UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 | ||
FORM 10-Q
| ☒ | |||||||||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||
For the quarterly period ended June 30, 20222023 or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||||
Commission file number: | 001-31465 | |||||||||||||
NATURAL RESOURCE PARTNERS LP | |||||||||||||
(Exact name of registrant as specified in its charter) | |||||||||||||
Delaware | 35-2164875 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
1415 Louisiana Street, Suite 2400
Houston, Texas 77002
(Address of principal executive offices)
(Zip Code)
(713) 751-7507
(Registrant’sRegistrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common Units representing limited partner interests | NRP | New York Stock Exchange | ||||||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of "accelerated filer", "large accelerated filer", "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | ☐ | Accelerated Filer | ☒ | |||||||||||
Non-accelerated Filer | ☐ | Smaller Reporting Company | ||||||||||||
Emerging Growth Company | ☐ | |||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐ No ☒APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes
☐ No ☐APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
TABLE OF CONTENTS
Page | ||||||||
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
NATURAL RESOURCE PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
(In thousands, except unit data) | (Unaudited) | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 10,730 | $ | 39,091 | ||||
Accounts receivable, net | 37,120 | 42,701 | ||||||
Other current assets, net | 2,865 | 1,822 | ||||||
Total current assets | $ | 50,715 | $ | 83,614 | ||||
Land | 24,008 | 24,008 | ||||||
Mineral rights, net | 404,741 | 412,312 | ||||||
Intangible assets, net | 14,432 | 14,713 | ||||||
Equity in unconsolidated investment | 290,900 | 306,470 | ||||||
Long-term contract receivable, net | 27,659 | 28,946 | ||||||
Other long-term assets, net | 7,804 | 7,068 | ||||||
Total assets | $ | 820,259 | $ | 877,131 | ||||
LIABILITIES AND CAPITAL | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 1,524 | $ | 1,992 | ||||
Accrued liabilities | 5,715 | 11,916 | ||||||
Accrued interest | 625 | 989 | ||||||
Current portion of deferred revenue | 6,823 | 6,256 | ||||||
Current portion of long-term debt, net | 36,743 | 39,076 | ||||||
Total current liabilities | $ | 51,430 | $ | 60,229 | ||||
Deferred revenue | 36,815 | 40,181 | ||||||
Long-term debt, net | 145,693 | 129,205 | ||||||
Other non-current liabilities | 6,462 | 5,472 | ||||||
Total liabilities | $ | 240,400 | $ | 235,087 | ||||
Commitments and contingencies (see Note 13) | ||||||||
Class A Convertible Preferred Units (121,667 and 250,000 units issued and outstanding at June 30, 2023 and December 31, 2022, respectively, at $1,000 par value per unit; liquidation preference of $1,850 per unit at June 30, 2023 and December 31, 2022) (See Note 3) | $ | 80,099 | $ | 164,587 | ||||
Partners’ capital | ||||||||
Common unitholders’ interest (12,634,642 and 12,505,996 units issued and outstanding at June 30, 2023 and December 31, 2022, respectively) | $ | 444,838 | $ | 404,799 | ||||
General partner’s interest | 6,913 | 5,977 | ||||||
Warrant holders’ interest | 47,964 | 47,964 | ||||||
Accumulated other comprehensive income (loss) | 45 | 18,717 | ||||||
Total partners’ capital | $ | 499,760 | $ | 477,457 | ||||
Total liabilities and partners' capital | $ | 820,259 | $ | 877,131 | ||||
| June 30, | December 31, | ||||||||||
| (In thousands, except unit data) | 2022 | 2021 | |||||||||
| ASSETS | (Unaudited) | ||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 59,356 | $ | 135,520 | |||||||
| Accounts receivable, net | 37,288 | 24,538 | |||||||||
| Other current assets, net | 3,204 | 2,723 | |||||||||
| Total current assets | $ | 99,848 | $ | 162,781 | |||||||
| Land | 24,008 | 24,008 | |||||||||
| Mineral rights, net | 428,505 | 437,697 | |||||||||
| Intangible assets, net | 15,634 | 16,130 | |||||||||
| Equity in unconsolidated investment | 280,300 | 276,004 | |||||||||
| Long-term contract receivable, net | 30,182 | 31,371 | |||||||||
| Other long-term assets, net | 4,664 | 5,832 | |||||||||
| Total assets | $ | 883,141 | $ | 953,823 | |||||||
| LIABILITIES AND CAPITAL | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 1,969 | $ | 1,956 | |||||||
| Accrued liabilities | 5,507 | 10,297 | |||||||||
| Accrued interest | 1,050 | 1,213 | |||||||||
| Current portion of deferred revenue | 11,475 | 11,817 | |||||||||
| Current portion of long-term debt, net | 39,070 | 39,102 | |||||||||
| Total current liabilities | $ | 59,071 | $ | 64,385 | |||||||
| Deferred revenue | 40,811 | 50,045 | |||||||||
| Long-term debt, net | 259,296 | 394,443 | |||||||||
| Other non-current liabilities | 5,012 | 5,018 | |||||||||
| Total liabilities | $ | 364,190 | $ | 513,891 | |||||||
| Commitments and contingencies (see Note 12) | 0 | 0 | |||||||||
| Class A Convertible Preferred Units (250,000 and 269,321 units issued and outstanding at June 30, 2022 and December 31, 2021, respectively, at $1,000 par value per unit; liquidation preference of $1,850 per unit at June 30, 2022 and December 31, 2021) | $ | 164,587 | $ | 183,908 | |||||||
| Partners’ capital | |||||||||||
| Common unitholders’ interest (12,505,996 and 12,351,306 units issued and outstanding at June 30, 2022 and December 31, 2021, respectively) | $ | 300,753 | $ | 203,062 | |||||||
| General partner’s interest | 3,904 | 1,787 | |||||||||
| Warrant holders’ interest | 47,964 | 47,964 | |||||||||
| Accumulated other comprehensive income | 1,743 | 3,211 | |||||||||
| Total partners’ capital | $ | 354,364 | $ | 256,024 | |||||||
| Total liabilities and partners' capital | $ | 883,141 | $ | 953,823 | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
(In thousands, except per unit data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenues and other income | ||||||||||||||||
Royalty and other mineral rights | $ | 61,007 | $ | 79,333 | $ | 137,278 | $ | 150,416 | ||||||||
Transportation and processing services | 3,270 | 5,612 | 6,868 | 9,408 | ||||||||||||
Equity in earnings of Sisecam Wyoming | 26,978 | 14,643 | 46,232 | 29,480 | ||||||||||||
Gain on asset sales and disposals | 5 | 345 | 101 | 345 | ||||||||||||
Total revenues and other income | $ | 91,260 | $ | 99,933 | $ | 190,479 | $ | 189,649 | ||||||||
Operating expenses | ||||||||||||||||
Operating and maintenance expenses | $ | 7,930 | $ | 10,015 | $ | 15,093 | $ | 18,091 | ||||||||
Depreciation, depletion and amortization | 3,792 | 5,847 | 7,875 | 9,715 | ||||||||||||
General and administrative expenses | 5,643 | 5,052 | 11,488 | 9,519 | ||||||||||||
Asset impairments | 69 | 43 | 69 | 62 | ||||||||||||
Total operating expenses | $ | 17,434 | $ | 20,957 | $ | 34,525 | $ | 37,387 | ||||||||
Income from operations | $ | 73,826 | $ | 78,976 | $ | 155,954 | $ | 152,262 | ||||||||
Other expenses, net | ||||||||||||||||
Interest expense, net | $ | (3,492 | ) | $ | (8,108 | ) | $ | (6,345 | ) | $ | (17,495 | ) | ||||
Loss on extinguishment of debt | — | (4,048 | ) | — | (4,048 | ) | ||||||||||
Total other expenses, net | $ | (3,492 | ) | $ | (12,156 | ) | $ | (6,345 | ) | $ | (21,543 | ) | ||||
Net income | $ | 70,334 | $ | 66,820 | $ | 149,609 | $ | 130,719 | ||||||||
Less: income attributable to preferred unitholders | (4,971 | ) | (7,500 | ) | (11,632 | ) | (15,000 | ) | ||||||||
Less: redemption of preferred units | (27,618 | ) | — | (43,846 | ) | — | ||||||||||
Net income attributable to common unitholders and the general partner | $ | 37,745 | $ | 59,320 | $ | 94,131 | $ | 115,719 | ||||||||
Net income attributable to common unitholders | $ | 36,990 | $ | 58,134 | $ | 92,248 | $ | 113,405 | ||||||||
Net income attributable to the general partner | 755 | 1,186 | 1,883 | 2,314 | ||||||||||||
Net income per common unit (see Note 5) | ||||||||||||||||
Basic | $ | 2.93 | $ | 4.65 | $ | 7.32 | $ | 9.10 | ||||||||
Diluted | 2.49 | 3.29 | 5.96 | 6.50 | ||||||||||||
Net income | $ | 70,334 | $ | 66,820 | $ | 149,609 | $ | 130,719 | ||||||||
Comprehensive income (loss) from unconsolidated investment and other | 911 | (4,013 | ) | (18,672 | ) | (1,468 | ) | |||||||||
Comprehensive income | $ | 71,245 | $ | 62,807 | $ | 130,937 | $ | 129,251 | ||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
| (In thousands, except per unit data) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Revenues and other income | |||||||||||||||||||||||
| Royalty and other mineral rights | $ | 79,333 | $ | 33,611 | $ | 150,416 | $ | 66,538 | |||||||||||||||
| Transportation and processing services | 5,612 | 2,182 | 9,408 | 4,374 | |||||||||||||||||||
| Equity in earnings of Sisecam Wyoming | 14,643 | 2,601 | 29,480 | 4,574 | |||||||||||||||||||
| Gain on asset sales and disposals | 345 | 116 | 345 | 175 | |||||||||||||||||||
| Total revenues and other income | $ | 99,933 | $ | 38,510 | $ | 189,649 | $ | 75,661 | |||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Operating and maintenance expenses | $ | 10,015 | $ | 5,170 | $ | 18,091 | $ | 10,722 | |||||||||||||||
| Depreciation, depletion and amortization | 5,847 | 4,871 | 9,715 | 9,963 | |||||||||||||||||||
| General and administrative expenses | 5,052 | 3,388 | 9,519 | 7,498 | |||||||||||||||||||
| Asset impairments | 43 | 16 | 62 | 4,059 | |||||||||||||||||||
| Total operating expenses | $ | 20,957 | $ | 13,445 | $ | 37,387 | $ | 32,242 | |||||||||||||||
| Income from operations | $ | 78,976 | $ | 25,065 | $ | 152,262 | $ | 43,419 | |||||||||||||||
| Other expenses, net | |||||||||||||||||||||||
| Interest expense, net | $ | (8,108) | $ | (9,683) | $ | (17,495) | $ | (19,656) | |||||||||||||||
| Loss on extinguishment of debt | (4,048) | — | (4,048) | — | |||||||||||||||||||
| Total other expenses, net | $ | (12,156) | $ | (9,683) | $ | (21,543) | $ | (19,656) | |||||||||||||||
| Net income | $ | 66,820 | $ | 15,382 | $ | 130,719 | $ | 23,763 | |||||||||||||||
| Less: income attributable to preferred unitholders | (7,500) | (7,842) | (15,000) | (15,569) | |||||||||||||||||||
| Net income attributable to common unitholders and the general partner | $ | 59,320 | $ | 7,540 | $ | 115,719 | $ | 8,194 | |||||||||||||||
| Net income attributable to common unitholders | $ | 58,134 | $ | 7,389 | $ | 113,405 | $ | 8,030 | |||||||||||||||
| Net income attributable to the general partner | 1,186 | 151 | 2,314 | 164 | |||||||||||||||||||
| Net income per common unit (see Note 4) | |||||||||||||||||||||||
| Basic | $ | 4.65 | $ | 0.60 | $ | 9.10 | $ | 0.65 | |||||||||||||||
| Diluted | 3.29 | 0.56 | 6.50 | 0.65 | |||||||||||||||||||
| Net income | $ | 66,820 | $ | 15,382 | $ | 130,719 | $ | 23,763 | |||||||||||||||
| Comprehensive income (loss) from unconsolidated investment and other | (4,013) | 2,533 | (1,468) | 3,265 | |||||||||||||||||||
| Comprehensive income | $ | 62,807 | $ | 17,915 | $ | 129,251 | $ | 27,028 | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
NATURAL RESOURCE PARTNERS L.P. CONSOLIDATED STATEMENTS OF (Unaudited) Accumulated Other Total Common Unitholders General Warrant Comprehensive Partners' (In thousands) Units Amounts Partner Holders Income (Loss) Capital Balance at December 31, 2022 Net income (1) Redemption of preferred units Distributions to common unitholders and the general partner Distributions to preferred unitholders Issuance of unit-based awards Unit-based awards amortization and vesting, net Capital contribution Comprehensive loss from unconsolidated investment and other Balance at March 31, 2023 Net income (2) Redemption of preferred units Distributions to common unitholders and the general partner Distributions to preferred unitholders Unit-based awards amortization and vesting Comprehensive income from unconsolidated investment and other Balance at June 30, 2023 (1) Net income includes $6.7 million of income attributable to preferred unitholders that accumulated during the period, of which $6.5 million is allocated to the common unitholders and $0.1 million is allocated to the general partner. Accumulated Other Total Common Unitholders General Warrant Comprehensive Partners' (In thousands) Units Amounts Partner Holders Income Capital Balance at December 31, 2021 Net income (1) Distributions to common unitholders and the general partner Distributions to preferred unitholders Issuance of unit-based awards Unit-based awards amortization and vesting, net Capital contribution Comprehensive income from unconsolidated investment and other Balance at March 31, 2022 Net income (1) Distributions to common unitholders and the general partner Distributions to preferred unitholders Unit-based awards amortization and vesting Comprehensive loss from unconsolidated investment and other Balance at June 30, 2022 (1) Net income includes $7.5 million of income attributable to preferred unitholders that accumulated during the period, of which $7.4 million is allocated to the common unitholders and $0.2 million is allocated to the general partner. The accompanying notes are an integral part of these consolidated financial statements.PARTNERS’PARTNERS’ CAPITAL 12,506 $ 404,799 $ 5,977 $ 47,964 $ 18,717 $ 477,457 — 77,690 1,585 — — 79,275 — (15,904 ) (324 ) — — (16,228 ) — (40,082 ) (818 ) — — (40,900 ) — (7,924 ) (162 ) — — (8,086 ) 129 — — — — — — (1,178 ) — — — (1,178 ) — — 142 — — 142 — — — — (19,583 ) (19,583 ) 12,635 $ 417,401 $ 6,400 $ 47,964 $ (866 ) $ 470,899 — 68,927 1,407 — — 70,334 — (27,065 ) (553 ) — — (27,618 ) — (9,476 ) (193 ) — — (9,669 ) — (7,248 ) (148 ) — — (7,396 ) — 2,299 — — — 2,299 — — — — 911 911 12,635 $ 444,838 $ 6,913 $ 47,964 $ 45 $ 499,760 (Unaudited) Common Unitholders General Partner Warrant Holders Accumulated
Other
Comprehensive IncomeTotal Partners' Capital (In thousands) Units Amounts Balance at December 31, 2021 12,351 $ 203,062 $ 1,787 $ 47,964 $ 3,211 $ 256,024 Net income (1)— 62,621 1,278 — — 63,899 Distributions to common unitholders and the general partner — (5,559) (113) — — (5,672) Distributions to preferred unitholders — (7,603) (155) — — (7,758) Issuance of unit-based awards 155 — — — — — Unit-based awards amortization and vesting, net — (1,754) — — — (1,754) Capital contribution — — 112 — — 112 Comprehensive income from unconsolidated investment and other — — — — 2,545 2,545 Balance at March 31, 2022 12,506 $ 250,767 $ 2,909 $ 47,964 $ 5,756 $ 307,396 Net income (1)— 65,484 1,336 — — 66,820 Distributions to common unitholders and the general partner — (9,379) (191) — — (9,570) Distributions to preferred unitholders — (7,350) (150) — — (7,500) Unit-based awards amortization and vesting — 1,231 — — — 1,231 Comprehensive loss from unconsolidated investment and other — — — — (4,013) (4,013) Balance at June 30, 2022 12,506 $ 300,753 $ 3,904 $ 47,964 $ 1,743 $ 354,364 (2) Net income includes $5.0 million of income attributable to preferred unitholders that accumulated during the period, of which $4.9 million is allocated to the common unitholders and $0.1 million is allocated to the general partner. 12,351 $ 203,062 $ 1,787 $ 47,964 $ 3,211 $ 256,024 — 62,621 1,278 — — 63,899 — (5,559 ) (113 ) — — (5,672 ) — (7,603 ) (155 ) — — (7,758 ) 155 — — — — — — (1,754 ) — — — (1,754 ) — — 112 — — 112 — — — — 2,545 2,545 12,506 $ 250,767 $ 2,909 $ 47,964 $ 5,756 $ 307,396 — 65,484 1,336 — — 66,820 — (9,379 ) (191 ) — — (9,570 ) — (7,350 ) (150 ) — — (7,500 ) — 1,231 — — — 1,231 — — — — (4,013 ) (4,013 ) 12,506 $ 300,753 $ 3,904 $ 47,964 $ 1,743 $ 354,364 (1)Net income includes $7.5 million of income attributable to preferred unitholders that accumulated during the period, of which $7.4 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.
