March 6, 2017 - Natural Resource Partners L.P. (NYSE: NRP) today reported net income from continuing operations attributable to the limited partners for the year ended December 31, 2016 of $93.6 million, or $7.65 per unit, an increase of $347.8 million from a loss of $254.2 million, or $(20.78) per unit, a year earlier.  Net cash provided by operating activities from continuing operations was $100.6 million for the year ended December 31, 2016, a decrease of $67.9 million compared to the prior year.  Adjusted EBITDA, a non-GAAP measure, was $255.5 million for the year ended December 31, 2016, a decrease of $7.1 million compared to the same period in 2015.  Excluding impairments and gains on sales of assets in both years, net income from continuing operations attributable to the limited partners was $81.7 million for the year ended December 31, 2016 compared to $115.9 million for the year ended December 31, 2015. 

NRP reported net income from continuing operations attributable to the limited partners for the quarter ended December 31, 2016 of $3.8 million, or $0.31 per unit, a $5.8 million decrease from the $9.6 million, or $0.79 per unit reported for the fourth quarter 2015.  This decline is primarily attributed to coal lease assignment fees of $15 million that were reported in the fourth quarter of 2015. Net cash provided by operating activities from continuing operations was $26.1 million in the fourth quarter of 2016 compared to $36.3 million for the fourth quarter of 2015.  Adjusted EBITDA for the fourth quarter of 2016 was $51.1 million compared to $64.6 million in the same quarter 2015. Excluding impairments and gains on sale of assets in both fourth quarters, net income from continuing operations attributable to the limited partners was $11.1 million for the quarter ended December 31, 2016 compared to $28.3 million for the quarter ended December 31, 2015.

"Although 2016 was a challenging year for the coal industry, NRP enters 2017 as a much stronger company," said Wyatt Hogan, President and Chief Operating Officer.  "The recent improvements in the markets for both metallurgical and thermal coal, combined with the continued balance and diversification of our soda ash and aggregates businesses, position NRP well for the new year."

"Our successful deleveraging efforts throughout the course of 2016 culminated in the recently announced investments in NRP by Blackstone and GoldenTree, as well as the extensions of our 2018 debt maturities," said Craig Nunez, Chief Financial Officer.  "We look forward to working with our new partners to continue to improve our balance sheet and explore new opportunities to grow and diversify the partnership."

Coal Royalty and Other

In the fourth quarter, NRP began to realize the benefits of the significant increases in metallurgical coal prices during 2016.  A number of NRP's lessees were able to take advantage of the improved markets and lock in tonnage commitments for 2017 at substantially higher prices than they realized in 2016.  While spot metallurgical prices have recently retreated from the highs reached in the fourth quarter, NRP believes that the global supply/demand dynamic will support long-term metallurgical coal prices well above the lows hit in the first half of 2016.  NRP derived approximately 37% of its coal royalty revenues and approximately 35% of the related production from metallurgical coal during the year ended December 31, 2016.  The domestic thermal coal markets have also shown modest improvements, as production cuts over the last two years have rationalized coal stockpiles.  Although a mild winter has tempered demand for thermal coal, natural gas prices remain higher than 2016, causing thermal coal to be more competitive for electricity generation as compared to recent years.

Revenues and other income decreased $11.5 million, or 5%, from $250.7 million in the year ended December 31, 2015 to $239.2 million in the year ended December 31, 2016.  A $42.3 million reduction in total coal royalty revenues was caused by a 16.8 million ton reduction in sales.  While all regions experienced reduced revenue, the largest decrease occurred in Central Appalachia, which continues to face challenges with respect to thermal coal production.  Included in the 2016 total coal royalty and other segment revenues and other income was recognition of $40.5 million of deferred revenue associated with lease modifications and terminations and $29.1 million in gains on asset sales primarily from the sale of certain oil and gas and aggregates royalty properties. Included in the 2015 total coal royalty and other segment revenues and other income was $21.0 million in lease assignment fees and a $9.3 million gain on reserve swap. Revenues and other income for the fourth quarter of 2016 decreased $14.6 million to $46.1 million from the $60.7 million reported for the fourth quarter of 2015.  The decrease was primarily due to $15.0 million in lease assignment fees received in the fourth quarter of 2015.

Net income from continuing operations increased $370.0 million, from a loss of $208.2 million in the year ended December 31, 2015 to income of $161.8 million in the year ended December 31, 2016.  This increase is primarily related to $378.3 million of impairments taken in the year ended December 31, 2015.  Net income from continuing operations decreased $1.5 million to $24.0 million in the fourth quarter of 2016 from the same quarter in 2015.

Adjusted EBITDA increased $3.3 million, or 2%, from $206.1 million in the year ended December 31, 2015 to $209.4 million in the year ended December 31, 2016.  This increase was primarily the result of lower operating and maintenance expenses year-over-year, partially offset by lower revenues as discussed. Adjusted EBITDA of $40.5 million reported in the fourth quarter of 2016 decreased $8.7 million from 2015.

Net cash provided by operating activities of continuing operations decreased $70.4 million or 34% from $204.9 million in the year ended December 31, 2015 to $134.5 million in the year ended December 31, 2016. This decrease is primarily related to lower coal royalty production and less minimum payments received from our coal leases.  Net cash provided by operating activities of continuing operations decreased $12.0 million to $43.1 million in the fourth quarter of 2016 from 2015.  This decline was primarily associated with the $15.0 million of lease assignment fees received in the fourth quarter of 2015.

Net cash provided by investing activities increased $49.3 million to $65.1 million in the year ending December 31, 2016,  mainly due to the sale of certain oil and gas and aggregates royalty properties in 2016.  Net cash provided by financing activities increased $2.8 million from 2015 due to distributions to non-controlling interests in 2015.  For the quarter ending December 31, 2016, net cash provided by investing activities rose $7.0 million to $7.2 million mainly due to the proceeds from the sale of oil and gas royalty properties in the fourth quarter of 2016, while net cash provided by financing activities for the fourth quarter were virtually flat.

Distributable cash flow of $199.5 million for the calendar year 2016 declined $18.3 million from 2015 mainly due to the change in net cash provided by operating activities of continuing operations described above less the $48.5 million of increased proceeds from the sale of mineral rights and property plant and equipment in 2016 over that of 2015.  Distributable cash flow of $50.3 million in the fourth quarter of 2016 declined $4.5 million from the fourth quarter of 2015.  The $15.0 million of lease assignment fees reported in the fourth quarter of 2015 were partially offset by the $6.9 million of proceeds from the sale of mineral rights received in the fourth quarter of 2016.