8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

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

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): August 6, 2009

NATURAL RESOURCE PARTNERS L.P.

(Exact name of registrant as specified in its charter)

Delaware	001-31465	35-2164875
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)
601 Jefferson, Suite 3600 Houston, Texas (Address of principal executive offices)		77002 (Zip code)

Registrant’s telephone number, including area code: (713) 751-7507

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1

Item 2.02. Results of Operations and Financial Condition.  

     In accordance with General Instruction B.2. of Form 8-K, the following information and the exhibits referenced therein are being furnished pursuant to Item 2.02 of Form 8-K and are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, are not subject to the liabilities of that section and are not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

 

     On August 6, 2009, Natural Resource Partners L.P. announced via press release its earnings and operating results for the second quarter of 2009. A copy of NRP’s press release is attached hereto as Exhibit 99.1.

Item 7.01. Regulation FD Disclosure.

     In accordance with General Instructions B.2. and B.6 of Form 8-K, the following information and the exhibit referenced therein are being furnished under Item 7.01 of Form 8-K and are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, are not subject to the liabilities of that section and are not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

     On August 6, 2009, Natural Resource Partners L.P. announced via press release its guidance for the remainder of 2009. A copy of the press release is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.  

     (c) Exhibits

 

     99.1 Natural Resource Partners L.P. press release dated as of August 6, 2009.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

NATURAL RESOURCE PARTNERS L.P. (Registrant)
By:	NRP (GP) LP
	its General Partner
By:	GP Natural Resource Partners LLC
	its General Partner
	/s/ Wyatt L. Hogan
	Wyatt L. Hogan
	Vice President and General Counsel

Dated: August 6, 2009

EX-99.1

Exhibit 99.1

Natural Resource Partners L.P.
601 Jefferson St., Suite 3600, Houston, TX 77002

NEWS RELEASE

Natural Resource Partners L.P.
Reports Second Quarter 2009 Results
And Updates Guidance

Second Quarter 2009 Highlights:

• Distributable cash flow of $49.1 million, down 14% from 2Q08

• Revenues of $59.5 million, down 21%

• Net income attributable to the limited partners of $0.07, down 85%

• Adjusted net income attributable to the limited partners of $0.19, down 59%

• Distribution of $0.54 per unit, a 4.9% increase

• Decreased guidance for 2009

o Distributable cash flow decreased approximately 33%

o Revenues decreased approximately 25%

HOUSTON, August 6, 2009 — Natural Resource Partners L.P. (NYSE:NRP) today reported that decreased demand for coal led to lower second quarter 2009 results. Distributable cash flow, a non-GAAP measure, decreased 14% to $49.1 million, from the $57.4 million reported for the second quarter of 2008. Primarily due to lower coal demand and a non-cash expense discussed in more detail below, net income attributable to the limited partners decreased $25.1 million to $4.8 million for the second quarter of 2009, compared to $29.9 million for the second quarter last year. Similarly, net income per unit decreased to $0.07 per unit in the second quarter of 2009 from $0.46 for the second quarter of 2008. Net income attributable to the limited partners included an $8.0 million or $0.12 per unit write-off, which was the limited partners’ share of an $8.2 million write-off for a terminated lease on a property due to a mine closure. Excluding this non-cash expense, net income attributable to the limited partners would have been $12.8 million or $0.19 per unit. Reconciliations of distributable cash flow and adjusted net income attributable to the limited partners are provided in the tables attached.

NRP Reports 2Q09 Results and Updates Guidance Page 2 of 14

Highlights	2Q09		1Q09		2Q08
	(in thousands except per ton and per unit)
Coal production:		11,784		12,482		16,093
Coal royalty revenues:	$	46,379	$	52,607	$	60,026
Average coal royalty revenue per ton:	$	3.94	$	4.21	$	3.73
Total revenues:	$	59,487	$	66,733	$	75,592
Net income to limited partners:	$	4,804	$	21,598	$	29,920
Average units outstanding in quarter:		66,946		64,891		64,891
Net income per unit:	$	0.07	$	0.33	$	0.46
Distributable cash flow:	$	49,068	$	35,493	$	57,359

