Natural Resource Partners LP Limited Partnership · NYSE:NRP
Natural Resource Partners LP Limited Partnership — Natural Resource Partners — Fifth Annual Master Limited Partnership Conference 2006
17 slides from Natural Resource Partners LP Limited Partnership's conference presentation, Mar 9, 2006
Slide 1: Natural Resource Partners L.P.
Natural Resource Partners L.P. Fifth Annual Master Limited Partnership Conference New York March 9, 2006
Slide 2: Forward-Looking Statements
Forward-Looking Statements The statements made by representatives of Natural Resource Partners L.P. (“NRP”) during the course of this presentation that are not historical facts are forward-looking statements. Although NRP believes that the assumptions underlying these statements are reasonable, inve
Slide 3: Overview of Natural Resource Partners
Overview of Natural Resource Partners • Own and manage coal properties in the three major coal producing regions of the United States: – Appalachia, Illinois Basin and Western US – Eleven States • Lease reserves to experienced mine operators under long-term leases in exchange for royalty payments •
Slide 4: 2005 Highlights
2005 Highlights • Increased distributions for the tenth consecutive quarter to annualized rate of $3.05 • Reported record financial results – Net income increased 56% over 2004 – Coal royalty revenues increased 33% – Distributable cash flow increased 38% – Distributions increased 15% • Completed 6 a
Slide 5: Evolution Since Natural Resource Partners' IPO
Evolution Since Natural Resource Partners’ IPO IPO (10/11/2002) Current Reserves: ~1.2 billion tons ~2.0 billion tons (1) Annual Production: (2) 30.5 million tons 53.6 million tons Number of Leases: 62 176 (3) Number of Lessees: 31 67 (3) Market Capitalization: $454 million $1,359 million (4) Distri
Slide 6: Diverse Portfolio of Properties
Diverse Portfolio of Properties • 2.0 billion tons at 12/31/05 • 23% Met / 77% Steam Northern Powder River Basin • 58% Low Sulfur / 35% Compliance Reserves – 132 mm tons (7%) Low Sulfur Illinois Basin (1) Reserves – 62 mm tons (3%) Medium and High Sulfur Appalachia Coal Producing Basins in U.S. Rese
Slide 7: Stable and Predictable Historical Performance
Stable and Predictable Historical Performance Coal Production CA GR • Royalty structure supports 21% stable revenues • Diversified sources of royalty revenues • Downside price protection Coal Royalty Revenues without limiting upside; minimum royalty payments of A GR % C $29.6 mm at 12/31/05 42 • Tra
Slide 8: No Direct Operating Costs or Risks
No Direct Operating Costs or Risks Operating Cost Operating Risks • Capital Expenditures • Reclamation Exposure • Labor • Regulatory / Permitting • Employee Benefits • Competition • Property Taxes • Weather • Transportation / Processing • Economy 8
Slide 9: Active Acquisition History – Major Acquisitions
Active Acquisition History – Major Acquisitions Acquisition Reserves Date (mm tons) AFG ( Penn Central) Nov 2005 179 Area F/Lexington Sep 2005 25 (1) Steelhead Development Jul 2005 88 (2) Plum Creek Timber Company Mar 2005 85 BLC Properties Jan 2004 176 East Kentucky Nov 2003 21 PinnOak Jul 2003 79
Slide 10: Strong Cash Flow and Distribution Strength
Strong Cash Flow and Distribution Strength • Increased distributions 11 out of 12 quarters since IPO, 49% overall • Two full quarters of distributions reserved in cash balance – $20.9 mm per quarter based on $0.7625 per unit ($3.05 annualized) including GP and IDRs – Cash balance at 12/31/05 - $47.7
Slide 11: Strong Balance Sheet – 12/31/05
Strong Balance Sheet – 12/31/05 Cash $ 47.7 mm Total assets $ 685.0 mm Fixed rate debt $ 206.3 mm Floating rate debt $ 25.0 mm Debt / Total capitalization 35% Weighted average interest rate on Senior Notes 5.2% (Fixed) 11
Slide 12: Attractive Tax Structure Due to Coal
Attractive Tax Structure Due to Coal • Distributions are treated as return of capital • Unitholders are taxed on the income generated by the partnership • Coal royalty revenues are taxed as long term capital gains • Approximately 60% of the revenue generated is sheltered by depletion deductions • De
Slide 13: Favorable Current Coal Fundamentals
Favorable Current Coal Fundamentals Domestic Demand • Electricity generated from coal is currently 50%, EIA projects to increase to 57% by 2030 • High natural gas prices • Coal-fired equipment has become cleaner • Increase in plans to build new coal-fired plants • Scrubbers being added to existing c
Slide 14: NRP – A Proxy for the Coal Industry
NRP – A Proxy for the Coal Industry • Over 2 billion tons of low, medium and high sulfur coal reserves • 67 lessees produce approximately 5% of the US production from our 176 leases • Three major coal producing regions in eleven states – Appalachia • Northern • Central • Southern – Illinois Basin –
Slide 15: Investment Highlights
Investment Highlights • Attractive portfolio of long-life, diverse properties • Lease to operators with diverse customer base • Distribution supported by stable, royalty-based cash flows • No direct exposure to mining operating costs or risks • Well-positioned for growth via coal and mineral acquisi
Slide 16: Supplemental Data
Supplemental Data 16
Slide 17: Weighted Average Interest Rate on Senior Notes
Weighted Average Interest Rate on Senior Notes Amount Outstanding Fixed Interest 2006 Annual Series 12/31/05 Rate Payment A $53.4 mm 5.55% $3.3 mm B $67.9 mm 4.91% $6.05 mm C $35.0 mm 5.55% $0 mm D $50.0 mm 5.05% $0 mm Total $206.3 mm 5.22% $9.35 mm 17
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