Natural Resource Partners 10Q 2023 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023 or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		Commission file number:	001-31465

NATURAL RESOURCE PARTNERS LP
	(Exact name of registrant as specified in its charter)

Delaware

35-2164875

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1415 Louisiana Street, Suite 3325

Houston, Texas 77002

(Address of principal executive offices)

(Zip Code)

(713) 751-7507

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Units representing limited partner interests		NRP		New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of "accelerated filer", "large accelerated filer", "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Table of Contents

NATURAL RESOURCE PARTNERS, L.P.

TABLE OF CONTENTS

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

NATURAL RESOURCE PARTNERS L.P.

CONSOLIDATED BALANCE SHEETS

	*June 30,*		*December 31,*
	*2023*		*2022*
(In thousands, except unit data)	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	10,730	$	39,091
Accounts receivable, net		37,120		42,701
Other current assets, net		2,865		1,822
Total current assets	$	50,715	$	83,614
Land		24,008		24,008
Mineral rights, net		404,741		412,312
Intangible assets, net		14,432		14,713
Equity in unconsolidated investment		290,900		306,470
Long-term contract receivable, net		27,659		28,946
Other long-term assets, net		7,804		7,068
Total assets	$	820,259	$	877,131
LIABILITIES AND CAPITAL
Current liabilities
Accounts payable	$	1,524	$	1,992
Accrued liabilities		5,715		11,916
Accrued interest		625		989
Current portion of deferred revenue		6,823		6,256
Current portion of long-term debt, net		36,743		39,076
Total current liabilities	$	51,430	$	60,229
Deferred revenue		36,815		40,181
Long-term debt, net		145,693		129,205
Other non-current liabilities		6,462		5,472
Total liabilities	$	240,400	$	235,087
Commitments and contingencies (see Note 13)
Class A Convertible Preferred Units (121,667 and 250,000 units issued and outstanding at June 30, 2023 and December 31, 2022, respectively, at $1,000 par value per unit; liquidation preference of $1,850 per unit at June 30, 2023 and December 31, 2022) (See Note 3)	$	80,099	$	164,587
Partners’ capital
Common unitholders’ interest (12,634,642 and 12,505,996 units issued and outstanding at June 30, 2023 and December 31, 2022, respectively)	$	444,838	$	404,799
General partner’s interest		6,913		5,977
Warrant holders’ interest		47,964		47,964
Accumulated other comprehensive income (loss)		45		18,717
Total partners’ capital	$	499,760	$	477,457
Total liabilities and partners' capital	$	820,259	$	877,131

The accompanying notes are an integral part of these consolidated financial statements.

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NATURAL RESOURCE PARTNERS L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	*For the Three Months Ended June 30,*						*For the Six Months Ended June 30,*
(In thousands, except per unit data)	*2023*			*2022*			*2023*			*2022*
Revenues and other income
Royalty and other mineral rights	$	61,007		$	79,333		$	137,278		$	150,416
Transportation and processing services		3,270			5,612			6,868			9,408
Equity in earnings of Sisecam Wyoming		26,978			14,643			46,232			29,480
Gain on asset sales and disposals		5			345			101			345
Total revenues and other income	$	91,260		$	99,933		$	190,479		$	189,649

Operating expenses
Operating and maintenance expenses	$	7,930		$	10,015		$	15,093		$	18,091
Depreciation, depletion and amortization		3,792			5,847			7,875			9,715
General and administrative expenses		5,643			5,052			11,488			9,519
Asset impairments		69			43			69			62
Total operating expenses	$	17,434		$	20,957		$	34,525		$	37,387

Income from operations	$	73,826		$	78,976		$	155,954		$	152,262

Other expenses, net
Interest expense, net	$	(3,492	)	$	(8,108	)	$	(6,345	)	$	(17,495	)
Loss on extinguishment of debt		—			(4,048	)		—			(4,048	)
Total other expenses, net	$	(3,492	)	$	(12,156	)	$	(6,345	)	$	(21,543	)

Net income	$	70,334		$	66,820		$	149,609		$	130,719
Less: income attributable to preferred unitholders		(4,971	)		(7,500	)		(11,632	)		(15,000	)
Less: redemption of preferred units		(27,618	)		—			(43,846	)		—
Net income attributable to common unitholders and the general partner	$	37,745		$	59,320		$	94,131		$	115,719

Net income attributable to common unitholders	$	36,990		$	58,134		$	92,248		$	113,405
Net income attributable to the general partner		755			1,186			1,883			2,314

Net income per common unit (see Note 5)
Basic	$	2.93		$	4.65		$	7.32		$	9.10
Diluted		2.49			3.29			5.96			6.50

Net income	$	70,334		$	66,820		$	149,609		$	130,719
Comprehensive income (loss) from unconsolidated investment and other		911			(4,013	)		(18,672	)		(1,468	)
Comprehensive income	$	71,245		$	62,807		$	130,937		$	129,251

The accompanying notes are an integral part of these consolidated financial statements.

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NATURAL RESOURCE PARTNERS L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(Unaudited)

											*Accumulated*
											*Other*			*Total*
	*Common Unitholders*					*General*			*Warrant*		*Comprehensive*			*Partners'*
(In thousands)	*Units*		*Amounts*			*Partner*			*Holders*		*Income (Loss)*			*Capital*
Balance at December 31, 2022		12,506	$	404,799		$	5,977		$	47,964	$	18,717		$	477,457
Net income ⁽¹⁾		—		77,690			1,585			—		—			79,275
Redemption of preferred units		—		(15,904	)		(324	)		—		—			(16,228	)
Distributions to common unitholders and the general partner		—		(40,082	)		(818	)		—		—			(40,900	)
Distributions to preferred unitholders		—		(7,924	)		(162	)		—		—			(8,086	)
Issuance of unit-based awards		129		—			—			—		—			—
Unit-based awards amortization and vesting, net		—		(1,178	)		—			—		—			(1,178	)
Capital contribution		—		—			142			—		—			142
Comprehensive loss from unconsolidated investment and other		—		—			—			—		(19,583	)		(19,583	)
Balance at March 31, 2023		12,635	$	417,401		$	6,400		$	47,964	$	(866	)	$	470,899
Net income ⁽²⁾		—		68,927			1,407			—		—			70,334
Redemption of preferred units		—		(27,065	)		(553	)		—		—			(27,618	)
Distributions to common unitholders and the general partner		—		(9,476	)		(193	)		—		—			(9,669	)
Distributions to preferred unitholders		—		(7,248	)		(148	)		—		—			(7,396	)
Unit-based awards amortization and vesting		—		2,299			—			—		—			2,299
Comprehensive income from unconsolidated investment and other		—		—			—			—		911			911
Balance at June 30, 2023		12,635	$	444,838		$	6,913		$	47,964	$	45		$	499,760

⁽¹⁾	Net income includes $6.7 million of income attributable to preferred unitholders that accumulated during the period, of which $6.5 million is allocated to the common unitholders and $0.1 million is allocated to the general partner.
⁽²⁾	Net income includes $5.0 million of income attributable to preferred unitholders that accumulated during the period, of which $4.9 million is allocated to the common unitholders and $0.1 million is allocated to the general partner.

											*Accumulated*
											*Other*			*Total*
	*Common Unitholders*					*General*			*Warrant*		*Comprehensive*			*Partners'*
(In thousands)	*Units*		*Amounts*			*Partner*			*Holders*		*Income*			*Capital*
Balance at December 31, 2021		12,351	$	203,062		$	1,787		$	47,964	$	3,211		$	256,024
Net income ⁽¹⁾		—		62,621			1,278			—		—			63,899
Distributions to common unitholders and the general partner		—		(5,559	)		(113	)		—		—			(5,672	)
Distributions to preferred unitholders		—		(7,603	)		(155	)		—		—			(7,758	)
Issuance of unit-based awards		155		—			—			—		—			—
Unit-based awards amortization and vesting, net		—		(1,754	)		—			—		—			(1,754	)
Capital contribution		—		—			112			—		—			112
Comprehensive income from unconsolidated investment and other		—		—			—			—		2,545			2,545
Balance at March 31, 2022		12,506	$	250,767		$	2,909		$	47,964	$	5,756		$	307,396
Net income ⁽¹⁾		—		65,484			1,336			—		—			66,820
Distributions to common unitholders and the general partner		—		(9,379	)		(191	)		—		—			(9,570	)
Distributions to preferred unitholders		—		(7,350	)		(150	)		—		—			(7,500	)
Unit-based awards amortization and vesting		—		1,231			—			—		—			1,231
Comprehensive loss from unconsolidated investment and other		—		—			—			—		(4,013	)		(4,013	)
Balance at June 30, 2022		12,506	$	300,753		$	3,904		$	47,964	$	1,743		$	354,364

⁽¹⁾	Net income includes $7.5 million of income attributable to preferred unitholders that accumulated during the period, of which $7.4 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.

The accompanying notes are an integral part of these consolidated financial statements.

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NATURAL RESOURCE PARTNERS L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	*For the Six Months Ended June 30,*
(In thousands)	*2023*			*2022*
Cash flows from operating activities
Net income	$	149,609		$	130,719
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		7,875			9,715
Distributions from unconsolidated investment		43,130			23,716
Equity earnings from unconsolidated investment		(46,232	)		(29,480	)
Gain on asset sales and disposals		(101	)		(345	)
Loss on extinguishment of debt		—			4,048
Asset impairments		69			62
Bad debt expense		(808	)		640
Unit-based compensation expense		5,137			2,787
Amortization of debt issuance costs and other		566			1,672
Change in operating assets and liabilities:
Accounts receivable		6,700			(12,612	)
Accounts payable		(469	)		13
Accrued liabilities		(6,786	)		(5,109	)
Accrued interest		(364	)		(163	)
Deferred revenue		(2,800	)		(9,575	)
Other items, net		(1,276	)		(634	)
Net cash provided by operating activities	$	154,250		$	115,454

Cash flows from investing activities
Proceeds from asset sales and disposals	$	106		$	346
Return of long-term contract receivable		1,208			563
Capital expenditures		(10	)		—
Net cash provided by investing activities	$	1,304		$	909
			��
Cash flows from financing activities
Debt borrowings	$	165,034		$	—
Debt repayments		(151,061	)		(137,171	)
Distributions to common unitholders and the general partner		(50,569	)		(15,242	)
Distributions to preferred unitholders		(15,482	)		(15,258	)
Redemption of preferred units		(128,333	)		—
Redemption of preferred units paid-in-kind		—			(19,321	)
Other items, net		(3,504	)		(5,535	)
Net cash used in financing activities	$	(183,915	)	$	(192,527	)

Net decrease in cash and cash equivalents	$	(28,361	)	$	(76,164	)
Cash and cash equivalents at beginning of period		39,091			135,520
Cash and cash equivalents at end of period	$	10,730		$	59,356

Supplemental cash flow information:
Cash paid for interest	$	6,434		$	16,772

The accompanying notes are an integral part of these consolidated financial statements.

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Nature of Business

Natural Resource Partners L.P. (the "Partnership") engages principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and owns a non-controlling 49% interest in Sisecam Wyoming LLC ("Sisecam Wyoming"), a trona ore mining and soda ash production business. The Partnership is organized into two operating segments further described in Note 6. Segment Information. The Partnership’s operations are conducted through, and its operating assets are owned by, its subsidiaries. The Partnership owns its subsidiaries through one wholly owned operating company, NRP (Operating) LLC ("Opco"). As used in these Notes to Consolidated Financial Statements, the terms "NRP," "we," "us" and "our" refer to Natural Resource Partners L.P. and its subsidiaries, unless otherwise stated or indicated by context.

