þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) |
35-2164875 (I.R.S. Employer Identification No.) |
þ Large Accelerated Filer | o Accelerated Filer | o Non-accelerated Filer (Do not check if a smaller reporting company) | o Smaller Reporting Company |
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EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
2
3
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 150,112 | $ | 95,506 | ||||
Accounts receivable, net of allowance for doubtful accounts |
34,538 | 26,195 | ||||||
Accounts receivable affiliates |
12,342 | 7,915 | ||||||
Other |
391 | 910 | ||||||
Total current assets |
197,383 | 130,526 | ||||||
Land |
24,533 | 24,543 | ||||||
Plant and equipment, net |
49,228 | 62,348 | ||||||
Coal and other mineral rights, net |
1,289,874 | 1,281,636 | ||||||
Intangible assets, net |
109,885 | 161,931 | ||||||
Loan financing costs, net |
4,782 | 2,436 | ||||||
Other assets, net |
579 | 616 | ||||||
Total assets |
$ | 1,676,264 | $ | 1,664,036 | ||||
LIABILITIES AND PARTNERS CAPITAL |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 2,100 | $ | 1,388 | ||||
Accounts payable affiliates |
| 499 | ||||||
Obligation related to acquisitions |
500 | | ||||||
Current portion of long-term debt |
30,801 | 31,518 | ||||||
Accrued incentive plan expenses current portion |
7,690 | 6,788 | ||||||
Property, franchise and other taxes payable |
4,499 | 6,926 | ||||||
Accrued interest |
8,101 | 9,811 | ||||||
Total current liabilities |
53,691 | 56,930 | ||||||
Deferred revenue |
108,093 | 109,509 | ||||||
Accrued incentive plan expenses |
10,431 | 11,347 | ||||||
Long-term debt |
786,268 | 661,070 | ||||||
Partners capital: |
||||||||
Common units outstanding (106,027,836) |
701,602 | 806,529 | ||||||
General partners interest |
11,995 | 14,132 | ||||||
Non-controlling interest |
4,691 | 5,065 | ||||||
Accumulated other comprehensive loss |
(507 | ) | (546 | ) | ||||
Total partners capital |
717,781 | 825,180 | ||||||
Total liabilities and partners capital |
$ | 1,676.264 | $ | 1,664,036 | ||||
4
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Revenues: |
||||||||||||||||
Coal royalties |
$ | 76,430 | $ | 60,142 | $ | 211,583 | $ | 165,135 | ||||||||
Aggregate royalties |
2,099 | 1,606 | 5,124 | 2,847 | ||||||||||||
Coal processing fees |
3,967 | 2,343 | 10,229 | 6,680 | ||||||||||||
Transportation fees |
4,765 | 4,285 | 12,608 | 11,103 | ||||||||||||
Oil and gas royalties |
5,059 | 1,013 | 10,047 | 4,200 | ||||||||||||
Property taxes |
2,974 | 3,552 | 9,563 | 8,985 | ||||||||||||
Minimums recognized as revenue |
1,582 | 3,782 | 3,930 | 10,574 | ||||||||||||
Override royalties |
4,131 | 2,625 | 10,666 | 8,749 | ||||||||||||
Other |
2,764 | 1,404 | 6,282 | 5,586 | ||||||||||||
Total revenues |
103,771 | 80,752 | 280,032 | 223,859 | ||||||||||||
Operating costs and expenses: |
||||||||||||||||
Depreciation, depletion and amortization |
19,153 | 16,195 | 49,641 | 44,048 | ||||||||||||
Asset impairment |
90,932 | | 90,932 | | ||||||||||||
General and administrative |
5,521 | 8,761 | 22,156 | 22,103 | ||||||||||||
Property, franchise and other taxes |
3,915 | 4,580 | 10,918 | 11,812 | ||||||||||||
Transportation costs |
540 | 614 | 1,531 | 1,436 | ||||||||||||
Coal royalty and override payments |
233 | 258 | 700 | 1,251 | ||||||||||||
Total operating costs and expenses |
120,294 | 30,408 | 175,878 | 80,650 | ||||||||||||
Income
(loss) from operations |
(16,523 | ) | 50,344 | 104,154 | 143,209 | |||||||||||
Other income (expense): |
||||||||||||||||
Interest expense |
(12,779 | ) | (10,204 | ) | (35,795 | ) | (31,279 | ) | ||||||||
Interest income |
16 | 13 | 40 | 25 | ||||||||||||
Income
(loss) before non-controlling interest |
(29,286 | ) | 40,153 | 68,399 | 111,955 | |||||||||||
Less non-controlling interest |
| | (51 | ) | | |||||||||||
Net income (loss) |
$ | (29,286 | ) | $ | 40,153 | $ | 68,348 | $ | 111,955 | |||||||
Net income
(loss) attributable to: |
||||||||||||||||
General partner |
$ | (586 | ) | $ | 803 | $ | 1,367 | $ | 1,720 | |||||||
Holders of incentive distribution rights |
| $ | | $ | | $ | 25,966 | |||||||||
Limited partners |
$ | (28,700 | ) | $ | 39,350 | $ | 66,981 | $ | 84,269 | |||||||
Basic and diluted net income (loss) per limited partner unit |
$ | (0.27 | ) | $ | 0.51 | $ | 0.63 | $ | 1.14 | |||||||
Weighted average number of units outstanding |
106,028 | 77,896 | 106,028 | 73,792 | ||||||||||||
5
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 68,348 | $ | 111,955 | ||||
Adjustments to reconcile net income to net |
||||||||
cash provided by operating activities: |
||||||||
Depreciation, depletion and amortization |
49,641 | 44,048 | ||||||
Gain on sale of assets |
(1,058 | ) | | |||||
Asset impairment |
90,932 | | ||||||
Non-cash interest charge, net |
493 | 415 | ||||||
Non-controlling interest |
51 | | ||||||
Change in operating assets and liabilities: |