NATURAL RESOURCE PARTNERS L.P. CONSOLIDATED STATEMENTS OF (Unaudited) For the Six Months Ended June 30, (In thousands) 2023 2022 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization Distributions from unconsolidated investment Equity earnings from unconsolidated investment Gain on asset sales and disposals Loss on extinguishment of debt Asset impairments Bad debt expense Unit-based compensation expense Amortization of debt issuance costs and other Change in operating assets and liabilities: Accounts receivable Accounts payable Accrued liabilities Accrued interest Deferred revenue Other items, net Net cash provided by operating activities Cash flows from investing activities Proceeds from asset sales and disposals Return of long-term contract receivable Capital expenditures Net cash provided by investing activities Cash flows from financing activities Debt borrowings Debt repayments Distributions to common unitholders and the general partner Distributions to preferred unitholders Redemption of preferred units Redemption of preferred units paid-in-kind Other items, net Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental cash flow information: Cash paid for interest The accompanying notes are an integral part of these consolidated financial statements.PARTNERS’ CAPITALCASH FLOWS $ 149,609 $ 130,719 7,875 9,715 43,130 23,716 (46,232 ) (29,480 ) (101 ) (345 ) — 4,048 69 62 (808 ) 640 5,137 2,787 566 1,672 6,700 (12,612 ) (469 ) 13 (6,786 ) (5,109 ) (364 ) (163 ) (2,800 ) (9,575 ) (1,276 ) (634 ) $ 154,250 $ 115,454 $ 106 $ 346 1,208 563 (10 ) — $ 1,304 $ 909 $ 165,034 $ — (151,061 ) (137,171 ) (50,569 ) (15,242 ) (15,482 ) (15,258 ) (128,333 ) — — (19,321 ) (3,504 ) (5,535 ) $ (183,915 ) $ (192,527 ) $ (28,361 ) $ (76,164 ) 39,091 135,520 $ 10,730 $ 59,356 $ 6,434 $ 16,772 (Unaudited) Common Unitholders General Partner Warrant Holders Accumulated
Other
Comprehensive
IncomeTotal Partners' Capital (In thousands) Units Amounts Balance at December 31, 2020 12,261 $ 136,927 $ 459 $ 66,816 $ 322 $ 204,524 Net income (1)— 8,213 168 — — 8,381 Distributions to common unitholders and the general partner — (5,517) (113) — — (5,630) Distributions to preferred unitholders — (7,461) (152) — — (7,613) Issuance of unit-based awards 90 — — — — — Unit-based awards amortization and vesting, net — 215 — — — 215 Capital contribution — — 32 — — 32 Comprehensive income from unconsolidated investment and other — — — — 732 732 Balance at March 31, 2021 12,351 $ 132,377 $ 394 $ 66,816 $ 1,054 $ 200,641 Net income (2)— 15,074 308 — — 15,382 Distributions to common unitholders and the general partner — (5,559) (113) — — (5,672) Distributions to preferred unitholders — (7,571) (155) — — (7,726) Unit-based awards amortization and vesting — 515 — — — 515 Comprehensive income from unconsolidated investment and other — — — — 2,533 2,533 Balance at June 30, 2021 12,351 $ 134,836 $ 434 $ 66,816 $ 3,587 $ 205,673 (1)Net income includes $7.7 million of income attributable to preferred unitholders that accumulated during the period, of which $7.6 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.(2)Net income includes $7.8 million of income attributable to preferred unitholders that accumulated during the period, of which $7.7 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.
NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Nature of Business Natural Resource Partners L.P. (the "Partnership") engages principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and owns a non-controlling 49% interest in Sisecam Wyoming LLC ("Sisecam Wyoming"), a trona ore mining and soda ash production business. The Partnership is organized into Principles of Consolidation and Reporting The accompanying unaudited Consolidated Financial Statements of the Partnership have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and with Rule Recently Adopted Accounting Standard On January 1, 2023, NRP adopted Accounting Standards Update ("ASU") 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06)”. The ASU includes targeted improvements to earnings per share, which the Partnership adopted on a modified retrospective basis. The adoption of this ASU did not have a material impact on the Partnership’s Consolidated Financial Statements. See Note 5. Net Income Per Common Unit for the calculations of our basic and diluted net income per common unit. See Note 3. Class A Convertible Preferred Units and Warrants for disclosures related to our convertible preferred units and warrants. The following table presents the Partnership's Mineral Rights segment revenues by major source: (In thousands) 2023 2022 2023 2022 Coal royalty revenues Production lease minimum revenues Minimum lease straight-line revenues Carbon neutral initiative revenues Property tax revenues Wheelage revenues Coal overriding royalty revenues Lease amendment revenues Aggregates royalty revenues Oil and gas royalty revenues Other revenues Royalty and other mineral rights revenues Transportation and processing services revenues (1) Total Mineral Rights segment revenues Transportation and processing services revenues from contracts with customers as defined under ASC 606 was $2.7 million and $4.9 million for the three months ended June 30, 2023 and 2022, respectively and $5.6 million and $8.0 million for the six months ended June 30, 2023 and 2022, respectively. The remaining transportation and processing services revenues of $0.6 million and $0.7 million for the three months ended June 30, 2023 and 2022, respectively, and $1.3 million and $1.4 million for the six months ended June 30, 2023 and 2022, respectively, related to other NRP-owned infrastructure leased to and operated by third-party operators accounted for under other guidance. See Note 15. Financing Transactionfor more information. The following table details the Partnership's Mineral Rights segment receivables and liabilities resulting from contracts with customers: June 30, December 31, (In thousands) 2023 2022 Receivables Accounts receivable, net Other current assets, net (1) Other long-term assets, net (2) Contract liabilities Current portion of deferred revenue Deferred revenue Other current assets, net includes short-term notes receivables from contracts with customers. Other long-term assets, net includes long-term lease amendment fee receivables from contracts with customers. The following table shows the activity related to the Partnership's Mineral Rights segment deferred revenue: For the Six Months Ended June 30, (In thousands) 2023 2022 Balance at beginning of period (current and non-current) Increase due to minimums and lease amendment fees Recognition of previously deferred revenue Balance at end of period (current and non-current) The Partnership's non-cancelable annual minimum payments due under the lease terms of its coal and aggregates royalty leases are as follows as of June 30, Lease Term (1) Weighted Average Remaining Years Annual Minimum Payments 0 - 5 years 5 - 10 years 10+ years Total Lease term does not include renewal periods. 3. Class A Convertible Preferred Units and Warrants On March 2, 2017, NRP issued $250 million of Class A Convertible Preferred Units representing limited partner interests in NRP (the "preferred units") to certain entities controlled by funds affiliated with The Blackstone Group Inc. (collectively referred to as "Blackstone") and certain affiliates of GoldenTree Asset Management LP (collectively referred to as "GoldenTree") (together the "preferred purchasers") pursuant to a Preferred Unit and Warrant Purchase Agreement. NRP issued 250,000 preferred units to the preferred purchasers at a price of $1,000 per preferred unit (the "per unit purchase price"), less a 2.5% structuring and origination fee. The preferred units entitle the preferred purchasers to receive cumulative distributions at a rate of 12% of the purchase price per year, up to one half of which NRP may pay in additional preferred units (such additional preferred units, the "PIK units"). The preferred units have a perpetual term, unless converted or redeemed as described below. NRP also issued two tranches of warrants (the "warrants") to purchase common units to the preferred purchasers (warrants to purchase 1.75 million common units with a strike price of $22.81 and warrants to purchase 2.25 million common units with a strike price of $34.00). The warrants may be exercised by the holders thereof at any time before the eighth anniversary of the closing date. Upon exercise of the warrants, NRP may, at its option, elect to settle the warrants in common units or cash, each on a net basis. After March 2, 2022 and prior to March 2, 2025, the holders of the preferred units may elect to convert up to 33% of the outstanding preferred units in any 12-month period into common units if the volume weighted average trading price of our common units (the "VWAP") for the 30 trading days immediately prior to date notice is provided is greater than $51.00. In such case, the number of common units to be issued upon conversion would be equal to the per unit purchase price plus the value of any accrued and unpaid distributions divided by an amount equal to a 7.5% discount to the VWAP for the 30 trading days immediately prior to the notice of conversion. Rather than have the preferred units convert to common units in accordance with the provisions of this paragraph, NRP would have the option to elect to redeem the preferred units proposed to be converted for cash at a price equal to the per unit purchase price plus the value of any accrued and unpaid distributions. On or after March 2, 2025, the holders of the preferred units may elect to convert the preferred units to common units at a conversion rate equal to the Liquidation Value divided by an amount equal to a 10% discount to the VWAP for the 30 trading days immediately prior to the notice of conversion. The “liquidation value” will be an amount equal to the greater of: (1) (a) the per unit purchase price multiplied by (i) prior to March 2, 2020, 1.50, (ii) on or after March 2, 2020 and prior to March 2, 2021, 1.70 and (iii) on or after March 2, 2021, 1.85, less (b)(i) all preferred unit distributions previously made by NRP and (ii) all cash payments previously made in respect of redemption of any PIK units; and (2) the per unit purchase price plus the value of all accrued and unpaid distributions. To the extent the holders of the preferred units have not elected to convert their preferred units before March 2, 2029, NRP has the right to force conversion of the preferred units at a price equal to the liquidation value divided by an amount equal to a 10% discount to the VWAP for the 30 trading days immediately prior to the notice of conversion. In addition, NRP has the ability to redeem at any time (subject to compliance with its debt agreements) all or any portion of the preferred units and any outstanding PIK units for cash. The redemption price for each outstanding PIK unit is $1,000 plus the value of any accrued and unpaid distributions per PIK unit. The redemption price for each preferred unit is the liquidation value divided by the number of outstanding preferred units. The preferred units are redeemable at the option of the preferred purchasers only upon a change in control. The terms of the preferred units contain certain restrictions on NRP's ability to pay distributions on its common units. To the extent that either (i) NRP's consolidated Leverage Ratio, as defined in the Partnership's Fifth Amended and Restated Partnership Agreement dated March 2, 2017 (the "restated partnership agreement"), is greater than The holders of the preferred units have the right to vote with holders of NRP’s common units on an as-converted basis and have other customary approval rights with respect to changes of the terms of the preferred units. In addition, Blackstone has certain approval rights over certain matters as identified in the restated partnership agreement. GoldenTree also has more limited approval rights that will expand once Blackstone's ownership goes below the minimum preferred unit threshold (as defined below). These approval rights are not transferrable without NRP's consent. In addition, the approval rights held by Blackstone and GoldenTree will terminate at such time that Blackstone (together with their affiliates) or GoldenTree (together with their affiliates), as applicable, no longer own at least 20% of the total number of preferred units issued on the closing date, together with all PIK units that have been issued but not redeemed (the "minimum preferred unit threshold"). At the closing, pursuant to the Board Representation and Observation Rights Agreement, the Preferred Purchasers received certain board appointment and observation rights, and Blackstone appointed one director and one observer to the Board of Directors. NRP also entered into a registration rights agreement (the "preferred unit and warrant registration rights agreement") with the preferred purchasers, pursuant to which NRP is required to file (i) a shelf registration statement to register the common units issuable upon exercise of the warrants and to cause such registration statement to become effective not later than 90 days following the closing date and (ii) a shelf registration statement to register the common units issuable upon conversion of the preferred units and to cause such registration statement to become effective not later than the earlier of the fifth anniversary of the closing date or 90 days following the first issuance of any common units upon conversion of preferred units (the "registration deadlines"). In addition, the preferred unit and warrant registration rights agreement gives the preferred purchasers piggyback registration and demand underwritten offering rights under certain circumstances. The shelf registration statement to register the common units issuable upon exercise of the warrants became effective on April 20, 2017. If the shelf registration statement to register the common units issuable upon conversion of the preferred units is not effective by the applicable registration deadline, NRP will be required to pay the preferred purchasers liquidated damages in the amounts and upon the term set forth in the preferred unit and warrant registration rights agreement. Accounting for the Preferred Units and Warrants Classification The preferred units are accounted for as temporary equity on NRP's Consolidated Balance Sheets due to certain contingent redemption rights that may be exercised at the election of preferred purchasers. The warrants are accounted for as equity on NRP's Consolidated Balance Sheets. Initial Measurement The net transaction price was allocated to the preferred units and warrants based on their relative fair values at inception date. NRP allocated the transaction issuance costs to the preferred units and warrants primarily on a pro-rata basis based on their relative inception date allocated values. Subsequent Measurement Preferred Units Subsequent adjustment of the preferred units will not occur until NRP has determined that the conversion or redemption of all or a portion of the preferred units is probable of occurring. Once conversion or redemption becomes probable of occurring, the carrying amount of the preferred units will be accreted to their redemption value over the period from the date the feature is probable of occurring to the date the preferred units can first be converted or redeemed. In February 2023, the Partnership received a notice from holders of the Class A Preferred Units exercising their right to either convert or redeem, at the election of NRP, an aggregate of 47,499 Class A Preferred Units. The Partnership chose to redeem the preferred units for $47.5 million in cash rather than issuing common units. In May 2023, the Partnership received a notice from holders of the Class A Preferred Units exercising their right to either convert or redeem, at the election of NRP, an aggregate of 35,834 Class A Preferred Units. The Partnership chose to redeem the preferred units for $35.8 million in cash rather than issuing common units. In June 2023, the Partnership executed a negotiated transaction with holders of the Class A Preferred Units pursuant to which it repurchased and retired an aggregate of 45,000 Class A Preferred Units for $45.0 million in cash. Of the originally issued 250,000 Class A Preferred Units, 121,667 Class A Preferred Units remain outstanding as of June 30, 2023. Activity related to the preferred units is as follows: Units Financial (In thousands, except unit data) Outstanding Position Balance at December 31, 2021 Redemption of preferred units paid-in-kind Balance at December 31, 2022 Redemption of preferred units Balance at June 30, 2023 Warrants As of June 30, 2023 and December 31, 2022 there were 3.0 million warrants outstanding, which included warrants to purchase 0.75 million common units at a strike price of $22.81 and warrants to purchase 2.25 million common units with a strike price of $34.00. These warrants had a $48.0 million carrying value included in warrant holders' interest within partners' capital on the Partnership's Consolidated Balance Sheets at June 30, 2023 and December 31, 2022. Subsequent adjustment of the warrants will not occur until the warrants are exercised, at which time, NRP may, at its option, elect to settle the warrants in common units or cash, each on a net basis. The net basis will be equal to the difference between the Partnership's common unit price and the strike price of the warrant. Once warrant exercise occurs, the difference between the carrying amount of the warrants and the net settlement amount will be allocated on a pro-rata basis to the common unitholders and general partner. Embedded Features Certain embedded features within the preferred unit and warrant purchase agreement are accounted for at fair value and are remeasured each quarter. See Note 10. The Partnership makes cash distributions to common and preferred unitholders on a quarterly basis, subject to approval by the Board of Directors of GP Natural Resource Partners LLC (the "Board of Directors"). NRP recognizes both common unit and preferred unit distributions on the date the distribution is declared. Distributions made on the common units and the general partner's general partner ("GP") interest are made on a pro-rata basis in accordance with their relative percentage interests in the Partnership. The general partner is entitled to receive 2% of such distributions. Income available to common unitholders and the general partner is reduced by preferred unit distributions that accumulated during the period. NRP reduced net income available to common unitholders and the general partner by The following table shows the cash distributions declared and paid to common and preferred unitholders during the six months ended June 30, Common Units Preferred Units Month Paid Period Covered by Distribution Distribution per Unit Total Distribution (1) (In thousands) Distribution per Unit Total Distribution (In thousands) 2023 February 2023 October 1 - December 31, 2022 February 2023 (2) January 1 - February 8, 2023 March 2023 (3) Special Distribution May 2023 