Principles of Consolidation and Reporting

The accompanying unaudited Consolidated Financial Statements of the Partnership have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2022 and notes thereto included in the Partnership's Annual Report on Form 10-K, which was filed with the SEC on March 3, 2023. Reclassifications have been made to prior year amounts in the Consolidated Financial Statements to conform with current year presentation. These reclassifications had no impact on previously reported total assets, total liabilities, partners' capital, net income, or cash flows from operating, investing or financing activities.

Recently Adopted Accounting Standard

On January 1, 2023, NRP adopted Accounting Standards Update ("ASU") 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06)”. The ASU includes targeted improvements to earnings per share, which the Partnership adopted on a modified retrospective basis. The adoption of this ASU did not have a material impact on the Partnership’s Consolidated Financial Statements. See Note 5. Net Income Per Common Unit for the calculations of our basic and diluted net income per common unit. See Note 3. Class A Convertible Preferred Units and Warrants for disclosures related to our convertible preferred units and warrants.

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

2. Revenues from Contracts with Customers

The following table presents the Partnership's Mineral Rights segment revenues by major source:

	*For the Three Months Ended June 30,*				*For the Six Months Ended June 30,*
(In thousands)	*2023*		*2022*		*2023*		*2022*
Coal royalty revenues	$	47,960	$	62,945	$	105,983	$	118,394
Production lease minimum revenues		562		65		1,175		1,657
Minimum lease straight-line revenues		4,447		4,674		8,950		9,457
Carbon neutral initiative revenues		115		—		2,233		—
Property tax revenues		1,470		1,695		2,940		3,167
Wheelage revenues		3,284		4,379		7,153		8,096
Coal overriding royalty revenues		150		682		338		940
Lease amendment revenues		848		811		1,699		1,691
Aggregates royalty revenues		686		1,037		1,439		1,807
Oil and gas royalty revenues		1,214		2,906		4,802		4,720
Other revenues		271		139		566		487
Royalty and other mineral rights revenues	$	61,007	$	79,333	$	137,278	$	150,416
Transportation and processing services revenues ⁽¹⁾		3,270		5,612		6,868		9,408
Total Mineral Rights segment revenues	$	64,277	$	84,945	$	144,146	$	159,824

⁽¹⁾

Transportation and processing services revenues from contracts with customers as defined under ASC 606 was $2.7 million and $4.9 million for the three months ended June 30, 2023 and 2022, respectively and $5.6 million and $8.0 million for the six months ended June 30, 2023 and 2022, respectively. The remaining transportation and processing services revenues of $0.6 million and $0.7 million for the three months ended June 30, 2023 and 2022, respectively, and $1.3 million and $1.4 million for the six months ended June 30, 2023 and 2022, respectively, related to other NRP-owned infrastructure leased to and operated by third-party operators accounted for under other guidance. See Note 15. Financing Transaction for more information.

The following table details the Partnership's Mineral Rights segment receivables and liabilities resulting from contracts with customers:

	*June 30,*		*December 31,*
(In thousands)	*2023*		*2022*
Receivables
Accounts receivable, net	$	33,370	$	39,004
Other current assets, net ⁽¹⁾		2,155		—
Other long-term assets, net ⁽²⁾		—		75

Contract liabilities
Current portion of deferred revenue	$	6,823	$	6,256
Deferred revenue		36,815		40,181

⁽¹⁾	Other current assets, net includes short-term notes receivables from contracts with customers.

⁽²⁾	Other long-term assets, net includes long-term lease amendment fee receivables from contracts with customers.

The following table shows the activity related to the Partnership's Mineral Rights segment deferred revenue:

	*For the Six Months Ended June 30,*
(In thousands)	*2023*			*2022*
Balance at beginning of period (current and non-current)	$	46,437		$	61,862
Increase due to minimums and lease amendment fees		10,810			7,997
Recognition of previously deferred revenue		(13,609	)		(17,573	)
Balance at end of period (current and non-current)	$	43,638		$	52,286

The Partnership's non-cancelable annual minimum payments due under the lease terms of its coal and aggregates royalty leases are as follows as of June 30, 2023 (in thousands):

Lease Term ⁽¹⁾	*Weighted Average Remaining Years*		*Annual Minimum Payments*
0 - 5 years		1.7	$	22,230
5 - 10 years		3.1		7,417
10+ years		12.1		27,129
Total		6.8	$	56,776

⁽¹⁾	Lease term does not include renewal periods.

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

3. Class A Convertible Preferred Units and Warrants

On March 2, 2017, NRP issued $250 million of Class A Convertible Preferred Units representing limited partner interests in NRP (the "preferred units") to certain entities controlled by funds affiliated with The Blackstone Group Inc. (collectively referred to as "Blackstone") and certain affiliates of GoldenTree Asset Management LP (collectively referred to as "GoldenTree") (together the "preferred purchasers") pursuant to a Preferred Unit and Warrant Purchase Agreement. NRP issued 250,000 preferred units to the preferred purchasers at a price of $1,000 per preferred unit (the "per unit purchase price"), less a 2.5% structuring and origination fee. The preferred units entitle the preferred purchasers to receive cumulative distributions at a rate of 12% of the purchase price per year, up to one half of which NRP may pay in additional preferred units (such additional preferred units, the "PIK units"). The preferred units have a perpetual term, unless converted or redeemed as described below.

NRP also issued two tranches of warrants (the "warrants") to purchase common units to the preferred purchasers (warrants to purchase 1.75 million common units with a strike price of $22.81 and warrants to purchase 2.25 million common units with a strike price of $34.00). The warrants may be exercised by the holders thereof at any time before the eighth anniversary of the closing date. Upon exercise of the warrants, NRP may, at its option, elect to settle the warrants in common units or cash, each on a net basis.

After March 2, 2022 and prior to March 2, 2025, the holders of the preferred units may elect to convert up to 33% of the outstanding preferred units in any 12-month period into common units if the volume weighted average trading price of our common units (the "VWAP") for the 30 trading days immediately prior to date notice is provided is greater than $51.00. In such case, the number of common units to be issued upon conversion would be equal to the per unit purchase price plus the value of any accrued and unpaid distributions divided by an amount equal to a 7.5% discount to the VWAP for the 30 trading days immediately prior to the notice of conversion. Rather than have the preferred units convert to common units in accordance with the provisions of this paragraph, NRP would have the option to elect to redeem the preferred units proposed to be converted for cash at a price equal to the per unit purchase price plus the value of any accrued and unpaid distributions.

On or after March 2, 2025, the holders of the preferred units may elect to convert the preferred units to common units at a conversion rate equal to the Liquidation Value divided by an amount equal to a 10% discount to the VWAP for the 30 trading days immediately prior to the notice of conversion. The “liquidation value” will be an amount equal to the greater of: (1) (a) the per unit purchase price multiplied by (i) prior to March 2, 2020, 1.50, (ii) on or after March 2, 2020 and prior to March 2, 2021, 1.70 and (iii) on or after March 2, 2021, 1.85, less (b)(i) all preferred unit distributions previously made by NRP and (ii) all cash payments previously made in respect of redemption of any PIK units; and (2) the per unit purchase price plus the value of all accrued and unpaid distributions.

To the extent the holders of the preferred units have not elected to convert their preferred units before March 2, 2029, NRP has the right to force conversion of the preferred units at a price equal to the liquidation value divided by an amount equal to a 10% discount to the VWAP for the 30 trading days immediately prior to the notice of conversion.

In addition, NRP has the ability to redeem at any time (subject to compliance with its debt agreements) all or any portion of the preferred units and any outstanding PIK units for cash. The redemption price for each outstanding PIK unit is $1,000 plus the value of any accrued and unpaid distributions per PIK unit. The redemption price for each preferred unit is the liquidation value divided by the number of outstanding preferred units. The preferred units are redeemable at the option of the preferred purchasers only upon a change in control.

The terms of the preferred units contain certain restrictions on NRP's ability to pay distributions on its common units. To the extent that either (i) NRP's consolidated Leverage Ratio, as defined in the Partnership's Fifth Amended and Restated Partnership Agreement dated March 2, 2017 (the "restated partnership agreement"), is greater than 3.25x, or (ii) the ratio of NRP's Distributable Cash Flow (as defined in the Restated Partnership Agreement) to cash distributions made or proposed to be made is less than 1.2x (in each case, with respect to the most recently completed four-quarter period), NRP may not increase the quarterly distribution above $0.45 per quarter without the approval of the holders of a majority of the outstanding preferred units. In addition, if at any time after January 1, 2022, any PIK units are outstanding, NRP may not make distributions on its common units until it has redeemed all PIK units for cash.

The holders of the preferred units have the right to vote with holders of NRP’s common units on an as-converted basis and have other customary approval rights with respect to changes of the terms of the preferred units. In addition, Blackstone has certain approval rights over certain matters as identified in the restated partnership agreement. GoldenTree also has more limited approval rights that will expand once Blackstone's ownership goes below the minimum preferred unit threshold (as defined below). These approval rights are not transferrable without NRP's consent. In addition, the approval rights held by Blackstone and GoldenTree will terminate at such time that Blackstone (together with their affiliates) or GoldenTree (together with their affiliates), as applicable, no longer own at least 20% of the total number of preferred units issued on the closing date, together with all PIK units that have been issued but not redeemed (the "minimum preferred unit threshold").

At the closing, pursuant to the Board Representation and Observation Rights Agreement, the Preferred Purchasers received certain board appointment and observation rights, and Blackstone appointed one director and one observer to the Board of Directors.

NRP also entered into a registration rights agreement (the "preferred unit and warrant registration rights agreement") with the preferred purchasers, pursuant to which NRP is required to file (i) a shelf registration statement to register the common units issuable upon exercise of the warrants and to cause such registration statement to become effective not later than 90 days following the closing date and (ii) a shelf registration statement to register the common units issuable upon conversion of the preferred units and to cause such registration statement to become effective not later than the earlier of the fifth anniversary of the closing date or 90 days following the first issuance of any common units upon conversion of preferred units (the "registration deadlines"). In addition, the preferred unit and warrant registration rights agreement gives the preferred purchasers piggyback registration and demand underwritten offering rights under certain circumstances. The shelf registration statement to register the common units issuable upon exercise of the warrants became effective on April 20, 2017. If the shelf registration statement to register the common units issuable upon conversion of the preferred units is not effective by the applicable registration deadline, NRP will be required to pay the preferred purchasers liquidated damages in the amounts and upon the term set forth in the preferred unit and warrant registration rights agreement.

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

Accounting for the Preferred Units and Warrants

Classification

The preferred units are accounted for as temporary equity on NRP's Consolidated Balance Sheets due to certain contingent redemption rights that may be exercised at the election of preferred purchasers. The warrants are accounted for as equity on NRP's Consolidated Balance Sheets.

Initial Measurement

The net transaction price was allocated to the preferred units and warrants based on their relative fair values at inception date. NRP allocated the transaction issuance costs to the preferred units and warrants primarily on a pro-rata basis based on their relative inception date allocated values.