||||||||
Accounts receivable |
(12,770 | ) | (5,341 | ) | ||||
Other assets |
556 | 620 | ||||||
Accounts payable and accrued liabilities |
213 | 303 | ||||||
Accrued interest |
(1,710 | ) | (7,458 | ) | ||||
Deferred revenue |
26,067 | 29,254 | ||||||
Accrued incentive plan expenses |
(14 | ) | 2,425 | |||||
Property, franchise and other taxes payable |
(2,427 | ) | (561 | ) | ||||
Net cash provided by operating activities |
218,322 | 175,660 | ||||||
Cash flows from investing activities: |
||||||||
Acquisition of land, coal and other mineral rights |
(107,509 | ) | (111,176 | ) | ||||
Acquisition or construction of plant and equipment |
(325 | ) | (4,320 | ) | ||||
Proceeds from sale of assets |
5,500 | 808 | ||||||
Net cash used in investing activities |
(102,334 | ) | (114,688 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from loans |
335,000 | 85,000 | ||||||
Debt issuance costs |
(2,774 | ) | | |||||
Proceeds from issuance of units |
| 110,436 | ||||||
Repayment of loans |
(210,519 | ) | (106,234 | ) | ||||
Capital contribution |
| 2,350 | ||||||
Payment of obligation related to acquisitions |
(7,625 | ) | (9,169 | ) | ||||
Costs associated with equity transactions |
(141 | ) | (152 | ) | ||||
Fees associated with the elimination of the IDRs |
| (2,170 | ) | |||||
Distributions to partners |
(175,323 | ) | (151,427 | ) | ||||
Net cash used in financing activities |
(61,382 | ) | (71,366 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
54,606 | (10,394 | ) | |||||
Cash and cash equivalents at beginning of period |
95,506 | 82,634 | ||||||
Cash and cash equivalents at end of period |
$ | 150,112 | $ | 72,240 | ||||
Supplemental cash flow information: |
||||||||
Cash paid during the period for interest |
$ | 37,074 | $ | 38,292 | ||||
Non-cash activities: |
||||||||
Mineral rights to be received |
$ | | $ | 13,249 | ||||
Non-controlling interest |
$ | 373 | $ | (7,355 | ) | |||
Obligation related to purchase of reserves and infrastructure |
$ | 4,100 | $ | 6,200 | ||||
Liability associated with an acquisition |
$ | | $ | 1,268 |
6
7
Final | ||||
Fair Value | ||||
(In thousands) | ||||
(unaudited) | ||||
Coal and other mineral rights |
$ | 45,329 | ||
Intangible assets |
$ | 1,863 | ||
Capital contribution |
$ | 42,500 | ||
Non-controlling interests |
$ | 4,692 |
8
Net Book | |||||||||
Fair Value | Value | ||||||||
(In thousands) | |||||||||
Coal and other mineral rights, net |
$ | 5,404 | $ | 76,003 | |||||
Intangible assets, net |
| 43,855 | |||||||
Plant and equipment, net |
2,600 | 6,561 | |||||||
Total |
$ | 8,004 | $ | 126,419 | |||||
The Partnerships plant and equipment consist of the following: |
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Plant construction in process |
$ | | $ | 6,279 | ||||
Plant and equipment at cost |
70,810 | 81,906 | ||||||
Less accumulated depreciation |
(21,582 | ) | (25,837 | ) | ||||
Net book value |
$ | 49,228 | $ | 62,348 | ||||
9
Nine months ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Total depreciation expense on plant and equipment |
$ | 6,681 | $ | 6,238 | ||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Coal and other mineral rights |
$ | 1,670,147 | $ | 1,629,286 | ||||
Less accumulated depletion and amortization |
(380,273 | ) | (347,650 | ) | ||||
Net book value |
$ | 1,289,874 | $ | 1,281,636 | ||||
Nine months ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Total depletion and amortization expense on coal and other mineral rights |
$ | 34,711 | $ | 28,285 | ||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Contract intangibles |
$ | 124,087 | $ | 180,233 | ||||
Less accumulated amortization |
(14,202 | ) | (18,302 | ) | ||||
Net book value |
$ | 109,885 | $ | 161,931 | ||||
Nine months ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Total amortization expense on intangible assets |
$ | 8,248 | $ | 9,524 | ||||
Estimated Amortization | ||||
Expense | ||||
(In thousands) | ||||
(Unaudited) | ||||
Remainder of 2011 |
$ | 2,325 | ||
For year ended December 31, 2012 |
5,173 | |||
For year ended December 31, 2013 |
4,519 | |||
For year ended December 31, 2014 |
4,519 | |||
For year ended December 31, 2015 |
4,519 |
10
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
$300 million floating rate revolving credit facility, due August 2016 |
$ | | $ | 94,000 | ||||
5.55% senior notes, with semi-annual interest payments in June and
December, maturing June 2013 |
35,000 | 35,000 | ||||||
4.91% senior notes, with semi-annual interest payments in June and
December, with annual principal payments in June, maturing in June 2018 |
32,317 | 37,650 | ||||||
8.38% senior notes, with semi-annual interest payments in March and
September, with scheduled principal payments beginning March 2013,
maturing in March 2019 |
150,000 | 150,000 | ||||||
5.05% senior notes, with semi-annual interest payments in January and