“Coal fired electric generation is down about 14% year over year because of the recession and low natural gas prices. Similarly metallurgical coal consumption is depressed due to worldwide steel production being at about 50% of capacity. In addition, while some of our lessees have received new mining permits, costs, delays and uncertainties in the permit process persist. These factors have led to production cutbacks and price declines that caused our revenue to drop below our forecast. We expect these conditions to persist through the remainder of 2009. Compared to the first quarter of 2009, we saw both steam and metallurgical production in Central Appalachia decline, while Illinois Basin production increased after a longwall move in the first quarter depressed production. However, we hear from some of our lessees that metallurgical coal has bottomed and if that proves to be true and demand and prices improve, so should our performance,” said Nick Carter, President and Chief Operating Officer. “Throughout this period we continue to manage the company for the long term, not the short term. We continue to work to grow NRP and see attractive acquisition opportunities and we remain optimistic about our long-range prospects.”

Current Market

One year ago, the worldwide economies were booming and coal prices, particularly metallurgical coal prices, were growing rapidly as well. Over the last six years, global coal consumption has increased 37%, with China increasing its consumption by 97%. In 2008, global coal consumption continued to increase, but at a much slower rate of 3.8%. While coal has been the fastest growing major fuel consumed in the world, weakening economies have temporarily created lower demand for steel and electricity and hence coal. Some improvements in the worldwide economies are beginning to be recognized; however, it will take some time for a full recovery to occur. China has increased imports of metallurgical coal over the last couple of months and for the first time in several months, U.S. furnaces are beginning to come back on line and producing steel.

Guidance

“When we issued guidance earlier this year, neither we nor our lessees could have predicted the drastic impact that the downturn in the economy would have on the coal industry and NRP. While we lack the desired clarity, we believe the new guidance reflects today’s market conditions,” said Nick Carter.

NRP Reports 2Q09 Results and Updates Guidance Page 3 of 14

Due to the continued weak coal market, NRP is lowering its annual guidance for 2009. The updated guidance includes:

• Distributable cash flow decreased approximately 33% to a range of approximately $139 million to $165 million.

• Net income per unit decreased to a range of $0.58 to $0.90 per unit. Excluding the item written off in the second quarter, which accounts for a $0.12 per unit reduction, the net income per unit for 2009 would be $0.70 to $1.02.

• Coal royalty revenues reduced approximately 27% to a range between $176 million and $196 million.

• Total revenues decreased approximately 25% to a range between $221 million and $254 million.

Metallurgical coal accounts for 26% of total coal royalty revenues and 20% of production for the revised forecast.

A complete table of all guidance metrics is attached to this release.

Acquisitions and Liquidity

As previously announced, in the second quarter 2009 NRP issued 4,560,000 units for the acquisition of a new property located in Meigs County, Ohio. This property, while currently producing, has not reached full productive capacity and therefore had a negative impact on earnings per unit in the second quarter.

Following the end of the quarter, NRP also acquired an aggregate property located in Texas for a total of $24 million, $9 million of which was paid at closing. Taking into account the full $24 million purchase price, NRP has $276 million available on its credit facility and at quarter-end had $81 million of cash.

“While NRP experienced lower than expected operating results, with the current cash and credit capacity available to NRP, we are well-positioned to weather the current market and also to continue to look at various acquisition opportunities,” said Dwight Dunlap, Chief Financial Officer.

Second Quarter 2009 versus First Quarter 2009

Total revenues in the second quarter decreased $7.2 million, or 11% from the first quarter of 2009, primarily due to decreased coal production and coal royalty revenues. Coal production decreased 700 thousand tons, or 6%, while average coal royalty revenue per ton decreased $0.27 per ton, or approximately 6% this quarter.

Distributable cash flow increased 38% from the first quarter 2009 to $49.1 million due to improvements in working capital that offset declines in both production and revenues.

NRP Reports 2Q09 Results and Updates Guidance Page 4 of 14

Second Quarter and Six Month Results

Revenues

Second Quarter

Total revenues for the second quarter of 2009 decreased $16.1 million, or 21%, to $59.5 million compared to the same period last year due primarily to decreases in coal royalty revenues. Coal royalty revenues accounted for $13.6 million, or approximately 85% of the decline in total revenues. Coal royalty revenues decreased 23% from the second quarter of 2008 to $46.4 million due to a 27% decrease in coal royalty production, offset modestly by a 6% increase in the combined average royalty revenue per ton.