Subsequent Measurement

Preferred Units

Subsequent adjustment of the preferred units will not occur until NRP has determined that the conversion or redemption of all or a portion of the preferred units is probable of occurring. Once conversion or redemption becomes probable of occurring, the carrying amount of the preferred units will be accreted to their redemption value over the period from the date the feature is probable of occurring to the date the preferred units can first be converted or redeemed.

In February 2023, the Partnership received a notice from holders of the Class A Preferred Units exercising their right to either convert or redeem, at the election of NRP, an aggregate of 47,499 Class A Preferred Units. The Partnership chose to redeem the preferred units for $47.5 million in cash rather than issuing common units. In May 2023, the Partnership received a notice from holders of the Class A Preferred Units exercising their right to either convert or redeem, at the election of NRP, an aggregate of 35,834 Class A Preferred Units. The Partnership chose to redeem the preferred units for $35.8 million in cash rather than issuing common units. In June 2023, the Partnership executed a negotiated transaction with holders of the Class A Preferred Units pursuant to which it repurchased and retired an aggregate of 45,000 Class A Preferred Units for $45.0 million in cash. Of the originally issued 250,000 Class A Preferred Units, 121,667 Class A Preferred Units remain outstanding as of June 30, 2023.

Activity related to the preferred units is as follows:

	*Units*			*Financial*
(In thousands, except unit data)	*Outstanding*			*Position*
Balance at December 31, 2021		269,321		$	183,908
Redemption of preferred units paid-in-kind		(19,321	)		(19,321	)
Balance at December 31, 2022		250,000		$	164,587
Redemption of preferred units		(128,333	)		(84,488	)
Balance at June 30, 2023		121,667		$	80,099

Warrants

As of June 30, 2023 and December 31, 2022 there were 3.0 million warrants outstanding, which included warrants to purchase 0.75 million common units at a strike price of $22.81 and warrants to purchase 2.25 million common units with a strike price of $34.00. These warrants had a $48.0 million carrying value included in warrant holders' interest within partners' capital on the Partnership's Consolidated Balance Sheets at June 30, 2023 and December 31, 2022. Subsequent adjustment of the warrants will not occur until the warrants are exercised, at which time, NRP may, at its option, elect to settle the warrants in common units or cash, each on a net basis. The net basis will be equal to the difference between the Partnership's common unit price and the strike price of the warrant. Once warrant exercise occurs, the difference between the carrying amount of the warrants and the net settlement amount will be allocated on a pro-rata basis to the common unitholders and general partner.

Embedded Features

Certain embedded features within the preferred unit and warrant purchase agreement are accounted for at fair value and are remeasured each quarter. See Note 10. Fair Value Measurements for further information regarding valuation of these embedded derivatives.

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

4. Common and Preferred Unit Distributions

The Partnership makes cash distributions to common and preferred unitholders on a quarterly basis, subject to approval by the Board of Directors of GP Natural Resource Partners LLC (the "Board of Directors"). NRP recognizes both common unit and preferred unit distributions on the date the distribution is declared.

Distributions made on the common units and the general partner's general partner ("GP") interest are made on a pro-rata basis in accordance with their relative percentage interests in the Partnership. The general partner is entitled to receive 2% of such distributions.

Income available to common unitholders and the general partner is reduced by preferred unit distributions that accumulated during the period. NRP reduced net income available to common unitholders and the general partner by $5.0 million and $7.5 million during the three months ended June 30, 2023 and 2022, respectively, and $11.6 million and $15.0 million for the six months ended June 30, 2023 and 2022, respectively, as a result of accumulated preferred unit distributions earned during the period. Of the $6.7 million in accumulated preferred unit distributions earned during March 31, 2023, $0.6 million was paid in February 2023 in connection with the preferred units that were redeemed in February. Of the $5.0 million in accumulated preferred unit distributions earned during June 30, 2023, $0.4 million was paid in May 2023 and $0.9 million was paid in June 2023 in connection with the preferred units that were redeemed during those months. Income available to common unitholders and the general partner is also reduced by the difference between the fair value of the consideration paid upon redemption and the carrying value of the preferred units. As such, NRP reduced net income available to common unitholders and the general partner by $27.6 million and $43.8 million during the three and six months ended June 30, 2023, respectively.

The following table shows the cash distributions declared and paid to common and preferred unitholders during the six months ended June 30, 2023 and 2022, respectively:


		*Common Units*				*Preferred Units*
Month Paid	*Period Covered by Distribution*	*Distribution per Unit*		Total Distribution ⁽¹⁾ (In thousands)		*Distribution per Unit*		*Total Distribution (In thousands)*
2023
February 2023	October 1 - December 31, 2022	$	0.75	$	9,571	$	30.00	$	7,500
February 2023 ⁽²⁾	January 1 - February 8, 2023		—		—		12.33		586
March 2023 ⁽³⁾	Special Distribution		2.43		31,329		—		—
May 2023	January 1 - March 31, 2023		0.75		9,669		30.00		6,075
May 2023 ⁽⁴⁾	April 1 - May 5, 2023		—		—		11.33		406
June 2023 ⁽⁵⁾	April 1 - June 2, 2023		—		—		20.33		915

2022
February 2022	October 1 - December 31, 2021	$	0.45	$	5,672	$	30.00	$	7,500
February 2022 ⁽⁶⁾	January 1 - February 8, 2022		—		—		13.35		258
May 2022	January 1 - March 31, 2022		0.75		9,570		30.00		7,500

⁽¹⁾	Totals include the amount paid to NRP's general partner in accordance with the general partner's 2% general partner interest.
⁽²⁾	Relates to accrued distribution paid upon the redemption of 47,499 preferred units in February 2023.
⁽³⁾	Special distribution was made to help cover unitholder tax liabilities associated with owning NRP's common units during 2022.
⁽⁴⁾	Relates to accrued distribution paid upon the redemption of 35,834 preferred units in May 2023.
⁽⁵⁾	Relates to accrued distribution paid upon the redemption of 45,000 preferred units in June 2023.
⁽⁶⁾	Relates to accrued distribution paid upon the redemption of 19,321 preferred units paid-in-kind in February 2022.

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

5. Net Income Per Common Unit

Basic net income per common unit is computed by dividing net income, after considering income attributable to preferred unitholders, the difference between the fair value of the consideration paid upon redemption and the carrying value of the preferred units and the general partner’s general partner interest, by the weighted average number of common units outstanding. Diluted net income per common unit includes the effect of NRP's preferred units, warrants, and unvested unit-based awards if the inclusion of these items is dilutive.

The dilutive effect of the preferred units is calculated using the if-converted method. Under the if-converted method, the preferred units are assumed to be converted at the beginning of the period, and the resulting common units are included in the denominator of the diluted net income per unit calculation for the period being presented. Distributions declared in the period and undeclared distributions on the preferred units that accumulated during the period are added back to the numerator for purposes of the if-converted calculation. The calculation of diluted net income per common unit for the three and six months ended June 30, 2023 includes the assumed conversion of the remaining preferred units while it does not include the assumed conversion of the preferred units that were redeemed during the three and six months ended June 30, 2023 as the inclusion of these units would be anti-dilutive. The calculation of diluted net income per common unit for the three and six months ended June 30, 2022 includes the assumed conversion of the preferred units.

The dilutive effect of the warrants is calculated using the treasury stock method, which assumes that the proceeds from the exercise of these instruments are used to purchase common units at the average market price for the period. The calculation of diluted net income per common unit for the three and six months ended June 30, 2023 and 2022 includes the net settlement of warrants to purchase 0.75 million common units at a strike price of $22.81 and the net settlement of warrants to purchase 2.25 million common units with a strike price of $34.00.

The following table reconciles the numerator and denominator of the basic and diluted net income per common unit computations and calculates basic and diluted net income per common unit:

	*For the Three Months Ended June 30,*						*For the Six Months Ended June 30,*
(In thousands, except per unit data)	*2023*			*2022*			*2023*			*2022*
Basic net income per common unit
Net income attributable to common unitholders	$	36,990		$	58,134		$	92,248		$	113,405
Weighted average common units—basic		12,635			12,506			12,603			12,461
Basic net income per common unit	$	2.93		$	4.65		$	7.32		$	9.10

Diluted net income per common unit
Weighted average common units—basic		12,635			12,506			12,603			12,461
Plus: dilutive effect of preferred units		2,420			6,292			3,099			6,292
Plus: dilutive effect of warrants		1,139			937			1,197			734
Plus: dilutive effect of unvested unit-based awards		122			178			165			209
Weighted average common units—diluted		16,316			19,913			17,064			19,696

Net income	$	70,334		$	66,820		$	149,609		$	130,719
Less: income attributable to preferred unitholders		(1,321	)		—			(1,907	)		—
Less: redemption of preferred units		(27,618	)		—			(43,846	)		—
Diluted net income attributable to common unitholders and the general partner	$	41,395		$	66,820		$	103,856		$	130,719
Less: diluted net income attributable to the general partner		(828	)		(1,336	)		(2,077	)		(2,614	)
Diluted net income attributable to common unitholders	$	40,567		$	65,484		$	101,779		$	128,105

Diluted net income per common unit	$	2.49		$	3.29		$	5.96		$	6.50

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

6. Segment Information

The Partnership's segments are strategic business units that offer distinct products and services to different customers in different geographies within the U.S. and that are managed accordingly. NRP has the following two operating segments:

Mineral Rights—consists of mineral interests and other subsurface rights across the United States. NRP's ownership provides critical inputs for the manufacturing of steel, electricity and basic building materials, as well as opportunities for carbon sequestration and renewable energy. The Partnership is working to strategically redefine its business as a key player in the transitional energy economy in the years to come.

Soda Ash—consists of the Partnership's 49% non-controlling equity interest in Sisecam Wyoming, a trona ore mining operation and soda ash refinery in the Green River Basin of Wyoming. Sisecam Wyoming mines trona and processes it into soda ash that is sold both domestically and internationally to the glass and chemicals industries.

Direct segment costs and certain other costs incurred at the corporate level that are identifiable and that benefit the Partnership's segments are allocated to the operating segments accordingly. These allocated costs generally include salaries and benefits, insurance, property taxes, legal, royalty, information technology and shared facilities services and are included in operating and maintenance expenses on the Partnership's Consolidated Statements of Comprehensive Income.

Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment and are included in general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income.