July, with annual principal payments in July, maturing in July 2020 |
69,230 | 76,923 | ||||||
5.31% utility local improvement obligation, with annual principal and
interest payments, maturing in March 2021 |
1,922 | 2,115 | ||||||
5.55% senior notes, with semi-annual interest payments in June and
December, with annual principal payments in June, maturing in June 2023 |
33,600 | 36,900 | ||||||
4.73% senior notes, with semi-annual interest payments in June and
December, with scheduled principal payments beginning December 2014,
maturing in December 2023 |
75,000 | | ||||||
5.82% senior notes, with semi-annual interest payments in March and
September, with annual principal payments in March, maturing in March
2024 |
195,000 | 210,000 | ||||||
8.92% senior notes, with semi-annual interest payments in March and
September, with scheduled principal payments beginning March 2014,
maturing in March 2024 |
50,000 | 50,000 | ||||||
5.03% senior notes, with semi-annual interest payments in June and
December, with scheduled principal payments beginning December 2014,
maturing in December 2026 |
175,000 | | ||||||
Total debt |
817,069 | 692,588 | ||||||
Less current portion of long term debt |
(30,801 | ) | (31,518 | ) | ||||
Long-term debt |
$ | 786,268 | $ | 661,070 | ||||
Senior Notes | Credit Facility | Total | ||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Remainder of 2011 |
$ | | $ | | $ | | ||||||
2012 |
30,801 | | 30,801 | |||||||||
2013 |
87,230 | | 87,230 | |||||||||
2014 |
77,137 | | 77,137 | |||||||||
2015 |
77,137 | | 77,137 | |||||||||
Thereafter |
544,764 | | 544,764 | |||||||||
$ | 817,069 | $ | | $ | 817,069 | |||||||
11
| Maintain a ratio of consolidated indebtedness to consolidated EBITDA (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 EBITDA to consolidated fixed charges (consisting of consolidated interest expense and consolidated operating lease expense) at not less than 3.5 to 1.0. |
Series | Amount | Interest Rate | Issue Date | Maturity | ||||||||||||
H |
$75 million | 4.73 | % | April 20, 2011 | December 1, 2023 | |||||||||||
I |
$125 million | 5.03 | % | April 20, 2011 | December 1, 2026 | |||||||||||
J |
$50 million | 5.03 | % | June 15, 2011 | December 1, 2026 | |||||||||||
K |
$50 million | 5.18 | % | October 3, 2011 | December 1, 2026 |
| a ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the credit agreement) not to exceed 4.0 to 1.0; and |
| a ratio of consolidated EBITDDA to consolidated fixed charges (consisting of consolidated interest expense and consolidated lease operating expense) not less than 3.5 to 1.0 for the four most recent quarters. |
12
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Reimbursement for services |
$ | 2,050 | $ | 1,823 | $ | 6,203 | $ | 5,403 | ||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Coal royalty revenues |
$ | 16,244 | $ | 9,873 | $ | 30,673 | $ | 22,655 | ||||||||
Coal processing fees |
885 | 344 | 2,078 | 785 | ||||||||||||
Transportation fees |
4,765 | 4,271 | 12,609 | 10,671 | ||||||||||||
Minimums recognized as revenue |
| 3,100 | | 9,300 | ||||||||||||
Override revenue |
704 | 718 | 1,384 | 1,437 | ||||||||||||
$ | 22,598 | $ | 18,306 | $ | 46,744 | $ | 44,848 | |||||||||
13
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Coal processing revenues |
$ | 2,962 | $ | 1,666 | $ | 7,587 | $ | 4,014 | ||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Coal royalty revenues |
$ | 440 | $ | 363 | $ | 1,192 | $ | 1,195 | ||||||||
14
15
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
Revenues | Percent | Revenues | Percent | Revenues | Percent | Revenues | Percent | |||||||||||||||||||||||||
Alpha Natural Resources |
$ | 27,718 | 27 | % | $ | 20,629 | 26 | % | $ | 82,010 | 29 | % | $ | 59,570 | 27 | % | ||||||||||||||||
The Cline Group |
$ | 22,598 | 22 | % | $ | 18,306 | 23 | % | $ | 46,744 | 17 | % | $ | 44,858 | 20 | % |
Outstanding grants at January 1, 2011 |
753,868 | |||
Grants during the year |
279,078 | |||
Grants vested and paid during the year |
(162,186 | ) | ||
Forfeitures during the year |
| |||
Outstanding grants at September 30, 2011 |
870,760 | |||
16
17
18
19
20
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Net cash provided by operating activities |
$ | 79,642 | $ | 62,107 | $ | 218,322 | $ | 175,660 | ||||||||
Less scheduled principal payments |
(7,692 | ) | (7,692 | ) | (31,518 | ) | (32,234 | ) | ||||||||
Less reserves for future principal payments |
(7,700 | ) | (7,880 | ) | (23,459 | ) | (23,819 | ) | ||||||||
Add reserves used for scheduled principal payments |
7,692 | 7,692 | 31,518 | 32,234 | ||||||||||||
Distributable cash flow |
$ | 71,942 | $ | 54,227 | $ | 194,863 | $ | 151,841 | ||||||||
21
22
Three Months Ended | Increase | Percentage | ||||||||||||||
September 30, | (Decrease) | Change | ||||||||||||||
2011 | 2010 | |||||||||||||||