Production decreased 4.3 million tons from the second quarter last year to 11.8 million tons for the second quarter of 2009 due to decreased production in all regions, particularly in Appalachia. Weak economies worldwide have caused decreased demand for metallurgical coal and with the 14% decline in domestic demand for coal fired electricity and increasing stockpiles at utilities, many of NRP’s lessees have reduced production to better meet current demand.

Combined average royalty revenue per ton increased $0.21 to $3.94 from the $3.73 reported for the second quarter last year. Increases occurred in all regions except Central Appalachia and the Northern Powder River Basin. The most dramatic increase occurred in the Illinois Basin, where the partnership experienced a 30% increase to $3.36 per ton due to a higher royalty rate per ton on current production.

Six Months

Total revenues decreased 10% from the first six months of last year to $126.2 million mainly due to a $10.2 million decrease in coal royalty revenues. Coal royalty revenues decreased 9% from the same period last year due to a 6.3 million, or 21%, decrease in production, which was offset somewhat by an increase of $0.51, or 14%, in the combined average royalty revenue per ton to $4.08 in the first half of 2009.

Metallurgical coal accounted for 28% of NRP’s coal royalty revenues and 21% of its production for the first half of 2009.

Expenses

Second Quarter

Total expenses increased $3.3 million in the second quarter of 2009 when compared to the same period last year, due to increased depreciation, depletion and amortization offset by lower general and administrative expenses and lower property, franchise and other taxes. Depreciation, depletion and amortization expense increased due to an $8.2 million non-cash write-off of a terminated lease due to a mine closure in the second quarter of 2009.

Six Months

NRP Reports 2Q09 Results and Updates Guidance Page 5 of 14

Total expenses for the six month period ending June 30, 2009 increased $5.4 million to $57.1 million over the same period last year. This increase was due to an increase in depreciation, depletion and amortization expense of $3.3 million and an increase of approximately $2.3 million in general and administrative expenses from the six month period last year. While production volumes decreased, NRP’s depreciation, depletion and amortization increased due to the $8.2 million write-off described above. The general and administrative expense increased due to additional long-term incentive awards granted.

Net Income Attributable to the Limited Partners

Second Quarter

Second quarter 2009 net income attributable to the limited partners declined $25.1 million to $4.8 million, from the second quarter last year. This amount included the $8.0 million, or $0.12 per unit, limited partners’ share of the non-cash write-off of a terminated lease due to a mine closure. Net income per unit decreased to $0.07 versus $0.46 for the same quarter last year. Excluding the write-off described above, the partnership would have reported $0.19 per unit for this quarter. Net income for the second quarter 2009 was also impacted by the 4,560,000 units issued in conjunction with the acquisition discussed earlier.

Six Months

Net income attributable to the limited partners for the six month period ended June 30, 2009 decreased $28.3 million over the same period last year, accounting for a $0.44 decline in net income per unit to $0.40 for the six month period. Excluding the effects of the write-off discussed above, net income per unit would be increased by $0.12 per unit to $0.52 per unit for the six month period. Net income was also impacted by the additional units issued in the second quarter 2009 discussed above.

Distributable Cash Flow

Second Quarter

Distributable cash flow decreased 14% to $49.1 million when compared to the same quarter last year, due to decreases in total revenues and increases in NRP’s reserves for scheduled debt payments. The reserve for debt payments increased $3.7 million over second quarter of 2008 due to additional scheduled principal payments on NRP’s senior notes coming due in 2010.

Six Months

For the six months ended June 30, 2009 distributable cash flow decreased $7.7 million, or 8%, to $84.6 million due to increased reserves of $7.5 million for scheduled debt payments due in the next twelve months.

Distributions

As reported on July 21, the Board of Directors of NRP’s general partner declared a quarterly distribution of $0.54 per unit. This represents a 4.9% increase over the second quarter 2008 and is unchanged from the first quarter 2009.

NRP Reports 2Q09 Results and Updates Guidance Page 6 of 14

“In light of the current economy, the NRP Board of Directors opted to maintain the distribution rather than increasing the distribution as we had for the last 23 straight quarters. While NRP has a sufficient cash balance to offset any near term shortfalls in distributable cash flow, this prudent approach will give NRP more options regarding potential acquisitions that may present themselves during these economic times,” said Corbin J. Robertson, Chairman and Chief Executive Officer.

