Debt and Debt-Affiliate | 3 Months Ended |
Mar. 31, 2015 |
Debt Disclosure [Abstract] | |
Debt and Debt-Affiliate | |
7 | Debt and Debt—Affiliate | | | | | | | |
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As used in this Note 7, references to “NRP LP” refer to Natural Resource Partners L.P. only, and not to NRP (Operating) LLC, a wholly owned subsidiary of NRP LP, or any of Natural Resource Partners L.P.’s subsidiaries. References to “Opco” refer to NRP (Operating) LLC and its subsidiaries. References to NRP Oil and Gas refer to NRP Oil and Gas LLC, a wholly owned subsidiary of NRP LP. NRP Finance Corporation (“NRP Finance”) is a wholly owned subsidiary of NRP LP and a co-issuer with NRP LP on the 9.125% senior notes described below. |
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As of March 31, 2015 and December 31, 2014, debt and debt—affiliate consisted of the following (in thousands): |
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| | March 31, | | | December 31, | |
2015 | 2014 |
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NRP LP Debt: | | | | | | | | |
$425 million 9.125% senior notes, with semi-annual interest payments in April and October, maturing October 2018, $300 million issued at 99.007% and $125 million issued at 99.5% | | $ | 422,356 | | | $ | 422,167 | |
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Opco Debt: | | | | | | | | |
$300 million floating rate revolving credit facility, due August 2016 | | | 225,000 | | | | 200,000 | |
$200 million floating rate term loan, due January 2016 | | | 75,000 | | | | 75,000 | |
4.91% senior notes, with semi-annual interest payments in June and December, with annual principal payments in June, maturing in June 2018 | | | 18,467 | | | | 18,467 | |
8.38% senior notes, with semi-annual interest payments in March and September, with annual principal payments in March, maturing in March 2019 | | | 85,714 | | | | 107,143 | |
5.05% senior notes, with semi-annual interest payments in January and July, with annual principal payments in July, maturing in July 2020 | | | 46,154 | | | | 46,154 | |
5.31% utility local improvement obligation, with annual principal and interest payments, maturing in March 2021 | | | 1,153 | | | | 1,345 | |
5.55% senior notes, with semi-annual interest payments in June and December, with annual principal payments in June, maturing in June 2023 | | | 24,300 | | | | 24,300 | |
4.73% senior notes, with semi-annual interest payments in June and December, with annual principal payments in December, maturing in December 2023 | | | 67,500 | | | | 67,500 | |
5.82% senior notes, with semi-annual interest payments in March and September, with annual principal payments in March, maturing in March 2024 | | | 135,000 | | | | 150,000 | |
8.92% senior notes, with semi-annual interest payments in March and September, with annual principal payments in March, maturing in March 2024 | | | 40,910 | | | | 45,455 | |
5.03% senior notes, with semi-annual interest payments in June and December, with annual principal payments in December, maturing in December 2026 | | | 161,538 | | | | 161,538 | |
5.18% senior notes, with semi-annual interest payments in June and December, with annual principal payments in December, maturing in December 2026 | | | 46,154 | | | | 46,154 | |
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NRP Oil and Gas Debt: | | | | | | | | |
Reserve-based revolving credit facility due 2019 | | | 110,000 | | | | 110,000 | |
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Total debt and debt – affiliate | | | 1,459,246 | | | | 1,475,223 | |
Less: current portion of long-term debt | | | (155,983 | ) | | | (80,983 | ) |
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Total long-term debt and debt – affiliate | | $ | 1,303,263 | | | $ | 1,394,240 | |
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NRP LP Debt |
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Senior Notes |
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In September 2013, NRP LP, together with NRP Finance as co-issuer, issued $300 million of 9.125% Senior Notes due 2018 at an offering price of 99.007% of par. Net proceeds after expenses from the issuance of the senior notes were approximately $289.0 million. The senior notes call for semi-annual interest payments on April 1 and October 1 of each year, and will mature on October 1, 2018. |
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In October 2014, NRP LP, together with NRP Finance as co-issuer, issued an additional $125 million of its 9.125% Senior Notes due 2018 at an offering price of 99.5% of par. The notes constitute the same series of securities as the existing $300.0 million 9.125% senior notes due 2018 issued in September 2013. Net proceeds of $122.6 million from the additional issuance of the Senior Notes were used to fund a portion of the purchase price of NRP’s acquisition of non-operated working interests in oil and gas assets located in the Williston Basin in North Dakota. The notes call for semi-annual interest payments on April 1 and October 1 of each year and will mature on October 1, 2018. |
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The indenture for the senior notes contains covenants that, among other things, limit the ability of NRP LP and certain of its subsidiaries to incur or guarantee additional indebtedness. Under the indenture, NRP LP and certain of its subsidiaries generally are not permitted to incur additional indebtedness unless, on a consolidated basis, the fixed charge coverage ratio (as defined in the indenture) is at least 2.0 to 1.0 for the four preceding full fiscal quarters. The ability of NRP LP and certain of its subsidiaries to incur additional indebtedness is further limited in the event the amount of indebtedness of NRP LP and certain of its subsidiaries that is senior to NRP LP’s unsecured indebtedness exceeds certain thresholds. |
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Opco Debt |
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All of Opco’s debt is guaranteed by its wholly owned subsidiaries. As of March 31, 2015 and December 31, 2014, Opco was in compliance with the terms of the financial covenants contained in its debt agreements. |
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Senior Notes |
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Opco made principal payments of $41.0 million on its senior notes during each of the three months ended March 31, 2015 and 2014. The Opco senior note purchase agreement contains covenants requiring Opco to: |