(In thousands, except percent and per ton data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Coal: |
||||||||||||||||
Coal royalty revenues |
||||||||||||||||
Appalachia |
||||||||||||||||
Northern |
$ | 4,731 | $ | 4,883 | $ | (152 | ) | (3 | )% | |||||||
Central |
50,595 | 38,418 | 12,177 | 32 | % | |||||||||||
Southern |
1,554 | 5,520 | (3,966 | ) | (72 | )% | ||||||||||
Total Appalachia |
56,880 | 48,821 | 8,059 | 17 | % | |||||||||||
Illinois Basin |
15,767 | 9,278 | 6,489 | 70 | % | |||||||||||
Northern Powder River Basin |
3,622 | 2,033 | 1,589 | 78 | % | |||||||||||
Gulf Coast |
161 | 10 | 151 | | ||||||||||||
Total |
$ | 76,430 | $ | 60,142 | $ | 16,288 | 27 | % | ||||||||
Production (tons) |
||||||||||||||||
Appalachia |
||||||||||||||||
Northern |
1,156 | 1,177 | (21 | ) | (2 | )% | ||||||||||
Central |
7,406 | 7,051 | 355 | 5 | % | |||||||||||
Southern |
290 | 763 | (473 | ) | (62 | )% | ||||||||||
Total Appalachia |
8,852 | 8,991 | (139 | ) | (2 | )% | ||||||||||
Illinois Basin |
3,574 | 2,389 | 1,185 | 50 | % | |||||||||||
Northern Powder River Basin |
1,119 | 987 | 132 | 13 | % | |||||||||||
Gulf Coast |
80 | 3 | 77 | | ||||||||||||
Total |
13,625 | 12,370 | 1,255 | 10 | % | |||||||||||
Average gross royalty per ton |
||||||||||||||||
Appalachia |
||||||||||||||||
Northern |
$ | 4.09 | $ | 4.15 | $ | (0.06 | ) | (1 | )% | |||||||
Central |
6.83 | 5.45 | 1.38 | 25 | % | |||||||||||
Southern |
5.36 | 7.23 | (1.87 | ) | (26 | )% | ||||||||||
Total Appalachia |
6.43 | 5.43 | 1.00 | 18 | % | |||||||||||
Illinois Basin |
4.41 | 3.88 | 0.53 | 14 | % | |||||||||||
Northern Powder River Basin |
3.24 | 2.06 | 1.18 | 57 | % | |||||||||||
Gulf Coast |
2.01 | 3.33 | (1.32 | ) | (40 | )% | ||||||||||
Combined average gross royalty per ton |
5.61 | $ | 4.86 | $ | 0.75 | 15 | % | |||||||||
Aggregates: |
||||||||||||||||
Royalty revenue |
$ | 2,099 | $ | 1,606 | $ | 493 | 31 | % | ||||||||
Production |
1,682 | 1,193 | 489 | 41 | % | |||||||||||
Average base royalty per ton |
$ | 1.25 | $ | 1.35 | $ | (0.10 | ) | (7 | )% | |||||||
Oil and Gas: |
||||||||||||||||
Oil and gas royalties |
$ | 5,059 | $ | 1,013 | $ | 4,046 | 400 | % |
23
24
Nine Months Ended | Increase | Percentage | ||||||||||||||
September 30, | (Decrease) | Change | ||||||||||||||
2011 | 2010 | |||||||||||||||
(In thousands, except percent and per ton data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Coal: |
||||||||||||||||
Coal royalty revenues |
||||||||||||||||
Appalachia |
||||||||||||||||
Northern |
$ | 14,592 | $ | 14,224 | $ | 368 | 3 | % | ||||||||
Central |
151,156 | 108,751 | 42,405 | 39 | % | |||||||||||
Southern |
9,742 | 15,795 | (6,053 | ) | (38 | )% | ||||||||||
Total Appalachia |
175,490 | 138,770 | 36,720 | 26 | % | |||||||||||
Illinois Basin |
29,598 | 20,307 | 9,291 | 46 | % | |||||||||||
Northern Powder River Basin |
6,135 | 6,048 | 87 | 1 | % | |||||||||||
Gulf Coast |
360 | 10 | 350 | | ||||||||||||
Total |
211,583 | 165,135 | 46,448 | 28 | % | |||||||||||
Production (tons) |
||||||||||||||||
Appalachia |
||||||||||||||||
Northern |
3,530 | 3,676 | (146 | ) | (4 | )% | ||||||||||
Central |
22,756 | 20,417 | 2,339 | 11 | % | |||||||||||
Southern |
1,410 | 2,297 | (887 | ) | (39 | )% | ||||||||||
Total Appalachia |
27,696 | 26,390 | 1,306 | 5 | % | |||||||||||
Illinois Basin |
7,118 | 5,287 | 1,831 | 35 | % | |||||||||||
Northern Powder River Basin |
2,024 | 3,259 | (1,235 | ) | (38 | )% | ||||||||||
Gulf Coast |
271 | 3 | 268 | | ||||||||||||
Total |
37,109 | 34,939 | 2,170 | 6 | % | |||||||||||
Average gross royalty per ton |
||||||||||||||||
Appalachia |
||||||||||||||||
Northern |
$ | 4.13 | $ | 3.87 | $ | 0.26 | 7 | % | ||||||||
Central |
6.64 | 5.33 | 1.31 | 25 | % | |||||||||||
Southern |
6.91 | 6.88 | 0.03 | | ||||||||||||
Total Appalachia |
6.34 | 5.26 | 1.08 | 21 | % | |||||||||||
Illinois Basin |
4.16 | 3.84 | 0.32 | 8 | % | |||||||||||
Northern Powder River Basin |
3.03 | 1.86 | 1.17 | 63 | % | |||||||||||
Gulf Coast |
1.33 | 3.33 | (2.00 | ) | (60 | )% | ||||||||||
Combined average gross royalty per ton |
$ | 5.70 | $ | 4.73 | $ | 0.97 | 21 | % | ||||||||
Aggregates: |
||||||||||||||||
Royalty revenue |
$ | 5,030 | $ | 3,486 | $ | 1,544 | 44 | % | ||||||||
Aggregate royalty bonus |
$ | 94 | $ | (639 | ) | $ | 733 | | ||||||||
Production |
4,618 | 2,576 | 2,042 | 79 | % | |||||||||||
Average base royalty per ton |
$ | 1.09 | $ | 1.35 | $ | (0.26 | ) | (19 | )% | |||||||
Oil and Gas: |
||||||||||||||||
Oil and gas royalties |
$ | 10,047 | $ | 4,200 | $ | 5,847 | 139 | % |
25
| Depreciation, depletion and amortization of $19.2 million and $16.2 million for the quarters ended September 30, 2011 and 2010 and $49.6 million and $44.0 million for the nine months ended September 30, 2011 and 2010. Depletion and amortization increased approximately $5.6 million for the nine months ended September 30, 2011, primarily due to increased oil and gas depletion on our BRP properties. | ||
