Document





 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________________________________
FORM 10-Q
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2016
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 L.P.
(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.)
1201 Louisiana Street, Suite 3400
Houston, Texas 77002
(Address of principal executive offices)
(Zip Code)
(713) 751-7507
(Registrant’s telephone number, including area code) 
  ______________________________________________________
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  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "accelerated filer", "large accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer
¨
Accelerated Filer
 
ý
Non-accelerated Filer
¨  (Do not check if a smaller reporting company)
Smaller Reporting Company
 
¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
At August 1, 2016 there were 12,232,006 Common Units outstanding.
 






NATURAL RESOURCE PARTNERS, L.P.
TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 





i


PART I. FINANCIAL INFORMATION 
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data) 
 
June 30,
2016
 
December 31,
2015
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
21,391


$
41,204

Accounts receivable, net
40,815


43,633

Accounts receivable—affiliates
8,616


6,345

Inventory
7,832


7,835

Prepaid expenses and other
4,777


4,268

Current assets of discontinued operations (see Note 3)
113,218


17,844

Total current assets
196,649

 
121,129

Land
25,020


25,022

Plant and equipment, net
55,763


60,675

Mineral rights, net
946,355


984,522

Intangible assets, net
3,470


3,930

Intangible assets, net—affiliate
51,570

 
52,997

Equity in unconsolidated investment
259,778


261,942

Long-term contracts receivable—affiliate
44,572


47,359

Other assets
863


1,173

Other assets—affiliate
1,046


1,124

Non-current assets of discontinued operations (see Note 3)
—


110,162

Total assets
$
1,585,086

 
$
1,670,035

LIABILITIES AND CAPITAL
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
5,260


$
5,022

Accounts payable—affiliates
779


801

Accrued liabilities
33,837


44,997

Accrued liabilities—affiliates
—

 
456

Current portion of long-term debt, net
157,996


80,745

Current liabilities of discontinued operations (see Note 3)
79,947


4,388

Total current liabilities
277,819


136,409

Deferred revenue
42,608


80,812

Deferred revenue—affiliates
78,793


82,853

Long-term debt, net
1,050,562


1,186,681

Long-term debt, net—affiliate
—


19,930

Other non-current liabilities
3,670


5,171

Non-current liabilities of discontinued operations (see Note 3)
—


85,237

Commitments and contingencies (see Note 11)



Partners’ capital:



Common unitholders’ interest (12,232,006 units outstanding)
136,695


79,094

General partner’s interest
568


(606
)
Accumulated other comprehensive loss
(2,235
)

(2,152
)
Total partners’ capital
135,028

 
76,336

Non-controlling interest
(3,394
)
 
(3,394
)
Total capital
131,634

 
72,942

Total liabilities and capital
$
1,585,086

 
$
1,670,035


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

1



NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except per unit data) 
(Unaudited)

Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Revenues and other income:
 
 
 
 
 
 
 
Coal and hard mineral royalty and other
$
58,892


$
34,752


$
87,368


$
69,201

Coal and hard mineral royalty and other—affiliates
17,504


32,342


28,074


51,403

VantaCore
31,642


40,643


56,324


67,442

Oil and gas royalty
1,091


892


1,464


2,507

Equity in earnings of Ciner Wyoming
10,188


11,599


19,989


24,122

Gain (loss) on asset sales
(1,071
)

3,455


20,854


5,070

Total revenues and other income
118,246

 
123,683

 
214,073

 
219,745


 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Operating and maintenance expenses
29,797


36,781


56,582


68,592

Operating and maintenance expenses—affiliates, net
2,402


3,479


5,886


6,346

Depreciation, depletion and amortization
10,472


18,170


20,252


28,846

Amortization expense—affiliate
704


907


1,426


1,745

General and administrative
3,173


1,918


6,408


4,205

General and administrative—affiliates
866


301


1,803


1,385

Asset impairments
91


3,803


1,984


3,803

Total operating expenses
47,505

 
65,359

 
94,341

 
114,922


 
 
 
 
 
 
 
Income from operations
70,741


58,324


119,732


104,823


 
 
 
 
 
 
 
Other income (expense)
 
 
 
 
 
 
 
Interest expense
(22,054
)

(21,474
)

(44,251
)

(43,147
)
Interest expense—affiliate
(61
)
 
(462
)
 
(523
)
 
(924
)
Interest income
7


1


26


16

Other expense, net
(22,108
)
 
(21,935
)
 
(44,748
)
 
(44,055
)

 
 
 
 
 
 
 
Net income from continuing operations
48,633

 
36,389

 
74,984

 
60,768

Loss from discontinued operations (see Note 3)
(2,187
)
 
(3,811
)
 
(5,111
)
 
(10,701
)
Net income
46,446

 
32,578

 
69,873

 
50,067

Less: net income attributable to non-controlling interest
—

 
(1,244
)
 
—

 
(1,244
)
Net income attributable to NRP
$
46,446

 
$
31,334

 
$
69,873


$
48,823


 
 
 
 

 
 
Net income (loss) attributable to limited partners:
 
 
 
 
 
 
 
Continuing operations
$
47,726


$
34,442


$
73,616


$
58,334

Discontinued operations
(2,143
)

(3,735
)

(5,009
)

(10,487
)
Total
$
45,583


$
30,707


$
68,607


$
47,847


 
 
 
 
 
 
 
Net income (loss) attributable to the general partner:
 
 
 
 
 
 
 
Continuing operations
$
907


$
703


$
1,368


$
1,190

Discontinued operations
(44
)

(76
)

(102
)

(214
)
Total
$
863

 
$
627

 
$
1,266

 
$
976


 
 
 
 
 
 
 
Basic and diluted net income (loss) per common unit:
 
 
 
 
 
 
 
Continuing operations
$
3.90

 
$
2.82

 
$
6.02

 
$
4.77

Discontinued operations
(0.18
)

(0.31
)

(0.41
)

(0.86
)
Total
$
3.72

 
$
2.51

 
$
5.61

 
$
3.91


 
 
 
 
 
 
 
Weighted average number of common units outstanding
12,232


12,232


12,232


12,232


 
 
 
 
 
 
 
Net income
$
46,446

 
$
32,578

 
$
69,873

 
$
50,067

Add: comprehensive income (loss) from unconsolidated investment and other
462


210


(83
)

(755
)
Less: comprehensive income attributable to non-controlling interest
—

 
(1,244
)
 
—

 
(1,244
)
Comprehensive income
$
46,908

 
$
31,544

 
$
69,790

 
$
48,068

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

2



NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(In thousands) 
(Unaudited)
 
Common Unitholders
 
General Partner
 
Accumulated
Other
Comprehensive
Loss
 
Partners' Capital Excluding Non-Controlling Interest
 
Non-Controlling Interest
 
Total Capital
 
 
Units
 
Amounts
 
Balance at December 31, 2015
12,232

 
$
79,094

 
$
(606
)
 
$
(2,152
)
 
$
76,336

 
$
(3,394
)
 
$
72,942

Distributions to unitholders
—

 
(11,006
)
 
(226
)
 
—

 
(11,232
)
 
—

 
(11,232
)
Net income
—

 
68,607

 
1,266

 
—

 
69,873

 
—

 
69,873

Non-cash contributions
—

 
—

 
134

 
—

 
134

 
—

 
134

Comprehensive loss from unconsolidated investment and other
—

 
—

 
—

 
(83
)
 
(83
)
 
—

 
(83
)
Balance at June 30, 2016
12,232

 
$
136,695

 
$
568

 
$
(2,235
)
 
$
135,028

 
$
(3,394
)
 
$
131,634


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

3



NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six Months Ended
 
June 30,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Net income
$
69,873


$
50,067

Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:



Depreciation, depletion and amortization
20,252

 
28,846

Amortization expense—affiliates
1,426

 
1,745

Distributions from equity earnings from unconsolidated investment
22,050


21,805

Equity earnings from unconsolidated investment
(19,989
)
 
(24,122
)
Gain on asset sales
(20,854
)
 
(5,070
)
Loss from discontinued operations
5,111

 
10,701

Asset impairment
1,984


3,803

Gain on reserve swap
—


(9,290
)
Other, net
4,094


(10,049
)
Other, net—affiliates
212


(352
)
Change in operating assets and liabilities:



Accounts receivable
3,922


6,620

Accounts receivable—affiliates
(2,271
)

1,302

Accounts payable
150


686

Accounts payable—affiliates
(25
)

(41
)
Accrued liabilities
(3,131
)

63

Accrued liabilities—affiliates
(456
)
 
—

Deferred revenue
(38,204
)

7,499

Deferred revenue—affiliates
(4,060
)