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| • | | maintain a ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the note purchase agreement) of no more than 4.0 to 1.0 for the four most recent quarters; | | | | | |
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| • | | not permit debt secured by certain liens and debt of subsidiaries to exceed 10% of consolidated net tangible assets (as defined in the note purchase agreement); and | | | | | |
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| • | | maintain the ratio of consolidated EBITDDA (as defined in the note purchase agreement) to consolidated fixed charges (consisting of consolidated interest expense and consolidated operating lease expense) at not less than 3.5 to 1.0. | | | | | |
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The 8.38% and 8.92% senior notes also provide that in the event that Opco’s leverage ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the note purchase agreement) 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. |
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Revolving Credit Facility |
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The weighted average interest rates for the debt outstanding under Opco’s revolving credit facility for the three months ended March 31, 2015 and 2014 were 1.94% and 1.98%, respectively. Opco incurs a commitment fee on the undrawn portion of the revolving credit facility at rates ranging from 0.18% to 0.40% per annum. The facility includes an accordion feature whereby Opco may request its lenders to increase their aggregate commitment to a maximum of $500 million on the same terms. |
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Opco’s revolving credit facility contains covenants requiring Opco to maintain: |
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| • | | a ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the credit agreement) not to exceed 4.0 to 1.0 and, | | | | | |
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| • | | a ratio of consolidated EBITDDA (as defined in the credit agreement) to consolidated fixed charges (consisting of consolidated interest expense and consolidated lease operating expense) of not less than 3.5 to 1.0 for the four most recent quarters. | | | | | |
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Term Loan Facility |
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During 2013, Opco issued $200 million in term debt. The weighted average interest rates for the debt outstanding under the term loan for the three months ended March 31, 2015 and 2014 were 2.19% and 2.25% respectively. Opco repaid $101.0 million in principal under the term loan during the third quarter of 2013 and an additional $24.0 million during the fourth quarter of 2014. Repayment terms call for the remaining outstanding balance of $75.0 million to be paid on January 23, 2016. |
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Opco’s term loan contains covenants requiring Opco to maintain: |
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| • | | a ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the credit agreement) not to exceed 4.0 to 1.0 and, | | | | | |
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| • | | a ratio of consolidated EBITDDA to consolidated fixed charges (consisting of consolidated interest expense and consolidated lease operating expense) of not less than 3.5 to 1.0 for the four most recent quarters. | | | | | |
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NRP Oil and Gas Debt |
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Revolving Credit Facility |
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In August 2013, NRP Oil and Gas entered into a 5-year, $100 million senior secured, reserve-based revolving credit facility in order to fund capital expenditure requirements related to the development of the oil and gas assets in which it owns non-operated working interests. In connection with the closing of the Sanish Field acquisition in November 2014, the credit facility was amended to increase its size to $500 million with an initial borrowing base of $137 million. The maturity date of the credit facility is November 12, 2019. The credit facility is secured by a first priority lien and security interest in substantially all of the assets of NRP Oil and Gas. NRP Oil and Gas is the sole obligor under its revolving credit facility, and neither the Partnership nor any of its other subsidiaries is a guarantor of such facility. At both March 31, 2015 and December 31, 2014, there was $110.0 million outstanding under the credit facility. The weighted average interest rate for the debt outstanding under the credit facility for each of the three months ended March 31, 2015 and 2014 was 2.43% and 1.91%, respectively. |
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Indebtedness under the NRP Oil and Gas credit facility bears interest, at the option of NRP Oil and Gas, at either: |
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| • | | the higher of (i) the prime rate as announced by the agent bank; (ii) the federal funds rate plus 0.50%; or (iii) LIBOR plus 1%, in each case plus an applicable margin ranging from 0.50% to 1.50%; or | | | | | |
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| • | | a rate equal to LIBOR, plus an applicable margin ranging from 1.50% to 2.50%. | | | | | |
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NRP Oil and Gas incurs a commitment fee on the unused portion of the borrowing base under the credit facility at a rate ranging from 0.375% to 0.50% per annum. |
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The NRP Oil and Gas credit facility contains certain covenants, which, among other things, require the maintenance of: |
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| • | | a total leverage ratio (defined as the ratio of the total debt of NRP Oil and Gas to its EBITDAX) of not more than 3.5 to 1.0; and | | | | | |
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| • | | a minimum current ratio of 1.0 to 1.0. | | | | | |
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As of March 31, 2015 and December 31, 2014, NRP Oil and Gas was in compliance with the terms of the financial covenants contained in its credit facility. |
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The maximum amount available under the credit facility is subject to semi-annual redeterminations of the borrowing base in May and November of each year, based on the value of the proved oil and natural gas reserves of NRP Oil and Gas, in accordance with the lenders’ customary procedures and practices. NRP Oil and Gas and the lenders each have a right to one additional redetermination each year. |