| General and administrative expenses were $5.5 million and $8.8 million for the quarters ended September 30, 2011 and 2010 and $22.2 million and $22.1 million the nine month periods ending September 30, 2011 and 2010, respectively. General and administrative expenses for the three months ended September 30, 2011 decreased $3.2 million compared to the same period in 2010, primarily due to lower accruals under our long-term incentive plan attributable to our lower unit price. For the nine months ended September 30, 2011 and 2010 accruals were nearly the same. |
26
Quarters Ending | ||||||||||||
March 31, | June 30, | September 30, | ||||||||||
2011 | 2011 | 2011 | ||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Outstanding balance, beginning of period |
$ | 94,000 | $ | 179,000 | $ | | ||||||
Borrowings under credit facility |
85,000 | | | |||||||||
Less: Repayments under credit facility |
| 179,000 | | |||||||||
Outstanding balance, ending period |
$ | 179,000 | $ | | $ | | ||||||
27
| the Alternate Base Rate (as defined in the credit agreement) plus an applicable margin ranging from 0% to 1%; or | ||
| the Adjusted LIBO Rate (as defined in the credit agreement) plus an applicable margin ranging from 1.00% to 2.25%. |
| a ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the credit agreement) not to exceed 4.0 to 1.0; and | ||
| a ratio of consolidated EBITDDA to consolidated fixed charges (consisting of consolidated interest expense and consolidated lease operating expense) not less than 3.5 to 1.0. |
The senior note purchase agreement contains covenants requiring our operating subsidiary to: |
| Maintain a ratio of consolidated indebtedness to consolidated EBITDA (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 EBITDA to consolidated fixed charges (consisting of consolidated interest expense and consolidated operating lease expense) at not less than 3.5 to 1.0. |
| $35.0 million of 5.55% senior notes due 2013; | ||
| $32.3 million of 4.91% senior notes due 2018; | ||
| $150.0 million of 8.38% senior notes due 2019; | ||
| $69.2 million of 5.05% senior notes due 2020; | ||
| $1.9 million of 5.31% utility local improvement obligation due 2021; | ||
| $33.6 million of 5.55% senior notes due 2023; | ||
| $75.0 million of 4.73% senior notes due 2023; | ||
| $195.0 million of 5.82% senior notes due 2024; | ||
| $50.0 million of 8.92% senior notes due 2024; | ||
| $175.0 million of 5.03% senior notes due 2026; and | ||
| $50.0 million of 5.18% senior notes due 2026. |
28
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Reimbursement for services |
$ | 2,050 | $ | 1,823 | $ | 6,203 | $ | 5,403 | ||||||||
29
Three Months End | Nine Months End | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Coal royalty revenues |
$ | 16,244 | $ | 9,873 | $ | 30,673 | $ | 22,655 | ||||||||
Coal processing fees |
885 | 344 | 2,078 | 785 | ||||||||||||
Transportation fees |
4,765 | 4,271 | 12,609 | 10,671 | ||||||||||||
Minimums recognized as revenue |
| 3,100 | | 9,300 | ||||||||||||
Override revenue |
704 | 718 | 1,384 | 1,437 | ||||||||||||
$ | 22,598 | $ | 18,306 | $ | 46,744 | $ | 44,848 | |||||||||
Three Months End | Nine Months End | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Coal processing revenue |
$ | 2,962 | $ | 1,666 | $ | 7,587 | $ | 4,014 | ||||||||
30
Three Months End | Nine Months End | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Coal royalty revenue |
$ | 440 | $ | 363 | $ | 1,192 | $ | 1,195 | ||||||||
31
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
32
Item 4. | Controls and Procedures |
33
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | (Removed and Reserved) |
Item 5. | Other Information |
34
Item 6. | Exhibits |
4.1
|
| Form of Series K Note (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on October 3, 2011). | ||
10.1
|
| Second Amended and Restated Credit Agreement, dated as of August 10, 2011 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on August 11, 2011). | ||
31.1*
|
| Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley. | ||
31.2*
|
| Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley. | ||
32.1*
|
| Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350. | ||
32.2*
|
| Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350. | ||
101*
|
| The following financial information from the quarterly report on Form 10-Q of Natural Resource Partners L.P. for the quarter ended September 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Cash Flows, and (iv) Notes to Consolidated Financial Statements, tagged as blocks of text. |
* | Submitted herewith. |
35
NATURAL RESOURCE PARTNERS L.P. |
||||
By: | NRP (GP) LP, its general partner | |||
By: | GP NATURAL RESOURCE | |||
PARTNERS LLC, its general partner | ||||
Date: November 8, 2011 | By: | /s/ Corbin J. Robertson, Jr. | ||