Company Profile

Natural Resource Partners L.P. is headquartered in Houston, TX, with its operations headquarters in Huntington, WV. NRP is a master limited partnership that is principally engaged in the business of owning and managing mineral reserve properties. NRP owns coal reserves and coal handling and transportation infrastructure in the three major coal producing regions of the United States: Appalachia, the Illinois Basin and the Powder River Basin. In addition, the partnership owns and manages aggregate reserves in Texas, West Virginia and Washington.

For additional information, please contact Kathy H. Roberts at 713-751-7555 or kroberts@nrplp.com. Further information about NRP is available on the partnership’s website at http://www.nrplp.com.

Disclosure of Non-GAAP Financial Measures

Distributable cash flow represents cash flow from operations less actual principal payments and cash reserves set aside for scheduled principal payments on the senior notes. Distributable cash flow is a “non-GAAP financial measure” that is presented because management believes it is a useful adjunct to net cash provided by operating activities under GAAP. Distributable cash flow is a significant liquidity metric that is an indicator of NRP’s ability to generate cash flows at a level that can sustain or support an increase in quarterly cash distributions paid to its partners. Distributable cash flow is also the quantitative standard used throughout the investment community with respect to publicly traded partnerships. Distributable cash flow 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. A reconciliation of distributable cash flow to net cash provided by operating activities is included in the tables attached to this release. Distributable cash flow may not be calculated the same for NRP as other companies.

Forward-Looking Statements

This press release may include “forward-looking statements” as defined by the Securities and Exchange Commission. Such statements include the current coal market conditions and borrowing capacity. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the partnership based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the partnership. These risks include, but are not limited to, decreases in demand for coal; changes in operating conditions and costs; production cuts by our lessees; commodity prices; unanticipated geologic problems; changes in the legislative or regulatory environment and other factors detailed in Natural Resource Partners’ Securities and Exchange Commission filings. Natural Resource Partners L.P. has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

NRP Reports 2Q09 Results and Updates Guidance Page 7 of 14

     09-11 -Financial statements follow-

NRP Reports 2Q09 Results and Updates Guidance Page 8 of 14

Natural Resource Partners L.P.
Operating Statistics
(In thousands except per ton data)

	Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2009		2008		2009		2008
	(unaudited)				(unaudited)
Coal Royalties:
Coal royalty revenues:
Appalachia
Northern	$	2,890	$	4,902	$	5,933	$	8,405
Central		30,308		42,974		68,186		77,271
Southern		4,809		3,802		9,906		9,300
Total Appalachia	$	38,007	$	51,678	$	84,025	$	94,976
Illinois Basin		6,570		5,923		10,821		8,556
Northern Powder River Basin		1,803		2,425		4,141		5,646
Total	$	46,380	$	60,026	$	98,987	$	109,178
Coal royalty production (tons):
Appalachia
Northern		967		1,927		2,066		3,264
Central		6,989		9,629		14,978		18,571
Southern		798		930		1,639		2,224
Total Appalachia		8,754		12,486		18,683		24,059
Illinois Basin		1,956		2,293		3,282		3,458
Northern Powder River Basin		1,074		1,314		2,301		3,045
Total		11,784		16,093		24,266		30,562
Average royalty revenue per ton:
Appalachia
Northern	$	2.99	$	2.54	$	2.87	$	2.58
Central		4.34		4.46		4.55		4.16
Southern		6.03		4.09		6.04		4.18
Total Appalachia		4.34		4.14		4.50		3.95
Illinois Basin		3.36		2.58		3.30		2.47
Northern Powder River Basin		1.68		1.85		1.80		1.85
Combined average royalty revenue per ton	$	3.94	$	3.73	$	4.08	$	3.57
Aggregates:
Royalty revenues	$	1,047	$	1,633	$	1,977	$	3,051
Aggregate royalty bonus	$	300	$	300	$	1,020	$	2,244
Production:		791		1,238		1,481		2,392
Average base royalty per ton:	$	1.32	$	1.32	$	1.33	$	1.28

NRP Reports 2Q09 Results and Updates Guidance Page 9 of 14

Natural Resource Partners L.P.
Consolidated Statements of Income
(In thousands, except per unit data)

	Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(Unaudited)						(Unaudited)
Revenues:
Coal royalties	$	46,380		$	60,026		$	98,987		$	109,178
Aggregate royalties		1,347			1,933			2,997			5,295
Coal processing fees		2,400			1,757			4,300			3,654
Transportation fees		3,489			3,361			5,585			5,010
Oil and gas royalties		953			1,933			2,446			3,378
Property taxes		2,514			3,105			5,725			5,497
Minimums recognized as revenue		67			149			290			456
Override royalties		1,336			2,006			3,884			4,505
Other		1,001			1,322			2,006			2,674
Total revenues		59,487			75,592			126,220			139,647
Operating costs and expenses:
Depreciation, depletion and amortization		21,996			16,748			35,074			31,807
General and administrative		5,834			6,890			13,340			11,039
Property, franchise and other taxes		3,151			4,098			7,126			7,747
Transportation costs		473			408			741			529
Coal royalty and override payments		372			343			861			652
Total operating costs and expenses		31,826			28,487			57,142			51,774
Income from operations		27,661			47,105			69,078			87,873
Other income (expense)
Interest expense		(10,675	)		(7,064	)		(18,754	)		(14,424	)
Interest income		96			312			178			756
Net income	$	17,082		$	40,353		$	50,502		$	74,205
Net income attributable to:
General partner	$	98		$	611		$	539		$	1,116
Holders of incentive distribution rights	$	12,180		$	9,822		$	23,561		$	18,399
Limited partners	$	4,804		$	29,920		$	26,402		$	54,690
Basic and diluted net income per limited partner unit:	$	0.07		$	0.46		$	0.40		$	0.84
Weighted average number of units outstanding:		66,946			64,891			65,924			64,891

NRP Reports 2Q09 Results and Updates Guidance Page 10 of 14

Natural Resource Partners L.P.
Statements of Cash Flows
(In thousands)

	Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(Unaudited)						(Unaudited)
Cash flows from operating activities:
Net income	$	17,082		$	40,353		$	50,502		$	74,205
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		21,996			16,748			35,074			31,807
Non-cash interest charge		128			117			1,010			235
Loss from disposition of assets		—			32			—			32
Change in operating assets and liabilities:
Accounts receivable		5,328			(5,252	)		1,865			(8,971	)
Other assets		—			323			267			584
Accounts payable and accrued liabilities		148			680			(247	)		429
Accrued interest		7,054			2,655			3,909			(265	)
Deferred revenue		2,798			313			8,310			2,726
Accrued incentive plan expenses		2,034			4,226			1,568			1,078
Property, franchise and other taxes payable		559			1,472			(1,579	)		(990	)
Net cash provided by operating activities		57,127			61,667			100,679			100,870
Cash flows from investing activities:
Acquisition of land, coal and other mineral rights		—			—			(95,641	)		—
Acquisition or construction of plant and equipment		—			(4,654	)		(1,157	)		(7,454	)
Net cash used in investing activities		—			(4,654	)		(96,798	)		(7,454	)
Cash flows from financing activities:
Proceeds from loans		—			—			303,000			—
Deferred financing costs		—			—			(661	)		—
Repayments of loans		(9,350	)		(9,350	)		(160,542	)		(9,543	)
Retirement of purchase obligation related to reserve and infrastructure		(20,000	)		—			(60,000	)		—
Costs associated with issuance of units		(21	)		—			(21	)		—
Distributions to partners		(47,370	)		(41,529	)		(94,090	)		(81,760	)
Net cash used in financing activities		(76,741	)		(50,879	)		(12,314	)		(91,303	)
Net increase or (decrease) in cash and cash equivalents		(19,614	)		6,134			(8,433	)		2,113
Cash and cash equivalents at beginning of period		101,109			54,320			89,928			58,341
Cash and cash equivalents at end of period	$	81,495		$	60,454		$	81,495		$	60,454
SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest	$	3,480		$	4,292		$	13,760		$	14,450
Non-cash investing activities:
Equity issued for acquisitions	$	95,910		$	—		$	95,910		$	—
Liability assumed in acquisition		1,170		$	—			1,170		$	—
Non-cash financing activities:
Purchase obligation related to reserve and infrastructure acquisition	$	—		$	—		$	59,220		$	—

