operating and maintenance expenses as compared to the prior year period primarily as a result of higher costs related to an overriding royalty agreement with WPPLP, partially offset by a decrease in bad debt expense. The coal royalty expense we pay to WPPLP is fully offset by the coal royalty revenue we receive from this property. Total operating expenses also increased as a result of a $2.5 million increase in general and administrative expenses primarily due to increased long-term incentive expense incurred during the nine months ended September 30, 2022. These increases were partially offset by a $3.2 million decrease in asset impairments as compared to the prior year period. Asset impairments in 2021 primarily related to a lease termination that resulted in the full impairment of a coal property.
Total other expenses, net was essentially flat year-over-year. The $6.7 million decrease in interest expense, net resulting from less debt outstanding was partially offset by a $6.5 million loss on early extinguishment of debt related to the premiums and fees incurred and write-off of debt issuance costs associated with the retirement of the 2025 Senior Notes during the nine months ended September 30, 2022.
Adjusted EBITDA (Non-GAAP Financial Measure)
The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment:
| Operating Segments |
||||||||||||||||
| For the Nine Months Ended (In thousands) |
Mineral Rights |
Soda Ash |
Corporate and Financing |
Total |
||||||||||||
| September 30, 2022 |
||||||||||||||||
| Net income (loss) |
$ | 204,548 | $ | 43,931 | $ | (43,205 | ) | $ | 205,274 | |||||||
| Less: equity earnings from unconsolidated investment |
— | (44,036 | ) | — | (44,036 | ) | ||||||||||
| Add: total distributions from unconsolidated investment |
— | 34,055 | — | 34,055 | ||||||||||||
| Add: interest expense, net |
— | — | 22,636 | 22,636 | ||||||||||||
| Add: loss on extinguishment of debt |
— | — | 6,532 | 6,532 | ||||||||||||
| Add: depreciation, depletion and amortization |
16,565 | — | — | 16,565 | ||||||||||||
| Add: asset impairments |
874 | — | — | 874 | ||||||||||||
| Adjusted EBITDA |
$ | 221,987 | $ | 33,950 | $ | (14,037 | ) | $ | 241,900 | |||||||
| September 30, 2021 |
||||||||||||||||
| Net income (loss) |
$ | 82,980 | $ | 11,115 | $ | (40,834 | ) | $ | 53,261 | |||||||
| Less: equity earnings from unconsolidated investment |
— | (11,246 | ) | — | (11,246 | ) | ||||||||||
| Add: total distributions from unconsolidated investment |
— | 3,920 | — | 3,920 | ||||||||||||
| Add: interest expense, net |
24 | — | 29,284 | 29,308 | ||||||||||||
| Add: depreciation, depletion and amortization |
15,145 | — | — | 15,145 | ||||||||||||
| Add: asset impairments |
4,116 | — | — | 4,116 | ||||||||||||
| Adjusted EBITDA |
$ | 102,265 | $ | 3,789 | $ | (11,550 | ) | $ | 94,504 | |||||||
Adjusted EBITDA increased $147.4 million primarily due to a $119.7 million increase in Adjusted EBITDA within our Mineral Rights segment as a result of higher revenues and other income as discussed above, in addition to a $30.2 million increase in Adjusted EBITDA within our Soda Ash segment as a result of higher distributions received from Sisecam Wyoming in the first nine months of 2022 as compared to the prior year period as discussed above.
Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)
The following table presents the three major categories of the statement of cash flows by business segment:
| Operating Segments |
||||||||||||||||
| For the Nine Months Ended (In thousands) |
Mineral Rights |
Soda Ash |
Corporate and Financing |
Total |
||||||||||||
| September 30, 2022 |
||||||||||||||||
| Cash flow provided by (used in) continuing operations |
||||||||||||||||
| Operating activities |
$ | 194,475 | $ | 33,934 | $ | (30,459 | ) | $ | 197,950 | |||||||
| Investing activities |
1,837 | — | (59 | ) | 1,778 | |||||||||||
| Financing activities |
(614 | ) | — | (273,697 | ) | (274,311 | ) | |||||||||
| September 30, 2021 |
||||||||||||||||
| Cash flow provided by (used in) continuing operations |
||||||||||||||||
| Operating activities |
$ | 91,958 | $ | 3,817 | $ | (29,132 | ) | $ | 66,643 | |||||||
| Investing activities |
1,871 | — | — | 1,871 | ||||||||||||
| Financing activities |
(1,132 | ) | — | (48,183 | ) | (49,315 | ) | |||||||||
The following table reconciles net cash provided by (used in) operating activities of continuing operations (the most comparable GAAP financial measure) by business segment to DCF and FCF:
| Operating Segments |
||||||||||||||||
| For the Nine Months Ended (In thousands) |
Mineral Rights |
Soda Ash |
Corporate and Financing |
Total |
||||||||||||
| September 30, 2022 |
||||||||||||||||
| Net cash provided by (used in) operating activities of continuing operations |
$ | 194,475 | $ | 33,934 | $ | (30,459 | ) | $ | 197,950 | |||||||
| Add: proceeds from asset sales and disposals |
699 | — | — | 699 | ||||||||||||
| Add: return of long-term contract receivable |
1,138 | — | — | 1,138 | ||||||||||||
| Less: maintenance capital expenditures |
— | — | (59 | ) | (59 | ) | ||||||||||
| Distributable cash flow |
$ | 196,312 | $ | 33,934 | $ | (30,518 | ) | $ | 199,728 | |||||||
| Less: proceeds from asset sales and disposals |
(699 | ) | — | — | (699 | ) | ||||||||||
| Free cash flow |
$ | 195,613 | $ | 33,934 | $ | (30,518 | ) | $ | 199,029 | |||||||
| September 30, 2021 |
||||||||||||||||
| Net cash provided by (used in) operating activities of continuing operations |
$ | 91,958 | $ | 3,817 | $ | (29,132 | ) | $ | 66,643 | |||||||
| Add: proceeds from asset sales and disposals |
249 | — | — | 249 | ||||||||||||
| Add: return of long-term contract receivable |
1,622 | — | — | 1,622 | ||||||||||||
| Distributable cash flow |
$ | 93,829 | $ | 3,817 | $ | (29,132 | ) | $ | 68,514 | |||||||
| Less: proceeds from asset sales and disposals |
(249 | ) | — | — | (249 | ) | ||||||||||
| Less: acquisition costs |
(1,000 | ) | — | — | (1,000 | ) | ||||||||||
| Free cash flow |
$ | 92,580 | $ | 3,817 | $ | (29,132 | ) | $ | 67,265 | |||||||
DCF and FCF increased $131.2 million and $131.8 million, respectively, primarily due to the following:
| • |
Mineral Rights Segment |
| ◦ |
DCF and FCF increased $102.5 million and $103.0 million, respectively, primarily due to the segment's increase in revenues and other income as discussed above. |
| • |
Soda Ash Segment |
| ◦ |
DCF and FCF increased $30.1 million as a result of higher cash distributions received from Sisecam Wyoming in the first nine months of 2022 as compared to the prior year period as discussed above. |
Liquidity and Capital Resources
Current Liquidity
As of September 30, 2022, we had total liquidity of $190.9 million, consisting of $60.9 million of cash and cash equivalents and $130.0 million of borrowing capacity under our Opco Credit Facility. We have debt service obligations, including approximately $20 million of principal repayments on Opco’s senior notes throughout the remainder of 2022. As discussed previously, through the date of this report, we have permanently retired all of our 9.125% Senior Notes due 2025 and have $70 million drawn on our Opco Credit Facility. We believe our liquidity position provides us with the flexibility to continue paying down debt and manage our business.
