Coal and mineral partnership,
Natural Resource Partners L.P.
) announced its purchase of an overriding royalty interest in the
liquids-rich portion of the Marcellus Shale formation situated in
the Appalachian basin. The shale prospect covers approximately
88,000 net acres and was bought at a price of $30.3 million.
The area is presently being leased and has significant
production as well as development potential. The stake buyout was
financed through the partnership's credit facility.
The acquisition will upgrade Natural Resource Partners'
premium asset portfolio. Presently, the partnership has
properties in the resource-rich prospects of Marcellus Shale,
Mississippi Lime and Haynesville Shale.
The partnership derives income mainly from the royalties on
the various reserves owned and often engages in purchase of
high-quality assets to boost potential growth. Natural Resources
Partners recently acquired frac sand reserves in Wisconsin for an
amount of $15.0 million. Given the popularity of fracturing
technology in the well drilling process, the partnership is
expected to capitalize from higher oil and natural gas production
volumes in the future.
With the current downturn in the coal market, we believe this
back-to-back unconventional asset buyout will sit well with the
partnership's broad growth goals. Moreover, a diversified asset
basket will lend constancy to the partnership's earnings stream
in the near term.
However, demand volatilities arising from uncertain weather
conditions and increase in coal stockpiles in the Central
Appalachia will temper the aforementioned positives. Natural
Resource Partners currently has a short-term Zacks #3 Rank (Hold
Another coal major,
CONSOL Energy Inc.
) has partnered with exploration and production company
Noble Energy Inc.
) for the development of natural gas prospects in the Marcellus
play. The duo has raised the estimate for gas recoverable
reserves in the area by 41%.
For Natural Resources Partners, the Zacks Consensus Estimates
for the fourth quarter and full year 2012 are currently pegged at
43 cents per unit and $1.84 per unit, respectively.
With a market capitalization of $1.87 billion, the Houston,
Texas based partnership engages in the ownership and management
of coal properties in Appalachia, the Illinois Basin, and the
western United States, as well as lignite reserves in the Gulf
CONSOL ENERGY (CNX): Free Stock Analysis
NOBLE ENERGY (NBL): Free Stock Analysis
NATURAL RSRC LP (NRP): Free Stock Analysis
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