Natural Resource Partners L.P.
) further expanded its position in the Mississippian Lime oil play
in North Central Oklahoma by acquiring 19,200 net mineral acres for
$64 million. The acquisition dwarfs prior acquisitions made by the
partnership in this region from December 2011 through February 2012
of 9,500 net mineral acres. The acquired acreages are leased out to
oil and gas operators and the partnership will receive royalty
revenue from the oil and gas produced from the acreage.
The high resource potential in the Mississippian oil play has
attracted big oil and gas operators. Natural Resource too decided
to jump in on the bandwagon. However, the partnership's acreage is
much more modest than
) control of 230,000 net acres and
) possession of 2 million net acres in this play.
Financial strength has enabled the partnership to make selective
strategic acquisition and strengthen its operation. In March
2012, the partnership acquired rail loadout, associated
infrastructure assets and a contractual overriding royalty interest
on certain tonnage at the Sugar Camp mine near Benton, Illinois for
$58.85 million. The partnership will receive throughput fee in the
band of $1.05 to $1.17/ton over the first 20 years of the
agreement, for all coal produced from the first longwall in the
Sugar Camp mine and the associated development units.
In February 2012, the partnership made a fifth acquisition of
coal reserves at the Deer Run mine near Hillsboro, Illinois for $40
million from Colt LLC, an affiliate of the Cline Group. Till date
the partnership has paid $215 million out of $255 million decided
upon to acquire 200 million tons of coal reserves from that region.
The royalty revenue from Illinois Basin in 2011 was $41.3
million, growing from $30.2 million in 2010. We believe the
addition of new acreage will enhance royalty revenue in 2012.
The first quarter results of the partnership exceeded our
projections, driven by the higher production in Northern Appalachia
and the Gulf Coast region. We believe the royalty revenue from
these acquisitions will act as a breather, given the expected weak
performance in the first half of 2012, stemming from softer demand
due to mild weather conditions. The Zacks Consensus Estimates for
the second quarter and fiscal 2012 are presently pegged at 43 cents
and $1.79 per unit, respectively.
Natural Resource Partners currently retains a Zacks #3 Rank
which translates into a short-term Hold rating.
Based in Houston, Texas, Natural Resource Partners principally
engages in owning and managing of mineral reserve properties. The
partnership mainly owns coal, aggregate, and oil and gas reserves
across the United States.
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