Texas energy partnership
Natural Resource Partners L.P.
) announced its acquisition of frac sand reserves in Wisconsin
for an amount of $15.0 million. The reserves span across 561
acres adjacent to the Wyeville village in Monroe County.
The Northern White reserves buyout was financed from Natural
Resources' credit accounts. Frac sand is used in the fracturing
process during the completion of wells in the petroleum industry.
The reserves are advantageously located and have a projected life
of more than 30 years.
The production plants also have logistics support which will
enable the facility to have easy access to all prime U.S. oil and
natural gas basins including the resource-rich Bakken play. The
sand assets which as of now are being mined, processed and sold
under long-term contracts are expected to generate revenue
straightaway for Natural Resource.
The partnership derives income mainly from the royalties on
the various reserves owned and often engages in purchase of
high-quality reserves to boost growth. Natural Resources, in the
second quarter 2012, concluded its phased acquisition of the
low-cost Deer Run Mine coal reserves of 200 million tons in
Illinois from Colt LLC, a unit of Cline Group. It brought the
entire reserve for a price of $255 million.
We believe a slight uptick in the coal market will contribute
to the partnership's growth. The rise in demand for electricity
during the winter months could stabilize the current downward
coal trend in the U.S. This will to some extent drive the
partnership's top-line in the subsequent quarters. However, low
crude prices could partially counter the positives.
For 2012, the partnership expects bottom-line in the range of
$1.65 per unit to $1.85 per unit versus its prior expectation of
$1.65 per unit to $1.95 per unit. The top-line is projected in
the range of $340 million to $365 million as against the previous
estimate of $335 million to $380 million.
Coal royalty revenue for 2012 is estimated in a band of
$245-$260 million versus the previous range of $265-$295 million.
The Zacks Consensus Estimates for the third quarter and full year
2012 are currently pegged at 42 cents per unit and $1.77 per
Natural Resource Partners faces stiff opposition from
Cloud Peak Energy
). The partnership holds a Zacks #3 Rank (Hold rating).
Natural Resource Partners L.P. is a master limited partnership
principally engaged in the business of owning and managing
mineral reserve properties. The partnership primarily holds coal,
natural gas and oil reserves across the United States.
CLOUD PEAK EGY (CLD): Free Stock Analysis
NATURAL RSRC LP (NRP): Free Stock Analysis
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