The following table summarizes certain financial information for each of the Partnership's business segments:

	*Operating Segments*
(In thousands)	*Mineral Rights*		*Soda Ash*		*Corporate and Financing*			*Total*
For the Three Months Ended June 30, 2023
Revenues	$	64,277	$	26,978	$	—		$	91,255
Gain on asset sales and disposals		5		—		—			5
Operating and maintenance expenses		7,916		14		—			7,930
Depreciation, depletion and amortization		3,787		—		5			3,792
General and administrative expenses		—		—		5,643			5,643
Asset impairments		69		—		—			69
Other expenses, net		—		—		3,492			3,492
Net income (loss)		52,510		26,964		(9,140	)		70,334

For the Three Months Ended June 30, 2022
Revenues	$	84,945	$	14,643	$	—		$	99,588
Gain on asset sales and disposals		345		—		—			345
Operating and maintenance expenses		9,992		23		—			10,015
Depreciation, depletion and amortization		5,847		—		—			5,847
General and administrative expenses		—		—		5,052			5,052
Asset impairments		43		—		—			43
Other expenses, net		—		—		12,156			12,156
Net income (loss)		69,408		14,620		(17,208	)		66,820

For the Six Months Ended June 30, 2023
Revenues	$	144,146	$	46,232	$	—		$	190,378
Gain on asset sales and disposals		101		—		—			101
Operating and maintenance expenses		14,921		172		—			15,093
Depreciation, depletion and amortization		7,866		—		9			7,875
General and administrative expenses		—		—		11,488			11,488
Asset impairments		69		—		—			69
Other expenses, net		—		—		6,345			6,345
Net income (loss)		121,391		46,060		(17,842	)		149,609

For the Six Months Ended June 30, 2022
Revenues	$	159,824	$	29,480	$	—		$	189,304
Gain on asset sales and disposals		345		—		—			345
Operating and maintenance expenses		18,017		74		—			18,091
Depreciation, depletion and amortization		9,715		—		—			9,715
General and administrative expenses		—		—		9,519			9,519
Asset impairments		62		—		—			62
Other expenses, net		—		—		21,543			21,543
Net income (loss)		132,375		29,406		(31,062	)		130,719

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

7. Equity Investment

The Partnership accounts for its 49% investment in Sisecam Wyoming using the equity method of accounting. Activity related to this investment is as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(In thousands)	2023			2022			2023			2022
Balance at beginning of period	$	295,361		$	280,156		$	306,470		$	276,004
Income allocation to NRP’s equity interests ⁽¹⁾		28,212			15,804			48,576			31,869
Amortization of basis difference		(1,234	)		(1,161	)		(2,344	)		(2,389	)
Other comprehensive income (loss)		911			(4,013	)		(18,672	)		(1,468	)
Distribution		(32,350	)		(10,486	)		(43,130	)		(23,716	)
Balance at end of period	$	290,900		$	280,300		$	290,900		$	280,300

⁽¹⁾	Amounts reclassified into income out of accumulated other comprehensive loss were $2.3 million and $(3.0) million for the three months ended June 30, 2023 and 2022, respectively, and $(18.3) million and $(4.7) million for the six months ended June 30, 2023 and 2022, respectively.

The following table represents summarized financial information for Sisecam Wyoming as derived from their respective unaudited financial statements for the three and six months ended June 30, 2023 and 2022:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In thousands)	2023		2022		2023		2022
Net sales	$	201,365	$	189,068	$	408,493	$	352,505
Gross profit		64,554		40,279		113,609		80,044
Net income		57,574		32,253		99,134		65,039

8. Mineral Rights, Net

The Partnership’s mineral rights consist of the following:

	*June 30, 2023*							*December 31, 2022*
(In thousands)	*Carrying Value*		*Accumulated Depletion*			*Net Book Value*		*Carrying Value*		*Accumulated Depletion*			*Net Book Value*
Coal properties	$	661,743	$	(276,085	)	$	385,658	$	661,812	$	(269,037	)	$	392,775
Aggregates properties		8,655		(3,618	)		5,037		8,655		(3,410	)		5,245
Oil and gas royalty properties		12,354		(9,841	)		2,513		12,354		(9,600	)		2,754
Other		13,145		(1,612	)		11,533		13,150		(1,612	)		11,538
Total mineral rights, net	$	695,897	$	(291,156	)	$	404,741	$	695,971	$	(283,659	)	$	412,312

Depletion expense related to the Partnership’s mineral rights is included in depreciation, depletion and amortization on its Consolidated Statements of Comprehensive Income and totaled $3.6 million and $5.4 million for the three months ended June 30, 2023 and 2022, respectively and $7.5 million and $9.1 million for the six months ended June 30, 2023 and 2022, respectively.

The Partnership has developed procedures to evaluate its long-lived assets for possible impairment periodically or whenever events or changes in circumstances indicate an asset's net book value may not be recoverable. Potential events or circumstances include, but are not limited to, specific events such as a reduction in economically recoverable reserves or production ceasing on a property for an extended period. This analysis is based on historic, current and future performance and considers both quantitative and qualitative information. As a result of the analysis, the Partnership recorded immaterial impairment expenses during the three and six months ended June 30, 2023 and 2022.

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

9. Debt, Net

The Partnership's debt consists of the following:

	*June 30,*			*December 31,*
(In thousands)	*2023*			*2022*
Opco Credit Facility	$	103,034		$	70,000
Opco Senior Notes
5.55% with semi-annual interest payments in June and December, with annual principal payments in June, due June 2023	$	—		$	2,366
4.73% with semi-annual interest payments in June and December, with annual principal payments in December, due December 2023		6,004			6,004
5.82% with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024		12,684			25,368
8.92% with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024		4,011			8,023
5.03% with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026		45,683			45,683
5.18% with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026		11,643			11,643
Total Opco Senior Notes	$	80,025		$	99,087
Total debt at face value	$	183,059		$	169,087
Net unamortized debt issuance costs		(623	)		(806	)
Total debt, net	$	182,436		$	168,281
Less: current portion of long-term debt		(36,743	)		(39,076	)
Total long-term debt, net	$	145,693		$	129,205

Opco Debt

All of Opco’s debt is guaranteed by its wholly owned subsidiaries and is secured by certain of the assets of Opco and its wholly owned subsidiaries, other than BRP LLC and NRP Trona LLC. As of June 30, 2023 and December 31, 2022, Opco was in compliance with the terms of the financial covenants contained in its debt agreements.

Opco Credit Facility

In May 2023, the Partnership entered into the Sixth Amendment (the "Sixth Amendment) to the Opco Credit Facility (the "Opco Credit Facility"). The Sixth Amendment maintained the term of the Opco Credit Facility until August 2027. Lender commitments under the Opco Credit Facility increased from $130.0 million to $155.0 million, with the ability to expand such commitments to $200.0 million with the addition of future commitments and. The Sixth Amendment also includes modifications to Opco’s ability to declare and make certain restricted payments. The Opco Credit Facility contains financial covenants requiring Opco to maintain:

•

A leverage ratio of consolidated indebtedness to EBITDDA (in each case as defined in the Opco Credit Facility) not to exceed 3.0x; provided, and

•

an interest coverage ratio of consolidated EBITDDA to the sum of consolidated interest expense and consolidated lease expense (in each case as defined in the Opco Credit Facility) of not less than 3.5 to 1.0.

As of December 31, 2022, the Partnership had $70.0 million in borrowings outstanding under the Opco Credit Facility. During the six months ended June 30, 2023, the Partnership borrowed $165.0 million and repaid $132.0 million, resulting in $103.0 million in borrowings outstanding under the Opco Credit Facility as of June 30, 2023. The weighted average interest rate for the borrowings outstanding under the Opco Credit Facility for the three and six months ended June 30, 2023 was 8.61% and 8.44%, respectively. During the three and six months ended June 30, 2022, the Partnership did not have any borrowings outstanding under the Opco Credit Facility. The Partnership had $52.0 million and $60.0 million of available borrowing capacity as of June 30, 2023 and December 31, 2022, respectively.

The Opco Credit Facility is collateralized and secured by liens on certain of Opco’s assets with carrying values of $320.0 million and $326.4 million classified as mineral rights, net and other long-term assets, net on the Partnership’s Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, respectively.

Opco Senior Notes

Opco has issued several series of private placement senior notes (the "Opco Senior Notes") with various interest rates and principal due dates. As of June 30, 2023 and December 31, 2022, the Opco Senior Notes had cumulative principal balances of $80.0 million and $99.1 million, respectively. Opco made mandatory principal payments of $19.1 million during the six months ended June 30, 2023 and 2022.

The 8.92% Opco Senior Notes also provides that in the event that Opco’s leverage ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the Note Purchase Agreements) exceeds 3.75 to 1.00 at the end of any fiscal quarter, then in addition to all other interest accruing on these notes, additional interest in the amount of 2.00% per annum shall accrue on the notes for the two succeeding quarters and for as long thereafter as the leverage ratio remains above 3.75 to 1.00. Opco has not exceeded the 3.75 to 1.00 ratio at the end of any fiscal quarter through June 30, 2023.

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

10. Fair Value Measurements

Fair Value of Financial Assets and Liabilities

The Partnership’s financial assets and liabilities consist of cash and cash equivalents, a contract receivable and debt. The carrying amounts reported on the Consolidated Balance Sheets for cash and cash equivalents approximate fair value due to their short-term nature. The Partnership uses available market data and valuation methodologies to estimate the fair value of its debt and contract receivable.

The following table shows the carrying value and estimated fair value of the Partnership's debt and contract receivable:

			*June 30, 2023*				*December 31, 2022*
	*Fair Value*		*Carrying*		*Estimated*		*Carrying*		*Estimated*
(In thousands)	*Hierarchy Level*		*Value*		*Fair Value*		*Value*		*Fair Value*
Debt:
Opco Senior Notes ⁽¹⁾		3	$	79,402	$	75,848	$	98,281	$	96,060
Opco Credit Facility ⁽²⁾		3		103,034		103,034		70,000		70,000

Assets:
Contract receivable, net (current and long-term) ⁽³⁾		3	$	30,182	$	25,254	$	31,371	$	24,833

⁽¹⁾	The fair value of the Opco Senior Notes at June 30, 2023 and December 31, 2022 were estimated by management utilizing the present value replacement method incorporating the interest rate of the Opco Credit facility at June 30, 2023 and December 31, 2022, respectively.
⁽²⁾	The fair value of the Opco Credit Facility approximates the outstanding borrowing amount because the interest rates are variable and reflective of market rates and the terms of the credit facility allow the Partnership to repay the debt at any time without penalty.
⁽³⁾	The fair value of the Partnership's contract receivable is determined based on the present value of future cash flow projections related to the underlying asset at a discount rate of 15% at June 30, 2023 and December 31, 2022.

NRP has embedded derivatives in the preferred units related to certain conversion options, redemption features and the change of control provision that are accounted for separately from the preferred units as assets and liabilities at fair value on the Partnership's Consolidated Balance Sheets. Level 3 valuation of the embedded derivatives are based on numerous factors including the likelihood of the event occurring. The embedded derivatives are revalued quarterly and changes in their fair value would be recorded in other expenses, net on the Partnership's Consolidated Statements of Comprehensive Income. The embedded derivatives had zero value as of June 30, 2023 and December 31, 2022.

11. Related Party Transactions

Affiliates of our General Partner

The Partnership’s general partner does not receive any management fee or other compensation for its management of NRP. However, in accordance with the partnership agreement, the general partner and its affiliates are reimbursed for services provided to the Partnership and for expenses incurred on the Partnership’s behalf. Employees of Quintana Minerals Corporation ("QMC") and Western Pocahontas Properties Limited Partnership ("WPPLP"), affiliates of the Partnership, provide their services to manage the Partnership's business. QMC and WPPLP charge the Partnership the portion of their employee salary and benefits costs related to their employee services provided to NRP. These QMC and WPPLP employee management service costs are presented as operating and maintenance expenses and general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income. NRP also reimburses overhead costs incurred by its affiliates, including Quintana Infrastructure Development ("QID"), to manage the Partnership's business. These overhead costs include certain rent, information technology, administration of employee benefits and other corporate services incurred by or on behalf of the Partnership’s general partner and its affiliates and are presented as operating and maintenance expenses and general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income.