63

Other items, net
(2,045
)

741

Other items, net—affiliates
607


—

Net cash provided by operating activities of continuing operations
38,646


85,017

Net cash provided by operating activities of discontinued operations
5,815

 
21,093

Net cash provided by operating activities
44,461


106,110

Cash flows from investing activities:
 
 
 
Proceeds from sale of oil and gas royalty properties
34,347


—

Proceeds from sale of coal and hard mineral royalty properties
9,802


1,845

Return of long-term contract receivables—affiliate
2,180


1,137

Proceeds from sale of plant and equipment and other
843


5,255

Acquisition of plant and equipment and other
(3,919
)

(5,073
)
Acquisition of mineral rights
—


(400
)
Net cash provided by investing activities of continuing operations
43,253


2,764

Net cash used in investing activities of discontinued operations
(3,814
)
 
(25,285
)
Net cash provided by (used in) investing activities
39,439


(22,521
)
Cash flows from financing activities:
 
 
 
Proceeds from loans
20,000


25,000

Repayments of loans
(98,482
)

(58,483
)
Distributions to partners
(11,232
)

(54,910
)
Distributions to non-controlling interest
—


(2,744
)
Contributions to discontinued operations
—

 
(31,725
)
Debt issue costs and other
(11,998
)

(5,086
)
Net cash used in financing activities of continuing operations
(101,712
)
 
(127,948
)
Net cash provided by (used in) financing activities of discontinued operations
(10,570
)
 
21,808

Net cash used in financing activities
(112,282
)

(106,140
)
Net decrease in cash and cash equivalents
(28,382
)
 
(22,551
)
Cash and cash equivalents of continuing operations at beginning of period
41,204

 
48,971

Cash and cash equivalents of discontinued operations at beginning of period
10,569

 
1,105

Cash and cash equivalents at beginning of period
51,773


50,076

Cash and cash equivalents at end of period
23,391


27,525

Less: cash and cash equivalents of discontinued operations at end of period
2,000

 
18,721

Cash and cash equivalents of continuing operations at end of period
$
21,391


$
8,804

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

4

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, operating, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal, trona and soda ash, oil and gas, construction aggregates, frac sand and other natural resources. 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. Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation.

As described in Note 2. Segment Information, we reclassified certain prior period amounts to conform to the way we internally manage and monitor segment performance. In particular, prior year general and administrative charges that were allocated to operating segments have been reclassified to Operating and maintenance expenses and Operating and maintenance expenses—affiliates on the Consolidated Statements of Comprehensive Income. The prior period reclassifications for new segments had no impact on the Partnership's consolidated financial position, net income (loss) or cash flows.

As described in Note 3. Discontinued Operations, we reclassified the operations of the Partnership's non-operated oil and gas working interest assets to discontinued operations and reclassified its related assets and liabilities to assets and liabilities held for sale for all periods presented in the accompanying consolidated financial statements.

On January 1, 2016, the Partnership adopted a new accounting standard using a retrospective approach that required the presentation of the Partnership's debt issuance costs as a direct deduction from the related debt liability, rather than recorded as an asset. The adoption resulted in a reclassification that reduced other current assets and short-term debt by $0.2 million and reduced other assets and long-term debt (including affiliate) by $13.8 million on the Partnership’s Consolidated Balance Sheet at December 31, 2015.

On January 26, 2016, the board of directors of our general partner approved a 1-for-10 reverse split on our common units, effective following market close on February 17, 2016. Pursuant to the authorization provided, the Partnership completed the 1-for-10 reverse unit split and its common units began trading on a reverse unit split-adjusted basis on the New York Stock Exchange on February 18, 2016. As a result of the reverse unit split, every 10 outstanding common units were combined into one common unit. The reverse unit split reduced the number of common units outstanding from 122.3 million units to 12.2 million units. All unit and per unit data included in these consolidated financial statements has been retroactively restated to reflect the reverse unit split.

In the second quarter of 2016, the Partnership determined its net cash provided by operating activities and net cash used by financing activities were understated by $8.0 million for the three months ended March 31, 2016. The Consolidated Statement of Cash Flows for the six months ended June 30, 2016 has been corrected for this error.

In our opinion, all adjustments considered necessary for a fair presentation have been included. The interim financial statements should be read in conjunction with the audited financial statements and related notes included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2015. Interim results are not necessarily indicative of the results for a full year.


5

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



Management’s Forecast, Strategic Plan and Going Concern Analysis
    
While NRP has a diversified portfolio of assets and a history and continued forecast of profitable operations with positive operating cash flows, its operating results and credit metrics continue to be impacted by demand challenges for coal. As described in Note 8. Debt and Debt—Affiliate, NRP Operating LLC ("Opco"), a wholly owned subsidiary of NRP, has debt agreements that contain customary financial covenants, including maintenance covenants, and other covenants. In addition, NRP has issued $425 million of 9.125% Senior Notes due October 2018 that are governed by an indenture (the "Indenture") containing customary incurrence-based financial covenants and other covenants, but not maintenance covenants. In July 2016, NRP Oil and Gas LLC, a wholly owned subsidiary, sold all of its non-operated oil and gas working interest assets and used a portion of the proceeds to repay the NRP Oil and Gas reserve based lending facility (the "RBL Facility") in full. The following discussion presents management’s going concern analysis in light of management’s outlook and strategic plan to address its debt covenant compliance and maturities.

As of June 30, 2016, Opco had $260.0 million of indebtedness outstanding under its revolving credit facility (the "Opco Credit Facility") with scheduled commitment reductions of $50.0 million on December 31, 2016, $30.0 million on June 30, 2017, $30.0 million on December 31, 2017 and the remaining $150 million on June 30, 2018. In addition, as of June 30, 2016 Opco had $537.6 million outstanding under several series of Private Placement Notes with scheduled principal payments of $80.8 million through June 30, 2017 (the "Opco Private Placement Notes") (collectively referred to as the "Opco Debt agreements"). The maximum leverage ratio under the Opco Debt agreements is required not to exceed 4.0x. In addition, the Opco Debt agreements contain certain additional customary negative covenants that, among other items, restrict Opco’s ability to incur additional debt, grant liens on its assets, make investments, sell assets and engage in business combinations. Opco's leverage ratio was 2.84x at June 30, 2016.

Our going concern analysis includes an evaluation of relevant conditions and events including the Partnership's ability to meet its obligations and remain in compliance with its debt covenants over the next twelve months. We currently forecast that we will meet the Partnership's obligations, that we will be in compliance with all of the covenants under the Opco Debt agreements and that we will continue as a going concern. However, our forecast is sensitive to commodity pricing and counterparty risk. Breaches of the Opco Debt agreement covenants that are not waived or cured, to the extent possible, would result in an event of default under the Opco Debt agreements, and if such debt is accelerated by the lenders thereunder, such acceleration would also result in a cross-default under the Indenture. We are currently pursuing or considering a number of actions in order to mitigate the effects of adverse market developments which could otherwise cause us to breach financial covenants under the Opco Debt agreements. These actions include (i) dispositions of assets, (ii) actively managing our debt capital structure through a number of potential alternatives, including exchange offers and non-traditional debt and equity financing, (iii) minimizing our capital expenditures, (iv) obtaining waivers or amendments from our lenders, (v) effectively managing our working capital, (vi) improving our cash flows from operations and (vii) engaging legal and financial advisers to assist us in this process.

Recently Issued Accounting Standards Not Yet Adopted

The Financial Accounting Standards Board ("FASB") amended its guidance on revenue recognition. The core principle of this amendment is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The guidance will also require enhanced disclosures, provide more comprehensive guidance for transactions such as service revenue and contract modifications, and enhance guidance for multiple-element arrangements. The Partnership is required to adopt this guidance in the first quarter of 2018 using one of two retrospective application methods. The Partnership is currently evaluating the provisions of this guidance and has not determined the impact this guidance may have on its consolidated financial statements and related disclosure or decided upon the method of adoption.

The FASB issued guidance on management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new guidance will require a formal assessment of going concern by management based on criteria prescribed in the new guidance, but will not impact the Partnership's financial position or results of operations. This guidance is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Partnership is evaluating the impact this guidance will have on its consolidated financial statements and related disclosure and reviewing its policies and processes to ensure compliance with this new guidance upon adoption.



6

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



The FASB issued authoritative guidance which intended to simplify the measurement of inventory. This guidance requires an entity to measure inventory at the lower of cost or net realizable value, and defines net realizable value as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance is effective for annual and interim periods ending after December 15, 2016. The Partnership is currently evaluating the impact of this guidance on its consolidated financial statements.