January 1 - March 31, 2023 May 2023 (4) April 1 - May 5, 2023 June 2023 (5) April 1 - June 2, 2023 2022 February 2022 October 1 - December 31, 2021 February 2022 (6) January 1 - February 8, 2022 May 2022 January 1 - March 31, 2022 Totals include the amount paid to NRP's general partner in accordance with the general partner's 2% general partner interest. Basic net income per common unit is computed by dividing net income, after considering income attributable to preferred unitholders, the difference between the fair value of the consideration paid upon redemption and the carrying value of the preferred units and the general partner’s general partner interest, by the weighted average number of common units outstanding. Diluted net income per common unit includes the effect of NRP's preferred units, warrants, and unvested unit-based awards if the inclusion of these items is dilutive. The dilutive effect of the preferred units is calculated using the if-converted method. Under the if-converted method, the preferred units are assumed to be converted at the beginning of the period, and the resulting common units are included in the denominator of the diluted net income per unit calculation for the period being presented. Distributions declared in the period and undeclared distributions on the preferred units that accumulated during the period are added back to the numerator for purposes of the if-converted calculation. The calculation of diluted net income per common unit for the three and six months ended June 30, The dilutive effect of the warrants is calculated using the treasury stock method, which assumes that the proceeds from the exercise of these instruments are used to purchase common units at the average market price for the period. The calculation of diluted net income per common unit for the three and six months ended June 30, 2023 and 2022 includes the net settlement of warrants to purchase 0.75 million The following (In thousands, except per unit data) 2023 2022 2023 2022 Basic net income per common unit Net income attributable to common unitholders Weighted average common units—basic Basic net income per common unit Diluted net income per common unit Weighted average common units—basic Plus: dilutive effect of preferred units Plus: dilutive effect of warrants Plus: dilutive effect of unvested unit-based awards Weighted average common units—diluted Net income Less: income attributable to preferred unitholders Less: redemption of preferred units Diluted net income attributable to common unitholders and the general partner Less: diluted net income attributable to the general partner Diluted net income attributable to common unitholders Diluted net income per common unit The Partnership's segments are strategic business units that offer distinct products and services to different customers in different geographies within the U.S. and that are managed accordingly. NRP has the following Mineral Rights Soda Ash Direct segment costs and certain other costs incurred at the corporate level that are identifiable and that benefit the Partnership's segments are allocated to the operating segments accordingly. These allocated costs generally include salaries and benefits, insurance, property taxes, legal, royalty, information technology and shared facilities services and are included in operating and maintenance expenses on the Partnership's Consolidated Statements of Comprehensive Income. Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment and are included in general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income. The following table summarizes certain financial information for each of the Partnership's business segments: Operating Segments (In thousands) Mineral Rights Soda Ash Corporate and Financing Total For the Three Months Ended June 30, 2023 Revenues Gain on asset sales and disposals Operating and maintenance expenses Depreciation, depletion and amortization General and administrative expenses Asset impairments Other expenses, net Net income (loss) For the Three Months Ended June 30, 2022 Revenues Gain on asset sales and disposals Operating and maintenance expenses Depreciation, depletion and amortization General and administrative expenses Asset impairments Other expenses, net Net income (loss) For the Six Months Ended June 30, 2023 Revenues Gain on asset sales and disposals Operating and maintenance expenses Depreciation, depletion and amortization General and administrative expenses Asset impairments Other expenses, net Net income (loss) For the Six Months Ended June 30, 2022 Revenues Gain on asset sales and disposals Operating and maintenance expenses Depreciation, depletion and amortization General and administrative expenses Asset impairments Other expenses, net Net income (loss) The Partnership accounts for its 49% investment in Sisecam Wyoming using the equity method of accounting. Activity related to this investment is as follows: (In thousands) 2023 2022 2023 2022 Balance at beginning of period Income allocation to NRP’s equity interests (1) Amortization of basis difference Other comprehensive income (loss) Distribution Balance at end of period The following table represents summarized financial information for Sisecam Wyoming as derived from their respective unaudited financial statements for the three and six months ended June 30, (In thousands) 2023 2022 2023 2022 Net sales Gross profit Net income The Partnership’s mineral rights consist of the following: June 30, 2023 December 31, 2022 (In thousands) Carrying Value Accumulated Depletion Net Book Value Carrying Value Accumulated Depletion Net Book Value Coal properties Aggregates properties Oil and gas royalty properties Other Total mineral rights, net Depletion expense related to the Partnership’s mineral rights is included in depreciation, depletion and amortization on its Consolidated Statements of Comprehensive Income and totaled The Partnership has developed procedures to evaluate its long-lived assets for possible impairment periodically or whenever events or changes in circumstances indicate an asset's net book value may not be recoverable. Potential events or circumstances include, but are not limited to, specific events such as a reduction in economically recoverable reserves or production ceasing on a property for an extended period. This analysis is based on historic, current and future performance and considers both quantitative and qualitative information. The Partnership's debt consists of the following: June 30, December 31, (In thousands) 2023 2022 Opco Credit Facility Opco Senior Notes 5.55% with semi-annual interest payments in June and December, with annual principal payments in June, due June 2023 4.73% with semi-annual interest payments in June and December, with annual principal payments in December, due December 2023 5.82% with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024 8.92% with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024 5.03% with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026 5.18% with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026 Total Opco Senior Notes Total debt at face value Net unamortized debt issuance costs Total debt, net Less: current portion of long-term debt Total long-term debt, net Opco Debt All of Opco’s debt is guaranteed by its wholly owned subsidiaries and is secured by certain of the assets of Opco and its wholly owned subsidiaries, other than BRP LLC and NRP Trona LLC. As of June 30, Opco Credit Facility In • A leverage ratio of consolidated indebtedness to EBITDDA (in each case as defined in the Opco Credit Facility) not to exceed 3.0x; provided, and • an interest coverage ratio of consolidated EBITDDA to the sum of consolidated interest expense and consolidated lease expense (in each case as defined in the Opco Credit Facility) of not less than 3.5 to 1.0. As of The Opco Credit Facility is collateralized and secured by liens on certain of Opco’s assets with carrying values of Opco Senior Notes Opco has issued several series of private placement senior notes (the "Opco Senior Notes") with various interest rates and principal due dates. As of June 30, The 8.92% Opco Senior Notes also provides that in the event that Opco’s leverage ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the Note Purchase Agreements) exceeds 3.75 to 1.00 at the end of any fiscal quarter, then in addition to all other interest accruing on these notes, additional interest in the amount of 2.00% per annum shall accrue on the notes for the two succeeding quarters and for as long thereafter as the leverage ratio remains above 3.75 to 1.00. Opco has not exceeded the 3.75 to 1.00 ratio at the end of any fiscal quarter through June 30, Fair Value of Financial Assets and Liabilities The Partnership’s financial assets and liabilities consist of cash and cash equivalents, a contract receivable and debt. The carrying amounts reported on the Consolidated Balance Sheets for cash and cash equivalents approximate fair value due to their short-term nature. The Partnership uses available market data and valuation methodologies to estimate the fair value of its debt and contract receivable. The following table shows the carrying value and estimated fair value of the Partnership's debt and contract receivable: June 30, 2023 December 31, 2022 Fair Value Carrying Estimated Carrying Estimated (In thousands) Hierarchy Level Value Fair Value Value Fair Value Debt: Opco Senior Notes (1) Opco Credit Facility (2) Assets: Contract receivable, net (current and long-term) (3) NRP has embedded derivatives in the preferred units related to certain conversion options, redemption features and the change of control provision that are accounted for separately from the preferred units as assets and liabilities at fair value on the Partnership's Consolidated Balance Sheets. Level 3 valuation of the embedded derivatives are based on numerous factors including the likelihood of the event occurring. The embedded derivatives are revalued quarterly and changes in their fair value would be recorded in other expenses, net on the Partnership's Consolidated Statements of Comprehensive Income. The embedded derivatives had zero value as of June 30, Affiliates of our General Partner The Partnership’s general partner does not receive any management fee or other compensation for its management of NRP. However, in accordance with the partnership agreement, the general partner and its affiliates are reimbursed for services provided to the Partnership and for expenses incurred on the Partnership’s behalf. Employees of Quintana Minerals Corporation ("QMC") and Western Pocahontas Properties Limited Partnership ("WPPLP"), affiliates of the Partnership, provide their services to manage the Partnership's business. QMC and WPPLP charge the Partnership the portion of their employee salary and benefits costs related to their employee services provided to NRP. These QMC and WPPLP employee management service costs are presented as operating and maintenance expenses and general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income. NRP also reimburses overhead costs incurred by its affiliates, including Quintana Infrastructure Development ("QID"), to manage the Partnership's business. These overhead costs include certain rent, information technology, administration of employee benefits and other corporate services incurred by or on behalf of the Partnership’s general partner and its affiliates and are presented as operating and maintenance expenses and general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income. Direct general and administrative expenses charged to the Partnership by QMC, WPPLP and QID are included on the Partnership's Consolidated Statement of Comprehensive Income as follows: (In thousands) 2023 2022 2023 2022 Operating and maintenance expenses General and administrative expenses The Partnership had accounts payable to QMC of $0.4 million on its Consolidated Balance Sheets During the three months ended June 30, Revenues from customers that exceeded 10 percent of total revenues for any of the periods presented below are as follows: For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 (In thousands) Revenues Percent Revenues Percent Revenues Percent Revenues Percent Alpha Metallurgical Resources, Inc. (1) Foresight Energy Resources LLC ("Foresight") (1) (1) Revenues from Alpha Metallurgical Resources, Inc. and Foresight are included within the Partnership's Mineral Rights segment. NRP is involved, from time to time, in various legal proceedings arising in the ordinary course of business. While the ultimate results of these proceedings cannot be predicted with certainty, Partnership management believes these ordinary course matters will not have a material effect on the Partnership’s financial position, liquidity or operations. During the three and six months ended June 30,2023, the Partnership granted service, performance and market-based awards under its 2017 Long-Term Incentive Plan and during the six months ended June 30, 2022, the Partnership granted service-based awards. The Partnership's A summary of the unit activity in the outstanding grants during (In thousands) Common Units Weighted Average Grant Date Fair Value per Common Unit Outstanding at January 1, 2023 Granted Fully vested and issued Outstanding at June 30, 2023 The Partnership owns rail loadout and associated infrastructure at the Sugar Camp mine in the Illinois Basin operated by a subsidiary of Foresight. The infrastructure at the Sugar Camp mine is leased to a subsidiary of Foresight and is accounted for as a financing transaction (the "Sugar Camp lease"). The Sugar Camp lease expires in 2032 with renewal options for up to 80 additional years. Minimum payments are $5.0 million per year through the end of the lease term. The Partnership is also entitled to variable payments in the form of throughput fees The Partnership is exposed to credit losses through collection of its short-term trade receivables resulting from contracts with customers and a long-term receivable resulting from a financing transaction with a customer. The Partnership records an allowance for current expected credit losses on these receivables based on the loss-rate method. NRP assessed the likelihood of collection of its receivables utilizing historical loss rates, current market conditions, As of June 30, June 30, 2023 December 31, 2022 (In thousands) Gross CECL Allowance Net Gross CECL Allowance Net Receivables Long-term contract receivable Total NRP recorded NRP has procedures in place to monitor its ongoing credit exposure through timely review of counterparty balances against contract terms and due dates, account and financing receivable reconciliation, bankruptcy monitoring, lessee audits and dispute resolution. The Partnership may employ legal counsel or collection specialists to pursue recovery of defaulted receivables. The following represents material events that have occurred subsequent to June 30, Common Unit and Preferred Unit Distributions In August The following review of operations for the three and six month periods ended June 30, As used herein, unless the context otherwise requires: "we," "our," "us" and the "Partnership" refer to Natural Resource Partners L.P. and, where the context requires, our subsidiaries. References to "NRP" and "Natural Resource Partners" refer to Natural Resource Partners L.P. only, and not to NRP (Operating) LLC or any of Natural Resource Partners L.P.’s subsidiaries. References to "Opco" refer to NRP (Operating) LLC, a wholly owned subsidiary of NRP, and its subsidiaries. NRP Finance Corporation ("NRP Finance") is a wholly owned subsidiary of NRP and was a co-issuer with NRP on the 9.125% senior notes due 2025 (the "2025 Senior Notes"). INFORMATION REGARDING FORWARD-LOOKING STATEMENTS Statements included in this 10-Q may constitute forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such forward-looking statements include, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on our common and preferred units; our business strategy; our liquidity and access to capital and financing sources; our financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected These forward-looking statements speak only as of the date hereof and are made based upon our current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. You should not put undue reliance on any forward-looking statements. See " NON-GAAP FINANCIAL MEASURES Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) less equity earnings from unconsolidated investment; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income or loss, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. For a description of Opco's debt agreements, see Distributable Cash Flow Distributable cash flow ("DCF") represents net cash provided by (used in) operating activities Free Cash Flow Free cash flow ("FCF") represents net cash provided by (used in) operating activities Leverage Ratio Leverage ratio represents the outstanding principal of our debt at the end of the period divided by the last twelve months' Adjusted EBITDA as defined above. We believe that leverage ratio is a useful measure to management and investors to evaluate and monitor our indebtedness relative to our ability to generate income to service such debt and in understanding trends in our overall financial condition. Leverage ratio may not be calculated the same for us as for other companies and is not a substitute for, and should not be used in conjunction with, GAAP financial ratios. Introduction The following discussion and analysis presents management's view of our business, financial condition and overall performance. Our discussion and analysis consists of the following subjects: • • • • • • • Executive Overview We are a diversified natural resource company engaged principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and own a non-controlling 49% interest in Sisecam Wyoming, a trona ore mining and soda ash production business. Our common units trade on the New York Stock Exchange under the symbol "NRP." Our business is organized into two operating segments: Mineral Rights Soda Ash Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment. Our financial results by segment for the six months ended June 30, Operating Segments (In thousands) Mineral Rights Soda Ash Corporate and Financing Total Revenues and other income Net income (loss) Adjusted EBITDA (1) Cash flow provided by (used in) continuing operations Operating activities Investing activities Financing activities Distributable cash flow (1) Free cash flow (1) (1) See "—Results of Operations" below for reconciliations to the most comparable GAAP financial measures. Current Results/Market Financial Results and Quarterly Distributions We generated In May 2023, we declared and paid a In February 2023, we received a notice from holders of the Class A Preferred Units exercising their right to either convert or redeem, at the election of NRP, an aggregate of 47,499 Class A Preferred Units. We chose to redeem the preferred units for $47.5 million in cash rather than issuing common units. In May 2023, we received a notice from holders of our Class A Preferred Units