Direct general and administrative expenses charged to the Partnership by QMC, WPPLP and QID are included on the Partnership's Consolidated Statement of Comprehensive Income as follows:

	*For the Three Months Ended June 30,*				*For the Six Months Ended June 30,*
(In thousands)	*2023*		*2022*		*2023*		*2022*
Operating and maintenance expenses	$	1,712	$	1,698	$	3,431	$	3,357
General and administrative expenses		1,253		1,225		2,573		2,465

The Partnership had accounts payable to QMC of $0.4 million on its Consolidated Balance Sheets at both June 30, 2023 and December 31, 2022, and $0.8 million and $1.0 million of accounts payable to WPPLP at June 30, 2023 and December 31, 2022, respectively.

During the three months ended June 30, 2023 and 2022, the Partnership recognized $2.0 million and $2.7 million, respectively, in operating and maintenance expenses on its Consolidated Statements of Comprehensive Income related to an overriding royalty agreement with WPPLP. These amounts were $4.0 million and $4.3 million during the six months ended June 30, 2023 and 2022, respectively.

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

12. Major Customers

Revenues from customers that exceeded 10 percent of total revenues for any of the periods presented below are as follows:

	For the Three Months Ended June 30,										For the Six Months Ended June 30,
	2023					2022					2023					2022
(In thousands)	Revenues		Percent			Revenues		Percent			Revenues		Percent			Revenues		Percent
Alpha Metallurgical Resources, Inc. ⁽¹⁾	$	19,685		22	%	$	32,895		33	%	$	43,903		23	%	$	60,638		32	%
Foresight Energy Resources LLC ("Foresight") ⁽¹⁾	$	12,324		14	%	$	16,497		17	%	$	24,853		13	%	$	27,747		15	%

⁽¹⁾	Revenues from Alpha Metallurgical Resources, Inc. and Foresight are included within the Partnership's Mineral Rights segment.

13. Commitments and Contingencies

NRP is involved, from time to time, in various legal proceedings arising in the ordinary course of business. While the ultimate results of these proceedings cannot be predicted with certainty, Partnership management believes these ordinary course matters will not have a material effect on the Partnership’s financial position, liquidity or operations.

14. Unit-Based Compensation

During the three and six months ended June 30, 2023, the Partnership granted service, performance and market-based awards under its 2017 Long-Term Incentive Plan and during the six months ended June 30, 2022, the Partnership granted service-based awards. The Partnership's service and performance-based awards are valued using the closing price of NRP's common units as of the grant date while the Partnership's market-based awards are valued using a Monte Carlo simulation. The grant date fair value of these awards granted during the three months ended June 30, 2023 was $0.1 million. The grant date fair value of these awards granted during six months ended June 30, 2023 and 2022 was $16.0 million and $7.9 million, respectively. Total unit-based compensation expense associated with these awards was $2.6 million and $1.3 million for the three months ended June 30, 2023 and 2022, respectively, and $5.1 million and $2.8 million for the six months ended June 30, 2023 and 2022, respectively, and is included in general and administrative expenses and operating and maintenance expenses on the Partnership's Consolidated Statements of Comprehensive Income. The unamortized cost associated with unvested outstanding awards as of June 30, 2023 is $18.2 million, which is to be recognized over a weighted average period of 2.3 years. The unamortized cost associated with unvested outstanding awards as of December 31, 2022 was $6.3 million.

A summary of the unit activity in the outstanding grants during 2023 is as follows:

(In thousands)	*Common Units*			*Weighted Average Grant Date Fair Value per Common Unit*
Outstanding at January 1, 2023		386		$	28.96
Granted		281		$	56.84
Fully vested and issued		(184	)	$	26.30
Outstanding at June 30, 2023		483		$	46.21

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

15. Financing Transaction

The Partnership owns rail loadout and associated infrastructure at the Sugar Camp mine in the Illinois Basin operated by a subsidiary of Foresight. The infrastructure at the Sugar Camp mine is leased to a subsidiary of Foresight and is accounted for as a financing transaction (the "Sugar Camp lease"). The Sugar Camp lease expires in 2032 with renewal options for up to 80 additional years. Minimum payments are $5.0 million per year through the end of the lease term. The Partnership is also entitled to variable payments in the form of throughput fees based on the amount of coal transported and processed utilizing the Partnership's assets. In the event the Sugar Camp lease is renewed beyond 2032, payments become a fixed ten thousand dollars per year for the remainder of the renewed term.

16. Credit Losses

The Partnership is exposed to credit losses through collection of its short-term trade receivables resulting from contracts with customers and a long-term receivable resulting from a financing transaction with a customer. The Partnership records an allowance for current expected credit losses on these receivables based on the loss-rate method. NRP assessed the likelihood of collection of its receivables utilizing historical loss rates, current market conditions, industry and macroeconomic factors, reasonable and supportable forecasts and facts or circumstances of individual customers and properties. Examples of these facts or circumstances include, but are not limited to, contract disputes or renegotiations with the customer and evaluation of short and long-term economic viability of the contracted property. For its long-term contract receivable, management reverts to the historical loss experience immediately after the reasonable and supportable forecast period ends.

As of June 30, 2023 and December 31, 2022, NRP had the following current expected credit loss (“CECL”) allowance related to its receivables and long-term contract receivable:

	*June 30, 2023*							*December 31, 2022*
(In thousands)	*Gross*		*CECL Allowance*			*Net*		*Gross*		*CECL Allowance*			*Net*
Receivables	$	42,974	$	(3,699	)	$	39,275	$	47,237	$	(4,461	)	$	42,776
Long-term contract receivable		28,652		(993	)		27,659		29,984		(1,038	)		28,946
Total	$	71,626	$	(4,692	)	$	66,934	$	77,221	$	(5,499	)	$	71,722

NRP recorded a reversal of $0.2 million and $0.4 million of operating and maintenance expenses on its Consolidated Statements of Comprehensive Income related to the change in the CECL allowance during the three months ended June 30, 2023 and 2022, respectively and a reversal of $0.8 million and expense of $0.6 million during the six months ended June 30, 2023 and 2022, respectively.

NRP has procedures in place to monitor its ongoing credit exposure through timely review of counterparty balances against contract terms and due dates, account and financing receivable reconciliation, bankruptcy monitoring, lessee audits and dispute resolution. The Partnership may employ legal counsel or collection specialists to pursue recovery of defaulted receivables.

17. Subsequent Events

The following represents material events that have occurred subsequent to June 30, 2023 through the time of the Partnership’s filing of its Quarterly Report on Form 10-Q with the SEC:

Common Unit and Preferred Unit Distributions

In August 2023, the Board of Directors declared a distribution of $0.75 per common unit with respect to the second quarter of 2023. The Board of Directors also declared a $3.7 million cash distribution on NRP's outstanding preferred units with respect to the second quarter of 2023.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following review of operations for the three and six month periods ended June 30, 2023 and 2022 should be read in conjunction with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements included in this Form 10-Q and with the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Management’s Discussion and Analysis included in the Natural Resource Partners L.P. Annual Report on Form 10-K for the year ended December 31, 2022.

As used herein, unless the context otherwise requires: "we," "our," "us" and the "Partnership" refer to Natural Resource Partners L.P. and, where the context requires, our subsidiaries. References to "NRP" and "Natural Resource Partners" refer to Natural Resource Partners L.P. only, and not to NRP (Operating) LLC or any of Natural Resource Partners L.P.’s subsidiaries. References to "Opco" refer to NRP (Operating) LLC, a wholly owned subsidiary of NRP, and its subsidiaries. NRP Finance Corporation ("NRP Finance") is a wholly owned subsidiary of NRP and was a co-issuer with NRP on the 9.125% senior notes due 2025 (the "2025 Senior Notes").

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

Statements included in this 10-Q may constitute forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such forward-looking statements include, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on our common and preferred units; our business strategy; our liquidity and access to capital and financing sources; our financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected future performance by our lessees; Sisecam Wyoming LLC’s ("Sisecam Wyoming's") trona mining and soda ash refinery operations; distributions from our soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving us, and of scheduled or potential regulatory or legal changes; and global and U.S. economic conditions.

These forward-looking statements speak only as of the date hereof and are made based upon our current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. You should not put undue reliance on any forward-looking statements. See "Item 1A. Risk Factors" included in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022 for important factors that could cause our actual results of operations or our actual financial condition to differ.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) less equity earnings from unconsolidated investment; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income or loss, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. For a description of Opco's debt agreements, see Note 9. Debt, Net in the Notes to Consolidated Financial Statements included herein as well as in "Item 8. Financial Statements and Supplementary Data—Note 11. Debt, Net" in our Annual Report on Form 10-K for the year ended December 31, 2022. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.

Distributable Cash Flow

Distributable cash flow ("DCF") represents net cash provided by (used in) operating activities plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from asset sales and disposals, including sales of discontinued operations, and return of long-term contract receivable; less maintenance capital expenditures. DCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. DCF may not be calculated the same for us as for other companies. In addition, DCF presented below is not calculated or presented on the same basis as distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. DCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.

Free Cash Flow

Free cash flow ("FCF") represents net cash provided by (used in) operating activities plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivable; less maintenance and expansion capital expenditures and cash flow used in acquisition costs classified as investing or financing activities. FCF is calculated before mandatory debt repayments. FCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. FCF may not be calculated the same for us as for other companies. FCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.

Leverage Ratio

Leverage ratio represents the outstanding principal of our debt at the end of the period divided by the last twelve months' Adjusted EBITDA as defined above. We believe that leverage ratio is a useful measure to management and investors to evaluate and monitor our indebtedness relative to our ability to generate income to service such debt and in understanding trends in our overall financial condition. Leverage ratio may not be calculated the same for us as for other companies and is not a substitute for, and should not be used in conjunction with, GAAP financial ratios.

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Introduction

The following discussion and analysis presents management's view of our business, financial condition and overall performance. Our discussion and analysis consists of the following subjects:

• Executive Overview

• Results of Operations

• Liquidity and Capital Resources

• Off-Balance Sheet Transactions

• Related Party Transactions

• Summary of Critical Accounting Estimates

• Recent Accounting Standards

Executive Overview

We are a diversified natural resource company engaged principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and own a non-controlling 49% interest in Sisecam Wyoming, a trona ore mining and soda ash production business. Our common units trade on the New York Stock Exchange under the symbol "NRP." Our business is organized into two operating segments:

Mineral Rights—consists of approximately 13 million acres of mineral interests and other subsurface rights across the United States. If combined in a single tract, our ownership would cover roughly 20,000 square miles. Our ownership provides critical inputs for the manufacturing of steel, electricity and basic building materials, as well as opportunities for carbon sequestration and renewable energy. We are working to strategically redefine our business as a key player in the transitional energy economy in the years to come.

Soda Ash—consists of our 49% non-controlling equity interest in Sisecam Wyoming, a trona ore mining and soda ash production business located in the Green River Basin of Wyoming. Sisecam Wyoming mines the trona and processes it into soda ash that is sold both domestically and internationally into the glass and chemicals industries.

Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment.

