Mineral Rights, Net

12 Months Ended

Dec. 31, 2020

The Partnership’s mineral rights consist of the following:


	December 31,
	2020						2019
(In thousands)	Carrying Value		Accumulated Depletion		Net Book Value		Carrying Value		Accumulated Depletion		Net Book Value
Coal properties	$	785,623	$	(346,773)	$	438,850	$	981,352	$	(420,448)	$	560,904
Aggregates properties	9,039		(2,819)		6,220		41,486		(13,357)		28,129
Oil and gas royalty properties	12,354		(8,593)		3,761		12,395		(7,887)		4,508
Other	13,154		(1,612)		11,542		13,156		(1,601)		11,555
Total mineral rights, net	$	820,170	$	(359,797)	$	460,373	$	1,048,389	$	(443,293)	$	605,096

Depletion expense related to the Partnership’s mineral rights is included in depreciation, depletion and amortization on its Consolidated Statements of Comprehensive Income (Loss) and totaled $8.8 million, $12.1 million and $17.0 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Sales of Mineral Rights

During the year ended December 31, 2020, the Partnership recorded a gain of $0.6 million included in gain on asset sales and disposals on the Consolidated Statements of Comprehensive Income (Loss) related to sales of multiple mineral reserves. During the year ended December 31, 2019, the Partnership recorded a gain of $6.5 million included in gain on asset sales and disposals on the Consolidated Statements of Comprehensive Income (Loss) primarily related to the disposal of certain coal mineral rights with a $0 net book value. During the year ended December 31, 2018, the Partnership recorded a cumulative gain of $2.4 million included in gain on asset sales and disposals on the Consolidated Statements of Comprehensive Income (Loss) related to sales of multiple mineral reserves.

Impairment of Mineral Rights

During the years ended December 31, 2020, 2019 and 2018, the Partnership identified facts and circumstances that indicated that the carrying value of certain of its mineral rights exceed future cash flows from those assets and recorded non-cash impairment expense included in asset impairments on the Consolidated Statements of Comprehensive Income (Loss) as follows:


	For the Year Ended December 31,
(In thousands)	2020		2019		2018
Coal properties (1)	$	114,302	$	125,806	$	5,259

Aggregates properties (2)	21,583		103		13,021
Total	$	135,885	$	125,909	$	18,280

(1)The Partnership recorded $114.3 million of impairment expense to impair certain assets during the year ended December 31, 2020 primarily related to weakened coal markets that resulted in termination of certain coal leases and changes to lessee mine plans resulting in permanent moves off certain of our coal properties. The Partnership recorded $125.8 million of impairment expense during the year ended December 31, 2019 primarily due to deterioration in thermal coal markets, lessee capital constraints, thermal coal lease terminations, and expectations of further reductions in global and domestic thermal coal demand due to low natural gas prices and continued pressure on the electric power generation industry over emissions and climate change, resulting in reductions in expected cash flows (combination of lower expected coal sales volumes, sales prices, minimums and/or life of mine assumptions) on certain of our coal properties. During the year ended December 31, 2019, the Partnership recorded $36.0 million to fully impair certain coal properties. In addition, NRP recorded $89.8 million of impairment expense on coal royalty properties with $97 million of net book value, resulting in a fair value of $7.2 million at December 31, 2019. The fair value of the impaired assets at December 31, 2019 was calculated using a discount rate of 15%. The Partnership recorded $5.3 million of coal property impairments during the year ended December 31, 2018 primarily as a result of lease terminations, of which it recorded $5.0 million of impairment expense to fully impair certain coal properties during the three months ended December 31, 2018. NRP compared the net

book value of its coal properties to estimated undiscounted future net cash flows. If the net book value exceeded the undiscounted future cash flows, the Partnership recorded an impairment for the excess of the net book value over fair value. A discounted cash flow model was used to estimate fair value. Significant inputs used to determine fair value include estimates of future cash flows from coal sales and minimum payments, discount rate and useful economic life. Estimated cash flows are the product of a process that began with current realized pricing as of the measurement date and included an adjustment for risk related to the future realization of cash flows.

(2)The Partnership recorded $21.6 million of aggregates royalty property impairments during the year ended December 31, 2020 primarily related to decreased oil and gas drilling activity which negatively impacted the outlook for NRP's frac sand properties. The Partnership recorded $0.1 million of aggregates royalty property impairments during the year ended December 31, 2019. During the three months ended December 31, 2018, the Partnership recorded $13.0 million of impairment expense related to an aggregates property that the Partnership owns and leases to its former construction aggregates business, which mines, produces and sells the aggregates. The fair value of the impaired asset was reduced to $2.3 million at December 31, 2018 using a discount rate of 11%. NRP compared the net book value of its aggregates and timber properties to estimated undiscounted future net cash flows. If the net book value exceeded the undiscounted cash flows, the Partnership recorded an impairment for the excess of the net book value over fair value. A discounted cash flow model was used to estimate fair value. Significant inputs used to determine fair value include estimates of future cash flows from aggregates sales and minimum payments, discount rate and useful economic life. Estimated cash flows are the product of a process that began with current realized pricing as of the measurement date and included an adjustment for risk related to the future realization of cash flows.

While the Partnership's impairment evaluation as of December 31, 2020 incorporated an estimated impact of the global COVID-19 pandemic, there is significant uncertainty as to the severity and duration of this disruption. If the impact is worse than we currently estimate, an additional impairment charge may be recognized in future periods.