The FASB issued authoritative lease guidance that requires lessees to recognize assets and liabilities on the balance sheet for the present value of the rights and obligations created by all leases with terms of more than 12 months. The guidance also requires disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for annual and interim periods ending after December 31, 2018. The Partnership is currently evaluating the impact of the provisions of this guidance on its consolidated financial statements.

The FASB issued authoritative guidance that replaces the incurred loss impairment methodology in the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for annual and interim periods ending after December 31, 2019. The Partnership is currently evaluating the impact of the provisions of this guidance on its consolidated financial statements.

2.    Segment Information

Due to acquisitions that diversified our natural resource asset base, effective for the quarter ended December 31, 2015, management revised the Partnership's operating segments to align with its management structure and organizational responsibilities and revised the information that its chief operating decision maker regularly reviews for purposes of allocating resources and assessing performance. As a result, effective for the quarter ended December 31, 2015, we reported our financial performance based on the new segments as described below.

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

Coal and Hard Mineral Royalty and Other—consists primarily of coal royalty, coal related transportation and processing assets, aggregate and industrial minerals royalty assets and timber. Our coal reserves are primarily located in Appalachia, the Illinois Basin and the Western United States. Our aggregates and industrial minerals are located in a number of states across the United States. In February 2016, we sold reserves and related royalty rights at three aggregates operations located in Texas, Georgia and Tennessee.

Soda Ash—consists of the Partnership's 49% non-controlling equity interest in a trona ore mining operation and soda ash refinery in the Green River Basin, Wyoming. Ciner Resources LP, our operating partner, mines the trona, processes it into soda ash, and distributes the soda ash both domestically and internationally into the glass and chemicals industries. We receive regular quarterly distributions from this business.

VantaCore—consists of our construction materials business acquired in October 2014 that operates hard rock quarries, an underground limestone mine, sand and gravel plants, asphalt plants and marine terminals. VantaCore operates in Pennsylvania, West Virginia, Tennessee, Kentucky and Louisiana.

Oil and Gas—consists of our royalty interests and overriding royalty interests in oil and natural gas properties. We own fee mineral, royalty and overriding royalty interests in oil and gas properties in Oklahoma and Louisiana. In February 2016, we sold royalty and overriding royalty interests in several producing properties located in the Appalachian Basin. In July 2016, we completed the sale of all of our Williston Basin non-operated working interest assets in North Dakota and Montana. See Note 3. Discontinued Operations for additional details about our discontinued operations. During the third quarter of 2016, the Partnership plans to transition the management responsibilities and reporting of its remaining oil and gas royalty assets into the Coal and Hard Minerals Royalty and Other operating segment.

Direct segment costs and certain costs incurred at a corporate level that are identifiable and that benefit the Partnership's segments are allocated to the operating segments. These allocated costs include costs of: taxes, legal, information technology and shared facilities services and are included in Operating and maintenance expenses and Operating and maintenance expenses—affiliates on the Consolidated Statements of Comprehensive Income. Prior year general and administrative charges that are allocated

7

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



to the operating segments have been reclassified to operating and maintenance expenses. Intersegment sales are at prices that approximate market.

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


8

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



The following table summarizes certain financial information for each of the Partnership's operating segments (in thousands):
 
 
Operating Segments
 
 
 
 
 
Coal and Hard Mineral Royalty and Other
 
Soda Ash
 
VantaCore
 
Oil and Gas
 
Corporate and Financing
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended June 30, 2016
Revenues (including affiliates)
 
$
76,396

 
$
10,188

 
$
31,642

 
$
1,091

 
$
—

 
$
119,317

Intersegment revenues (expenses)
 
30

 
—

 
(30
)
 
—

 
—

 
—

Gain (loss) on asset sales
 
67

 
—

 
9

 
(1,147
)
 
—

 
(1,071
)
Operating and maintenance expenses (including affiliates)
 
7,419

 
—

 
24,492

 
288

 
—

 
32,199

Depreciation, depletion and amortization
 
7,308

 
—

 
3,690

 
178

 
—

 
11,176

Asset impairment
 
91

 
—

 
—

 
—

 
—

 
91

Interest expense, net
 
—

 
—

 
—

 
—

 
22,108

 
22,108

Net income (loss) from continuing operations
 
61,675

 
10,188

 
3,439

 
(522
)
 
(26,147
)
 
48,633

Net loss from discontinued operations
 
—

 
—

 
—

 
(257
)
 
(1,930
)
 
(2,187
)
For the Three Months Ended June 30, 2015
Revenues (including affiliates)
 
$
67,094

 
$
11,599

 
$
40,643

 
$
892

 
$
—

 
$
120,228

Gain on asset sales
 
3,056

 
—

 
399

 
—

 
—

 
3,455

Operating and maintenance expenses (including affiliates)
 
7,070

 
—

 
32,564

 
626

 
—

 
40,260

Depreciation, depletion and amortization
 
12,749

 
—

 
4,865

 
1,463

 
—

 
19,077

Asset impairment
 
3,803

 
—

 
—

 
—

 
—

 
3,803

Interest expense, net
 
—

 
—

 
—

 
—

 
21,935

 
21,935

Net income (loss) from continuing operations
 
46,528

 
11,599

 
3,613

 
(1,197
)
 
(24,154
)
 
36,389

Net loss from discontinued operations
 
—

 
—

 
—

 
(2,404
)
 
(1,407
)
 
(3,811
)
For the Six Months Ended June 30, 2016
Revenues (including affiliates)
 
$
115,442

 
19,989

 
56,324

 
1,464

 
—

 
193,219

Intersegment revenues (expenses)
 
52

 
—

 
(52
)
 
—

 
—

 
—

Gain on asset sales
 
1,656

 
—

 
9

 
19,189

 
—

 
20,854

Operating and maintenance expenses (including affiliates)
 
14,820

 
—

 
46,627

 
1,021

 
—

 
62,468

Depreciation, depletion and amortization
 
14,069

 
—

 
7,252

 
357

 
—

 
21,678

Asset impairment
 
1,984

 
—

 
—

 
—

 
—

 
1,984

Interest expense, net
 
—

 
—

 
—

 
—

 
44,748

 
44,748

Net income (loss) from continuing operations
 
86,277

 
19,989

 
2,402

 
19,275

 
(52,959
)
 
74,984

Net loss from discontinued operations
 
—

 
—

 
—

 
(2,092
)
 
(3,019
)
 
(5,111
)
For the Six Months Ended June 30, 2015
Revenues (including affiliates)
 
120,604

 
24,122

 
67,442

 
2,507

 
—

 
214,675

Gain on asset sales
 
4,671

 
—

 
399

 
—

 
—

 
5,070

Operating and maintenance expenses (including affiliates)
 
15,484

 
—

 
57,998

 
1,456

 
—

 
74,938

Depreciation, depletion and amortization
 
22,765

 
—

 
8,721

 
(895
)
 
—

 
30,591

Asset impairment
 
3,803

 
—

 
—

 
—

 
—

 
3,803

Interest expense, net
 
—

 
—

 
—

 
—

 
44,055

 
44,055

Net income (loss) from continuing operations
 
83,223

 
24,122

 
1,122

 
1,946

 
(49,645
)
 
60,768

Net loss from discontinued operations
 
—

 
—

 
—

 
(8,486
)
 
(2,215
)
 
(10,701
)
Total Assets
June 30, 2016
 
996,714

 
259,778

 
199,187

 
128,903

 
504

 
1,585,086

December 31, 2015
 
1,047,922

 
261,942

 
200,348

 
158,862

 
961

 
1,670,035


9

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



3.    Discontinued Operations

In June 2016, the Partnership determined it met held for sale criteria for its non-operated oil and gas working interest assets. In June 2016, NRP Oil and Gas signed a definitive agreement to sell these assets for $116.1 million, subject to customary closing conditions and purchase price adjustments. In July 2016, NRP Oil and Gas closed this transaction, which had an effective date of April 1, 2016.

The Partnership's exit from its non-operated oil and gas working interest business represents a strategic shift to reduce debt and focus on its aggregates, soda ash and coal and hard minerals business segments. As a result, we have classified the operating results and cash flows of our non-operated oil and gas working interest assets as discontinued operations in our consolidated statements of comprehensive income and consolidated statements of cash flows for all periods presented. Additionally, the related assets and liabilities associated with discontinued operations are classified as held for sale in our consolidated balance sheets. The assets and liabilities of our non-operated oil and gas working interest assets as of June 30, 2016 are classified as current in our consolidated balance sheet as we closed on the transaction in July 2016. Remaining in the Oil and Gas segment is our investments in royalty interests in oil and natural gas properties that the Partnership plan to transition into the Coal Hard Minerals Royalty and Other operating segement during the third quarter of 2016.