Our financial results by segment for the six months ended June 30, 2023 are as follows:

	Operating Segments
(In thousands)	Mineral Rights			Soda Ash		Corporate and Financing			Total
Revenues and other income	$	144,247		$	46,232	$	—		$	190,479
Net income (loss)	$	121,391		$	46,060	$	(17,842	)	$	149,609
Adjusted EBITDA ⁽¹⁾	$	129,326		$	42,958	$	(11,488	)	$	160,796

Cash flow provided by (used in) continuing operations
Operating activities	$	128,898		$	42,943	$	(17,591	)	$	154,250
Investing activities	$	1,314		$	—	$	(10	)	$	1,304
Financing activities	$	(583	)	$	—	$	(183,332	)	$	(183,915	)
Distributable cash flow ⁽¹⁾	$	130,212		$	42,943	$	(17,601	)	$	155,554
Free cash flow ⁽¹⁾	$	130,106		$	42,943	$	(17,601	)	$	155,448

⁽¹⁾	See "—Results of Operations" below for reconciliations to the most comparable GAAP financial measures.

Current Results/Market Commentary

Financial Results and Quarterly Distributions

We generated $154.3 million of operating cash flow and $155.4 million of free cash flow during the six months ended June 30, 2023, and ended the quarter with $62.7 million of liquidity consisting of $10.7 million of cash and cash equivalents and $52.0 million of borrowing capacity under our Opco Credit Facility. As of June 30, 2023 our leverage ratio was 0.6 x.

In May 2023, we declared and paid a cash distribution of $0.75 per common unit of NRP with respect to the first quarter of 2023 as well as a $6.1 million cash distribution on the preferred units with respect to the first quarter of 2023. Future distributions on our common and preferred units will be determined on a quarterly basis by the Board of Directors. The Board of Directors considers numerous factors each quarter in determining cash distributions, including profitability, cash flow, debt service obligations, market conditions and outlook, estimated unitholder income tax liability and the level of cash reserves that the Board determines is necessary for future operating and capital needs.

In February 2023, we received a notice from holders of the Class A Preferred Units exercising their right to either convert or redeem, at the election of NRP, an aggregate of 47,499 Class A Preferred Units. We chose to redeem the preferred units for $47.5 million in cash rather than issuing common units. In May 2023, we received a notice from holders of our Class A Preferred Units exercising their right to either convert or redeem, at the election of NRP, an aggregate of 35,834 Class A Preferred Units. We chose to redeem the preferred units for $35.8 million in cash rather than issuing common units. In June 2023, we executed a negotiated transaction with holders of our Class A Preferred Units pursuant to which we repurchased and retired an aggregate of 45,000 Class A Preferred Units for $45.0 million in cash. Of the originally issued 250,000 Class A Preferred Units, 121,667 Class A Preferred Units remain outstanding.

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Mineral Rights Business Segment

Revenues and other income in the first six months of 2023 decreased $15.9 million, or 10%, as compared to the prior year period primarily due to decreased metallurgical coal sales prices. Cash provided by operating activities and free cash flow increased $10.4 million and $11.0 million, respectively, compared to the prior year period primarily due to the timing of minimum and royalty payments and prior year recoupments, partially offset by lower revenues and other income in the second quarter of 2023 as compared to the prior year period primarily due to lower met coal sales prices.

While metallurgical and thermal coal prices have decreased from the beginning of the year and decreased significantly from the record highs seen in 2022, they both remain strong relative to historical norms. Transportation and logistics challenges, limited access to capital, and qualified labor shortages limit operators' ability to increase production and sales which should provide continued price support at current levels.

We continue to explore opportunities for carbon neutral revenue across our large portfolio of land, mineral, and timber assets, including the sequestration of carbon dioxide underground and in standing forests, and the generation of electricity using geothermal, solar, and wind energy.

Soda Ash Business Segment

Revenues and other income in the first six months of 2023increased $16.8 million, or 57%, as compared to the prior year period driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales volumes. Cash provided by operating activities and free cash flow in the first six months of 2023increased $19.3 million as compared to the prior year period due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023.

After starting the year at historically high levels, global soda ash prices have fallen throughout the first half of the year. New supply from China entering the market in the second half of the year is expected to continue to put downward pressure on international soda ash pricing. However, we expect Sisecam Wyoming's domestic soda ash sales prices to remain strong in the second half of the year as a result of negotiated 2023 domestic sales contracts entered into at the end of 2022.

Results of Operations

Second Quarter of 2023 and 2022 Compared

Revenues and Other Income

The following table includes our revenues and other income by operating segment:

		For the Three Months Ended June 30,			Increase			Percentage
Operating Segment (In thousands)	2023		2022		(Decrease)			Change
Mineral Rights	$	64,282	$	85,290	$	(21,008	)		(25	)%
Soda Ash		26,978		14,643		12,335			84	%
Total	$	91,260	$	99,933	$	(8,673	)		(9	)%

The changes in revenues and other income are discussed for each of the operating segments below:

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Mineral Rights

The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income:

	For the Three Months Ended June 30,					Increase			Percentage
(In thousands, except per ton data)	2023		2022			(Decrease)			Change
Coal sales volumes (tons)
Appalachia
Northern		390		392			(2	)		(1	)%
Central		3,352		3,484			(132	)		(4	)%
Southern		693		312			381			122	%
Total Appalachia		4,435		4,188			247			6	%
Illinois Basin		1,631		3,403			(1,772	)		(52	)%
Northern Powder River Basin		881		699			182			26	%
Gulf Coast		139		67			72			107	%
Total coal sales volumes		7,086		8,357			(1,271	)		(15	)%

Coal royalty revenue per ton
Appalachia
Northern	$	6.87	$	11.84		$	(4.97	)		(42	)%
Central		8.49		12.19			(3.70	)		(30	)%
Southern		10.85		17.67			(6.82	)		(39	)%
Illinois Basin		3.15		2.07			1.08			52	%
Northern Powder River Basin		4.62		4.74			(0.12	)		(3	)%
Gulf Coast		0.71		0.57			0.14			25	%
Combined average coal royalty revenue per ton		6.77		7.54			(0.77	)		(10	)%

Coal royalty revenues
Appalachia
Northern	$	2,681	$	4,640		$	(1,959	)		(42	)%
Central		28,445		42,461			(14,016	)		(33	)%
Southern		7,521		5,513			2,008			36	%
Total Appalachia		38,647		52,614			(13,967	)		(27	)%
Illinois Basin		5,141		7,061			(1,920	)		(27	)%
Northern Powder River Basin		4,066		3,314			752			23	%
Gulf Coast		98		38			60			158	%
Unadjusted coal royalty revenues		47,952		63,027			(15,075	)		(24	)%
Coal royalty adjustment for minimum leases		8		(82	)		90			110	%
Total coal royalty revenues	$	47,960	$	62,945		$	(14,985	)		(24	)%

Other revenues
Production lease minimum revenues	$	562	$	65		$	497			765	%
Minimum lease straight-line revenues		4,447		4,674			(227	)		(5	)%
Carbon neutral initiative revenues		115		—			115			100	%
Wheelage revenues		3,284		4,379			(1,095	)		(25	)%
Property tax revenues		1,470		1,695			(225	)		(13	)%
Coal overriding royalty revenues		150		682			(532	)		(78	)%
Lease amendment revenues		848		811			37			5	%
Aggregates royalty revenues		686		1,037			(351	)		(34	)%
Oil and gas royalty revenues		1,214		2,906			(1,692	)		(58	)%
Other revenues		271		139			132			95	%
Total other revenues	$	13,047	$	16,388		$	(3,341	)		(20	)%
Royalty and other mineral rights	$	61,007	$	79,333		$	(18,326	)		(23	)%
Transportation and processing services revenues		3,270		5,612			(2,342	)		(42	)%
Gain on asset sales and disposals		5		345			(340	)		(99	)%
Total Mineral Rights segment revenues and other income	$	64,282	$	85,290		$	(21,008	)		(25	)%

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Coal Royalty Revenues

Approximately 70% of coal royalty revenues and approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the three months ended June 30, 2023. Total coal royalty revenues decreased $15.0 million as compared to the prior year quarter. The discussion by region is as follows:

•

Appalachia: Coal royalty revenues decreased $14.0 million primarily due to decreased metallurgical coal sales prices during the three months ended June 30, 2023, as compared to the prior year quarter.

•

Illinois Basin: Coal royalty revenues decreased $1.9 million primarily due to decreased sales volumes during the three months ended June 30, 2023, as compared to the prior year quarter. This decrease in sales volumes is primarily a result of a temporary relocation off of NRP's coal reserves. However, the decrease in sales volumes was partially offset by an increase in sales prices and increased wheelage revenues associated with the transportation of non-NRP coal across NRP property.

Other Revenues

Total other revenues decreased $3.3 million during the three months ended June 30, 2023, as compared to the prior year quarter primarily due a $1.7 million decrease in oil and gas royalty revenues and a $1.1 million decrease in wheelage revenues as compared to the prior year period. Oil and gas royalty revenues decreased primarily as a result of decreased natural gas prices as compared to the prior year quarter and wheelage revenues decreased primarily due to lower met coal sales prices resulting in a lower wheelage revenue received per ton of coal transported.

Transportation and Processing Services Revenues

Transportation and processing services revenues decreased $2.3 million during the three months ended June 30, 2023, as compared to the prior year quarter primarily due to a temporary relocation of certain production off of NRP's coal reserves. The fee per ton associated with the transportation and processing of the non-NRP coal is less than the fee per ton associated with the transportation and processing of NRP coal.

Soda Ash

Revenues and other income related to our Soda Ash segment increased $12.3 million compared to the prior year quarter primarily due to higher sales prices driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales volumes.

Operating and Other Expenses

The following table presents the significant categories of our consolidated operating and other expenses:

	For the Three Months Ended June 30,				Increase			Percentage
(In thousands)	2023		2022		(Decrease)			Change
Operating expenses
Operating and maintenance expenses	$	7,930	$	10,015	$	(2,085	)		(21	)%
Depreciation, depletion and amortization		3,792		5,847		(2,055	)		(35	)%
General and administrative expenses		5,643		5,052		591			12	%
Asset impairments		69		43		26			60	%
Total operating expenses	$	17,434	$	20,957	$	(3,523	)		(17	)%

Other expenses, net
Interest expense, net	$	3,492	$	8,108	$	(4,616	)		(57	)%
Loss on extinguishment of debt		—		4,048		(4,048	)		(100	)%
Total other expenses, net	$	3,492	$	12,156	$	(8,664	)		(71	)%

Total operating expenses decreased $3.5 million as compared to the prior year quarter primarily due to a $2.1 million decrease in operating and maintenance expenses and a $2.1 million decrease in depreciation, depletion and amortization. The decrease in operating and maintenance expenses was primarily driven by lower overriding royalty expense from an agreement with WPPLP in the second quarter of 2023 as compared to second quarter of 2022. This overriding royalty expense is fully offset by coal royalty revenue we receive from this property. The decrease in depreciation, depletion and amortization was primarily driven by lower Illinois Basin coal sales volumes during the second quarter of 2023 as compared to the second quarter of 2022 as explained in the coal royalty revenues section above.

Other expenses, net decreased $8.7 million as a result of less debt outstanding as compared to the prior year quarter, in addition to the loss on extinguishment of debt recognized in 2022 related to the partial retirement of the 2025 Senior Notes during the second quarter of 2022.