exercising their right to either convert or redeem, at the election of NRP, an aggregate of 35,834 Class A Preferred Units. We chose to redeem the preferred units for $35.8 million in cash rather than issuing common units. In June 2023, we executed a negotiated transaction with holders of our Class A Preferred Units pursuant to which we repurchased and retired an aggregate of 45,000 Class A Preferred Units for $45.0 million in cash. Of the originally issued 250,000 Class A Preferred Units, 121,667 Class A Preferred Units remain outstanding. Mineral Rights Business Segment Revenues and other income in the first six months of While metallurgical and thermal coal prices have decreased from the beginning of the year and decreased significantly from the record highs seen in 2022, they both remain strong relative to historical norms. Transportation and logistics challenges, limited access to capital, and qualified labor shortages limit operators' ability to increase production and sales which should provide continued price support at current levels. We continue to explore opportunities for carbon neutral revenue across our large portfolio of land, mineral, and timber assets, including the sequestration of carbon dioxide underground and in standing forests, and the generation of electricity using geothermal, solar, and wind energy. Soda Ash Business Segment Revenues and other income in the first six months of 2023increased$16.8 million, or 57%, as compared to the prior year period driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales volumes. Cash provided by operating activities and free cash flow in the first six months of After starting the year at historically high levels, global soda ash Results of Operations Second Quarter of 2023 and 2022 Revenues and Other Income The following table includes our revenues and other income by operating segment: Operating Segment (In thousands) 2023 2022 (Decrease) Change Mineral Rights Soda Ash Total The changes in revenues and other income The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income: Increase Percentage (In thousands, except per ton data) 2023 2022 (Decrease) Change Coal sales volumes (tons) Appalachia Northern Central Southern Total Appalachia Illinois Basin Northern Powder River Basin Gulf Coast Total coal sales volumes Coal royalty revenue per ton Appalachia Northern Central Southern Illinois Basin Northern Powder River Basin Gulf Coast Combined average coal royalty revenue per ton Coal royalty revenues Appalachia Northern Central Southern Total Appalachia Illinois Basin Northern Powder River Basin Gulf Coast Unadjusted coal royalty revenues Coal royalty adjustment for minimum leases Total coal royalty revenues Other revenues Production lease minimum revenues Minimum lease straight-line revenues Carbon neutral initiative revenues Wheelage revenues Property tax revenues Coal overriding royalty revenues Lease amendment revenues Aggregates royalty revenues Oil and gas royalty revenues Other revenues Total other revenues Royalty and other mineral rights Transportation and processing services revenues Gain on asset sales and disposals Total Mineral Rights segment revenues and other income Approximately • Appalachia: • Illinois Basin: Coal royalty revenues decreased $1.9 million primarily due to decreased sales volumes during the three months ended June 30, 2023, as compared to the prior year quarter. This decrease in sales volumes is primarily a result of a temporary relocation off of NRP's coal reserves. However, the decrease in sales volumes was partially offset by an increase in sales prices and increased wheelage revenues associated with the transportation of non-NRP coal across NRP property. Other Revenues Total other revenues Transportation and Processing Services Revenues Transportation and processing services revenues Soda Ash Revenues and other income related to our Soda Ash segment increased Operating and Other Expenses The following table presents the significant categories of our consolidated operating and other expenses: For the Three Months Ended June 30, Increase Percentage (In thousands) 2023 2022 (Decrease) Change Operating expenses Operating and maintenance expenses Depreciation, depletion and amortization General and administrative expenses Asset impairments Total operating expenses Other expenses, net Interest expense, net Loss on extinguishment of debt Total other expenses, net Total operating expenses Other expenses, net decreased $8.7 million as a result of The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment: Operating Segments For the Three Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2023 Net income (loss) Less: equity earnings from unconsolidated investment Add: total distributions from unconsolidated investment Add: interest expense, net Add: depreciation, depletion and amortization Add: asset impairments Adjusted EBITDA June 30, 2022 Net income (loss) Less: equity earnings from unconsolidated investment Add: total distributions from unconsolidated investment Add: interest expense, net Add: loss on extinguishment of debt Add: depreciation, depletion and amortization Add: asset impairments Adjusted EBITDA Net income increased Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") The following table presents the three major categories of the statement of cash flows by business segment: Operating Segments For the Three Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2023 Cash flow provided by (used in) Operating activities Investing activities Financing activities June 30, 2022 Cash flow provided by (used in) Operating activities Investing activities Financing activities The following table reconciles net cash provided by (used in) operating activities Operating Segments For the Three Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2023 Net cash provided by (used in) operating activities Add: proceeds from asset sales and disposals Add: return of long-term contract receivable Less: maintenance capital expenditures Distributable cash flow Less: proceeds from asset sales and disposals Free cash flow June 30, 2022 Net cash provided by (used in) operating activities Add: proceeds from asset sales and disposals Add: return of long-term contract receivable Distributable cash flow Less: proceeds from asset sales and disposals Free cash flow Operating cash flow, DCF and FCF increased • Mineral Rights Segment ◦ Operating cash flow, DCF and FCF decreased $15.3 million, $15.6 million and $15.3 million, respectively, primarily due to lower revenues and other income as discussed above primarily driven by lower met coal sales prices. • Soda Ash Segment ◦ Operating cash flow, DCF and FCF increased $21.9 million due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023. • Corporate and Financing Segment ◦ Operating cash flow, DCF and FCF increased $11.6 million primarily due to lower cash paid for interest as a result of the retirement of the 2025 Senior Notes in 2022. First Six Months of 2023 and 2022 Revenues and Other Income The following table includes our revenues and other income by operating segment: Operating Segment (In thousands) 2023 2022 (Decrease) Change Mineral Rights Soda Ash Total The changes in revenues and other income The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income: For the Six Months Ended June 30, Increase Percentage (In thousands, except per ton data) 2023 2022 (Decrease) Change Coal sales volumes (tons) Appalachia Northern Central Southern Total Appalachia Illinois Basin Northern Powder River Basin Gulf Coast Total coal sales volumes Coal royalty revenue per ton Appalachia Northern Central Southern Illinois Basin Northern Powder River Basin Gulf Coast Combined average coal royalty revenue per ton Coal royalty revenues Appalachia Northern Central Southern Total Appalachia Illinois Basin Northern Powder River Basin Gulf Coast Unadjusted coal royalty revenues Coal royalty adjustment for minimum leases Total coal royalty revenues Other revenues Production lease minimum revenues Minimum lease straight-line revenues Carbon neutral initiative revenues Wheelage revenues Property tax revenues Coal overriding royalty revenues Lease amendment revenues Aggregates royalty revenues Oil and gas royalty revenues Other revenues Total other revenues Royalty and other mineral rights Transportation and processing services revenues Gain on asset sales and disposals Total Mineral Rights segment revenues and other income Approximately 70% of coal • Appalachia: Coal royalty revenues decreased $13.4 million primarily due to decreased metallurgical coal sales prices during the six months ended June 30, 2023, as compared to the prior year quarter. • Illinois Basin: Coal royalty revenues decreased $0.5 million primarily due to decreased sales volumes during the six months ended June 30, 2023, as compared to the prior year period. This decrease in sales volumes is primarily a result of a temporary relocation of certain production off of NRP's coal reserves. However, the decrease in sales volumes was partially offset by an increase in sales prices and increased wheelage revenues associated with the transportation of non-NRP coal across NRP property. Transportation and Processing Services Revenues Transportation and processing services revenues Soda Ash Revenues and other income related to our Soda Ash segment increased Operating The following table presents the significant categories of our consolidated operating and other expenses: For the Six Months Ended June 30, Increase Percentage (In thousands) 2023 2022 (Decrease) Change Operating expenses Operating and maintenance expenses Depreciation, depletion and amortization General and administrative expenses Asset impairments Total operating expenses Other expenses, net Interest expense, net Loss on extinguishment of debt Total other expenses, net Total operating expenses Total other expenses, net decreased $15.2 million as a result of The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment: Operating Segments For the Six Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2023 Net income (loss) Less: equity earnings from unconsolidated investment Add: total distributions from unconsolidated investment Add: interest expense, net Add: depreciation, depletion and amortization Add: asset impairments Adjusted EBITDA June 30, 2022 Net income (loss) Less: equity earnings from unconsolidated investment Add: total distributions from unconsolidated investment Add: interest expense, net Add: loss on extinguishment of debt Add: depreciation, depletion and amortization Add: asset impairments Adjusted EBITDA Net income increased Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures) The following table presents the three major categories of the statement of cash flows by business segment: Operating Segments For the Six Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2023 Cash flow provided by (used in) Operating activities Investing activities Financing activities June 30, 2022 Cash flow provided by (used in) Operating activities Investing activities Financing activities The following table reconciles net cash provided by (used in) operating activities Operating Segments For the Six Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2023 Net cash provided by (used in) operating activities Add: proceeds from asset sales and disposals Add: return of long-term contract receivable Less: maintenance capital expenditures Distributable cash flow Less: proceeds from asset sales and disposals Free cash flow June 30, 2022 Net cash provided by (used in) operating activities Add: proceeds from asset sales and disposals Add: return of long-term contract receivable Distributable cash flow Less: proceeds from asset sales and disposals Free cash flow Operating cash flow, DCF and FCF increased • Mineral Rights Segment ◦ Operating cash flow, DCF and FCF increased $10.4 million, $10.8 million and $11.0 million, respectively, primarily due to the timing of minimum and royalty payments and prior year recoupments, partially offset by lower revenues and other income in the second quarter of 2023 as compared to the prior year period primarily driven by lower met coal sales prices. • Soda Ash Segment ◦ Operating cash flow, DCF and FCF increased $19.3 million due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023. • Corporate and Financing Segment ◦ Operating cash flow, DCF and FCF increased $9.1 million primarily due to lower cash paid for interest as a result of the retirement of the 2025 Senior Notes in 2022. Liquidity and Capital Resources Current Liquidity As of June 30, For the Three Months Ended (In thousands) September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 Last 12 Months Net income Less: equity earnings from unconsolidated investment Add: total distributions from unconsolidated investment Add: interest expense, net Add: loss on extinguishment of debt Add: depreciation, depletion and amortization Add: asset impairments Adjusted EBITDA Debt—at June 30, 2023 Leverage Ratio 0.6 x Cash flows provided by operating activities increased Cash used in financing activities decreased $8.6 million, from $192.5 million used in the six months ended June 30, 2022 • $165.0 million of borrowings on the Opco Credit Facility in 2023; $118.1 million of cash used to retire a portion of the 2025 Senior Notes in the second quarter of 2022; and $19.3 million of cash used to redeem the preferred units paid-in-kind during the first quarter of 2022. These decreases in cash flow used • $132.0 million of cash used to repay a portion of the Opco Credit Facility in 2023; $128.3 million of cash used to redeem the preferred units in 2023; and $35.3 million of increased cash distributions to common unitholders and the general partner as a result of increasing our quarterly cash distribution to $0.75/unit beginning in the second quarter of 2022 in addition to the special distribution paid in the first quarter of 2023. Capital Resources and Obligations Debt, Net We had the following debt outstanding as of June 30, June 30, December 31, (In thousands) 2023 2022 Current portion of long-term debt, net Long-term debt, net Total debt, net We have been and continue to be in compliance with the terms of the financial covenants contained in our debt agreements. For additional information regarding our debt and the agreements governing our debt, including the covenants contained therein, see Off-Balance Sheet Transactions We do not have any off-balance sheet arrangements with unconsolidated entities or related parties and accordingly, there are no off-balance sheet risks to our liquidity and capital resources from unconsolidated entities. Related Party Transactions The information required set forth under Summary of Critical Accounting Estimates The preparation of Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. There have been no significant changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, Recent Accounting Standards We do not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements. We are exposed to market risk, which includes adverse changes in commodity prices and interest rates as discussed below: Commodity Price Risk Our revenues, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on prevailing commodity prices. Historically, coal prices have been volatile, with prices fluctuating widely, and are likely to continue to be volatile. Depressed prices in the future would have a We are dependent upon the effective marketing of the coal mined by our lessees. Our lessees sell the coal under various long-term and short-term contracts as well as on the spot market. Current conditions in the coal industry may make it difficult for our lessees to The market price of soda ash and energy costs directly affects the profitability of Sisecam Wyoming's operations. If the market price for soda ash declines, Sisecam Wyoming's sales revenues will decrease. Historically, the global market and, to a lesser extent, the domestic market for soda ash have been volatile and are likely to remain volatile in the future. Interest Rate Risk Our exposure to changes in interest rates results from our Evaluation of Disclosure Controls and Procedures NRP carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of NRP management, including the Chief Executive Officer and Chief Financial Officer of the general partner of the general partner of NRP. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective in providing reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (b) such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Changes in the There were no material changes in the Partnership’s internal control over financial reporting during the first six months of From time to time, we are involved in various legal proceedings arising in the ordinary course of business. While the ultimate results of these proceedings cannot be predicted with certainty, we believe these ordinary course matters will not have a material effect on our financial position, liquidity or operations. During the period covered by this report, there were no material changes from the risk factors previously disclosed in Natural Resource Partners L.P.’s Annual Report on Form 10-K for the year ended December 31, None. None. None. None. Exhibit Number Description Fifth Amended and Restated Agreement of Limited Partnership of Natural Resource Partners L.P., dated as of March 2, 2017 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on March 6, 2017). Fifth Amended and Restated Agreement of Limited Partnership of NRP (GP) LP, dated as of December 16, 2011 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on December 16, 2011). Fifth Amended and Restated Limited Liability Company Agreement of GP Natural Resource Partners LLC, dated as of October 31, 2013 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on October 31, 2013). Certificate of Limited Partnership of Natural Resource Partners L.P. (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed April 19, 2002, File No. 333-86582). 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Labels Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104* Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101) * Filed herewith ** Furnished herewith Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned and thereunto duly authorized. NATURAL RESOURCE PARTNERS L.P. By: NRP (GP) LP, its general partner By: GP NATURAL RESOURCE PARTNERS LLC, its general partner Date: August 4, By: Corbin J. Robertson, Jr. Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Date: August 4, By: /s/ Christopher J. Zolas Chief Financial Officer (Principal Financial and Accounting Officer)CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) For the Six Months Ended June 30, (In thousands) 2022 2021 Cash flows from operating activities Net income $ 130,719 $ 23,763 Adjustments to reconcile net income to net cash provided by operating activities of continuing operations: Depreciation, depletion and amortization 9,715 9,963 Distributions from unconsolidated investment 23,716 3,920 Equity earnings from unconsolidated investment (29,480) (4,574) Gain on asset sales and disposals (345) (175) Loss on extinguishment of debt 4,048 — Asset impairments 62 4,059 Bad debt expense 640 (354) Unit-based compensation expense 2,787 1,719 Amortization of debt issuance costs and other 1,672 1,246 Change in operating assets and liabilities: Accounts receivable (12,612) (3,169) Accounts payable 13 (93) Accrued liabilities (5,109) (1,196) Accrued interest (163) (291) Deferred revenue (9,575) 531 Other items, net (634) 1,235 Net cash provided by operating activities $ 115,454 $ 36,584 Cash flows from investing activities Proceeds from asset sales and disposals $ 346 $ 175 Return of long-term contract receivable 563 1,082 Net cash provided by investing activities $ 909 $ 1,257 Cash flows from financing activities Debt repayments $ (137,171) $ (19,061) Distributions to common unitholders and the general partner (15,242) (11,302) Distributions to preferred unitholders (15,000) (7,670) Redemption of preferred units paid-in-kind (19,579) — Acquisition of non-controlling interest in BRP — (1,000) Other items, net (5,535) (690) Net cash used in financing activities $ (192,527) $ (39,723) Net decrease in cash and cash equivalents $ (76,164) $ (1,882) Cash and cash equivalents at beginning of period 135,520 99,790 Cash and cash equivalents at end of period $ 59,356 $ 97,908 Supplemental cash flow information: Cash paid for interest $ 16,772 $ 18,931 Non-cash investing and financing activities: Preferred unit distributions paid-in-kind $ — $ 7,669 The accompanying notes are an integral part of these consolidated financial statements.5NATURAL RESOURCE PARTNERS L.P.(Unaudited)2two operating segments further described in 5.6. Segment Information. The Partnership’s operations are conducted through, and its operating assets are owned by, its subsidiaries. The Partnership owns its subsidiaries through one wholly owned operating company, NRP (Operating) LLC ("Opco"). As used in these Notes to Consolidated Financial Statements, the terms "NRP," "we," "us" and "our" refer to Natural Resource Partners L.P. and its subsidiaries, unless otherwise stated or indicated by context.10-0110-01 of Regulation S-X.S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 20212022 and notes thereto included in the Partnership's Annual Report on Form 10-K,10-K, which was filed with the SEC on March 15, 2022.3, 2023. Reclassifications have been made to prior year amounts in the Consolidated Financial Statements to conform with current year presentation. These reclassifications had no impact on previously reported total assets, total liabilities, partners' capital, net income, or cash flows from operating, investing or financing activities.5NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)For the Three Months Ended