The following table (in thousands) presents summarized financial results of the Partnership's discontinued operations in the Consolidated Statements of Comprehensive Income:
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
 
(Unaudited)
Revenues and other income:
 
 
 
 
 
 
 
Oil and gas
$
9,511

 
$
13,947

 
$
16,435

 
$
27,111

Gain (loss) on asset sales
(184
)
 
—

 
(184
)
 
451

Total revenues and other income
9,327


13,947


16,251


27,562

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Operating and maintenance expenses (including affiliates)
5,871

 
4,768

 
10,252

 
10,587

Depreciation, depletion and amortization
3,286

 
11,583

 
7,527

 
25,461

Asset impairments
427

 
—

 
564

 
—

Total operating expenses
9,584


16,351


18,343


36,048

 
 
 
 
 
 
 
 
Interest expense
(1,930
)
 
(1,407
)
 
(3,019
)
 
(2,215
)
Loss from discontinued operations
$
(2,187
)
 
$
(3,811
)
 
$
(5,111
)
 
$
(10,701
)



10

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)




The following table (in thousands) presents the carrying amounts of the Partnership's assets and liabilities of discontinued operations in the Consolidated Balance Sheets:
 
June 30,
2016
 
December 31,
2015
 
(Unaudited)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
2,000

 
$
10,569

Accounts receivable, net (including affiliates) (1)
6,845

 
7,053

Mineral rights, net
103,962

 
—

Other
411

 
222

Total current assets
113,218


17,844

Mineral rights, net
—

 
109,505

Other non-current assets
—

 
657

     Total assets of discontinued operations
$
113,218

 
$
128,006

 
 
 
 
LIABILITIES
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt, net (2)
$
74,783

 
$
—

Other (including affiliates) (1)
5,164

 
4,388

Total current liabilities
79,947

 
4,388

Long-term debt, net (2)
—

 
83,600

Other non-current liabilities
—

 
1,637

     Total liabilities of discontinued operations
$
79,947

 
$
89,625

 
 
 
 
 
(1)
See Note 10. Related Party Transactions for additional information on the Partnership's related party assets and liabilities.
(2)
The Partnership identified the RBL Facility as specifically attributed to its non-operated oil and gas working interest assets and included the interest from this debt in discontinued operations. See Note 8. Debt and Debt—Affiliate for additional information on the Partnership's debt related to discontinued operations.
    
The following table (in thousands) presents supplemental cash flow information of the Partnership's discontinued operations:
 
Six Months Ended
 
June 30,
 
2016
 
2015
 
(Unaudited)
Cash paid for interest
$
1,489

 
$
1,435


Capital expenditures related to the Partnership's discontinued operations were $3.8 million and $28.7 million during the six months ended June 30, 2016 and 2015, respectively.

4.    Equity Investment

We account for our 49% investment in Ciner Wyoming LLC ("Ciner Wyoming", and formerly "OCI Wyoming LLC") using the equity method of accounting. Ciner Wyoming distributed $22.1 million and $21.8 million to us in the six months ended June 30, 2016 and 2015, respectively.

The difference between the amount at which the investment in Ciner Wyoming is carried and the amount of underlying equity in Ciner Wyoming's net assets was $152.1 million and $154.8 million as of June 30, 2016 and December 31, 2015, respectively. This excess basis relates to plant, property and equipment and right to mine assets. The excess basis difference that relates to property, plant and equipment is being amortized into income using the straight-line method over a weighted average of 28 years. The excess basis difference that relates to right to mine assets is being amortized into income using the units of production method. Our equity in the earnings of Ciner Wyoming is summarized as follows (in thousands):

11

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
 
(Unaudited)
Income allocation to NRP’s equity interests
$
11,388

 
$
12,786

 
$
22,384

 
$
26,513

Amortization of basis difference
(1,200
)
 
(1,187
)
 
(2,395
)
 
(2,391
)
Equity in earnings of unconsolidated investment
$
10,188

 
$
11,599

 
$
19,989

 
$
24,122


The results of Ciner Wyoming’s operations are summarized as follows (in thousands):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
 
(Unaudited)
Sales
$
116,698

 
$
122,200

 
$
231,082

 
$
242,630

Gross profit
28,732

 
31,091

 
56,983

 
63,815

Net Income
23,241

 
26,094

 
45,682

 
54,108


The financial position of Ciner Wyoming is summarized as follows (in thousands):
 
June 30,
2016
 
December 31,
2015
 
(Unaudited)
 
 
Current assets
$
134,053

 
$
144,695

Noncurrent assets
231,926

 
233,845

Current liabilities
43,772

 
43,018

Noncurrent liabilities
102,437

 
116,808


The purchase agreement for the acquisition of the Partnership’s interest in Ciner Wyoming required the Partnership to pay additional contingent consideration to Anadarko to the extent certain performance criteria described in the purchase agreement were met by Ciner Wyoming in any of the years 2013, 2014 or 2015. During the first quarters of 2014, 2015 and 2016, the Partnership paid contingent consideration of $0.5 million, $3.8 million and $7.2 million, respectively, in contingent consideration to Anadarko for performance criteria met by Ciner Wyoming in 2013, 2014 and 2015, respectively. The Partnership has no further contingent consideration payments due to Anadarko under the purchase agreement.

5.    Plant and Equipment

The Partnership’s plant and equipment consist of the following (in thousands):
 
June 30,
2016
 
December 31,
2015
 
(Unaudited)
 
 
Plant and equipment at cost
$
79,009

 
$
92,049

Construction in process
1,031

 
646

Less accumulated depreciation
(24,277
)
 
(32,020
)
Total plant and equipment, net
$
55,763


$
60,675


Depreciation expense related to the Partnership's plant and equipment totaled $3.0 million and $4.5 million for the three months ended June 30, 2016 and 2015, respectively. Depreciation expense related to the Partnership's plant and equipment totaled $6.5 million and $9.0 million for the six months ended June 30, 2016 and 2015, respectively.


12

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



6.    Mineral Rights

The Partnership’s mineral rights consist of the following (in thousands):
 
June 30, 2016
 
(Unaudited)
 
Carrying Value
 
Accumulated Depletion
 
Net Book Value
Coal and Hard Mineral Royalty and Other
$
1,268,661

 
$
(443,259
)
 
$
825,402

VantaCore
112,700

 
(4,017
)
 
108,683

Oil and Gas
18,098

 
(5,828
)
 
12,270

Total
$
1,399,459

 
$
(453,104
)
 
$
946,355

 
December 31, 2015
 
Carrying Value
 
Accumulated Depletion
 
Net Book Value
Coal and Hard Mineral Royalty and Other
$
1,278,274

 
$
(432,260
)
 
$
846,014

VantaCore
112,700

 
(3,082
)
 
109,618

Oil and Gas
38,884

 
(9,994
)
 
28,890

Total
$
1,429,858

 
$
(445,336
)
 
$
984,522


Depletion expense related to the Partnership’s mineral rights totaled $7.2 million and $13.3 million for the three months ended June 30, 2016 and 2015, respectively. Depletion expense related to the Partnership's mineral rights totaled $13.3 million and $19.3 million for the six months ended June 30, 2016 and 2015, respectively.

Sales of Royalty Properties

As discussed in Note 1. "Basis of Presentation," we are currently pursuing or considering a number of actions, including dispositions of assets, in order to mitigate the effects of adverse market developments which could otherwise cause us to breach financial covenants under our debt agreements. As part of this plan, the Partnership sold the following assets during the six months ended June 30, 2016:
1)Oil and gas royalty and overriding royalty interests in several producing properties located in the Appalachian Basin for $36.4 million. The effective date of the sale was January 1, 2016, and the Partnership recorded a $19.2 million gain from this sale included in Gain on asset sales on its Consolidated Statement of Comprehensive Income.
2)Hard mineral reserves and related royalty rights at three aggregates operations located in Texas, Georgia and Tennessee for $10.0 million. The effective date of the sale was February 1, 2016, and the Partnership recorded a $1.6 million gain from this sale included in Gain on asset sales on its Consolidated Statement of Comprehensive Income.

7.    Intangible Assets (Including Affiliate)

The Partnership's intangible assets—affiliate relate to above market coal transportation contracts with subsidiaries of Foresight Energy LP ("Foresight Energy") in which we receive throughput fees for the handling and transportation of coal.
 
June 30,
2016
 
December 31,
2015
 
(Unaudited)
 
 
Intangible assets—affiliate
$
81,109

 
$
81,109

Less accumulated amortization—affiliate
(29,539
)
 
(28,112
)
Total intangible assets, net—affiliate
$
51,570

 
$
52,997


Amortization expense related to the Partnership's intangible assets—affiliate totaled $0.7 million and $0.9 million for the three months ended June 30, 2016 and 2015, respectively. Amortization expense related to the Partnership's intangible assets—affiliate totaled $1.4 million and $1.8 million for the six months ended June 30, 2016 and 2015, respectively.