NRP Reports 2Q09 Results and Updates Guidance Page 11 of 14

Natural Resource Partners L.P.
Consolidated Balance Sheets
(In thousands, except for unit information)

	June 30,			December 31,
	2009			2008
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	81,495		$	89,928
Accounts receivable, net of allowance for doubtful accounts		26,293			31,883
Accounts receivable — affiliate		3,906			1,351
Other		704			934
Total current assets		112,398			124,096
Land		24,343			24,343
Plant and equipment, net		71,130			67,204
Coal and other mineral rights, net		1,133,023			979,692
Intangible assets		163,610			102,828
Loan financing costs, net		3,120			2,679
Other assets, net		461			498
Total assets	$	1,508,085		$	1,301,340
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable and accrued liabilities	$	804		$	861
Accounts payable — affiliate		175			365
Current portion of long-term debt		32,235			17,235
Accrued incentive plan expenses — current portion		3,982			3,179
Property, franchise and other taxes payable		4,543			6,122
Accrued interest		10,328			6,419
Total current liabilities		52,067			34,181
Deferred revenue		49,064			40,754
Accrued incentive plan expenses		5,007			4,242
Long-term debt		606,280			478,822
Partners’ capital:
Common units (69,451,136 in 2009, 64,891,136 in 2008)		769,892			719,341
General partner’s interest		14,218			13,579
Holders of incentive distribution rights		12,180			11,069
Accumulated other comprehensive loss		(623	)		(648	)
Total partners’ capital		795,667			743,341
Total liabilities and partners’ capital	$	1,508,085		$	1,301,340

NRP Reports 2Q09 Results and Updates Guidance Page 12 of 14

Natural Resource Partners L.P.
Reconciliation of GAAP Financial Measurements
to Non-GAAP Financial Measurements
(In thousands)

Reconciliation of GAAP “Net cash provided by operating activities”
To Non-GAAP “Distributable cash flow”

	Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(unaudited)						(unaudited)
Net cash provided by operating activities	$	57,127		$	61,667		$	100,679		$	100,870
Less scheduled principal payments		(9,350	)		(9,350	)		(9,542	)		(9,543	)
Less reserves for future principal payments		(8,059	)		(4,308	)		(16,118	)		(8,616	)
Add reserves used for scheduled principal payments		9,350			9,350			9,542			9,543
Distributable cash flow	$	49,068		$	57,359		$	84,561		$	92,254

Reconciliation of GAAP “Net income attributable to the limited partners”
To Non-GAAP “Adjusted net income attributable to the limited partners”

	Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2009		2008		2009		2008
	(unaudited)				(unaudited)
Non-GAAP
GAAP Net income	$	17,082	$	40,353	$	50,502	$	74,205
Add write-off of property due to mine closure	$	8,195		—	$	8,195		—
Adjusted net income	$	25,277	$	40,353	$	58,697	$	74,205
Adjusted net income attributable to:
General partner	$	262	$	611	$	703	$	1,116
Holders of incentive distribution rights:	$	12,180	$	9,822	$	23,561	$	18,399
Limited partners	$	12,835	$	29,920	$	34,433	$	54,690
Adjusted Basic and diluted net income per limited partner unit	$	0.19	$	0.46	$	0.52	$	0.84
Weighted average number of units outstanding:		66,946		64,891		65,924		64,891

NRP Reports 2Q09 Results and Updates Guidance Page 13 of 14

Natural Resource Partners L.P.
Guidance
(dollars and tons in millions except per unit amounts)