June 30,For the Six Months Ended June 30, (In thousands) 2022 2021 2022 2021 Coal royalty revenues $ 62,945 $ 18,298 $ 118,394 $ 33,663 Production lease minimum revenues 65 3,556 1,657 7,006 Minimum lease straight-line revenues 4,674 4,869 9,457 10,965 Property tax revenues 1,695 1,587 3,167 3,056 Wheelage revenues 4,379 1,844 8,096 3,625 Coal overriding royalty revenues 682 976 940 2,835 Lease amendment revenues 811 772 1,691 1,640 Aggregates royalty revenues 1,037 456 1,807 910 Oil and gas royalty revenues 2,906 900 4,720 2,266 Other revenues 139 353 487 572 Royalty and other mineral rights revenues $ 79,333 $ 33,611 $ 150,416 $ 66,538 Transportation and processing services revenues (1)5,612 2,182 9,408 4,374 Total Mineral Rights segment revenues $ 84,945 $ 35,793 $ 159,824 $ 70,912 For the Three Months Ended June 30, For the Six Months Ended June 30, $ 47,960 $ 62,945 $ 105,983 $ 118,394 562 65 1,175 1,657 4,447 4,674 8,950 9,457 115 — 2,233 — 1,470 1,695 2,940 3,167 3,284 4,379 7,153 8,096 150 682 338 940 848 811 1,699 1,691 686 1,037 1,439 1,807 1,214 2,906 4,802 4,720 271 139 566 487 $ 61,007 $ 79,333 $ 137,278 $ 150,416 3,270 5,612 6,868 9,408 $ 64,277 $ 84,945 $ 144,146 $ 159,824 (1) (1)Transportation and processing services revenues from contracts with customers as defined under ASC 606 was $4.9 million and $1.2 million for the three months ended June 30, 2022 and 2021, respectively, and $8.0 million and $2.5 million for the six months ended June 30, 2022 and 2021, respectively. The remaining transportation and processing services revenues of $0.7 million and $0.9 million for the three months ended June 30, 2022 and 2021, respectively, and $1.4 million and $1.9 million for the six months ended June 30, 2022 and 2021, respectively, related to other NRP-owned infrastructure leased to and operated by third-party operators accounted for under other guidance. See Note 14. Financing Transaction for more information.6NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)June 30, December 31, (In thousands) 2022 2021 Receivables Accounts receivable, net $ 33,629 $ 22,277 Other current assets, net (1)1,861 769 Other long-term assets, net (2)75 250 Contract liabilities Current portion of deferred revenue $ 11,475 $ 11,817 Deferred revenue 40,811 50,045 $ 33,370 $ 39,004 2,155 — — 75 $ 6,823 $ 6,256 36,815 40,181 (1) (2) (1)Other current assets, net includes short-term notes receivables from contracts with customers.(2)Other long-term assets, net includes long-term lease amendment fee receivables from contracts with customers.For the Six Months Ended
June 30,(In thousands) 2022 2021 Balance at beginning of period (current and non-current) $ 61,862 $ 61,554 Increase due to minimums and lease amendment fees 7,997 7,938 Recognition of previously deferred revenue (17,573) (7,406) Balance at end of period (current and non-current) $ 52,286 $ 62,086 $ 46,437 $ 61,862 10,810 7,997 (13,609 ) (17,573 ) $ 43,638 $ 52,286 20222023 (in thousands): 1.7 $ 22,230 3.1 7,417 12.1 27,129 6.8 $ 56,776 (1) 6Lease Term (1)Weighted Average Remaining Years Annual Minimum Payments 0 - 5 years 2.5 $ 20,754 5 - 10 years 4.1 7,500 10+ years 13.1 26,610 Total 7.9 $ 54,864 NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)(1)3.25x, or (ii) the ratio of NRP's Distributable Cash Flow (as defined in the Restated Partnership Agreement) to cash distributions made or proposed to be made is less than 1.2x (in each case, with respect to the most recently completed four-quarter period), NRP may not increase the quarterly distribution above $0.45 per quarter without the approval of the holders of a majority of the outstanding preferred units. In addition, if at any time after January 1, 2022, any PIK units are outstanding, NRP may not make distributions on its common units until it has redeemed all PIK units for cash.7NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited) 269,321 $ 183,908 (19,321 ) (19,321 ) 250,000 $ 164,587 (128,333 ) (84,488 ) 121,667 $ 80,099 Lease term does not include renewal periods.Fair Value Measurements for further information regarding valuation of these embedded derivatives.8NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED3. (Unaudited)7NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)$7.5$5.0 million and $7.8$7.5 million during the three months ended June 30, 2022 2023 and 2021,2022, respectively, and $11.6 million and $15.0 million and $15.6 million duringfor the six months ended June 30, 2022 2023 and 2021,2022, respectively, as a result of accumulated preferred unit distributions earned during the period. Of the $6.7 million in accumulated preferred unit distributions earned during March 31, 2023, $0.6 million was paid in February 2023 in connection with the preferred units that were redeemed in February. Of the $5.0 million in accumulated preferred unit distributions earned during June 30, 2023, $0.4 million was paid in May 2023 and $0.9 million was paid in June 2023 in connection with the preferred units that were redeemed during those months. Income available to common unitholders and the general partner is also reduced by the difference between the fair value of the consideration paid upon redemption and the carrying value of the preferred units. As such, NRP reduced net income available to common unitholders and the general partner by $27.6 million and $43.8 million during the three and six months ended June 30, 2023, respectively. 2022 2023 and 2021,2022, respectively:Cash Distributions Paid-in-kind Distributions Common Units Preferred Units Month Paid Period Covered by Distribution Distribution per Unit Total Distribution (1)(In thousands)Distribution per Unit Total Distribution
(In thousands)Total Distribution
(In units)2022 February 2022 October 1 - December 31, 2021 $ 0.45 $ 5,672 $ 30.00 $ 7,500 — May 2022 January 1 - March 31, 2022 0.75 9,570 30.00 7,500 — 2021 February 2021 October 1 - December 31, 2020 $ 0.45 $ 5,630 $ 15.00 $ 3,806 3,806 May 2021 January 1 - March 31, 2021 0.45 5,672 15.00 3,864 3,864 $ 0.75 $ 9,571 $ 30.00 $ 7,500 — — 12.33 586 2.43 31,329 — — 0.75 9,669 30.00 6,075 — — 11.33 406 — — 20.33 915 $ 0.45 $ 5,672 $ 30.00 $ 7,500 — — 13.35 258 0.75 9,570 30.00 7,500 (1) (2) Relates to accrued distribution paid upon the redemption of 47,499 preferred units in February 2023. (3) Special distribution was made to help cover unitholder tax liabilities associated with owning NRP's common units during 2022. (4) Relates to accrued distribution paid upon the redemption of 35,834 preferred units in May 2023. (5) Relates to accrued distribution paid upon the redemption of 45,000 preferred units in June 2023. (6) Relates to accrued distribution paid upon the redemption of 19,321 preferred units paid-in-kind in February 2022. 9(1)Totals include the amount paid to NRP's general partner in accordance with the general partner's 2% general partner interest.NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)4. 2022 and 2021 and the six months ended June 30, 20222023 includes the assumed conversion of the remaining preferred units.units while it does not include the assumed conversion of the preferred units that were redeemed during the three and six months ended June 30, 2023 as the inclusion of these units would be anti-dilutive. The calculation of diluted net income per common unit for the three and six months ended June 30, 2021 does not include2022 includes the assumed conversion of the preferred units because the impact would have been anti-dilutive.units. common common units at a strike price of $22.81 and the net settlement of warrants to purchase 2.25 million common units with a strike price of $34.00 whereas the calculation of diluted net income per common unit for the three and six months ended June 30, 2021 does not include the net settlement of warrants to purchase 1.75 million common units at a strike price of $22.81 or the net settlement of warrants to purchase 2.25 million common units with a strike price of $34.00 because the impact would have been anti-dilutive.8NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)$34.00.tables reconciletable reconciles the numerator and denominator of the basic and diluted net income per common unit computations and calculates basic and diluted net income per common unit: For the Three Months Ended
June 30,For the Six Months Ended June 30, (In thousands, except per unit data) 2022 2021 2022 2021 Allocation of net income Net income $ 66,820 $ 15,382 $ 130,719 $ 23,763 Less: income attributable to preferred unitholders (7,500) (7,842) (15,000) (15,569) Net income attributable to common unitholders and the general partner $ 59,320 $ 7,540 $ 115,719 $ 8,194 Less: net income attributable to the general partner (1,186) (151) (2,314) (164) Net income attributable to common unitholders $ 58,134 $ 7,389 $ 113,405 $ 8,030 Basic net income per common unit Weighted average common units—basic 12,506 12,351 12,461 12,322 Basic net income per common unit $ 4.65 $ 0.60 $ 9.10 $ 0.65 Diluted net income per common unit Weighted average common units—basic 12,506 12,351 12,461 12,322 Plus: dilutive effect of preferred units 6,292 14,351 6,292 — Plus: dilutive effect of warrants 937 — 734 — Plus: dilutive effect of unvested unit-based awards 178 119 209 117 Weighted average common units—diluted 19,913 26,821 19,696 12,439 Net income $ 66,820 $ 15,382 $ 130,719 $ 23,763 Less: income attributable to preferred unitholders — — — (15,569) Diluted net income attributable to common unitholders and the general partner $ 66,820 $ 15,382 $ 130,719 $ 8,194 Less: diluted net income attributable to the general partner (1,336) (308) (2,614) (164) Diluted net income attributable to common unitholders $ 65,484 $ 15,074 $ 128,105 $ 8,030 Diluted net income per common unit $ 3.29 $ 0.56 $ 6.50 $ 0.65 For the Three Months Ended June 30, For the Six Months Ended June 30, $ 36,990 $ 58,134 $ 92,248 $ 113,405 12,635 12,506 12,603 12,461 $ 2.93 $ 4.65 $ 7.32 $ 9.10 12,635 12,506 12,603 12,461 2,420 6,292 3,099 6,292 1,139 937 1,197 734 122 178 165 209 16,316 19,913 17,064 19,696 $ 70,334 $ 66,820 $ 149,609 $ 130,719 (1,321 ) — (1,907 ) — (27,618 ) — (43,846 ) — $ 41,395 $ 66,820 $ 103,856 $ 130,719 (828 ) (1,336 ) (2,077 ) (2,614 ) $ 40,567 $ 65,484 $ 101,779 $ 128,105 $ 2.49 $ 3.29 $ 5.96 $ 6.50 910NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)5. 2two operating segments:consistsconsists of mineral interests and other subsurface rights across the United States. NRP's ownership provides critical inputs for the manufacturing of steel, electricity and basic building materials, as well as opportunities for carbon sequestration and renewable energy. The Partnership is working to strategically redefine its business as a key player in the transitional energy economy in the years to come.10NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)Operating Segments (In thousands) Mineral Rights Soda Ash Corporate and Financing Total For the Three Months Ended June 30, 2022 Revenues $ 84,945 $ 14,643 $ — $ 99,588 Gain on asset sales and disposals 345 — — 345 Operating and maintenance expenses 9,992 23 — 10,015 Depreciation, depletion and amortization 5,847 — — 5,847 General and administrative expenses — — 5,052 5,052 Asset impairments 43 — — 43 Other expenses, net — — 12,156 12,156 Net income (loss) 69,408 14,620 (17,208) 66,820 For the Three Months Ended June 30, 2021 Revenues $ 35,793 $ 2,601 $ — $ 38,394 Gain on asset sales and disposals 116 — — 116 Operating and maintenance expenses 5,135 35 — 5,170 Depreciation, depletion and amortization 4,871 — — 4,871 General and administrative expenses — — 3,388 3,388 Asset impairment 16 — — 16 Other expenses, net 1 — 9,682 9,683 Net income (loss) 25,886 2,566 (13,070) 15,382 For the Six Months Ended June 30, 2022 Revenues $ 159,824 $ 29,480 $ — $ 189,304 Gain on asset sales and disposals 345 — — 345 Operating and maintenance expenses 18,017 74 — 18,091 Depreciation, depletion and amortization 9,715 — — 9,715 General and administrative expenses — — 9,519 9,519 Asset impairments 62 — — 62 Other expenses, net — — 21,543 21,543 Net income (loss) 132,375 29,406 (31,062) 130,719 For the Six Months Ended June 30, 2021 Revenues $ 70,912 $ 4,574 $ — $ 75,486 Gain on asset sales and disposals 175 — — 175 Operating and maintenance expenses 10,667 55 — 10,722 Depreciation, depletion and amortization 9,963 — — 9,963 General and administrative expenses — — 7,498 7,498 Asset impairments 4,059 — — 4,059 Other expenses, net 24 — 19,632 19,656 Net income (loss) 46,374 4,519 (27,130) 23,763 $ 64,277 $ 26,978 $ — $ 91,255 5 — — 5 7,916 14 — 7,930 3,787 — 5 3,792 — — 5,643 5,643 69 — — 69 — — 3,492 3,492 52,510 26,964 (9,140 ) 70,334 $ 84,945 $ 14,643 $ — $ 99,588 345 — — 345 9,992 23 — 10,015 5,847 — — 5,847 — — 5,052 5,052 43 — — 43 — — 12,156 12,156 69,408 14,620 (17,208 ) 66,820 $ 144,146 $ 46,232 $ — $ 190,378 101 — — 101 14,921 172 — 15,093 7,866 — 9 7,875 — — 11,488 11,488 69 — — 69 — — 6,345 6,345 121,391 46,060 (17,842 ) 149,609 $ 159,824 $ 29,480 $ — $ 189,304 345 — — 345 18,017 74 — 18,091 9,715 — — 9,715 — — 9,519 9,519 62 — — 62 — — 21,543 21,543 132,375 29,406 (31,062 ) 130,719 11NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)6. For the Three Months Ended
June 30,For the Six Months Ended June 30, (In thousands) 2022 2021 2022 2021 Balance at beginning of period $ 280,156 $ 261,299 $ 276,004 $ 262,514 Income allocation to NRP’s equity interests 15,804 3,855 31,869 7,071 Amortization of basis difference (1,161) (1,254) (2,389) (2,497) Other comprehensive income (loss) (4,013) 2,533 (1,468) 3,265 Distribution (10,486) — (23,716) (3,920) Balance at end of period $ 280,300 $ 266,433 $ 280,300 $ 266,433 For the Three Months Ended June 30, For the Six Months Ended June 30, $ 295,361 $ 280,156 $ 306,470 $ 276,004 28,212 15,804 48,576 31,869 (1,234 ) (1,161 ) (2,344 ) (2,389 ) 911 (4,013 ) (18,672 ) (1,468 ) (32,350 ) (10,486 ) (43,130 ) (23,716 ) $ 290,900 $ 280,300 $ 290,900 $ 280,300 (1) Amounts reclassified into income out of accumulated other comprehensive loss were $2.3 million and $(3.0) million for the three months ended June 30, 2023 and 2022, respectively, and $(18.3) million and $(4.7) million for the six months ended June 30, 2023 and 2022, respectively. 2022 2023 and 2021:2022: For the Three Months Ended June 30, For the Six Months Ended June 30, $ 201,365 $ 189,068 $ 408,493 $ 352,505 64,554 40,279 113,609 80,044 57,574 32,253 99,134 65,039 For the Three Months Ended