Corbin J. Robertson, Jr., Chairman of the Board and Chief Executive Officer (Principal Executive Officer) |
||||
Date: November 8, 2011 | By: | /s/ Dwight L. Dunlap | ||
Dwight L. Dunlap, Chief Financial Officer and Treasurer (Principal Financial Officer) |
||||
Date: November 8, 2011 | By: | /s/ Kenneth Hudson | ||
Kenneth Hudson Controller (Principal Accounting Officer) |
||||
36
1) | I have reviewed this report on Form 10-Q of Natural Resource Partners L.P. | ||
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4) | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5) | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions); |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
By: | /s/ Corbin J. Robertson, Jr. | |||
Corbin J. Robertson, Jr. Chief Executive Officer |
||||
1) | I have reviewed this report on Form 10-Q of Natural Resource Partners L.P. | ||
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4) | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5) | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions); |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
By: | /s/ Dwight L. Dunlap | |||
Dwight L. Dunlap Chief Financial Officer and Treasurer |
||||
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Corbin J. Robertson, Jr. | ||||
Name: | Corbin J. Robertson, Jr. | |||
Date: November 2, 2011 | ||||
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Dwight L. Dunlap | ||||
Name: | Dwight L. Dunlap | |||
Date: November 2, 2011 | ||||
Equity Transactions Including Distributions (Details) (USD $) | Sep. 30, 2011 | Aug. 12, 2011 | Dec. 31, 2010 |
---|---|---|---|
Equity Transactions Including Distributions (Textuals) [Abstract] | |||
Quarterly distribution to holders of common units | $ 0.54 | ||
Number of units issued to holders of incentive distribution rights | 32,000,000 | ||
Common units, outstanding | 106,027,836 | 106,027,836 | |
General partner interest percentage | 2.00% |
Consolidated Balance Sheets (Parenthetical) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Partners' capital: | ||
Common units, outstanding | 106,027,836 | 106,027,836 |
Asset Impairment (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Impairment Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net book value and fair values of the assets |
The unaudited net book value as of September 30, 2011 and calculated fair values of the assets
relating to the Gatling West Virginia operation is as follows:
|
Document and Entity Information (USD $) In Billions, except Share data | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Nov. 08, 2011 | Jun. 30, 2010 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | NATURAL RESOURCE PARTNERS LP | ||
Entity Central Index Key | 0001171486 | ||
Document Type | 10-Q | ||
Document Period End Date | Sep. 30, 2011 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q3 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1.0 | ||
Entity Common Stock, Shares Outstanding | 106,027,836 |
Major Lessee (Details) (USD $) In Thousands, unless otherwise specified | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Major Lessee (Textuals) [Abstract] | ||||
Minimum Percentage of revenue derived from Major two lessees | 46.00% | |||
Alpha Natural Resources [Member] | ||||
Revenues from lessees that exceeded ten percent of total revenues | ||||
Revenues | $ 27,718 | $ 20,629 | $ 82,010 | $ 59,570 |
Percent | 27.00% | 26.00% | 29.00% | 27.00% |
The Cline Group [Member] | ||||
Revenues from lessees that exceeded ten percent of total revenues | ||||
Revenues | $ 22,598 | $ 18,306 | $ 46,744 | $ 44,858 |
Percent | 22.00% | 23.00% | 17.00% | 20.00% |
Percentage of revenue derived from major lessee | 11.00% |
Intangible Assets (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets |
Amounts recorded as intangible assets along with the balances and accumulated amortization are
reflected in the table below:
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated amortization expense |
The estimates of future expense for the periods indicated below are based on current mining
plans, which are subject to revision in future periods.
|
Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified | 9 Months Ended |
---|---|
Sep. 30, 2011
Million_Tons_Of_Coal_Reserves
Floor
Company | |
Commitments and Contingencies (Textuals) [Abstract] | |
Excess purchase obligation on additional tons of coal reserves | 100,000,000 |
Aggregate purchase price | $ 80.0 |
Period of acquisition | over the next year |
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Intangible Assets | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets |
7. Intangible Assets
Amounts recorded as intangible assets along with the balances and accumulated amortization are
reflected in the table below:
The estimates of future expense for the periods indicated below are based on current mining
plans, which are subject to revision in future periods.