13

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



The Partnership's intangible assets consist of permits, aggregate-related trade names and other agreements as follows (in thousands):
 
June 30,
2016
 
December 31,
2015
 
(Unaudited)
 
 
Intangible assets
$
5,077

 
$
5,076

Less accumulated amortization
(1,607
)
 
(1,146
)
Total intangible assets, net
$
3,470

 
$
3,930


Amortization expense related to the Partnership's intangible assets totaled $0.3 million for both the three months ended June 30, 2016 and 2015 and $0.5 million both the six months ended June 30, 2016 and 2015.


8. Debt and Debt—Affiliate

As of June 30, 2016 and December 31, 2015, debt and debt—affiliate consisted of the following (in thousands):
 
June 30,
2016
 
December 31,
2015
 
(Unaudited)
 
 
NRP LP debt:
 
 
 
9.125% senior notes, with semi-annual interest payments in April and October, due October 2018, $300 million issued at 99.007% and $125 million issued at 99.5%
$
425,000

 
$
425,000

Opco debt (1):
 
 
 
$300 million floating rate revolving credit facility, due June 2018
260,000

 
290,000

4.91% senior notes, with semi-annual interest payments in June and December, with annual principal payments in June, due June 2018
9,233

 
13,850

8.38% senior notes, with semi-annual interest payments in March and September, with annual principal payments in March, due March 2019
64,286

 
85,714

5.05% senior notes, with semi-annual interest payments in January and July, with annual principal payments in July, due July 2020
38,462

 
38,462

5.31% utility local improvement obligation, with annual principal and interest payments in February, due March 2021
961

 
1,153

5.55% senior notes, with semi-annual interest payments in June and December, with annual principal payments in June, due June 2023
18,900

 
21,600

4.73% senior notes, with semi-annual interest payments in June and December, with annual principal payments in December, due December 2023
60,000

 
60,000

5.82% senior notes, with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024
120,000

 
135,000

8.92% senior notes, with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024
36,364

 
40,909

5.03% senior notes, with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026
148,077

 
148,077

5.18% senior notes, with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026
42,308

 
42,308

NRP Oil and Gas debt:
 
 
 
Reserve-based revolving credit facility due November 2019
75,000

 
85,000

Total debt at face value
$
1,298,591

 
$
1,387,073

Net unamortized debt discount
(1,700
)
 
(2,077
)
Net unamortized debt issuance costs (1)
(13,550
)
 
(14,040
)
Total debt, net
$
1,283,341


$
1,370,956

Less: current portion of long-term debt
157,996

 
80,745

Less: debt classified as liabilities of discontinued operations
74,783

 
83,600

Total long-term debt
$
1,050,562

 
$
1,206,611

 
 
 
 
 

14

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



(1)
See Note 1. Basis of Presentation for discussion of debt issuance costs reclassification upon adoption of new accounting standard on January 1, 2016.
NRP Debt

NRP Senior Notes    

In September 2013, NRP, together with NRP Finance Corporation ("NRP Finance"), a wholly owned subsidiary of NRP, as co-issuer, issued $300.0 million of 9.125% Senior Notes at an offering price of 99.007% of par (the "NRP Senior Notes"). Net proceeds after expenses from the issuance of NRP Senior Notes were approximately $289.0 million. The NRP Senior Notes call for semi-annual interest payments on April 1 and October 1 of each year, and will mature on October 1, 2018.

In October 2014, NRP, together with NRP Finance as co-issuer, issued an additional $125.0 million of the NRP Senior Notes at an offering price of 99.5% of par. The additional issuance constituted the same series of securities as the existing NRP Senior Notes. Net proceeds of $122.6 million from the additional issuance of the NRP Senior Notes were used to fund a portion of the purchase price of NRP’s acquisition of non-operated working interests in oil and gas assets located in the Williston Basin in North Dakota.

NRP and NRP Finance have the option to redeem the NRP Senior Notes, in whole or in part, at any time on or after April 1, 2016, at fixed redemption prices specified in the indenture governing the NRP Senior Notes (the "Indenture"). The Indenture contains covenants that, among other things, limit the ability of NRP and certain of its subsidiaries to incur or guarantee additional indebtedness. Under the Indenture, NRP and certain of its subsidiaries generally are not permitted to incur additional indebtedness unless, on a consolidated basis, the fixed charge coverage ratio (as defined in the indenture) is at least 2.0 to 1.0 for the four preceding full fiscal quarters. The ability of NRP and certain of its subsidiaries to incur additional indebtedness is further limited in the event the amount of indebtedness of NRP and certain of its subsidiaries that is senior to NRP’s unsecured indebtedness exceeds certain thresholds.

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 NRP Trona LLC, as further described below. As of June 30, 2016 and December 31, 2015, Opco was in compliance with the terms of the financial covenants contained in its debt agreements.

Opco Credit Facility

In June 2016, Opco entered into an amendment (the "First Amendment") to its $300.0 million Amended and Restated Credit Agreement ("Opco Credit Facility") that is guaranteed by all of Opco’s wholly owned subsidiaries, and is secured by liens on certain of the assets of Opco and its subsidiaries, as further described below. Under the First Amendment:
•
The maturity date of the Opco Credit Facility was extended from October 1, 2017 to June 30, 2018;
•
The maximum leverage ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the Opco Credit Facility) has been amended to remain at 4.0x for the remaining term of the Opco Credit Facility, including for the period ending June 30, 2016; and
•
The asset sale covenant was amended to allow asset sales of up to $300.0 million from and after the effective date of the First Amendment; provided, however, that 75% of the net cash proceeds of any such asset sales must be used to repay the Opco Credit Facility (without any corresponding commitment reduction) and/or NRP Opco’s Senior Notes described below.
  
On the effective date of the First Amendment, the total commitment under the Opco Credit Facility was reduced from $300.0 million to $260.0 million. In addition, Opco and the lenders agreed to further reduce commitments under the Opco Credit Facility to (a) $210.0 million on December 31, 2016, (b) $180.0 million on June 30, 2017 and (c) $150.0 million on December 31, 2017. Opco will have the right to delay any of these commitment reductions by up to 90 days each upon the agreement of the lenders holding 66.7% of the then-existing commitments. To the extent any such commitment reduction is extended under the terms of the A&R Revolving Credit Facility, Opco's ability to make distributions to the Partnership will be limited to amounts necessary for the Partnership to pay taxes and other general partnership expenses and make interest payments on its 9.125% Senior Notes due 2018.

15

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)




In addition to the 4.0x leverage ratio described above, the Opco Credit Facility requires Opco to maintain a ratio of consolidated EBITDDA to consolidated fixed charges (consisting of consolidated interest expense and consolidated lease expense) of not less than 3.5 to 1.0. As of June 30, 2016, Opco's leverage ratio was 2.84x, and fixed charge coverage ratio was 5.67x.

Effective on the date of the First Amendment, indebtedness under the Opco Credit Facility bears interest, at Opco's option, at:
•
the higher of (i) the prime rate as announced by the agent bank; (ii) the federal funds rate plus 0.50%; or (iii) LIBOR plus 1%, in each case plus an applicable margin ranging from 2.50% to 3.50%; or
•
a rate equal to LIBOR plus an applicable margin ranging from 3.50% to 4.50%.

The weighted average interest rates for the borrowings outstanding under the Opco Credit Facility for the three months ended June 30, 2016 and 2015 were 4.11% and 2.19%, respectively. The weighted average interest rates for the borrowings outstanding under the Opco Credit Facility for the six months ended June 30, 2016 and 2015 were 3.95% and 2.07%, respectively.

Opco will incur a commitment fee on the unused portion of the revolving credit facility at a rate of 0.50% per annum. Opco may prepay all amounts outstanding under the Opco Credit Facility at any time without penalty.

The Opco Credit Facility contains certain additional customary negative covenants that, among other items, restrict Opco’s ability to incur additional debt, grant liens on its assets, make investments, sell assets and engage in business combinations. Included in the investment covenant are restrictions upon Opco’s ability to acquire assets where Opco does not maintain certain levels of liquidity. The Opco Credit Facility also contains customary events of default, including cross-defaults under Opco’s senior notes (as described below).