June 30,For the Six Months Ended June 30, (In thousands) 2022 2021 2022 2021 Net sales $ 189,068 $ 120,690 $ 352,505 $ 248,481 Gross profit 40,279 14,087 80,044 26,787 Net income 32,253 7,867 65,039 14,430 June 30, 2022 December 31, 2021 (In thousands) Carrying Value Accumulated Depletion Net Book Value Carrying Value Accumulated Depletion Net Book Value Coal properties $ 670,613 $ (262,160) $ 408,453 $ 670,650 $ (253,503) $ 417,147 Aggregates properties 8,717 (3,201) 5,516 8,747 (2,975) 5,772 Oil and gas royalty properties 12,354 (9,357) 2,997 12,354 (9,115) 3,239 Other 13,151 (1,612) 11,539 13,151 (1,612) 11,539 Total mineral rights, net $ 704,835 $ (276,330) $ 428,505 $ 704,902 $ (267,205) $ 437,697 $ 661,743 $ (276,085 ) $ 385,658 $ 661,812 $ (269,037 ) $ 392,775 8,655 (3,618 ) 5,037 8,655 (3,410 ) 5,245 12,354 (9,841 ) 2,513 12,354 (9,600 ) 2,754 13,145 (1,612 ) 11,533 13,150 (1,612 ) 11,538 $ 695,897 $ (291,156 ) $ 404,741 $ 695,971 $ (283,659 ) $ 412,312 $5.4$3.6 million and $4.4$5.4 million for the three months ended June 30, 2022 2023 and 2021,2022, respectively and $7.5 million and $9.1 million and $9.2 million for the six months ended June 30, 2022 2023 and 2021,2022, respectively.2022.During the three months ended June 30, 2022 and 2021 and during the six months ended June 30, 2022 the Partnership did not have any material asset impairments. During the six months ended June 30, 2021, the Partnership recorded $4.1 million of expense primarily due to a lease termination that resulted in the full impairment of a coal property. WhileAs a result of the Partnership'sanalysis, the Partnership recorded immaterial impairment evaluation as of expenses during the three and six months ended June 30, 2022 incorporated an estimated impact of the global COVID-19 pandemic, there is significant uncertainty as to the severity 2023 and duration of this disruption. If the impact is worse than current estimates, an additional impairment charge may be recognized in future periods.12NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)June 30, December 31, (In thousands) 2022 2021 NRP LP debt: 9.125% senior notes, with semi-annual interest payments in June and December, due June 2025, issued at par ("2025 Senior Notes") $ 181,890 $ 300,000 Opco debt: Revolving credit facility $ — $ — Senior Notes 5.55% with semi-annual interest payments in June and December, with annual principal payments in June, due June 2023 $ 2,366 $ 4,730 4.73% with semi-annual interest payments in June and December, with annual principal payments in December, due December 2023 12,008 12,008 5.82% with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024 25,368 38,053 8.92% with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024 8,023 12,035 5.03% with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026 57,104 57,104 5.18% with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026 14,554 14,554 Total Opco Senior Notes $ 119,423 $ 138,484 Total debt at face value $ 301,313 $ 438,484 Net unamortized debt issuance costs (2,947) (4,939) Total debt, net $ 298,366 $ 433,545 Less: current portion of long-term debt (39,070) (39,102) Total long-term debt, net $ 259,296 $ 394,443 NRP LP Debt2025 Senior NotesThe 2025 Senior Notes were issued under an Indenture dated as of April 29, 2019 (the "2025 Indenture"), bear interest at 9.125% per year and mature on June 30, 2025. Interest is payable semi-annually on June 30 and December 30. NRP and NRP Finance have the option to redeem the 2025 Senior Notes, in whole or in part, at any time on or after October 30, 2021, at the redemption prices (expressed as percentages of principal amount) of 104.563% for the 12-month period beginning October 30, 2021, 102.281% for the 12-month period beginning October 30, 2022, and thereafter at 100.000%, together, in each case, with any accrued and unpaid interest to the date of redemption. In the event of a change of control, as defined in the 2025 Indenture, the holders of the 2025 Senior Notes may require us to purchase their 2025 Senior Notes at a purchase price equal to 101% of the principal amount of the 2025 Senior Notes, plus accrued and unpaid interest, if any. The 2025 Senior Notes were issued at par. During the second quarter of 2022, NRP and NRP Finance retired $118.1 million of its 2025 Senior Notes. These notes were purchased on the open market at a weighted average price of 102.275%, a discount to the current redemption price of 104.563%. The $2.7 million call premium and fees and the write off of $1.3 million of debt issuance costs are included in loss on extinguishment of debt on the Partnership's Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022.13NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)The 2025 Senior Notes are the senior unsecured obligations of NRP and NRP Finance. The 2025 Senior Notes rank equal in right of payment to all existing and future senior unsecured debt of NRP and NRP Finance and senior in right of payment to any of NRP's subordinated debt. The 2025 Senior Notes are effectively subordinated in right of payment to all future secured debt of NRP and NRP Finance to the extent of the value of the collateral securing such indebtedness and are structurally subordinated in right of payment to all existing and future debt and other liabilities of our subsidiaries, including the Opco Credit Facility and each series of Opco’s existing senior notes. "Opco" refers to NRP (Operating) LLC, a wholly owned subsidiary of NRP, and its subsidiaries. None of NRP's subsidiaries guarantee the 2025 Senior Notes. As of June 30, 2022 and December 31, 2021, NRP and NRP Finance were in compliance with the terms of the Indenture relating to their 2025 Senior Notes. $ 103,034 $ 70,000 $ — $ 2,366 6,004 6,004 12,684 25,368 4,011 8,023 45,683 45,683 11,643 11,643 $ 80,025 $ 99,087 $ 183,059 $ 169,087 (623 ) (806 ) $ 182,436 $ 168,281 (36,743 ) (39,076 ) $ 145,693 $ 129,205 20222023 and December 31, 2021,2022, Opco was in compliance with the terms of the financial covenants contained in its debt agreements.April 2019, May 2023, the Partnership entered into the FourthSixth Amendment (the “Fourth Amendment”)"Sixth Amendment) to the Opco Credit Facility (the "Opco Credit Facility"). The FourthSixth Amendment extendedmaintained the term of the Opco Credit Facility until April 2023. August 2027. Lender commitments under the Opco Credit Facility remain at $100.0 million.increased from $130.0 million to $155.0 million, with the ability to expand such commitments to $200.0 million with the addition of future commitments and. The Sixth Amendment also includes modifications to Opco’s ability to declare and make certain restricted payments. The Opco Credit Facility contains financial covenants requiring Opco to maintain:•consolidated indebtedness to EBITDDA (as definedDecember 31, 2022, the Partnership had $70.0 million in borrowings outstanding under the Opco Credit Facility) not to exceed 4.0x; provided, however, that if Facility. During the six months ended June 30, 2023, the Partnership increases its quarterly distribution to its common unitholders above $0.45 per common unit, the maximum leverage ratioborrowed $165.0 million and repaid $132.0 million, resulting in $103.0 million in borrowings outstanding under the Opco Credit Facility will permanently decrease from 4.0x to 3.0x;as of June 30, 2023. The weighted average interest rate for the borrowings outstanding under the Opco Credit Facility for the three and•a fixed charge coverage ratio of consolidated EBITDDA to consolidated fixed charges (consisting of consolidated interest expensesix months ended June 30, 2023 was 8.61% and consolidated lease expense) of not less than 3.5 to 1.0.8.44%, respectively. During the three and six months ended June 30,2022, and 2021, the Partnership did not have any borrowings outstanding under the Opco Credit FacilityFacility. The Partnership had $52.0 million and had $100.0$60.0 million inof available borrowing capacity at both as of June 30, 2022 2023 and December 31, 2021.2022, respectively.$336.8$320.0 million$345.0$326.4 million classified as mineral rights, net and other long-term assets, net on the Partnership’s ConsolidatedConsolidated Balance Sheets as of June 30, 20222023 and December 31, 2021,2022, respectively.20222023 and December 31, 2021,2022, the Opco Senior Notes had cumulative principal balances of $119.4$80.0 million and $138.5$99.1 million, respectively. Opco made mandatory principal payments of $19.1 million during the six months ended June 30, 2022 2023 and 2021.2022.2023.2022.1413NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)9. June 30, 2022 December 31, 2021 (In thousands) Fair Value Hierarchy Level Carrying
ValueEstimated
Fair ValueCarrying
ValueEstimated
Fair ValueDebt: NRP 2025 Senior Notes 1 $ 179,934 $ 186,437 $ 296,236 $ 300,000 Opco Senior Notes (1)3 118,432 122,408 137,309 138,484 Opco Credit Facility 3 — — — — Assets: Contract receivable, net (current andlong-term) (2)3 $ 32,514 $ 25,444 $ 33,612 $ 26,010 3 $ 79,402 $ 75,848 $ 98,281 $ 96,060 3 103,034 103,034 70,000 70,000 3 $ 30,182 $ 25,254 $ 31,371 $ 24,833 (1) The fair value of the Opco Senior Notes at June 30, 2023 and December 31, 2022 were estimated by management utilizing the present value replacement method incorporating the interest rate of the Opco Credit facility at June 30, 2023 and December 31, 2022, respectively. (2) The fair value of the Opco Credit Facility approximates the outstanding borrowing amount because the interest rates are variable and reflective of market rates and the terms of the credit facility allow the Partnership to repay the debt at any time without penalty. (3) The fair value of the Partnership's contract receivable is determined based on the present value of future cash flow projections related to the underlying asset at a discount rate of 15% at June 30, 2023 and December 31, 2022. (1)The fair value of the Opco Senior Notes are estimated by management using quotations obtained for the NRP 2025 Senior Notes on the closing trading prices near period end, which were at 103% and 100% of par value at June 30, 2022 and December 31, 2021, respectively.(2)The fair value of the Partnership's contract receivable is determined based on the present value of future cash flow projections related to the underlying asset at a discount rate of 15% at June 30, 2022 and December 31, 2021.20222023 and December 31, 2021.2022.15NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)For the Three Months Ended
June 30,For the Six Months Ended June 30, (In thousands) 2022 2021 2022 2021 Operating and maintenance expenses $ 1,698 $ 1,645 $ 3,357 $ 3,252 General and administrative expenses 1,225 1,115 2,465 2,301 For the Three Months Ended June 30, For the Six Months Ended June 30, $ 1,712 $ 1,698 $ 3,431 $ 3,357 1,253 1,225 2,573 2,465 of $0.4 million to QMC at both June 30, 20222023 and December 31, 20212022, and $0.9$0.8 million and $1.0 million of accounts payable to WPPLP at June 30, 20222023 and December 31, 2021.2022, respectively.2022 2023 and 2021,2022, the Partnership recognized $2.7$2.0 million and $1.0$2.7 million, respectively, in operating and maintenance expenses on its Consolidated Statements of Comprehensive Income related to an overriding royalty agreement with WPPLP. These amounts were $4.3$4.0 million and $1.2$4.3 million during the six months ended June 30, 2022 2023 and 2021.2022, respectively. 14Corbin J. Robertson, Jr. owns 85% of the general partner of Great Northern Properties Limited Partnership ("GNP"), a privately held company primarily engaged in owning and managing mineral properties and surface leases. As of June 30, 2022 and December 31, 2021 the Partnership had $0.0 million and $0.1 million, respectively, of accounts receivable from GNP included in accounts receivable, net on its Consolidated Balance Sheets related to amounts collected for surface leases that belong to NRP.NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED11. (Unaudited) For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 (In thousands) Revenues Percent Revenues Percent Revenues Percent Revenues Percent Foresight Energy Resources LLC ("Foresight") (1) (2)$ 16,497 17 % $ 8,562 22 % $ 27,747 15 % $ 17,134 23 % Alpha Metallurgical Resources, Inc. (1)32,895 33 % 8,851 23 % 60,638 32 % 16,894 22 % $ 19,685 22 % $ 32,895 33 % $ 43,903 23 % $ 60,638 32 % $ 12,324 14 % $ 16,497 17 % $ 24,853 13 % $ 27,747 15 % (1)Revenues from Foresight and Alpha Metallurgical Resources, Inc. are included within the Partnership's Mineral Rights segment.(2)Revenues from Foresight in 2021 were fixed as a result of the lease amendment the Partnership entered into with Foresight pursuant to which Foresight agreed to pay NRP fixed cash payments to satisfy all obligations arising out of the existing various coal mining leases and transportation infrastructure fee agreements between the Partnership and Foresight. Revenues from Foresight in 2022 represent traditional royalty and minimum payments.16NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)13. 14.Unit-Based Compensationunit-basedservice and performance-based awards granted in 2022 and 2021 wereare valued using the closing price of NRP's common units as of the grant date.date while the Partnership's market-based awards are valued using a Monte Carlo simulation. The grant date fair value of these awards granted during the sixthree months ended June 30, 2022 2023 was $0.1 million. The grant date fair value of these awards granted during six months ended June 30, 2023 and 2021 were $7.92022 was $16.0 million and $3.8$7.9 million, respectively. Total unit-based compensation expense associated with these awards was $1.3$2.6 million and $0.6$1.3 million for the three months ended June 30, 2022 2023 and 2021,2022, respectively, and $5.1 million and $2.8 million and $1.7 million for the six months ended June 30, 2022 2023 and 2021,2022, respectively, and is included in general and administrative expenses and operating and maintenance expenses on the Partnership's Consolidated Statements of Comprehensive Income. The unamortized cost associated with unvested outstanding awards as of June 30, 20222023 is $8.8$18.2 million, which is to be recognized over a weighted average period of 2.22.3 years. The unamortized cost associated with unvested outstanding awards as of December 31, 20212022 was $3.3$6.3 million.20222023 is as follows: 386 $ 28.96 281 $ 56.84 (184 ) $ 26.30 483 $ 46.21 15(In thousands) Common Units Weighted Average Grant Date Fair Value per Common Unit Outstanding at January 1, 2022 411 $ 23.00 Granted 208 $ 38.29 Fully vested and issued (233) $ 26.74 Outstanding at June 30, 2022 386 $ 28.96 NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited)14. determined based on the amount of coal transported and processed utilizing the Partnership's assets. In the event the Sugar Camp lease is renewed beyond 2032, payments become a fixed $10ten thousand dollars per year for the remainder of the renewed term.that included the estimated impact of the global COVID-19 pandemic, industry and macroeconomic factors, reasonable and supportable forecasts and facts or circumstances of individual customers and properties. Examples of these facts or circumstances include, but are not limited to, contract disputes or renegotiations with the customer and evaluation of short and long-term economic viability of the contracted property. For its long-term contract receivable, management reverts to the historical loss experience immediately after the reasonable and supportable forecast period ends.20222023 and December 31, 2021,2022, NRP had the following current expected credit loss (“CECL”) allowance related to its receivables and long-term contract receivable:June 30, 2022 December 31, 2021 (In thousands) Gross CECL Allowance Net Gross CECL Allowance Net Receivables $ 43,219 $ (3,994) $ 39,225 $ 28,869 $ (3,312) $ 25,557 Long-term contract receivable 31,265 (1,083) 30,182 32,497 (1,126) 31,371 Total $ 74,484 $ (5,077) $ 69,407 $ 61,366 $ (4,438) $ 56,928 17NATURAL RESOURCE PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED(Unaudited) $ 42,974 $ (3,699 ) $ 39,275 $ 47,237 $ (4,461 ) $ 42,776 28,652 (993 ) 27,659 29,984 (1,038 ) 28,946 $ 71,626 $ (4,692 ) $ 66,934 $ 77,221 $ (5,499 ) $ 71,722 $(0.4)a reversal of $0.2 million and $(1.1)$0.4 million inof operating and maintenance expenses on its Consolidated Statements of Comprehensive Income related to the change in the CECL allowance during the three months ended June 30, 2022 2023 and 2021,2022, respectively and $0.6a reversal of $0.8 million and $(0.7)expense of $0.6 million during the six months ended June 30, 2022 2023 and 2021,2022, respectively.20222023 through the time of the Partnership’s filing of its Quarterly Report on Form 10-Q10-Q with the SEC:2022, 2023, the Board of Directors declared a distribution of $0.75 per common unit with respect to the second quarter of 2022.2023. The Board of Directors also declared a $3.7 million cash distribution on NRP's outstanding preferred units with respect to the second quarter of 2022 totaling $7.5 million in cash.2023.Repurchases of 2025 Senior NotesIn July 2022, NRP and NRP Finance retired an additional $38.8 million of its 2025 Senior Notes, leaving $143.1 million of these Notes outstanding as of the date of this report. Our third quarter 2022 Consolidated Statements of Comprehensive Income will include a $1.8 million of loss on extinguishment of debt associated with these repurchases.181620222023 and 20212022 should be read in conjunction with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements included in this Form 10-Q and with the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Management’s Discussion and Analysis included in the Natural Resource Partners L.P. Annual Report on Form 10-K for the year ended December 31, 2021.2022.production levelsfuture performance by our lessees; Sisecam Wyoming LLC’s ("Sisecam Wyoming's") trona mining and soda ash refinery operations; distributions from our soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving us, and of scheduled or potential regulatory or legal changes; and global and U.S. economic conditions.20212022 for important factors that could cause our actual results of operations or our actual financial condition to differ.8.9. Debt, Net in the Notes to Consolidated Financial Statements included herein as well as in "Item 8. Financial Statements and Supplementary Data—Note 11. Debt, Net" in our Annual Report on Form 10-K for the year ended December 31, 2021.2022. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.19 of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from asset sales and disposals, including sales of discontinued operations, and return of long-term contract receivables;receivable; less maintenance capital expenditures. DCF 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. DCF may not be calculated the same for us as for other companies. In addition, DCF presented below is not calculated or presented on the same basis as distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. DCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt. of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivables;receivable; less maintenance and expansion capital expenditures and cash flow used in acquisition costs classified as investing or financing activities. FCF is calculated before mandatory debt repayments. FCF 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. FCF may not be calculated the same for us as for other companies. FCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.2020222023 are as follows:Operating Segments (In thousands) Mineral Rights Soda Ash Corporate and Financing Total Revenues and other income $ 160,169 $ 29,480 $ — $ 189,649 Net income (loss) $ 132,375 $ 29,406 $ (31,062) $ 130,719 Adjusted EBITDA (1)$ 142,152 $ 23,642 $ (9,519) $ 156,275 Cash flow provided by (used in) continuing operations Operating activities $ 118,527 $ 23,625 $ (26,698) $ 115,454 Investing activities $ 909 $ — $ — $ 909 Financing activities $ (614) $ — $ (191,913) $ (192,527) Distributable cash flow (1)$ 119,436 $ 23,625 $ (26,698) $ 116,363 Free cash flow (1)$ 119,090 $ 23,625 $ (26,698) $ 116,017 $ 144,247 $ 46,232 $ — $ 190,479 $ 121,391 $ 46,060 $ (17,842 ) $ 149,609 $ 129,326 $ 42,958 $ (11,488 ) $ 160,796 $ 128,898 $ 42,943 $ (17,591 ) $ 154,250 $ 1,314 $ — $ (10 ) $ 1,304 $ (583 ) $ — $ (183,332 ) $ (183,915 ) $ 130,212 $ 42,943 $ (17,601 ) $ 155,554 $ 130,106 $ 42,943 $ (17,601 ) $ 155,448 (1)See "—Results of Operations" below for reconciliations to the most comparable GAAP financial measures.21CommentaryBusiness OutlookCommentary$116.0$154.3 million of operating cash flow and $155.4 million of free cash flow during the six months ended 20222023, and ended the quarter with $159.4$62.7 million of liquidity consisting of $59.4$10.7 million of cash and cash equivalents and $100.0$52.0 million of borrowing capacity under our Opco Credit Facility. During the second quarter we permanently retired $118.1 millionAs of debt, droppingJune 30, 2023 our leverage ratio to 1.2x as of June 30, 2022. These debt repurchases will save approximately $10.8 million annually in interest costs. These notes were purchased on the open market atwas 0.6 x. weighted average price of 102.275%, a discount to the current redemption price of 104.563%. In July, we were able to retire an additional $38.8 million of our 2025 Senior Notes, which will save an additional $3.5 million annually in interest costs. The current outstanding amount of 9.125% Senior Notes due 2025 is $143.1 million.We declared a second quarter 2022 cash distribution of $0.75 per common unit of NRP andwith respect to the first quarter of 2023 as well as a $7.5$6.1 million cash distribution on the preferred units.units with respect to the first quarter of 2023. Future distributions on our common and preferred units will be determined on a quarterly basis by the Board of Directors. The Board of Directors considers numerous factors each quarter in determining cash distributions, including profitability, cash flow, debt service obligations, market conditions and outlook, estimated unitholder income tax liability and the level of cash reserves that the Board determines is necessary for future operating and capital needs.Metallurgical coal prices have declined from their record highs during the first quarter of 2022, but remain supported by the ongoing tightness in the supply-demand balance for metallurgical coal. Metallurgical coal production continues to face ongoing labor shortages and global supply chain interruptions which limits the ability of operators to increase metallurgical coal production and should provide continued support for domestic and international prices in the near term despite slowing global economic growth and softening demand for steel.Our lessees sold 15.2 million tons of coal from our properties in the first six months of 2022, and we derived approximately 75% of our coal royalty revenues and approximately 45% of our coal royalty sales volumes from metallurgical coal during the same period.Thermal coal demand and pricing remains strong due to the increased demand for electricity, high natural gas prices and constrained growth in thermal coal production. Boycotts on Russian coal caused by the war in Ukraine are amplifying the tightness in thermal coal markets caused by labor shortages, global supply chain interruptions, and environmental and political pressures limiting the ability of operators to increase thermal coal production to meet domestic and international demand. We continue to believe the near-term outlook for thermal coal prices is positive.We continue to identify alternative revenue sources across our large portfolio of land and mineral assets, specifically within the transitional energy economy. mkWe own the rights to sequester carbon dioxide ("CO2") on approximately 3.5 million mineral acres of pore space in the southern United States. As announced previously, in the first quarter of 2022 we executed on our first CO2 sequestration transaction by granting Denbury the right to develop a world-class subsurface CO2 sequestration project on 75,000 acres of underground pore space we own in southwest Alabama with the potential to store over 300 million metric tons of CO2. While the timing and likelihood of additional cash flows being realized from further activities is uncertain, we believe our large ownership footprint throughout the United States will provide additional opportunities to create value in this regard and position us to benefit from the transitional energy economy with minimal capital investment.Soda AshSoda Ash Business Segment2022 were higher by $24.92023 decreased $15.9 million, or 10%, as compared to the prior year period as a resultprimarily due to decreased metallurgical coal sales prices. Cash provided by operating activities and free cash flow increased $10.4 million and $11.0 million, respectively, compared to the prior year period primarily due to the timing of increased sales pricesminimum and royalty payments and prior year recoupments, partially offset by lower revenues and other income in the second quarter of 2023 as compared to the prior year period. Freeperiod primarily due to lower met coal sales prices. 2022 increased $19.82023increased$19.3 million as compared to the prior year period due to the early timing of distributions received from Sisecam Wyoming reinstating its regular quarterly cash distributions beginningand a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the fourthsecond quarter of 2021.Strong demand growth for2023.driven by global secular trends includingprices have fallen throughout the investments in renewable energy, the electrificationfirst half of the global auto fleet and urbanization, coupled with constrainedyear. New supply from China entering the market in the second half of the year is expected to continue to put downward pressure on international soda ash supply due in part duepricing. However, we expect Sisecam Wyoming's domestic soda ash sales prices to COVID-19 flash lockdowns in China and a partial closure of a Green River competitor due to a force majeure event allowed Sisecam Wyoming to deliver improved financial resultsremain strong in the first six monthssecond half of 2022.22negotiated 2023 domestic sales contracts entered into at the end of 2022.and 2021 ComparedFor the Three Months Ended June 30, Increase Percentage
ChangeOperating Segment (In thousands) 2022 2021 Mineral Rights $ 85,290 $ 35,909 $ 49,381 138 % Soda Ash 14,643 2,601 12,042 463 % Total $ 99,933 $ 38,510 $ 61,423 159 % For the Three Months Ended June 30, Increase Percentage $ 64,282 $ 85,290 $ (21,008 ) (25 )% 26,978 14,643 12,335 84 % $ 91,260 $ 99,933 $ (8,673 ) (9 )% isare discussed for each of the operating segments below: For the Three Months Ended June 30, Increase
(Decrease)Percentage
Change(In thousands, except per ton data) 2022 2021 Coal sales volumes (tons) Appalachia Northern 392 405 (13) (3) % Central 3,484 2,975 509 17 % Southern 312 316 (4) (1) % Total Appalachia 4,188 3,696 492 13 % Illinois Basin 3,403 2,640 763 29 % Northern Powder River Basin 699 185 514 278 % Gulf Coast 67 — 67 100 % Total coal sales volumes 8,357 6,521 1,836 28 % Coal royalty revenue per ton Appalachia Northern $ 11.84 $ 4.45 $ 7.39 166 % Central 12.19 4.62 7.57 164 % Southern 17.67 7.63 10.04 132 % Illinois Basin 2.07 2.01 0.06 3 % Northern Powder River Basin 4.74 4.15 0.59 14 % Gulf Coast 0.57 — 0.57 100 % Combined average coal royalty revenue per ton 7.54 3.69 3.85 104 % Coal royalty revenues Appalachia Northern $ 4,640 $ 1,804 $ 2,836 157 % Central 42,461 13,756 28,705 209 % Southern 5,513 2,410 3,103 129 % Total Appalachia 52,614 17,970 34,644 193 % Illinois Basin 7,061 5,300 1,761 33 % Northern Powder River Basin 3,314 768 2,546 332 % Gulf Coast 38 — 38 100 % Unadjusted coal royalty revenues 63,027 24,038 38,989 162 % Coal royalty adjustment for minimum leases (82) (5,740) 5,658 99 % Total coal royalty revenues $ 62,945 $ 18,298 $ 44,647 244 % Other revenues Production lease minimum revenues $ 65 $ 3,556 $ (3,491) (98) % Minimum lease straight-line revenues 4,674 4,869 (195) (4) % Property tax revenues 1,695 1,587 108 7 % Wheelage revenues 4,379 1,844 2,535 137 % Coal overriding royalty revenues 682 976 (294) (30) % Lease amendment revenues 811 772 39 5 % Aggregates royalty revenues 1,037 456 581 127 % Oil and gas royalty revenues 2,906 900 2,006 223 % Other revenues 139 353 (214) (61) % Total other revenues $ 16,388 $ 15,313 $ 1,075 7 % Royalty and other mineral rights $ 79,333 $ 33,611 $ 45,722 136 % Transportation and processing services revenues 5,612 2,182 3,430 157 % Gain on asset sales and disposals 345 116 229 197 % Total Mineral Rights segment revenues and other income $ 85,290 $ 35,909 $ 49,381 138 % For the Three Months Ended June 30, 390 392 (2 ) (1 )% 3,352 3,484 (132 ) (4 )% 693 312 381 122 % 4,435 4,188 247 6 % 1,631 3,403 (1,772 ) (52 )% 881 699 182 26 % 139 67 72 107 % 7,086 8,357 (1,271 ) (15 )% $ 6.87 $ 11.84 $ (4.97 ) (42 )% 8.49 12.19 (3.70 ) (30 )% 10.85 17.67 (6.82 ) (39 )% 3.15 2.07 1.08 52 % 4.62 4.74 (0.12 ) (3 )% 0.71 0.57 0.14 25 % 6.77 7.54 (0.77 ) (10 )% $ 2,681 $ 4,640 $ (1,959 ) (42 )% 28,445 42,461 (14,016 ) (33 )% 7,521 5,513 2,008 36 % 38,647 52,614 (13,967 ) (27 )% 5,141 7,061 (1,920 ) (27 )% 4,066 3,314 752 23 % 98 38 60 158 % 47,952 63,027 (15,075 ) (24 )% 8 (82 ) 90 110 % $ 47,960 $ 62,945 $ (14,985 ) (24 )% $ 562 $ 65 $ 497 765 % 4,447 4,674 (227 ) (5 )% 115 — 115 100 % 3,284 4,379 (1,095 ) (25 )% 1,470 1,695 (225 ) (13 )% 150 682 (532 ) (78 )% 848 811 37 5 % 686 1,037 (351 ) (34 )% 1,214 2,906 (1,692 ) (58 )% 271 139 132 95 % $ 13,047 $ 16,388 $ (3,341 ) (20 )% $ 61,007 $ 79,333 $ (18,326 ) (23 )% 3,270 5,612 (2,342 ) (42 )% 5 345 (340 ) (99 )% $ 64,282 $ 85,290 $ (21,008 ) (25 )% 75%70% of coal royalty revenues and approximately 45%55% of coal royalty sales volumes were derived from metallurgical coal during the three months ended June 30, 2022.2023. Total coal royalty revenues increased $44.6decreased $15.0 million as compared to the prior year quarter. The discussion by region is as follows:Appalachia: Coal royalty revenues decreased $14.0 million primarily due to decreased metallurgical coal sales prices during the three months ended June 30, 2023, as compared to the prior year quarter.increased $34.6decreased $3.3 million primarily due to increased coal sales prices and volumes during the three months ended 2022 as compared to the prior year quarter.•Illinois Basin: Coal royalty revenues increased $1.8 million primarily due to increased sales volumes and prices during the three months ended June 30, 2022 as compared to the prior year quarter. Revenues recognized from Foresight in 2021 were fixed as a result of the lease amendment the Partnership entered into with Foresight pursuant to which Foresight agreed to pay NRP fixed cash payments to satisfy all obligations arising out of the existing various coal mining leases and transportation infrastructure fee agreements between the Partnership and Foresight. Revenues from Foresight in 2022 represent traditional royalty and minimum payments.•Northern Powder River Basin: Coal royalty revenues increased $2.5 million primarily due to increased sales volumes as our lessee mined on our property more during the second quarter of 20222023, as compared to the prior year quarter primarily due a $1.7 million decrease in accordance with its mine planoil and gas royalty revenues and a $1.1 million decrease in additionwheelage revenues as compared to increased salesthe prior year period. Oil and gas royalty revenues decreased primarily as a result of decreased natural gas prices as compared to the prior year quarter.Total Otherquarter and wheelage revenues decreased primarily due to lower met coal sales prices resulting in a lower wheelage revenue received per ton of coal transported. Total otherincreased $1.1decreased $2.3 million during the three months ended June 30, 20222023, as compared to the prior year quarter primarily due to $2.5 million increase in wheelage revenues and a $2.0 million increase in oil and gas royalty revenues, partially offset by a $3.5 million decrease intemporary relocation of certain production lease minimum revenues.off of NRP's coal reserves. The increase in wheelage revenues is result of higher production fromfee per ton associated with the properties that pay us a wheelage fee and the increase in oil and gas royalty revenues is primarily related to new wells and increased gas prices as compared to the prior year period. The decrease in production lease minimum revenues was primarily as a result of breakage revenue recognized in the second quarter of 2021.Transportation and Processing Services RevenuesTransportation and processing services revenues increased $3.4 million during the three months ended June 30, 2022 as compared to the prior year period primarily due to the lease amendment with Foresight whereas transportation and processing revenues were based onof the recognition of a fixed amount in 2021. Revenues from Foresight in 2022 represent traditional royalty and minimum payments and were greaternon-NRP coal is less than the fixed revenue from 2021.fee per ton associated with the transportation and processing of NRP coal. $12.0$12.3 million compared to the prior year quarter as a result of increased internationalprimarily due to higher sales prices as compared to the prior year period.25driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales volumes.For the Three Months Ended June 30, Increase
(Decrease)Percentage
Change(In thousands) 2022 2021 Operating expenses Operating and maintenance expenses $ 10,015 $ 5,170 $ 4,845 94 % Depreciation, depletion and amortization 5,847 4,871 976 20 % General and administrative expenses 5,052 3,388 1,664 49 % Asset impairments 43 16 27 169 % Total operating expenses $ 20,957 $ 13,445 $ 7,512 56 % Other expenses, net Interest expense, net $ 8,108 $ 9,683 $ (1,575) (16) % Loss on extinguishment of debt 4,048 — 4,048 100 % Total other expenses, net $ 12,156 $ 9,683 $ 2,473 26 % $ 7,930 $ 10,015 $ (2,085 ) (21 )% 3,792 5,847 (2,055 ) (35 )% 5,643 5,052 591 12 % 69 43 26 60 % $ 17,434 $ 20,957 $ (3,523 ) (17 )% $ 3,492 $ 8,108 $ (4,616 ) (57 )% — 4,048 (4,048 ) (100 )% $ 3,492 $ 12,156 $ (8,664 ) (71 )% increased $7.5decreased $3.5 million as compared to the prior year quarter primarily due to a $4.8$2.1 million increasedecrease in operating and maintenance expenses and a $2.1 million decrease in depreciation, depletion and amortization. The decrease in operating and maintenance expenses was primarily driven by lower overriding royalty expense from an agreement with WPPLP in the second quarter of 2023 as compared to second quarter of 2022. This overriding royalty expense is fully offset by coal royalty revenue we receive from this property. The decrease in depreciation, depletion and amortization was primarily driven by lower Illinois Basin coal sales volumes during the second quarter of 2023 as compared to the second quarter of 2022 as explained in the coal royalty revenues section above.higher costs relatedless debt outstanding as compared to an overriding royalty agreement with Western Pocahontas Properties Limited Partnership ("WPPLP"). The coal royalty expense NRP paysthe prior year quarter, in addition to WPPLP is fully offset by the coal royalty revenue NRP receives from this property. Total operating expenses also increased as a result of a $1.7 million increase in general and administrative expenses primarily due to increased long-term incentive expense and consulting expense.Total other expenses, net increased $2.5 million primarily due to a $4.0 million loss on extinguishment of debt recognized in 2022 related to the premiums and fees incurred and write-off of debt issuance costs associated with thepartial retirement of the 2025 Senior Notes during the three months ended June 30,second quarter of 2022. This increase was partially offset by a $1.6 million decrease in interest expense, net as a result of less debt outstanding.Operating Segments For the Three Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2022 Net income (loss) $ 69,408 $ 14,620 $ (17,208) $ 66,820 Less: equity earnings from unconsolidated investment — (14,643) — (14,643) Add: total distributions from unconsolidated investment — 10,486 — 10,486 Add: interest expense, net — — 8,108 8,108 Add: loss on extinguishment of debt — — 4,048 4,048 Add: depreciation, depletion and amortization 5,847 — — 5,847 Add: asset impairments 43 — — 43 Adjusted EBITDA $ 75,298 $ 10,463 $ (5,052) $ 80,709 June 30, 2021 Net loss $ 25,886 $ 2,566 $ (13,070) $ 15,382 Less: equity earnings from unconsolidated investment — (2,601) — (2,601) Add: interest expense, net 1 — 9,682 9,683 Add: depreciation, depletion and amortization 4,871 — — 4,871 Add: asset impairments 16 — — 16 Adjusted EBITDA $ 30,774 $ (35) $ (3,388) $ 27,351 Adjusted EBITDA $ 52,510 $ 26,964 $ (9,140 ) $ 70,334 — (26,978 ) — (26,978 ) — 32,350 — 32,350 — — 3,492 3,492 3,787 — 5 3,792 69 — — 69 $ 56,366 $ 32,336 $ (5,643 ) $ 83,059 $ 69,408 $ 14,620 $ (17,208 ) $ 66,820 — (14,643 ) — (14,643 ) — 10,486 — 10,486 — — 8,108 8,108 — — 4,048 4,048 5,847 — — 5,847 43 — — 43 $ 75,298 $ 10,463 $ (5,052 ) $ 80,709 $53.4$3.5 million primarily due to a $44.5 million increasethe decrease in Adjusted EBITDA within our Mineral Rights segment as a result of higheroperating and other expenses, partially offset by the decrease in revenues and other income, all discussed above. Adjusted EBITDA increased $2.4 million as discussed above, in additioncompared to the prior year quarter primarily due to a $10.5$21.9 million increase in Adjusted EBITDA within our Soda Ash segment due to the early timing of distributions received from Sisecam Wyoming reinstating its regular quarterly cash distributions beginningand a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the fourthsecond quarter of 2021.2023. This increase in Adjusted EBITDA was partially offset by an $18.9 million decrease in Adjusted EBITDA within our Mineral Rights segment primarily as a result of lower revenues and other income as discussed above.(Non-GAAP (Non-GAAP Financial Measures)Operating Segments For the Three Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2022 Cash flow provided by (used in) continuing operations Operating activities $ 70,351 $ 10,430 $ (17,658) $ 63,123 Investing activities 909 — — 909 Financing activities — — (140,266) (140,266) June 30, 2021 Cash flow provided by (used in) continuing operations Operating activities $ 32,028 $ (35) $ (18,609) $ 13,384 Investing activities 657 — — 657 Financing activities (1,000) — (11,900) (12,900) $ 55,040 $ 32,326 $ (6,016 ) $ 81,350 615 — (8 ) 607 — — (88,882 ) (88,882 ) $ 70,351 $ 10,430 $ (17,658 ) $ 63,123 909 — — 909 — — (140,266 ) (140,266 ) 2722 of continuing operations (the most comparable GAAP financial measure) by business segment to DCF and FCF:Operating Segments For the Three Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2022 Net cash provided by (used in) operating activities of continuing operations $ 70,351 $ 10,430 $ (17,658) $ 63,123 Add: proceeds from asset sales and disposals 346 — — 346 Add: return of long-term contract receivable 563 — — 563 Distributable cash flow $ 71,260 $ 10,430 $ (17,658) $ 64,032 Less: proceeds from asset sales and disposals (346) — — (346) Free cash flow $ 70,914 $ 10,430 $ (17,658) $ 63,686 June 30, 2021 Net cash provided by (used in) operating activities of continuing operations $ 32,028 $ (35) $ (18,609) $ 13,384 Add: proceeds from asset sales and disposals 116 — — 116 Add: return of long-term contract receivable 541 — — 541 Distributable cash flow $ 32,685 $ (35) $ (18,609) $ 14,041 Less: proceeds from asset sales and disposals (116) — — (116) Less: acquisition costs (1,000) — — (1,000) Free cash flow $ 31,569 $ (35) $ (18,609) $ 12,925 $ 55,040 $ 32,326 $ (6,016 ) $ 81,350 5 — — 5 610 — — 610 — — (8 ) (8 ) $ 55,655 $ 32,326 $ (6,024 ) $ 81,957 (5 ) — — (5 ) $ 55,650 $ 32,326 $ (6,024 ) $ 81,952 $ 70,351 $ 10,430 $ (17,658 ) $ 63,123 346 — — 346 563 — — 563 $ 71,260 $ 10,430 $ (17,658 ) $ 64,032 (346 ) — — (346 ) $ 70,914 $ 10,430 $ (17,658 ) $ 63,686 $50.0$18.2 million, $17.9 million and $50.8$18.3 million, respectively, primarily due to the following:•an increase in cash flow within our Soda Ash and Corporate and Financing segments, partially offset by a decrease in cash flow within our Mineral Rights Segment◦DCF and FCF increased $38.6 million and $39.3 million, respectively, primarily due to the segment's increase in revenues and other incomesegment. The discussion by segment is as discussed above.•Soda Ash Segment◦DCF and FCF increased $10.5 million as a result of Sisecam Wyoming reinstating its regular quarterly cash distributions beginning in the fourth quarter of 2021.Results of Operationsfollows:and 2021 ComparedFor the Six Months Ended June 30, Increase Percentage