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Adjusted EBITDA (Non-GAAP Financial Measure)

The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment:

	Operating Segments
For the Three Months Ended (In thousands)	Mineral Rights		Soda Ash			Corporate and Financing			Total
June 30, 2023
Net income (loss)	$	52,510	$	26,964		$	(9,140	)	$	70,334
Less: equity earnings from unconsolidated investment		—		(26,978	)		—			(26,978	)
Add: total distributions from unconsolidated investment		—		32,350			—			32,350
Add: interest expense, net		—		—			3,492			3,492
Add: depreciation, depletion and amortization		3,787		—			5			3,792
Add: asset impairments		69		—			—			69
Adjusted EBITDA	$	56,366	$	32,336		$	(5,643	)	$	83,059

June 30, 2022
Net income (loss)	$	69,408	$	14,620		$	(17,208	)	$	66,820
Less: equity earnings from unconsolidated investment		—		(14,643	)		—			(14,643	)
Add: total distributions from unconsolidated investment		—		10,486			—			10,486
Add: interest expense, net		—		—			8,108			8,108
Add: loss on extinguishment of debt		—		—			4,048			4,048
Add: depreciation, depletion and amortization		5,847		—			—			5,847
Add: asset impairments		43		—			—			43
Adjusted EBITDA	$	75,298	$	10,463		$	(5,052	)	$	80,709

Net income increased $3.5 million primarily due to the decrease in operating and other expenses, partially offset by the decrease in revenues and other income, all discussed above. Adjusted EBITDA increased $2.4 million as compared to the prior year quarter primarily due to a $21.9 million increase in Adjusted EBITDA within our Soda Ash segment due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023. This increase in Adjusted EBITDA was partially offset by an $18.9 million decrease in Adjusted EBITDA within our Mineral Rights segment primarily as a result of lower revenues and other income as discussed above.

Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)

The following table presents the three major categories of the statement of cash flows by business segment:

	Operating Segments
For the Three Months Ended (In thousands)	Mineral Rights		Soda Ash		Corporate and Financing			Total
June 30, 2023
Cash flow provided by (used in)
Operating activities	$	55,040	$	32,326	$	(6,016	)	$	81,350
Investing activities		615		—		(8	)		607
Financing activities		—		—		(88,882	)		(88,882	)

June 30, 2022
Cash flow provided by (used in)
Operating activities	$	70,351	$	10,430	$	(17,658	)	$	63,123
Investing activities		909		—		—			909
Financing activities		—		—		(140,266	)		(140,266	)

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The following table reconciles net cash provided by (used in) operating activities (the most comparable GAAP financial measure) by business segment to DCF and FCF:

	Operating Segments
For the Three Months Ended (In thousands)	Mineral Rights			Soda Ash		Corporate and Financing			Total
June 30, 2023
Net cash provided by (used in) operating activities	$	55,040		$	32,326	$	(6,016	)	$	81,350
Add: proceeds from asset sales and disposals		5			—		—			5
Add: return of long-term contract receivable		610			—		—			610
Less: maintenance capital expenditures		—			—		(8	)		(8	)
Distributable cash flow	$	55,655		$	32,326	$	(6,024	)	$	81,957
Less: proceeds from asset sales and disposals		(5	)		—		—			(5	)
Free cash flow	$	55,650		$	32,326	$	(6,024	)	$	81,952

June 30, 2022
Net cash provided by (used in) operating activities	$	70,351		$	10,430	$	(17,658	)	$	63,123
Add: proceeds from asset sales and disposals		346			—		—			346
Add: return of long-term contract receivable		563			—		—			563
Distributable cash flow	$	71,260		$	10,430	$	(17,658	)	$	64,032
Less: proceeds from asset sales and disposals		(346	)		—		—			(346	)
Free cash flow	$	70,914		$	10,430	$	(17,658	)	$	63,686

Operating cash flow, DCF and FCF increased $18.2 million, $17.9 million and $18.3 million, respectively, primarily due to an increase in cash flow within our Soda Ash and Corporate and Financing segments, partially offset by a decrease in cash flow within our Mineral Rights segment. The discussion by segment is as follows:

•

Mineral Rights Segment

◦

Operating cash flow, DCF and FCF decreased $15.3 million, $15.6 million and $15.3 million, respectively, primarily due to lower revenues and other income as discussed above primarily driven by lower met coal sales prices.

•

Soda Ash Segment

◦

Operating cash flow, DCF and FCF increased $21.9 million due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023.

•

Corporate and Financing Segment

◦

Operating cash flow, DCF and FCF increased $11.6 million primarily due to lower cash paid for interest as a result of the retirement of the 2025 Senior Notes in 2022.

First Six Months of 2023 and 2022 Compared

Revenues and Other Income

The following table includes our revenues and other income by operating segment:

		For the Six Months Ended June 30,			Increase			Percentage
Operating Segment (In thousands)	2023		2022		(Decrease)			Change
Mineral Rights	$	144,247	$	160,169	$	(15,922	)		(10	)%
Soda Ash		46,232		29,480		16,752			57	%
Total	$	190,479	$	189,649	$	830			0	%

The changes in revenues and other income are discussed for each of the operating segments below:

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Mineral Rights

The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income:

	For the Six Months Ended June 30,					Increase			Percentage
(In thousands, except per ton data)	2023		2022			(Decrease)			Change
Coal sales volumes (tons)
Appalachia
Northern		769		820			(51	)		(6	)%
Central		6,961		6,735			226			3	%
Southern		1,275		673			602			89	%
Total Appalachia		9,005		8,228			777			9	%
Illinois Basin		2,941		4,905			(1,964	)		(40	)%
Northern Powder River Basin		1,966		1,937			29			1	%
Gulf Coast		197		136			61			45	%
Total coal sales volumes		14,109		15,206			(1,097	)		(7	)%

Coal royalty revenue per ton
Appalachia
Northern	$	8.35	$	10.95		$	(2.60	)		(24	)%
Central		9.23		11.80			(2.57	)		(22	)%
Southern		12.72		17.61			(4.89	)		(28	)%
Illinois Basin		3.34		2.11			1.23			58	%
Northern Powder River Basin		4.65		4.10			0.55			13	%
Gulf Coast		0.66		0.56			0.10			18	%
Combined average coal royalty revenue per ton		7.51		7.80			(0.29	)		(4	)%

Coal royalty revenues
Appalachia
Northern	$	6,418	$	8,981		$	(2,563	)		(29	)%
Central		64,251		79,441			(15,190	)		(19	)%
Southern		16,218		11,853			4,365			37	%
Total Appalachia		86,887		100,275			(13,388	)		(13	)%
Illinois Basin		9,816		10,364			(548	)		(5	)%
Northern Powder River Basin		9,141		7,946			1,195			15	%
Gulf Coast		131		76			55			72	%
Unadjusted coal royalty revenues		105,975		118,661			(12,686	)		(11	)%
Coal royalty adjustment for minimum leases		8		(267	)		275			103	%
Total coal royalty revenues	$	105,983	$	118,394		$	(12,411	)		(10	)%

Other revenues
Production lease minimum revenues	$	1,175	$	1,657		$	(482	)		(29	)%
Minimum lease straight-line revenues		8,950		9,457			(507	)		(5	)%
Carbon neutral initiative revenues		2,233		—			2,233			100	%
Wheelage revenues		7,153		8,096			(943	)		(12	)%
Property tax revenues		2,940		3,167			(227	)		(7	)%
Coal overriding royalty revenues		338		940			(602	)		(64	)%
Lease amendment revenues		1,699		1,691			8			0	%
Aggregates royalty revenues		1,439		1,807			(368	)		(20	)%
Oil and gas royalty revenues		4,802		4,720			82			2	%
Other revenues		566		487			79			16	%
Total other revenues	$	31,295	$	32,022		$	(727	)		(2	)%
Royalty and other mineral rights	$	137,278	$	150,416		$	(13,138	)		(9	)%
Transportation and processing services revenues		6,868		9,408			(2,540	)		(27	)%
Gain on asset sales and disposals		101		345			(244	)		(71	)%
Total Mineral Rights segment revenues and other income	$	144,247	$	160,169		$	(15,922	)		(10	)%

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Coal Royalty Revenues

Approximately 70% of coal royalty revenues and approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the six months ended June 30, 2023. Total coal royalty revenues decreased $12.4 million as compared to the prior year period. The discussion by region is as follows:

•

Appalachia: Coal royalty revenues decreased $13.4 million primarily due to decreased metallurgical coal sales prices during the six months ended June 30, 2023, as compared to the prior year quarter.

•

Illinois Basin: Coal royalty revenues decreased $0.5 million primarily due to decreased sales volumes during the six months ended June 30, 2023, as compared to the prior year period. This decrease in sales volumes is primarily a result of a temporary relocation of certain production off of NRP's coal reserves. However, the decrease in sales volumes was partially offset by an increase in sales prices and increased wheelage revenues associated with the transportation of non-NRP coal across NRP property.

Transportation and Processing Services Revenues

Transportation and processing services revenues decreased $2.5 million during the six months ended June 30, 2023, as compared to the prior year period primarily due to a temporary relocation of certain production off of NRP's coal reserves. The fee per ton on associated with the transportation and processing of the non-NRP coal is less than the fee per ton associated with the transportation and processing of NRP coal.

Soda Ash

Revenues and other income related to our Soda Ash segment increased $16.8 million compared to the prior year period primarily due to higher sales prices driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales volumes.

Operating Expenses

The following table presents the significant categories of our consolidated operating and other expenses:

	For the Six Months Ended June 30,				Increase			Percentage
(In thousands)	2023		2022		(Decrease)			Change
Operating expenses
Operating and maintenance expenses	$	15,093	$	18,091	$	(2,998	)		(17	)%
Depreciation, depletion and amortization		7,875		9,715		(1,840	)		(19	)%
General and administrative expenses		11,488		9,519		1,969			21	%
Asset impairments		69		62		7			11	%
Total operating expenses	$	34,525	$	37,387	$	(2,862	)		(8	)%

Other expenses, net
Interest expense, net	$	6,345	$	17,495	$	(11,150	)		(64	)%
Loss on extinguishment of debt		—		4,048		(4,048	)		(100	)%
Total other expenses, net	$	6,345	$	21,543	$	(15,198	)		(71	)%

Total operating expenses decreased $2.9 million primarily due to a $3.0 million decrease in operating and maintenance expenses, primarily driven by lower overriding royalty expense from an agreement with WPPLP as discussed above.

Total other expenses, net decreased $15.2 million as a result of less debt outstanding as compared to the prior year period, in addition to the loss on extinguishment of debt recognized in 2022 related to the partial retirement of the 2025 Senior Notes during the second quarter of 2022.

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Adjusted EBITDA (Non-GAAP Financial Measure)

The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment:

	Operating Segments
For the Six Months Ended (In thousands)	Mineral Rights		Soda Ash			Corporate and Financing			Total
June 30, 2023
Net income (loss)	$	121,391	$	46,060		$	(17,842	)	$	149,609
Less: equity earnings from unconsolidated investment		—		(46,232	)		—			(46,232	)
Add: total distributions from unconsolidated investment		—		43,130			—			43,130
Add: interest expense, net		—		—			6,345			6,345
Add: depreciation, depletion and amortization		7,866		—			9			7,875
Add: asset impairments		69		—			—			69
Adjusted EBITDA	$	129,326	$	42,958		$	(11,488	)	$	160,796

June 30, 2022
Net income (loss)	$	132,375	$	29,406		$	(31,062	)	$	130,719
Less: equity earnings from unconsolidated investment		—		(29,480	)		—			(29,480	)
Add: total distributions from unconsolidated investment		—		23,716			—			23,716
Add: interest expense, net		—		—			17,495			17,495
Add: loss on extinguishment of debt		—		—			4,048			4,048
Add: depreciation, depletion and amortization		9,715		—			—			9,715
Add: asset impairments		62		—			—			62
Adjusted EBITDA	$	142,152	$	23,642		$	(9,519	)	$	156,275

Net income increased $18.9 million primarily due to the decrease in operating and other expenses as discussed above. Adjusted EBITDA increased $4.5 million as compared to the prior year period primarily due to a $19.3 million increase in Adjusted EBITDA within our Soda Ash segment due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023. This increase in Adjusted EBITDA was partially offset by a $12.8 million decrease in Adjusted EBITDA within our Mineral Rights segment as a result of lower revenues and other income as discussed above.

Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)

The following table presents the three major categories of the statement of cash flows by business segment:

	Operating Segments
For the Six Months Ended (In thousands)	Mineral Rights			Soda Ash		Corporate and Financing			Total
June 30, 2023
Cash flow provided by (used in)
Operating activities	$	128,898		$	42,943	$	(17,591	)	$	154,250
Investing activities		1,314			—		(10	)		1,304
Financing activities		(583	)		—		(183,332	)		(183,915	)

June 30, 2022
Cash flow provided by (used in)
Operating activities	$	118,527		$	23,625	$	(26,698	)	$	115,454
Investing activities		909			—		—			909
Financing activities		(614	)		—		(191,913	)		(192,527	)

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The following table reconciles net cash provided by (used in) operating activities (the most comparable GAAP financial measure) by business segment to DCF and FCF:

	Operating Segments
For the Six Months Ended (In thousands)	Mineral Rights			Soda Ash		Corporate and Financing			Total
June 30, 2023
Net cash provided by (used in) operating activities	$	128,898		$	42,943	$	(17,591	)	$	154,250
Add: proceeds from asset sales and disposals		106			—		—			106
Add: return of long-term contract receivable		1,208			—		—			1,208
Less: maintenance capital expenditures		—			—		(10	)		(10	)
Distributable cash flow	$	130,212		$	42,943	$	(17,601	)	$	155,554
Less: proceeds from asset sales and disposals		(106	)		—		—			(106	)
Free cash flow	$	130,106		$	42,943	$	(17,601	)	$	155,448

June 30, 2022
Net cash provided by (used in) operating activities	$	118,527		$	23,625	$	(26,698	)	$	115,454
Add: proceeds from asset sales and disposals		346			—		—			346
Add: return of long-term contract receivable		563			—		—			563
Distributable cash flow	$	119,436		$	23,625	$	(26,698	)	$	116,363
Less: proceeds from asset sales and disposals		(346	)		—		—			(346	)
Free cash flow	$	119,090		$	23,625	$	(26,698	)	$	116,017

Operating cash flow, DCF and FCF increased $38.8 million, $39.2 million and $39.4 million, respectively, as compared to the prior year period due to increased cash flow within our Soda Ash, Corporate and Financing and Mineral Rights segments. The discussion by segment is as follows:

•

Mineral Rights Segment

◦

Operating cash flow, DCF and FCF increased $10.4 million, $10.8 million and $11.0 million, respectively, primarily due to the timing of minimum and royalty payments and prior year recoupments, partially offset by lower revenues and other income in the second quarter of 2023 as compared to the prior year period primarily driven by lower met coal sales prices.

•

Soda Ash Segment

◦

Operating cash flow, DCF and FCF increased $19.3 million due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023.

•

Corporate and Financing Segment

◦

Operating cash flow, DCF and FCF increased $9.1 million primarily due to lower cash paid for interest as a result of the retirement of the 2025 Senior Notes in 2022.

Liquidity and Capital Resources

Current Liquidity

As of June 30, 2023, we had total liquidity of $62.7 million, consisting of $10.7 million of cash and cash equivalents and $52.0 million of borrowing capacity under our Opco Credit Facility. We have debt service obligations, including approximately $20 million of principal repayments on Opco’s senior notes, throughout the remainder of 2023. The following table calculates our leverage ratio as of June 30, 2023:

	For the Three Months Ended
(In thousands)	September 30, 2022			December 31, 2022			March 31, 2023			June 30, 2023			Last 12 Months
Net income	$	74,555		$	63,218		$	79,275		$	70,334		$	287,382
Less: equity earnings from unconsolidated investment		(14,556	)		(15,759	)		(19,254	)		(26,978	)		(76,547	)
Add: total distributions from unconsolidated investment		10,339			10,780			10,780			32,350			64,249
Add: interest expense, net		5,141			3,638			2,853			3,492			15,124
Add: loss on extinguishment of debt		2,484			3,933			—			—			6,417
Add: depreciation, depletion and amortization		6,850			5,954			4,083			3,792			20,679
Add: asset impairments		812			3,583			—			69			4,464
Adjusted EBITDA	$	85,625		$	75,347		$	77,737		$	83,059		$	321,768

Debt—at June 30, 2023													$	183,059

Leverage Ratio													0.6 x

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Cash Flows

Cash flows provided by operating activities increased $38.8 million, from $115.5 million in the six months ended June 30, 2022 to $154.3 million in the six months ended June 30, 2023, due to an increased cash flow within our Soda Ash, Corporate and Financing and Mineral Rights segments, all discussed above.

Cash used in financing activities decreased $8.6 million, from $192.5 million used in the six months ended June 30, 2022 to $183.9 million used in the six months ended June 30, 2023, primarily due to the following:

	•	$165.0 million of borrowings on the Opco Credit Facility in 2023;
	•	$118.1 million of cash used to retire a portion of the 2025 Senior Notes in the second quarter of 2022; and
	•	$19.3 million of cash used to redeem the preferred units paid-in-kind during the first quarter of 2022.

These decreases in cash flow used were partially offset by the following:

	•	$132.0 million of cash used to repay a portion of the Opco Credit Facility in 2023;
	•	$128.3 million of cash used to redeem the preferred units in 2023; and
	•	$35.3 million of increased cash distributions to common unitholders and the general partner as a result of increasing our quarterly cash distribution to $0.75/unit beginning in the second quarter of 2022 in addition to the special distribution paid in the first quarter of 2023.

Capital Resources and Obligations

Debt, Net

We had the following debt outstanding as of June 30, 2023 and December 31, 2022:

	June 30,		December 31,
(In thousands)	2023		2022
Current portion of long-term debt, net	$	36,743	$	39,076
Long-term debt, net		145,693		129,205
Total debt, net	$	182,436	$	168,281

We have been and continue to be in compliance with the terms of the financial covenants contained in our debt agreements. For additional information regarding our debt and the agreements governing our debt, including the covenants contained therein, see Note 9. Debt, Net to the Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Transactions

We do not have any off-balance sheet arrangements with unconsolidated entities or related parties and accordingly, there are no off-balance sheet risks to our liquidity and capital resources from unconsolidated entities.

Related Party Transactions

The information required set forth under Note 11. Related Party Transactions to the Consolidated Financial Statements is incorporated herein by reference.

Summary of Critical Accounting Estimates

The preparation of Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. There have been no significant changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Recent Accounting Standards

We do not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, which includes adverse changes in commodity prices and interest rates as discussed below:

Commodity Price Risk

Our revenues, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on prevailing commodity prices. Historically, coal prices have been volatile, with prices fluctuating widely, and are likely to continue to be volatile. Depressed prices in the future would have a negative impact on our future financial results. In particular, substantially lower prices would significantly reduce revenues and could potentially trigger an impairment of our coal properties or a violation of certain financial debt covenants. Because substantially all our reserves are coal, changes in coal prices have a more significant impact on our financial results.

We are dependent upon the effective marketing of the coal mined by our lessees. Our lessees sell the coal under various long-term and short-term contracts as well as on the spot market. Current conditions in the coal industry may make it difficult for our lessees to extend existing contracts or enter into supply contracts with terms of one year or more. Our lessees' failure to negotiate long-term contracts could adversely affect the stability and profitability of our lessees' operations and adversely affect our future financial results. If more coal is sold on the spot market, coal royalty revenues may become more volatile due to fluctuations in spot coal prices.

The market price of soda ash and energy costs directly affects the profitability of Sisecam Wyoming's operations. If the market price for soda ash declines, Sisecam Wyoming's sales revenues will decrease. Historically, the global market and, to a lesser extent, the domestic market for soda ash have been volatile and are likely to remain volatile in the future.

Interest Rate Risk

Our exposure to changes in interest rates results from our borrowings under the Opco Credit Facility, which is subject to variably interest rates based upon SOFR. At June 30, 2023, we had $103.0 million in borrowings outstanding under the Opco Credit Facility. If interest rates were to increase by 1%, annual interest expense would increase approximately $1.0 million, assuming the same principal amount remained outstanding during the year.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

NRP carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of NRP management, including the Chief Executive Officer and Chief Financial Officer of the general partner of the general partner of NRP. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective in providing reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (b) such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in the Partnership’s Internal Control Over Financial Reporting

There were no material changes in the Partnership’s internal control over financial reporting during the first six months of 2023 that materially affected, or were reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

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PART II

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in various legal proceedings arising in the ordinary course of business. While the ultimate results of these proceedings cannot be predicted with certainty, we believe these ordinary course matters will not have a material effect on our financial position, liquidity or operations.

ITEM 1A. RISK FACTORS

During the period covered by this report, there were no material changes from the risk factors previously disclosed in Natural Resource Partners L.P.’s Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number		Description
3.1		Fifth Amended and Restated Agreement of Limited Partnership of Natural Resource Partners L.P., dated as of March 2, 2017 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on March 6, 2017).
3.2		Fifth Amended and Restated Agreement of Limited Partnership of NRP (GP) LP, dated as of December 16, 2011 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on December 16, 2011).
3.3		Fifth Amended and Restated Limited Liability Company Agreement of GP Natural Resource Partners LLC, dated as of October 31, 2013 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on October 31, 2013).
3.4		Certificate of Limited Partnership of Natural Resource Partners L.P. (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed April 19, 2002, File No. 333-86582).
10.1		Sixth Amendment to the Third Amended and Restated Credit Agreement, dated as of May 11, 2023, by and among NRP (Operating) LLC, the lenders party thereto and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on May 15, 2023).
10.2		New Lender Agreement, dated as of May 11, 2023, by and among NRP (Operating) LLC, Zions Bancorporation, N.A. dba Amegy Bank, and Gulf Capital Bank (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on May 15, 2023).
31.1*		Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley.
31.2*		Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley.
32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350.
32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350.
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

*		Filed herewith
**		Furnished herewith

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned and thereunto duly authorized.

	NATURAL RESOURCE PARTNERS L.P.
	By:	NRP (GP) LP, its general partner
	By:	GP NATURAL RESOURCE
		PARTNERS LLC, its general partner

Date: August 4, 2023	By:	/s/ Corbin J. Robertson, Jr.
		Corbin J. Robertson, Jr.
		Chairman of the Board and
		Chief Executive Officer
		(Principal Executive Officer)

Date: August 4, 2023	By:	/s/ Christopher J. Zolas
		Christopher J. Zolas
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

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		Page
Part I. Financial Information
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets	1
	Consolidated Statements of Comprehensive Income	2
	Consolidated Statements of Partners’ Capital	3
	Consolidated Statements of Cash Flows	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
Part II. Other Information
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	30
	Signatures	31

Natural Resource Partners (NRP) 10-Q2023 Q2 Quarterly report

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