The Opco Credit Facility is collateralized and secured by liens on certain of Opco’s assets with a carrying values of $691.2 million and $709.9 million classified as Land, Mineral rights and Plant and equipment on the Partnership’s Consolidated Balance Sheet as of June 30, 2016 and December 31, 2015, respectively. The collateral includes (1) the equity interests in all of Opco’s wholly owned subsidiaries, other than NRP Trona LLC (which owns a 49% non-controlling equity interest in Ciner Wyoming), (2) the personal property and fixtures owned by Opco’s wholly owned subsidiaries, other than NRP Trona LLC, (3) Opco’s material coal royalty revenue producing properties, (4) real property associated with certain of VantaCore’s construction aggregates mining operations, and (5) certain of Opco’s coal-related infrastructure assets.

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, 2016, and December 31, 2015, the Opco Senior Notes had cumulative principal balances of $537.6 million and $585.9 million, respectively. Opco made principal payments of $48.3 million on the Opco Senior Notes during each of the six months ended June 30, 2016 and 2015.

The Note Purchase Agreements relating to the Opco Senior Notes contain covenants requiring Opco to: 
•
maintain a ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the note purchase agreement) of no more than 4.0 to 1.0 for the four most recent quarters;
•
not permit debt secured by certain liens and debt of subsidiaries to exceed 10% of consolidated net tangible assets (as defined in the note purchase agreement); and
•
maintain the ratio of consolidated EBITDDA (as defined in the note purchase agreement) to consolidated fixed charges (consisting of consolidated interest expense and consolidated operating lease expense) at not less than 3.5 to 1.0.

The 8.38% and 8.92% Opco Senior Notes also provide 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, 2016.


16

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



In connection with the entry into an amendment to the Opco Credit Facility in June 2015, Opco entered into the Third Amendment to the Note Purchase Agreements (the "NPA Amendment") that provides for the security of the Opco Senior Notes by the same collateral package pledged by Opco and its subsidiaries to secure the A&R Revolving Credit Facility, as described above. In addition, the NPA Amendment includes a covenant that provides that, in the event Opco or any of its subsidiaries is subject to any additional or more restrictive covenants under the agreements governing its material indebtedness (including the A&R Revolving Credit Facility, and all renewals, amendments or restatements thereof), such covenants shall be deemed to be incorporated by reference in the Opco Senior Notes and the holders of the Opco Senior Notes shall receive the benefit of such additional or more restrictive covenants to the same extent as the lenders under such material indebtedness agreement. Certain holders of the Opco Senior Notes have communicated to us that they believe they are entitled to consideration under this provision in connection with the First Amendment to the Opco Credit Facility. We are evaluating the noteholders’ assertions and are in active discussions with them. We are unable to estimate the outcome of these discussions at this time.

NRP Oil and Gas Debt Classified as Liabilities of Discontinued Operations

The RBL Facility    

In August 2013, NRP Oil and Gas entered into the RBL Facility, a senior secured, reserve-based revolving credit facility, in order to fund capital expenditure requirements related to the development of the oil and gas assets in which it owned non-operated working interests. The RBL Facility was secured by a first priority lien and security interest in substantially all of the assets of NRP Oil and Gas. NRP Oil and Gas was the sole obligor under the RBL Facility, and neither the Partnership nor any of its other subsidiaries was a guarantor of the RBL Facility.

At June 30, 2016 and December 31, 2015, there was $75.0 million and $85.0 million respectively, outstanding under the RBL Facility. As described in Note 3. Discontinued Operations, the Partnership included this debt and its related interest expense in discontinued operations. In July 2016, NRP Oil and Gas LLC closed the sale of its Williston Basin non-operated working interest assets and used a portion of the proceeds to repay the RBL Facility in full.

In March 2016, the Company entered into an amendment to the RBL Facility (the "Fourth Amendment"). Per the Fourth Amendment, the borrowing base would have been reduced to $70.0 million on August 1, 2016, and to $50.0 million on October 1, 2016, with any outstanding amounts under the RBL Facility in excess of the reduced principal amounts due and payable on their respective day. The next scheduled redetermination of the borrowing base under the RBL Facility would have occured in November 2016.

The Fourth Amendment amended the financial covenants contained in the RBL Facility as follows:
•
The maximum total leverage ratio (defined as the ratio of the total debt to EBITDAX) was increased from 3.5x to 4.0x at March 31, 2016 and 4.5x at June 30, 2016. Thereafter, the total leverage ratio would have decreased to 3.5x for the remainder of the term of the RBL Facility.
•
The minimum current ratio decreased from 1.0x to 0.75x at March 31, 2016 and June 30, 2016 and would have reverted to 1.0x thereafter for the remainder of the term of the RBL Facility.

As of June 30, 2016, NRP Oil and Gas' leverage ratio was 3.98x, and current ratio was 2.61x. NRP Oil and Gas was in compliance with the terms of the covenants contained in the RBL Facility as of both June 30, 2016 and December 31, 2015.

Effective on the date of the Fourth Amendment, indebtedness under the RBL Facility bore interest, at the Company's option, at:
•
the higher of (i) the prime rate as announced by the agent bank; (ii) the federal funds rate plus 0.50%; or (iii) LIBOR plus 4.0%; or
•
a rate equal to LIBOR, plus an applicable margin of 4.0%.

The commitment fee on the unused portion of the borrowing base under the RBL Facility was also amended to be a flat 0.50% fee.

The Fourth Amendment contained several other amendments, including a requirement for NRP Oil and Gas to pay down the RBL Facility each month with excess cash flow (which amounts may not be reborrowed and will result in a corresponding reduction

17

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



in the borrowing base) and a requirement to use the net proceeds of any asset sales to repay the RBL Facility (which amounts may not be reborrowed and will result in a corresponding reduction in the borrowing base). In addition, the Fourth Amendment waived the delivery of 2015 audited financial statements containing an audit opinion containing "a "going concern" or like qualification or exception" as an event of default under the RBL Facility.

9.    Fair Value Measurements

The Partnership’s financial instruments consist of cash and cash equivalents, accounts receivable, contracts receivable—affiliate, accounts payable and debt. The carrying amounts reported on the Partnership's Consolidated Balance Sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term nature.


The following table (in thousands) shows the carrying value and estimated fair value of the Partnership's debt, debt—affiliate and contracts receivable—affiliate:
 
June 30, 2016
 
December 31, 2015
 
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
 
(Unaudited)
 
 
 
 
Debt and debt—affiliate:
 
 
 
 
 
 
 
NRP Senior Notes (2)
$
418,696

 
$
318,750

 
$
417,296

 
$
277,313

Opco Senior Notes and utility local improvement obligation (1)
536,527

 
403,943

 
584,890

 
383,065

Opco Revolving Credit Facility (3)
253,335

 
260,000

 
285,170

 
290,000

NRP Oil and Gas RBL Facility (3)
74,783

 
75,000

 
83,600

 
85,000

 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Contracts receivable—affiliate, current and long-term (1)
$
47,542

 
$
32,861

 
$
49,948

 
$
34,498

 
 
 
 
 
(1)
The Level 3 fair value is estimated by management using quotations obtained for comparable instruments on the closing trading prices near period end.
(2)
The Level 1 fair value is based upon quotations obtained for identical instruments on the closing trading prices near period end.
(3)
The Level 3 fair value approximates the carrying amount because the interest rates are variable and reflective of market rates and the terms of the credit facility allow the Partnership to repay this debt at any time without penalty.

10.    Related Party Transactions

Reimbursements to Affiliates of our General Partner

The Partnership’s general partner does not receive any management fee or other compensation for its management of Natural Resource Partners L.P. 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 Company'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. In addition, the Partnership receives non-cash equity contributions from its general partner related to compensation paid directly by the general partner and not reimbursed by the Partnership. These amounts are presented as non-cash equity contributions on the Partnership's Consolidated Statements of Partners' Capital and were $0.1 million during the six months ended June 30, 2016. These QMC and WPPLP employee management service costs and non-cash equity compensation expenses are presented as Operating and maintenance expenses—affiliates, net and General and administrative—affiliates on the Consolidated Statements of Comprehensive Income. NRP also reimburses overhead costs incurred by its affiliates to manage the Partnership's business. These overhead costs include certain legal, accounting, treasury, information technology, insurance, administration of employee benefits and other corporate services incurred by the Partnership’s general partner and its affiliates and are presented as Operating and maintenance expenses—affiliates, net and General and administrative—affiliates on the Consolidated Statements of Comprehensive Income.

18

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)




The Partnership had Accounts payable—affiliates to Quintana Minerals Corporation of $0.5 million and $1.1 million including $0.2 million and $0.7 million related to discontinued operations at June 30, 2016 and December 31, 2015, respectively, for services provided by Quintana Minerals Corporation to the Partnership. The Partnership had Accounts payable—affiliates to WPPLP of $0.5 million and $0.3 million at June 30, 2016 and December 31, 2015, respectively.