	Revised					Original
	2009 Guidance					2009 Guidance
	(Range)					(Range)
Revenues
Coal royalty revenues	$	176.0	—	$	195.5	$	240.0	—	$	270.0
Aggregate revenues		5.0	—		7.0		6.5	—		8.5
Override royalties		6.0	—		9.0		10.0	—		13.0
Oil and gas royalties		3.5	—		4.5		4.0	—		5.5
Coal processing fees		7.0	—		9.0		8.5	—		11.0
Coal transportation fees		10.0	—		13.5		13.0	—		16.5
Property taxes		10.0	—		11.0		9.0	—		10.0
Other revenues (1)		3.5	—		4.5		3.0	—		3.5
Total revenues	$	221.0	—	$	254.0	$	294.0	—	$	338.0
Expenses
Depreciation, depletion, and amortization	$	57.0	—	$	60.0	$	62.0	—	$	67.0
General and administrative		24.0	—		25.5		21.5	—		23.5
Property, franchise and other taxes		13.5	—		14.5		13.0	—		15.0
Coal transportation expenses		0.5	—		1.0		1.5	—		2.0
Coal royalty and override payments		2.0	—		3.0		1.0	—		1.5
Total operating expenses	$	97.0	—	$	104.0	$	99.0	—	$	109.0
Interest expense (net)	$	37.0	—	$	40.0	$	25.0	—	$	27.0
Net income	$	87.0	—	$	110.0	$	170.0	—	$	202.0
Net income per unit	$	0.58	—	$	0.90	$	1.67	—	$	2.12
Principal payments	$	32.2	—	$	32.2	$	24.7	—	$	24.7
Distributable cash flow (2)	$	139.0	—	$	165.0	$	207.3	—	$	244.3
Average units outstanding for 2009		67.7

(1)

Other revenues consist of minimums recognized as revenue, wheelage, rentals and timber.

(2)

Distributable cash flow represents net income plus depletion and amortization plus minimums of $27 million expected in 2009, minus principal payments to be paid within the next twelve months Distributable cash flow is a “non-GAAP financial measure” that is presented because management believes it is a useful adjunct to net cash provided by operating activities under GAAP. Distributable cash flow is a significant liquidity metric that is an indicator of NRP’s ability to generate cash flows at a level that can sustain or support an increase in quarterly cash distributions paid to its partners. Distributable cash flow is also the quantitative standard used throughout the investment community with respect to publicly-traded partnerships. Distributable cash flow 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. We believe that “net cash provided by operating activities” would be the most comparable financial measure to distributable cash. However, due to the substantial uncertainties associated with forecasting future changes to operating assets and liabilities, we cannot provide guidance on forward-looking net cash provided by operating activities or provide reconciliations of distributable cash flow to that measure.

NRP Reports 2Q09 Results and Updates Guidance Page 14 of 14

Guidance continued

	Revised					Original
	2009 Guidance					2009 Guidance
	(Range)					(Range)
Regional Statistics
Coal royalty production (tons)
Northern Appalachia		3.5	—		5.0		4.0	—		6.0
Central Appalachia		26.0	—		30.0		32.5	—		37.5
Southern Appalachia		2.5	—		3.5		3.5	—		4.5
Appalachia		32.0	—		38.5		40.0	—		48.0
Illinois Basin		6.0	—		7.0		7.0	—		8.0
Northern Powder River Basin		3.0	—		4.5		4.0	—		5.0
Total		41.0	—		50.0		51.0	—		61.0
Coal royalty revenues
Northern Appalachia	$	12.0	—	$	14.0	$	16.0	—	$	18.5
Central Appalachia		121.0	—		131.0		166.0	—		188.0
Southern Appalachia		16.0	—		19.0		24.0	—		27.0
Appalachia	$	149.0	—	$	164.0	$	206.0	—	$	233.5
Illinois Basin		20.0	—		23.0		26.0	—		27.0
Northern Powder River Basin		7.0	—		8.5		8.0	—		9.5
Total	$	176.0	—	$	195.5	$	240.0	—	$	270.0
Average coal royalty revenue per ton
Northern Appalachia	$	2.80	—	$	3.43	$	3.08	—	$	4.00
Central Appalachia		4.37	—		4.65		5.01	—		5.11
Southern Appalachia		5.43	—		6.40		6.00	—		6.86
Appalachia	$	4.26	—	$	4.66	$	4.86	—	$	5.15
Illinois Basin		3.29	—		3.33		3.38	—		3.71
Northern Powder River Basin		1.89	—		2.33		1.90	—		2.00
Total	$	3.91	—	$	4.29	$	4.43	—	$	4.71
Aggregates
Royalty revenues	$	4.0	—	$	5.0	$	5.5	—	$	6.5
Aggregate bonus royalty	$	1.0	—	$	2.0	$	1.0	—	$	2.0
Production (tons)		3.0	—		3.5		4.5	—		5.0
Average royalty revenue per ton	$	1.33	—	$	1.43	$	1.22	—	$	1.30

-end-