Cash Flows
Cash flows provided by operating activities increased $131.3 million, from $66.6 million in the nine months ended September 30, 2021 to $198.0 million in the nine months ended September 30, 2022, primarily related to increased revenues and other income within our Mineral Rights segment and $30.1 million of higher cash distributions received from Sisecam Wyoming in the first nine months of 2022 as compared to the prior year period.
Cash flows used in financing activities increased $225.0 million, from $49.3 million used in the nine months ended September 30, 2021 to $274.3 million used in the nine months ended September 30, 2022, primarily due to the following:
| • |
$178.6 million of cash used to retire a portion of our 2025 Senior Notes during the nine months ended September 30, 2022; |
|
| • | $19.6 million of cash used to redeem the preferred units paid-in-kind during the first quarter of 2022; |
|
| • | $10.9 million of increased cash used for preferred unit distributions as a result of paying all of our preferred unit distributions in cash in 2022 as compared to half in kind during the nine months ended September 30, 2021; |
|
| • | $9.1 million of increased cash used for other items, net which primarily related to the premiums paid related to the repayment of the 2025 Senior Notes during the nine months ended September 30, 2022; and |
|
| • | $7.8 million of increased cash used for distributions to common unitholders and the general partner as a result of increasing our common unit distribution to $0.75/unit beginning in the second quarter of 2022. |
Capital Resources and Obligations
Debt, Net
We had the following debt outstanding as of September 30, 2022 and December 31, 2021:
| September 30, |
December 31, |
|||||||
| (In thousands) |
2022 |
2021 |
||||||
| Current portion of long-term debt, net |
$ | 89,989 | $ | 39,102 | ||||
| Long-term debt, net |
148,734 | 394,443 | ||||||
| Total debt, net |
$ | 238,723 | $ | 433,545 | ||||
We have been and continue to be in compliance with the terms of the financial covenants contained in our debt agreements. For additional information regarding our debt and the agreements governing our debt, including the covenants contained therein, see Note 8. Debt, Net to the Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.
Off-Balance Sheet Transactions
We do not have any off-balance sheet arrangements with unconsolidated entities or related parties and accordingly, there are no off-balance sheet risks to our liquidity and capital resources from unconsolidated entities.
Related Party Transactions
The information required set forth under Note 10. Related Party Transactions to the Consolidated Financial Statements is incorporated herein by reference.
Summary of Critical Accounting Estimates
The preparation of Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. There have been no significant changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
Recent Accounting Standards
We do not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to include this disclosure in our Form 10-Q for the quarterly period ended September 30, 2022.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
NRP carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of NRP management, including the Chief Executive Officer and Chief Financial Officer of the general partner of the general partner of NRP. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective in providing reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (b) such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in the Partnership’s Internal Control Over Financial Reporting
There were no material changes in the Partnership’s internal control over financial reporting during the first nine months of 2022 that materially affected, or were reasonably likely to materially affect, the Partnership’s internal control over financial reporting.
From time to time, we are involved in various legal proceedings arising in the ordinary course of business. While the ultimate results of these proceedings cannot be predicted with certainty, we believe these ordinary course matters will not have a material effect on our financial position, liquidity or operations.
During the period covered by this report, there were no material changes from the risk factors previously disclosed in Natural Resource Partners L.P.’s Annual Report on Form 10-K for the year ended December 31, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
None.