Direct general and administrative expenses charged to the Partnership by WPPLP and Quintana Minerals Corporation are as follows (in thousands):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
 
(Unaudited)
Operating and maintenance expenses—affiliates, net
$
2,099

 
$
3,235

 
$
4,611

 
$
5,937

General and administrative—affiliates
866

 
301

 
1,803

 
1,385


Included in Income (loss) from discontinued operations are $0.5 million and $0.7 million and $0.2 million and $0.4 million of operating and maintenance expenses charged by Quintana Minerals Corporation for the three and six months ended June 30, 2016 and 2015, respectively.

Cline Affiliates

Various companies controlled by Chris Cline, including Foresight Energy LP ("Foresight Energy"), lease coal reserves from the Partnership, and the Partnership also leases coal transportation assets to these companies for a fee. Mr. Cline, both individually and through another affiliate, Adena Minerals, LLC, owns a 31% interest in the NRP's general partner, as well as approximately 0.5 million of NRP's common units at June 30, 2016.

Coal related revenues from Foresight Energy totaled $16.9 million and $31.6 million for the three months ended June 30, 2016 and 2015, respectively. Coal related revenues from Foresight Energy totaled $27.0 million and $49.9 million for the six months ended June 30, 2016 and 2015, respectively. As of June 30, 2016 and December 31, 2015, the Partnership had Accounts receivable—affiliates from Foresight Energy of $8.4 million and $6.4 million, respectively. The Partnership had recorded $78.5 million and $82.6 million in minimum royalty payments as Deferred revenue—affiliates at June 30, 2016 and December 31, 2015, respectively.

The Partnership owns and leases rail load out and associated facilities to Foresight Energy at Foresight Energy's Sugar Camp mine. The lease agreement is accounted for as a direct financing lease. Total projected remaining payments under the lease at June 30, 2016 were $78.9 million with unearned income of $33.6 million, and the net amount receivable was $45.3 million, of which $2.0 million is included in Accounts receivable—affiliates while the remaining is included in Long-term contracts receivable—affiliate on the accompanying Consolidated Balance Sheets. Total projected remaining payments under the lease at December 31, 2015 were $81.2 million with unearned income of $35.3 million and the net amount receivable was $45.9 million, of which $2.0 million is included in Accounts receivable—affiliates while the remaining is included in Long-term contracts receivable—affiliates on the accompanying Consolidated Balance Sheets.

The Partnership holds a contractual overriding royalty interest from a subsidiary of Foresight Energy that provides for payments based upon production from specific tons at Foresight Energy's Sugar Camp operations. This overriding royalty was accounted for as a financing arrangement and is reflected as an affiliate receivable. The net amount receivable under the agreement as of June 30, 2016 was $2.8 million, of which $1.5 million is included in Accounts receivable—affiliates while the remaining is included in Long-term contracts receivable—affiliate. The net amount receivable under the agreement as of December 31, 2015 was $4.9 million, of which $1.5 million is included in Accounts receivable—affiliates while the remaining is included in Long-term contracts receivable—affiliate on the accompanying Consolidated Balance Sheets.

Long-Term Debt—Affiliate

Donald R. Holcomb, one of the Partnership’s former directors, is a manager of Cline Trust Company, LLC, which owns approximately 0.5 million of the Partnership’s common units and $20.0 million in principal amount of the Partnership’s 9.125% Senior Notes due 2018. The members of the Cline Trust Company are four trusts for the benefit of the children of Chris Cline,

19

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



each of which owns an approximately equal membership interest in the Cline Trust Company. Mr. Holcomb also serves as trustee of each of the four trusts. Cline Trust Company, LLC purchased the $20.0 million of the Partnership’s 9.125% Senior Notes due 2018 in the Partnership’s offering of $125.0 million additional principal amount of such notes in October 2014 at the same price as the other purchasers in that offering. The balance on this portion of the Partnership’s 9.125% Senior Notes due 2018 was $19.9 million as of December 31, 2015 and is included in Long-term debt, net—affiliate on the accompanying Consolidated Balance Sheet as of December 31, 2015. In April 2016, Mr. Holcomb resigned from the Partnership's board of directors and as a result the $19.9 million debt balance held by Cline Trust Company was included in Long-term debt, net on the accompanying Consolidated Balance Sheet as of June 30, 2016.

Quintana Capital Group GP, Ltd.

Corbin J. Robertson, Jr. is a principal in Quintana Capital Group GP, Ltd. ("Quintana Capital"), which controls several private equity funds focused on investments in the energy business. In connection with the formation of Quintana Capital, the Partnership adopted a formal conflicts policy that establishes the opportunities that will be pursued by the Partnership and those that will be pursued by Quintana Capital. The governance documents of Quintana Capital’s affiliated investment funds reflect the guidelines set forth in the Partnership's conflicts policy.

At June 30, 2016, a fund controlled by Quintana Capital owned a majority interest in Corsa Coal Corp. ("Corsa"), a coal mining company traded on the TSX Venture Exchange that is one of the Partnership’s lessees in Tennessee. Corbin J. Robertson III, one of the Partnership’s directors, is Chairman of the Board of Corsa. Coal related revenues from Corsa totaled $0.6 million and $0.8 million for the three months ended June 30, 2016 and 2015, respectively and $1.1 million and $1.5 million for the six months ended June 30, 2016 and 2015, respectively. The Partnership had recorded $0.3 million in minimum royalty payments as Deferred revenue—affiliates at both June 30, 2016 and December 31, 2015. The Partnership also had Accounts receivable—affiliates totaling $0.2 million from Corsa at both June 30, 2016 and December 31, 2015.

WPPLP Production Royalty and Overriding Royalty

The Partnership recorded $0.1 million and $0.7 million in operating and maintenance expenses—affiliates related to a non-participating production royalty payable to WPPLP pursuant to a conveyance agreement entered into in 2007 for the three and six months ended June 30, 2016, respectively. These charges were zero for both the three and six months ended June 30, 2015. The Partnership had Other assets—affiliate from WPPLP of $1.0 million and $1.1 million at June 30, 2016 and December 31, 2015, respectively related to a non-production royalty receivable from WPPLP for overriding royalty interest on a mine.

11.    Commitments and Contingencies

Legal

The Partnership 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 claims will not have a material effect on the Partnership’s financial position, liquidity or operations.

Since 2013, several citizen group lawsuits have been filed against landowners alleging ongoing discharges of pollutants, including selenium and conductivity, from valley fills located at reclaimed mountaintop removal mining sites in West Virginia. In each case, the mine on the subject property had been closed, the property had been reclaimed, and the state reclamation bond had been released. Any determination that a landowner or lessee has liability for discharges from a previously reclaimed mine site could result in substantial compliance costs or fines and would result in uncertainty as to continuing liability for completed and reclaimed coal mine operations. A subsidiary of the Partnership has been named as a defendant in one of these lawsuits. The Partnership currently cannot reasonably estimate a range of potential loss, if any, related to this matter.

Foresight Energy Disputes

In November 2015, we filed a lawsuit against Foresight Energy’s subsidiary, Hillsboro Energy LLC ("Hillsboro"), in the Circuit Court of the Fourth Judicial Circuit in Montgomery County, Illinois. The lawsuit alleges, among other items, breach of contract by Hillsboro resulting from a wrongful declaration of force majeure at Hillsboro’s Deer Run mine in July 2015. In late March 2015, elevated carbon monoxide readings were detected at the Deer Run mine, and coal production at the mine was idled. In July 2015, we received the notice declaring a force majeure event at the mine as a result of the elevated carbon monoxide levels.

20

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



The effect of a valid force majeure declaration would relieve Foresight Energy of its obligation to pay us minimum deficiency payments of $7.5 million per quarter, or $30.0 million per year. Foresight Energy's failure to make the deficiency payment with respect to 2015 and the first half of 2016 resulted in a cumulative $31.0 million negative cash impact to us. Such amount will increase for each quarter during which mining operations continue to be idled. We do not currently have an estimate as to when the mine will resume coal production. If the mine remains idled for an extended period or if the mine is permanently closed, our financial condition could be adversely affected.

In April, 2016, we filed a lawsuit against Macoupin Energy, LLC ("Macoupin"), a subsidiary of Foresight Energy, in Macoupin County, Illinois. The lawsuit alleges that Macoupin has failed to comply with the terms of its coal mining, rail loadout and rail loop leases by incorrectly recouping previously paid minimum royalties. Foresight Energy’s failure to properly calculate its recoupable balance and failure to make payments in accordance with these lease agreements with respect to the third and fourth quarters of 2015 and the first half of 2016 resulted in a cumulative $4.7 million negative cash impact to us. While the Partnership plans to pursue its claim, a valuation allowance for the receivable amount has been recorded. It is possible that the Partnership’s current estimate of the valuation allowance related to this matter could change, perhaps materially, in the future.