|
Long Term Debt (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt |
Long-term debt consists of the following:
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal payments due |
Principal payments due in:
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the four tranches of senior notes |
A summary of the four tranches of senior notes are as follows:
|
Related Party Transactions (Details 1) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Summary of revenues from related party | ||||
Coal royalty revenues | $ 76,430 | $ 60,142 | $ 211,583 | $ 165,135 |
Coal processing fees | 3,967 | 2,343 | 10,229 | 6,680 |
Transportation fees | 4,765 | 4,285 | 12,608 | 11,103 |
Minimums recognized as revenue | 1,582 | 3,782 | 3,930 | 10,574 |
Override revenue | 4,131 | 2,625 | 10,666 | 8,749 |
Total revenues | 103,771 | 80,752 | 280,032 | 223,859 |
Cline Affiliates [Member] | ||||
Summary of revenues from related party | ||||
Coal royalty revenues | 16,244 | 9,873 | 30,673 | 22,655 |
Coal processing fees | 885 | 344 | 2,078 | 785 |
Transportation fees | 4,765 | 4,271 | 12,609 | 10,671 |
Minimums recognized as revenue | 3,100 | 9,300 | ||
Override revenue | 704 | 718 | 1,384 | 1,437 |
Total revenues | $ 22,598 | $ 18,306 | $ 46,744 | $ 44,848 |
Long-Term Debt (Details 1) (USD $) In Thousands | Sep. 30, 2011 |
---|---|
Principal payments due | |
Remainder of 2011 | $ 0 |
2012 | 30,801 |
2013 | 87,230 |
2014 | 77,137 |
2015 | 77,137 |
Thereafter | 544,764 |
Principal payments | 817,069 |
Credit Facility [Member] | |
Principal payments due | |
Remainder of 2011 | 0 |
2012 | 0 |
2013 | 0 |
2014 | 0 |
2015 | 0 |
Thereafter | 0 |
Principal payments | 0 |
Senior Notes [Member] | |
Principal payments due | |
Remainder of 2011 | 0 |
2012 | 30,801 |
2013 | 87,230 |
2014 | 77,137 |
2015 | 77,137 |
Thereafter | 544,764 |
Principal payments | $ 817,069 |
Coal and Other Mineral Rights (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Coal and Other Mineral Rights [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Coal and other mineral rights |
The Partnership’s coal and other mineral rights consist of the following:
|
Major Lessees | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Major Lessees [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Major Lessees |
12. Major Lessees
Revenues from lessees that exceeded ten percent of total revenues for the periods as presented
below:
In the first nine months of 2011, the Partnership derived over 46% of its total revenue from
the two companies listed above. As a result, the Partnership has a significant concentration of
revenues with those lessees, although in most cases, with the exception of the Williamson mine
operated by an affiliate of the Cline group, the exposure is spread out over a number of different
mining operations and leases. Cline’s Williamson mine alone was
responsible for approximately 11%
of our total revenues for the first nine months of 2011. As a result of the merger of Alpha
Natural Resources and Massey Energy Company, all prior period revenues from Massey have been
combined with those of Alpha for presentation purposes in this 10-Q.
|
Significant Acquisitions | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Acquisitions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Acquisitions |
3. Significant Acquisitions
NBR Sand. In June 2011, the Partnership acquired an overriding royalty interest in
approximately 711 acres of frac sand reserves near Tyler, TX for $16.5 million.
CALX Resources. In February 2011, the Partnership acquired approximately 500 acres of mineral
and surface rights related to limestone reserves on the Tennessee River near Paducah, Kentucky for
$16.0 million, of which $15.5 million has been paid at September 30, 2011 and the remaining $0.5
million will be paid as certain milestones are completed.
BRP LLC. In June 2010, the Partnership and International Paper Company (“IPC”) formed BRP to
own and manage mineral assets previously owned by IPC. Some of these assets are currently subject
to leases, and certain other assets are available for future development by the venture. In
exchange for a $42.5 million contribution, NRP became the controlling member with the right to
designate two of the three managers of BRP. NRP has a 51% income interest plus a preferential
cumulative annual distribution prior to profit sharing. In exchange for the contribution of the
producing properties and the properties not currently producing, IPC received $42.5 million in
cash, a minority voting interest and a 49% income interest after the preferential cumulative annual
distribution. The amount of the preference is fixed throughout the life of the venture but can be
reduced by a portion of the proceeds received from sales of producing properties included in the
initial acquisition. Identified tangible assets included in the transaction are oil and gas, coal,
and aggregate reserves, as well the rights to other unidentified minerals which may include coal
bed methane, geothermal, CO2 sequestration, water rights, precious metals, industrial
minerals and base metals. Certain properties, including oil and gas, coal and aggregates, as well
as land leased for cell towers, are currently under lease and generating revenues.
The transaction was accounted for as a business combination and the assets and liabilities of
the venture are included in the consolidated balance sheet. The following table summarizes the final
allocation of the purchase price fair values of the assets acquired and
liabilities assumed for the BRP transaction:
Approximately $38.3 million of the total $47.2 million asset fair value, as well as the value
of the $4.7 million non-controlling interest, were estimated using an expected cash flows approach.
The remaining assets fair value was determined using a Level 2 market approach.
Operations of the venture are included from June 1, 2010, the effective date of acquisition.
Total net income from startup through December 31, 2010 was $2.3 million and for the nine months
ended September 30, 2011 was $4.0 million. The venture operating agreement provides that net
income of the venture only be allocated to the non-controlling interests after the preferential
cumulative annual distribution.