| Exhibit Number |
Description |
|
| Fifth Amended and Restated Agreement of Limited Partnership of Natural Resource Partners L.P., dated as of March 2, 2017 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on March 6, 2017). |
||
| Fifth Amended and Restated Agreement of Limited Partnership of NRP (GP) LP, dated as of December 16, 2011 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on December 16, 2011). |
||
| Fifth Amended and Restated Limited Liability Company Agreement of GP Natural Resource Partners LLC, dated as of October 31, 2013 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on October 31, 2013). |
||
| Certificate of Limited Partnership of Natural Resource Partners L.P. (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed April 19, 2002, File No. 333-86582). |
||
| Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley. |
||
| Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley. |
||
| Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350. |
||
| Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350. |
||
| 10.1 | Master Assignment Agreement and Fifth Amendment to Third Amended Credit Agreement, dated as of August 9, 2022 by and among NRP (Operating) LLC, the Lenders party thereto, the Exiting Lenders, and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent for the Lenders, as Swingline Lender, and as an Issuing Bank (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on August 11, 2022). | |
| 10.2 | New Lender Agreement, dated as of September 1, 2022 by and among NRP (Operating) LLC, the Borrower, Zions Bancorporation, N.A. dba Amegy Bank, in its capacity as administrative agent under the Fifth Amendment to Third Amended Credit Agreement and Prosperity Bank, the New Lender (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on September 8, 2022). | |
| 101.INS* |
Inline XBRL Instance Document |
|
| 101.SCH* |
Inline XBRL Taxonomy Extension Schema Document |
|
| 101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
| 101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
| 101.LAB* |
Inline XBRL Taxonomy Extension Labels Linkbase Document |
|
| 101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
| 104* |
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101) |
|
| * |
Filed herewith |
|
| ** |
Furnished herewith |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned and thereunto duly authorized.
| NATURAL RESOURCE PARTNERS L.P. |
||
| By: |
NRP (GP) LP, its general partner |
|
| By: |
GP NATURAL RESOURCE |
|
| PARTNERS LLC, its general partner |
||
| Date: November 3, 2022 |
By: |
/s/ Corbin J. Robertson, Jr. |
| Corbin J. Robertson, Jr. |
||
| Chairman of the Board and |
||
| Chief Executive Officer |
||
| (Principal Executive Officer) |
||
| Date: November 3, 2022 |
By: |
/s/ Christopher J. Zolas |
| Christopher J. Zolas |
||
| Chief Financial Officer and Treasurer |
||
| (Principal Financial and Accounting Officer) |
||
|
|
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Corbin J. Robertson, Jr., certify that:
|
1 |
I have reviewed this report on Form 10-Q of Natural Resource Partners L.P. |
|
2 |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3 |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4 |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5 |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions); |
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
|
By: |
/s/ Corbin J. Robertson, Jr. |
|
Corbin J. Robertson, Jr. |
|
|
Chief Executive Officer |
|
|
Date: |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Christopher J. Zolas, certify that:
|
1 |
I have reviewed this report on Form 10-Q of Natural Resource Partners L.P. |
|
2 |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3 |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4 |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5 |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions); |
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
|
By: |
/s/ Christopher J. Zolas |
| Christopher J. Zolas | |
|
Chief Financial Officer |
|
|
Date: |
Exhibit 32.1
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
OF GP NATURAL RESOURCE PARTNERS LLC
PURSUANT TO 18 U.S.C. § 1350
In connection with the accompanying report on Form 10-Q for the quarter ended September 30, 2022 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Corbin J. Robertson, Jr., Chief Executive Officer of GP Natural Resource Partners LLC, the general partner of the general partner of Natural Resource Partners L.P. (the “Company”), hereby certify, to my knowledge, that:
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
|
By: |
/s/ Corbin J. Robertson, Jr. |
|
Corbin J. Robertson, Jr. |
|
|
Chief Executive Officer |
|
|
Date: |
Exhibit 32.2
CERTIFICATION OF
CHIEF FINANCIAL OFFICER
OF GP NATURAL RESOURCE PARTNERS LLC
PURSUANT TO 18 U.S.C. § 1350
In connection with the accompanying report on Form 10-Q for the quarter ended September 30, 2022 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher J. Zolas, Chief Financial Officer of GP Natural Resource Partners LLC, the general partner of the general partner of Natural Resource Partners L.P. (the “Company”), hereby certify, to my knowledge, that:
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
|
By: |
/s/ Christopher J. Zolas |
|
Christopher J. Zolas |
|
|
Chief Financial Officer |
|
|
Date: |