12.    Major Customers

Revenues from customers that exceeded ten percent of total revenues and other income for either the three or six months ended June 30, 2016 and 2015 are as follows (in thousands except for percentages):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
 
(Unaudited)
 
(Unaudited)
 
Revenues
 
Percent
 
Revenues
 
Percent
 
Revenues
 
Percent
 
Revenues
 
Percent
Foresight Energy
$
16,935

 
14%
 
$
31,581

 
26%
 
$
27,013

 
13%
 
$
49,879

 
23%

13.    Unit-Based Compensation

At the time of our initial public offering, GP Natural Resource Partners LLC adopted the Natural Resource Partners Long-Term Incentive Plan (the "Long-Term Incentive Plan") for directors of GP Natural Resource Partners LLC and employees of its affiliates who perform services for the Partnership. The Compensation, Nominating and Governance Committee ("CNG Committee") of GP Natural Resource Partners LLC’s board of directors administers the Long-Term Incentive Plan and has historically approved annual awards of phantom units that vest four years from the date of grant. In February 2016, the CNG Committee adopted and the Board approved a new cash-based long-term incentive plan to the employees of its affiliates who perform services for the Partnership.

Subject to the rules of the exchange upon which the common units are listed at the time, the board of directors and the compensation committee of the board of directors have the right to alter or amend the Long-Term Incentive Plan or any part of the Long-Term Incentive Plan from time to time. Except upon the occurrence of unusual or nonrecurring events, no change in any outstanding grant may be made that would materially reduce the benefit intended to be made available to a participant without the consent of the participant.

Phantom units are incentive based equity awards issued to employees over a vesting period that entitle the grantee to receive the cash equivalent to the value of a unit of our common units upon each vesting. The Partnership records compensation cost equal to the fair value of the award at the measurement date, which is determined to be the earlier of the performance commitment date or the service completion date. In addition, compensation cost for unvested phantom unit awards is adjusted quarterly for any changes in the Partnership’s unit price. Under the plan a grantee will receive the market value of a common unit in cash upon vesting. Market value is defined as the average closing price over the 20 trading days prior to the vesting date. The compensation committee may make grants under the Long-Term Incentive Plan to employees and directors containing such terms as it determines, including the vesting period. Outstanding grants vest upon a change in control of the Partnership, the general partner, or GP Natural Resource Partners LLC. If a grantee’s employment or membership on the board of directors terminates for any reason, outstanding grants will be automatically forfeited unless and to the extent the compensation committee provides otherwise.

In connection with the phantom unit awards, the Compensation, Nominating and Governance Committee also granted tandem Distribution Equivalent Rights ("DERs"), which entitle the holders to receive distributions equal to the distributions paid on the

21

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



Partnership’s common units between the date the units are granted and the vesting date. The DERs are payable in cash upon vesting but may be subject to forfeiture if the grantee ceases employment prior to vesting.

A summary of activity in the outstanding grants during 2016 is as follows (in thousands):
 
Phantom Units
Outstanding grants at January 1, 2016
126

Grants during the period
—

Grants vested and paid during the period
(28
)
Forfeitures during the period
(6
)
Outstanding grants at June 30, 2016
92


Grants typically vest at the end of a four-year period and are paid in cash upon vesting. The Partnership recorded expenses related to its Long-Term Incentive Plan of $0.2 million for both the three and six months ended June 30, 2016. The Partnership also recorded a credit to expenses related to its Long-Term Incentive plan of $1.4 million and $1.5 million for the three and six months ended June 30, 2015, respectively due to the decline in the market price of the Partnership's common units during the period.

In connection with the Long-Term Incentive Plan, payments are typically made during the first quarter of the year. Payments of $1.5 million and $4.4 million were made during the six months ended June 30, 2016 and 2015, respectively. The unaccrued cost associated with unvested outstanding grants and related DERs at June 30, 2016 and December 31, 2015, was $0.5 million and $0.7 million, respectively.

14.    Cash Distributions

The following table shows the distributions paid by the Partnership during the six months ended June 30, 2016 and 2015:
 
 
 
 
 
 
Total Distributions (In thousands)
Date Paid
 
Period Covered by Distribution
 
Distribution per Common Unit
 
Common Units
 
GP Interest
 
Total
2016
 
 
 
 
 
 
 
 
 
 
February 12, 2016
 
October 1 - December 31, 2015
 
$
0.45

 
$
5,503

 
$
113

 
$
5,616

May 13, 2016
 
January 1 - March 31, 2016
 
0.45

 
5,503

 
113

 
5,616

 
 
 
 
 
 
 
 
 
 
 
2015
 
 
 
 
 
 
 
 
 
 
February 13, 2015
 
October 1 - December 31, 2014
 
$
3.50

 
$
42,804

 
$
874

 
$
43,678

May 14, 2015
 
January 1 - March 31, 2015
 
0.90

 
11,007

 
225

 
11,232


15.  Supplemental Cash Flow Information

The Partnership's supplemental cash flow information of continuing operations is summarized as follows (in thousands):
 
Six Months Ended
June 30,
 
2016
 
2015
 
(Unaudited)
Cash paid for interest
$
42,671

 
$
42,739

Plant, equipment and mineral rights funded with accounts payable or accrued liabilities
—

 
4,452



22

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



16.  Supplementary Unrestricted Subsidiary Information

The following is presented as supplementary data as required by the Indenture governing the NRP Senior Notes. As described in Note 1. Basis of Presentation, in February 2016, the Partnership designated NRP Oil and Gas as an Unrestricted Subsidiary for purposes of the Indenture. In addition, the Partnership has designated BRP LLC, a joint venture in which the Partnership owns a 51% interest, and Coval Leasing Company, LLC, a wholly owned subsidiary of BRP LLC, as Unrestricted Subsidiaries for purposes of the Indenture. The information below may not necessarily be indicative of the results of operations, or financial position had the subsidiaries operated as independent entities. There were no transactions between the Partnership's Restricted Subsidiaries and its Unrestricted Subsidiaries. In accordance with the requirements of the Indenture, the following condensed consolidating financial information presents the financial condition and results of operations of the Partnership and its Restricted Subsidiaries and its Unrestricted Subsidiaries:


23

NATURAL RESOURCE PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(Unaudited)



CONDENSED CONSOLIDATING BALANCE SHEETS
(in thousands)
 
 
June 30, 2016
 
 
Unrestricted Subsidiaries of NRP
 
NRP and its Restricted Subsidiaries
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
Current assets of discontinued operations
 
$
113,218

 
$
—

 
$
—

 
$
113,218

Current assets (including affiliates)
 
3,621

 
79,810

 
—

 
83,431

Mineral rights, net
 
24,570

 
921,785

 
—

 
946,355

Equity in unconsolidated investment
 
—

 
259,778

 
—

 
259,778

Other non-current assets (including affiliates)
 
230

 
182,074

 
—

 
182,304

Total assets
 
$
141,639


$
1,443,447


$
—

 
$
1,585,086

LIABILITIES AND CAPITAL
 
 
 
 
 
 
 


Current portion of long-term debt, net
 
$
—

 
$
157,996

 
$
—

 
$
157,996

Current liabilities of discontinued operations
 
79,947

 
—

 
—

 
79,947

Other current liabilities (including affiliates)
 
2,672

 
37,207

 
(3
)
 
39,876

Long-term debt, net
 
—

 
1,050,562

 
—

 
1,050,562

Other non-current liabilities (including affiliates)
 
3,086

 
121,985

 
—

 
125,071

Partners' capital
 
59,379

 
75,646

 
3

 
135,028

Non-controlling interest
 
(3,445
)
 
51

 
—

 
(3,394
)
Total liabilities and capital
 
$
141,639


$
1,443,447


$
—

 
$
1,585,086

 
 
 
 
 
 
 
 


 
 
December 31, 2015
 
 
Unrestricted Subsidiaries of NRP
 
NRP and its Restricted Subsidiaries
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 


Current assets of discontinued operations
 
$
17,844

 
$
—

 
$
—

 
17,844

Current assets (including affiliates)
 
3,696

 
100,178

 
(589
)
 
103,285

Mineral rights, net
 
24,940

 
959,582

 
—

 
984,522

Equity in unconsolidated investment
 
—

 
261,942

 
—

 
261,942

Non-current assets of discontinued operations
 
110,162

 
—

 
—

 
110,162

Other non-current assets (including affiliates) (1)