Natural Resource Partners L.P.
) reported fourth quarter 2012 adjusted earnings of 58 cents per
unit, up 18.3% from the year-ago earnings of 49 cents per unit.
This was driven by favorable returns from the metallurgical coal
business and benefits accrued from increasing its presence in the
Illinois Basin. The partnership's quarterly earnings surpassed
the Zacks Consensus Estimate by 34.9%.
GAAP earnings in the fourth quarter stood at 56 cents compared
with a loss of 16 cents in the year-ago quarter. The difference
between GAAP and pro forma earnings stemmed from a 2 cent
non-cash impairment charge.
Natural Resource Partners' 2012 adjusted earnings were $2.00
per unit compared with $1.99 per unit reported in 2011. The
reported earnings beat the Zacks Consensus Estimate by 8.7%.
Natural Resource Partners' fourth quarter top line surged 9.9%
year over year to $102.4 million due to increase in revenues
other than coal royalty. The reported quarter revenue was higher
than the Zacks Consensus Estimate of $88.0 million.
The partnership's total revenue for 2012 was $379.1 million
increasing marginally from $377.6 million in the prior year. The
revenue was well above the Zacks Consensus Estimate of $362.0
million. In 2012, metallurgical coal accounted for 32% of the
partnership's total production and 44% of its coal royalty
revenues compared with 34% of production and 45% of coal royalty
revenues in the previous year.
Coal production in fourth quarter 2012 increased 41% from the
year-ago quarter to 17.0 million tons. Healthy production growth
in the Appalachian and Illinois Basin led to the sharp rise in
Natural Resource Partners' fourth quarter coal royalty revenue
was $67.7 million compared with $67.3 million in the year ago
quarter. This was due to a 29.1% downswing in average coal
royalty revenue per ton.
Revenues, other than coal royalty, increased 36% year over
year to $34.8 million owing to a $6.5 million revenue supplement
from minimums and an addition of $4.6 million gained from sales
to West Virginia Department of Highways. This was partially
offset by a shrinkage of $1.5 million in oil and gas revenues due
to lower prices and production from BRP LLC's gas properties in
Total operating costs and expenses during the quarter were
$29.2 million, including an impairment charge of $2.6 million for
the further write down of the Gatling West Virginia assets.
Excluding the impairment charge, total operating costs and
expenses were $26.7 million, up 5.1% over 2011, due to rise in
depreciation, depletion and amortization expenses on account of
rise in production partially offset by a $1.9 million drop in
general and administrative expenses.
Operating income for the fourth quarter was $73.2 million
compared with a loss of 2.6 million in the year-ago quarter. The
combination of revenue upturn and plummeting costs led to the
significant escalation in profit.
Cash provided by operating activities during the quarter was
$77.5 million versus $87.2 million in the prior-year quarter.
In the fourth quarter, distributable cash flow was $74.5
million, down 6.2% from the year-ago period mainly due to a rise
in reserves for future principal payments.
Cash and cash equivalents as of Dec 31, 2012 were $149.4
million versus $214.9 million as of Dec 31, 2011.
Long-term debt of the partnership as of Dec 31, 2012 was
$897.0 million versus $836.2 million as of Dec 31, 2011.
In 2012, the partnership invested $240.2 million for
acquisitions of which $46.1 million was spent in the fourth
quarter related to the purchase of oil and gas interests in the
Marcellus play and an overriding royalty on frac sand reserves in
The partnership's Board of Directors on Jan 22, 2013 announced
a quarterly distribution of 55 cents per unit for the fourth
Natural Resource Partners L.P. lowered its production
estimates for 2013 owing to challenges in thermal coal market in
the U.S. and depressed prices. Also, the closure of some mines
and production cutbacks by the lessees will affect revenue.
The partnership expects coal royalty revenue to further
decline by $25 million year over year to $50 million. Output at
the Central Appalachia will also continue to fall by 9 million
The acquisition of
Anadarko Petroleum Corporation
) interest in the OCI Wyoming L.P. could provide some respite to
dull coal revenues. Taking into account these factors, the
partnership expects total revenue for 2013 in the range of $330
million to $375 million. The partnership expects to retain its
distribution rate for 2013 at $2.20.
Other Coal Company Releases
Peabody Energy Corporation
) reported an operating loss of $1.12 per share in the fourth
quarter, coming significantly below the Zacks Consensus Estimate
of earnings of 26 cents.
Alliance Resource Partners, L.P.
) reported earnings of $1.87 per unit in the fourth quarter,
surpassing the Zacks Consensus Estimate of $1.32 per unit for the
Natural Resource Partners continued its winning streak,
posting earnings surprises for the last eleven quarters. We
believe the partnership will continue to have a good run in the
upcoming quarters given its recent high-return buyouts of
unconventional assets like the acquisition of frac sand resources
and the majority interest in the Marcellus which will boost
The latest interest purchase in OCI Wyoming could be
synergistic to the top line in the near term. Moreover, the rise
in met coal demand from the emerging markets of India and China
will contribute to the partnership's profitability. Natural
Resource Partners currently retains a Zacks Rank #2 (Buy).
Headquartered in Houston, TX, Natural Resource Partners L.P.
engages in the business of owning and managing mineral reserve
properties. It primarily owns coal, oil and gas reserves across
the US, generating royalty income for the partnership.
ANADARKO PETROL (APC): Free Stock Analysis
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NATURAL RSRC LP (NRP): Free Stock Analysis
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