Transaction expenses related to the acquisition through December 31, 2010 were $2.5 million.
For the nine months ended September 30, 2011, transaction expenses were $0.5 million and are
included in general and administrative expenses in the accompanying Consolidated Statements of
Income.
Sierra Silica. In April 2010, the Partnership acquired the rights to silica reserves on
approximately 1,000 acres of property in Northern California for $17.0 million.
Colt. In September 2009, the Partnership signed a definitive agreement to acquire
approximately 200 million tons of coal reserves related to the Deer Run Mine in Illinois from Colt,
LLC, an affiliate of the Cline Group, through several separate transactions for a total purchase
price of $255 million. As of September 30, 2011, the Partnership had acquired approximately 92.1
million tons of reserves for approximately $175 million, including $70.0 million paid during the
first quarter 2011. Future closings anticipated through 2012 will be associated with completion of
certain milestones related to the new mine.
|
Coal and Other Mineral Rights (Details) (USD $) In Thousands | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Dec. 31, 2010 | |
Coal and other mineral rights | |||
Coal and other mineral rights | $ 1,670,147 | $ 1,629,286 | |
Less accumulated depletion and amortization | (380,273) | (347,650) | |
Net book value | 1,289,874 | 1,281,636 | |
Total depletion and amortization expense on coal and other mineral rights | $ 34,711 | $ 28,285 |
Fair Value | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Fair Value [Abstract] | |
Fair Value |
9. Fair Value
The Partnership’s financial instruments consist of cash and cash equivalents, accounts
receivable, accounts payable and long-term debt. The carrying amount of the Partnership’s financial
instruments included in accounts receivable and accounts payable approximates their fair value due
to their short-term nature. The Partnership’s cash and cash equivalents include money market
accounts and are considered a Level 1 measurement. The fair market value of the Partnership’s
long-term debt was estimated to be $862.6 million and $596.1 million at September 30, 2011 and
December 31, 2010, respectively, for the senior notes. The carrying
value of the Partnership’s senior notes was $817.1 million and $598.6 million at September 30,
2011 and December 31, 2010, respectively. The fair value is estimated by management using
comparable term risk-free treasury issues with a market rate component determined by current
financial instruments with similar characteristics which is a Level 3 measurement. Since the
Partnership’s credit facility is variable rate debt, its fair value approximates its carrying
amount.
|
Equity Transactions, including Distribution | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Equity Transactions, including Distribution [Abstract] | |
Equity Transactions, including Distributions |
14. Equity Transactions, including Distributions
On August 12, 2011, the Partnership paid a quarterly distribution $0.54 per unit to all
holders of common units.
On September 20, 2010, the Partnership eliminated all of the incentive distribution rights
(IDRs) held by its general partner and affiliates of the general partner. As consideration for the
elimination of the IDRs, the Partnership issued 32 million common units to the holders of the IDRs.
There are now 106,027,836 common units outstanding and the general partner retained its 2%
interest in the Partnership.
|
Related Party Transactions | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions |
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 expenses incurred on the
Partnership’s behalf. All direct general and administrative expenses are charged to the
Partnership as incurred. The Partnership also reimburses indirect general and administrative
costs, including certain legal, accounting, treasury, information technology, insurance,
administration of employee benefits and other corporate services incurred by our general partner
and its affiliates.
The reimbursements to affiliates of the Partnership’s general partner for services performed
by Western Pocahontas Properties and Quintana Minerals Corporation are as follows:
The Partnership leases substantially all of two floors of an office building in Huntington,
West Virginia from Western Pocahontas Properties and pays $0.5 million in lease payments each year
through December 31, 2018.
Cline Affiliates
Various companies controlled by Chris Cline lease coal reserves from the Partnership, and the
Partnership provides coal transportation services to them for a fee. At September 30, 2011, Mr.
Cline, both individually and through another affiliate, Adena Minerals, LLC, owns a 31% interest in
the Partnership’s general partner, as well as 16,686,672 common units. Revenues from the Cline
affiliates are as follows:
At
September 30, 2011, the Partnership had accounts receivable
totaling $10.7 million from
Cline affiliates, and had received $43.0 million in minimum royalty payments that have not been
recouped by Cline affiliates, of which $14.8 million was received in the current year.
The
Partnership recognized an asset impairment of $90.9 million during the third quarter of
2011 related to several of the Partnership’s assets at the Gatling WV location. These assets are
leased by one of the Cline affiliates.
Quintana Capital Group GP, Ltd.
Corbin J. Robertson, Jr. is a principal in Quintana Capital Group GP, Ltd., 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 NRP’s conflicts policy.
A fund controlled by Quintana Capital owns a significant membership interest in Taggart Global
USA, LLC, including the right to nominate two members of Taggart’s 5-person board of directors.
The Partnership owns and leases preparation plants to Taggart Global, which designs, builds and
operates the plants. The lease payments are based on the sales price for the coal that is
processed through the facilities. The Partnership currently leases four facilities to Taggart.
Revenues from Taggart are as follows:
At September 30, 2011, the Partnership had accounts receivable totaling $1.5 million from
Taggart.
A fund controlled by Quintana Capital owns Kopper-Glo, a small coal mining company that is one
of the Partnership’s lessees with operations in Tennessee. Revenues from Kopper-Glo are as
follows:
The Partnership also had accounts receivable totaling $0.1 million from Kopper-Glo at
September 30, 2011.
|
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