ChangeOperating Segment (In thousands) 2022 2021 Mineral Rights $ 160,169 $ 71,087 $ 89,082 125 % Soda Ash 29,480 4,574 24,906 545 % Total $ 189,649 $ 75,661 $ 113,988 151 % For the Six Months Ended June 30, Increase Percentage $ 144,247 $ 160,169 $ (15,922 ) (10 )% 46,232 29,480 16,752 57 % $ 190,479 $ 189,649 $ 830 0 % isare discussed for each of the operating segments below: For the Six Months Ended June 30, Increase
(Decrease)Percentage
Change(In thousands, except per ton data) 2022 2021 Coal sales volumes (tons) Appalachia Northern 820 525 295 56 % Central 6,735 5,625 1,110 20 % Southern 673 416 257 62 % Total Appalachia 8,228 6,566 1,662 25 % Illinois Basin 4,905 5,298 (393) (7) % Northern Powder River Basin 1,937 1,244 693 56 % Gulf Coast 136 — 136 100 % Total coal sales volumes 15,206 13,108 2,098 16 % Coal royalty revenue per ton Appalachia Northern $ 10.95 $ 4.27 $ 6.68 156 % Central 11.80 4.44 7.36 166 % Southern 17.61 7.06 10.55 149 % Illinois Basin 2.11 2.04 0.07 3 % Northern Powder River Basin 4.10 3.49 0.61 17 % Gulf Coast 0.56 — 0.56 100 % Combined average coal royalty revenue per ton 7.80 3.45 4.35 126 % Coal royalty revenues Appalachia Northern $ 8,981 $ 2,241 $ 6,740 301 % Central 79,441 24,951 54,490 218 % Southern 11,853 2,938 8,915 303 % Total Appalachia 100,275 30,130 70,145 233 % Illinois Basin 10,364 10,783 (419) (4) % Northern Powder River Basin 7,946 4,341 3,605 83 % Gulf Coast 76 — 76 100 % Unadjusted coal royalty revenues 118,661 45,254 73,407 162 % Coal royalty adjustment for minimum leases (267) (11,591) 11,324 98 % Total coal royalty revenues $ 118,394 $ 33,663 $ 84,731 252 % Other revenues Production lease minimum revenues $ 1,657 $ 7,006 $ (5,349) (76) % Minimum lease straight-line revenues 9,457 10,965 (1,508) (14) % Wheelage revenues 8,096 3,625 4,471 123 % Property tax revenues 3,167 3,056 111 4 % Coal overriding royalty revenues 940 2,835 (1,895) (67) % Lease amendment revenues 1,691 1,640 51 3 % Aggregates royalty revenues 1,807 910 897 99 % Oil and gas royalty revenues 4,720 2,266 2,454 108 % Other revenues 487 572 (85) (15) % Total other revenues $ 32,022 $ 32,875 $ (853) (3) % Royalty and other mineral rights $ 150,416 $ 66,538 $ 83,878 126 % Transportation and processing services revenues 9,408 4,374 5,034 115 % Gain on asset sales and disposals 345 175 170 97 % Total Mineral Rights segment revenues and other income $ 160,169 $ 71,087 $ 89,082 125 % 769 820 (51 ) (6 )% 6,961 6,735 226 3 % 1,275 673 602 89 % 9,005 8,228 777 9 % 2,941 4,905 (1,964 ) (40 )% 1,966 1,937 29 1 % 197 136 61 45 % 14,109 15,206 (1,097 ) (7 )% $ 8.35 $ 10.95 $ (2.60 ) (24 )% 9.23 11.80 (2.57 ) (22 )% 12.72 17.61 (4.89 ) (28 )% 3.34 2.11 1.23 58 % 4.65 4.10 0.55 13 % 0.66 0.56 0.10 18 % 7.51 7.80 (0.29 ) (4 )% $ 6,418 $ 8,981 $ (2,563 ) (29 )% 64,251 79,441 (15,190 ) (19 )% 16,218 11,853 4,365 37 % 86,887 100,275 (13,388 ) (13 )% 9,816 10,364 (548 ) (5 )% 9,141 7,946 1,195 15 % 131 76 55 72 % 105,975 118,661 (12,686 ) (11 )% 8 (267 ) 275 103 % $ 105,983 $ 118,394 $ (12,411 ) (10 )% $ 1,175 $ 1,657 $ (482 ) (29 )% 8,950 9,457 (507 ) (5 )% 2,233 — 2,233 100 % 7,153 8,096 (943 ) (12 )% 2,940 3,167 (227 ) (7 )% 338 940 (602 ) (64 )% 1,699 1,691 8 0 % 1,439 1,807 (368 ) (20 )% 4,802 4,720 82 2 % 566 487 79 16 % $ 31,295 $ 32,022 $ (727 ) (2 )% $ 137,278 $ 150,416 $ (13,138 ) (9 )% 6,868 9,408 (2,540 ) (27 )% 101 345 (244 ) (71 )% $ 144,247 $ 160,169 $ (15,922 ) (10 )% Totalroyaltyroyalty revenues increased $84.7 millionand approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the six months ended June 30, 20222023. Total coal royalty revenues decreased $12.4 million as compared to the prior year period. The discussion by region is as follows:•increased $70.1decreased $2.5 million primarily due to increased coal sales prices and volumes during the six months ended June 30, 2022 as compared to the prior year period.•Illinois Basin: Coal royalty revenues decreased $0.4 million primarily due to lower sales volumes, partially offset by increased sales prices during the six months ended June 30, 2022 as compared to the prior year period. Revenues recognized from Foresight in 2021 were fixed as a result of the lease amendment the Partnership entered into with Foresight pursuant to which Foresight agreed to pay NRP fixed cash payments to satisfy all obligations arising out of the existing various coal mining leases and transportation infrastructure fee agreements between the Partnership and Foresight. Revenues from Foresight in 2022 represent traditional royalty and minimum payments.•Northern Powder River Basin: Coal royalty revenues increased $3.6 million primarily due to increased sales volumes as our lessee mined on our property more during the six months ended June 30, 2022 as compared to the prior year period in accordance with its mine plan in addition to increased sales prices as compared to the prior year period. Other RevenuesOther revenues decreased $0.9 million during the six months ended June 30, 20222023, as compared to the prior year period primarily due to a $5.3 million decrease intemporary relocation of certain production lease minimum revenues, partially offset by a $4.5 million increase in wheelage revenues.off of NRP's coal reserves. The decrease in production lease minimum revenues was primarily as a result of breakage revenues recognized infee per ton on associated with the first six months of 2021. The increase in wheelage revenues is result of higher production in 2022 from the properties that pay us a wheelage fee as compared to the prior year period.Transportation and Processing Services RevenuesTransportation and processing services revenues increased $5.0 million during the six months ended June 30, 2022 as compared to the prior year period primarily due to the lease amendment with Foresight whereas transportation and processing revenues were based onof the recognition of a fixed amount in 2021. Revenues from Foresight in 2022 represent traditional royalty and minimum payments and were greaternon-NRP coal is less than the fixed revenue from 2021.fee per ton associated with the transportation and processing of NRP coal. $24.9$16.8 million compared to the prior year period primarily as a result of increaseddue to higher sales prices driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales prices.30volumes.and Other ExpensesFor the Six Months Ended June 30, Increase (Decrease) Percentage
Change(In thousands) 2022 2021 Operating expenses Operating and maintenance expenses $ 18,091 $ 10,722 $ 7,369 69 % Depreciation, depletion and amortization 9,715 9,963 (248) (2) % General and administrative expenses 9,519 7,498 2,021 27 % Asset impairments 62 4,059 (3,997) (98) % Total operating expenses $ 37,387 $ 32,242 $ 5,145 16 % Other expenses, net Interest expense, net $ 17,495 $ 19,656 $ (2,161) (11) % Loss on extinguishment of debt 4,048 — 4,048 100 % Total other expenses, net $ 21,543 $ 19,656 $ 1,887 10 % $ 15,093 $ 18,091 $ (2,998 ) (17 )% 7,875 9,715 (1,840 ) (19 )% 11,488 9,519 1,969 21 % 69 62 7 11 % $ 34,525 $ 37,387 $ (2,862 ) (8 )% $ 6,345 $ 17,495 $ (11,150 ) (64 )% — 4,048 (4,048 ) (100 )% $ 6,345 $ 21,543 $ (15,198 ) (71 )% increased $5.1decreased $2.9 million primarily due to a $7.4$3.0 million increasedecrease in operating and maintenance expenses, primarily driven by lower overriding royalty expense from an agreement with WPPLP as discussed above.an increase in badless debt expense in addition to higher costs related to an overriding royalty agreement with WPPLP. The coal royalty expense NRP pays to WPPLP is fully offset by the coal royalty revenue NRP receives from this property. Total operating expenses also increased as a result of a $2.0 million increase in general and administrative expenses primarily due to increased long-term incentive expense and consulting expense. This increase was partially offset by the a $4.0 million decrease in asset impairmentsoutstanding as compared to the prior year period. Asset impairmentsperiod, in 2021 primarily relatedaddition to a lease termination that resulted in the full impairment of a coal property.Total other expenses, net increased $1.9 million primarily due to a $4.0 million loss on extinguishment of debt recognized in 2022 related to the premiums and fees incurred and write-off of debt issuance costs associated with thepartial retirement of the 2025 Senior Notes during the six months ended June 30,second quarter of 2022. This increase was partially offset by a $2.2 million decrease in interest expense, net as a result of less debt outstanding.Operating Segments For the Six Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2022 Net income (loss) $ 132,375 $ 29,406 $ (31,062) $ 130,719 Less: equity earnings from unconsolidated investment — (29,480) — (29,480) Add: total distributions from unconsolidated investment — 23,716 — 23,716 Add: interest expense, net — — 17,495 17,495 Add: loss on extinguishment of debt — — 4,048 4,048 Add: depreciation, depletion and amortization 9,715 — — 9,715 Add: asset impairments 62 — — 62 Adjusted EBITDA $ 142,152 $ 23,642 $ (9,519) $ 156,275 June 30, 2021 Net income (loss) $ 46,374 $ 4,519 $ (27,130) $ 23,763 Less: equity earnings from unconsolidated investment — (4,574) — (4,574) Add: total distributions from unconsolidated investment — 3,920 — 3,920 Add: interest expense, net 24 — 19,632 19,656 Add: depreciation, depletion and amortization 9,963 — — 9,963 Add: asset impairments 4,059 — — 4,059 Adjusted EBITDA $ 60,420 $ 3,865 $ (7,498) $ 56,787 Adjusted EBITDA $ 121,391 $ 46,060 $ (17,842 ) $ 149,609 — (46,232 ) — (46,232 ) — 43,130 — 43,130 — — 6,345 6,345 7,866 — 9 7,875 69 — — 69 $ 129,326 $ 42,958 $ (11,488 ) $ 160,796 $ 132,375 $ 29,406 $ (31,062 ) $ 130,719 — (29,480 ) — (29,480 ) — 23,716 — 23,716 — — 17,495 17,495 — — 4,048 4,048 9,715 — — 9,715 62 — — 62 $ 142,152 $ 23,642 $ (9,519 ) $ 156,275 $99.5$18.9 million primarily due to the decrease in operating and other expenses as discussed above. Adjusted EBITDA increased $4.5 million as compared to the prior year period primarily due to a $81.7$19.3 million increase in Adjusted EBITDA within our Soda Ash segment due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023. This increase in Adjusted EBITDA was partially offset by a $12.8 million decrease in Adjusted EBITDA within our Mineral Rights segment as a result of higherlower revenues and other income as discussed above, in addition to a $19.8 million increase in Adjusted EBITDA within our Soda Ash segment as a result of higher cash distributions received from Sisecam Wyoming in the first six months of 2022 as compared to the prior year period.above. Operating Segments For the Six Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2022 Cash flow provided by (used in) continuing operations Operating activities $ 118,527 $ 23,625 $ (26,698) $ 115,454 Investing activities 909 — — 909 Financing activities (614) — (191,913) (192,527) June 30, 2021 Cash flow provided by (used in) continuing operations Operating activities $ 57,990 $ 3,853 $ (25,259) $ 36,584 Investing activities 1,257 — — 1,257 Financing activities (1,132) — (38,591) (39,723) $ 128,898 $ 42,943 $ (17,591 ) $ 154,250 1,314 — (10 ) 1,304 (583 ) — (183,332 ) (183,915 ) $ 118,527 $ 23,625 $ (26,698 ) $ 115,454 909 — — 909 (614 ) — (191,913 ) (192,527 ) 3226 of continuing operations (the most comparable GAAP financial measure) by business segment to DCF and FCF:Operating Segments For the Six Months Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total June 30, 2022 Net cash provided by (used in) operating activities of continuing operations $ 118,527 $ 23,625 $ (26,698) $ 115,454 Add: proceeds from asset sales and disposals 346 — — 346 Add: return of long-term contract receivable 563 — — 563 Distributable cash flow $ 119,436 $ 23,625 $ (26,698) $ 116,363 Less: proceeds from asset sales and disposals (346) — — (346) Free cash flow $ 119,090 $ 23,625 $ (26,698) $ 116,017 June 30, 2021 Net cash provided by (used in) operating activities of continuing operations $ 57,990 $ 3,853 $ (25,259) $ 36,584 Add: proceeds from asset sales and disposals 175 — — 175 Add: return of long-term contract receivable 1,082 — — 1,082 Distributable cash flow $ 59,247 $ 3,853 $ (25,259) $ 37,841 Less: proceeds from asset sales and disposals (175) — — (175) Less: acquisition costs (1,000) — — (1,000) Free cash flow $ 58,072 $ 3,853 $ (25,259) $ 36,666 $ 128,898 $ 42,943 $ (17,591 ) $ 154,250 106 — — 106 1,208 — — 1,208 — — (10 ) (10 ) $ 130,212 $ 42,943 $ (17,601 ) $ 155,554 (106 ) — — (106 ) $ 130,106 $ 42,943 $ (17,601 ) $ 155,448 $ 118,527 $ 23,625 $ (26,698 ) $ 115,454 346 — — 346 563 — — 563 $ 119,436 $ 23,625 $ (26,698 ) $ 116,363 (346 ) — — (346 ) $ 119,090 $ 23,625 $ (26,698 ) $ 116,017 $78.5$38.8 million, $39.2 million and $79.4$39.4 million, respectively, primarily due to the following:•Mineral Rights Segment◦DCF and FCF increased $60.2 million and $61.0 million, respectively, primarily due to the segment's increase in revenues and other income as discussed above.•Soda Ash Segment◦DCF and FCF increased $19.8 million as a result of higher cash distributions received from Sisecam Wyoming in the first six months of 2022 as compared to the prior year period.period due to increased cash flow within our Soda Ash, Corporate and Financing and Mineral Rights segments. The discussion by segment is as follows:June 30, 2023: 2022,2023, we had total liquidity of $159.4$62.7 million, consisting of $59.4$10.7 million of cash and cash equivalents and $100.0$52.0 million of significant debt service obligations, including approximately $20 millionmillion of principal repayments on Opco’s senior notes, throughout the remainder of 2022. As discussed previously, through the date2023. The following table calculates our leverage ratio as of this report, we have permanently retired $156.9 million in debt, leaving our outstanding balance of 9.125% Notes due 2025 at $143.1 million. We believe our liquidity position provides us with the flexibility to continue paying down debt and manage our business through the current market environment. $ 74,555 $ 63,218 $ 79,275 $ 70,334 $ 287,382 (14,556 ) (15,759 ) (19,254 ) (26,978 ) (76,547 ) 10,339 10,780 10,780 32,350 64,249 5,141 3,638 2,853 3,492 15,124 2,484 3,933 — — 6,417 6,850 5,954 4,083 3,792 20,679 812 3,583 — 69 4,464 $ 85,625 $ 75,347 $ 77,737 $ 83,059 $ 321,768 $ 183,059 $78.9$38.8 million, from $36.6$115.5 million in the six months ended June 30, 2021 to $115.5 million in the six months ended June 30, 2022 primarily related to increased revenues and other income within our Mineral Rights segment and $19.8$154.3 million of a higher cash distributions received from Sisecam Wyoming in the first six months of 2022 as compared to the prior year period.Cash flows used in financing activities increased $152.8 million from $39.7 million used in the six months ended June 30, 20212023, due to an increased cash flow within our Soda Ash, Corporate and Financing and Mineral Rights segments, all discussed above.primarily due to the $118.1$183.9 million cash used to retire a portion of our 2025 Senior Notes in the second quarter of 2022 in addition to $19.6 million cash used to redeem the preferred units paid-in-kind during the first quarter of 2022, $7.3 million of increased cash used for preferred unit distributions as a result of paying all of our preferred unit distributions in cash in 2022 as compared to half in kind during the six months ended June 30, 2021 and $3.9 million of increased2023, primarily due to the following:• • for distributions to common unitholders andwere partially offset by the general partner as a result of increasing our common unit distribution to $0.75/unit in the second quarter of 2022.following:• • 20222023 and December 31, 2021:June 30, December 31, (In thousands) 2022 2021 Current portion of long-term debt, net $ 39,070 $ 39,102 Long-term debt, net 259,296 394,443 Total debt, net $ 298,366 $ 433,545 2022: $ 36,743 $ 39,076 145,693 129,205 $ 182,436 $ 168,281 8.9. Debt, Net to the Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.10.11. Related Party Transactions to the Consolidated Financial Statements is incorporated herein by reference.2021.2022.28Assmaller reporting company, wenegative impact on our future financial results. In particular, substantially lower prices would significantly reduce revenues and could potentially trigger an impairment of our coal properties or a violation of certain financial debt covenants. Because substantially all our reserves are not requiredcoal, changes in coal prices have a more significant impact on our financial results. include this disclosureextend existing contracts or enter into supply contracts with terms of one year or more. Our lessees' failure to negotiate long-term contracts could adversely affect the stability and profitability of our lessees' operations and adversely affect our future financial results. If more coal is sold on the spot market, coal royalty revenues may become more volatile due to fluctuations in spot coal prices. Form 10-Q forborrowings under the quarterly period endedOpco Credit Facility, which is subject to variably interest rates based upon SOFR. At June 30, 2022.342023, we had $103.0 million in borrowings outstanding under the Opco Credit Facility. If interest rates were to increase by 1%, annual interest expense would increase approximately $1.0 million, assuming the same principal amount remained outstanding during the year.ITEM 4. CONTROLS AND PROCEDURESPartnership’sPartnership’s Internal Control Over Financial Reporting20222023 that materially affected, or were reasonably likely to materially affect, the Partnership’s internal control over financial reporting.2021.36ITEM 6. EXHIBITSDescriptionSixth Amendment to the Third Amended and Restated Credit Agreement, dated as of May 11, 2023, by and among NRP (Operating) LLC, the lenders party thereto and Zions Bancorporation, N.A. dba Amegy Bank, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on May 15, 2023). New Lender Agreement, dated as of May 11, 2023, by and among NRP (Operating) LLC, Zions Bancorporation, N.A. dba Amegy Bank, and Gulf Capital Bank (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on May 15, 2023). 31.1* Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley. Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley. Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350. Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350. 20222023/s/ CORBIN J. ROBERTSON, JR.Corbin J. Robertson, Jr. 20222023CHRISTOPHER J. ZOLASChristopher J. Zolas and Treasurer3831