UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

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

COMMISSION FILE NUMBER: 001-31465

NATURAL RESOURCE PARTNERS L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Delaware 35-2164875
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

601 JEFFERSON STREET, SUITE 3600
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)

(713) 751-7507
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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 [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

At November 10, 2003, there were outstanding 11,353,658 Common Units and
11,353,658 Subordinated Units.

TABLE OF CONTENTS

PAGE
----

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
Natural Resource Partners L.P.:
Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002................................... 3
Consolidated Statements of Income For the Three and Nine Months Ended September 30, 2003..................... 4
Consolidated Statements of Cash Flows Nine Months Ended September 30, 2003................................... 5
Notes to Consolidated Financial Statements................................................................... 6
Western Pocahontas Properties Limited Partnership:
Statements of Income For the Three and Nine Months Ended September 30, 2002.................................. 12
Statement of Cash Flows For the Nine Months Ended September 30, 2002......................................... 13
Notes to Financial Statements................................................................................ 14
Great Northern Properties Limited Partnership:
Statements of Income For the Three and Nine Months Ended September 30, 2002................................. 15
Statement of Cash Flows For the Nine Months Ended September 30, 2002 ....................................... 16
Notes to Financial Statements............................................................................... 17
New Gauley Coal Corporation:
Statements of Income For the Three and Nine Months Ended September 30, 2002................................. 18
Statement of Cash Flows For the Nine Months Ended September 30, 2002........................................ 19
Notes to Financial Statements............................................................................... 20
Arch Coal Contributed Properties:
Statements of Revenues and Direct Costs and Expenses - Three and Nine
Months Ended September 30, 2002......................................................................... 21
Notes to Financial Statements............................................................................... 22
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction............................................................................................... 23
Results of Operations:
Natural Resource Partners L.P.............................................................................. 26
Western Pocahontas Properties Limited Partnership.......................................................... 29
Great Northern Properties Limited Partnership.............................................................. 31
New Gauley Coal Corporation................................................................................ 33
Arch Coal Contributed Properties........................................................................... 34
Related Party Transactions................................................................................. 35
Liquidity and Capital Resources............................................................................ 36
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK............................................................................................. 37
ITEM 4. CONTROLS AND PROCEDURES................................................................................. 39
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS....................................................................................... 40
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............................................................... 40
ITEM 3. DEFAULTS UPON SENIOR SECURITIES......................................................................... 40
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS................................................................................................. 40
ITEM 5. OTHER INFORMATION....................................................................................... 40
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................................................................ 41
SIGNATURES...................................................................................................... 42

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NATURAL RESOURCE PARTNERS L. P.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

SEPTEMBER 30, DECEMBER 31,
2003 2002
------------- -------------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents ............................................. $ 21,837 $ 7,753
Accounts receivable ................................................... 10,148 7,593
Accounts receivable - affiliate ....................................... -- 1,450
Other ................................................................. 22 511
------------- -------------
Total current assets ............................................... 32,007 17,307
Property and equipment, at cost ........................................... 557,139 433,430
Less accumulated depletion and amortization ........................... (77,661) (59,243)
------------- -------------
Net property and equipment ............................................ 479,478 374,187
Loan financing costs, net ................................................. 3,179 1,225
------------- -------------
Total assets ..................................................... $ 514,664 $ 392,719
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable ...................................................... $ 93 $ 735
Accounts payable - affiliate .......................................... 312 667
Current portion of long-term debt ..................................... 9,350 --
Accrued incentive plan expenses - current portion ..................... 1,223 --
Property and franchise taxes payable .................................. 2,311 1,731
Accrued interest ...................................................... 2,050 200
------------- -------------
Total current liabilities ....................................... 15,339 3,333
Deferred revenue .......................................................... 13,011 13,252
Accrued incentive plan expenses ........................................... 703 --
Long-term debt ............................................................ 173,650 57,500
Partners' capital:
Common units (11,353,658 units outstanding) ......................... 145,826 148,646
Subordinated units (11,353,658 units outstanding) ................... 160,501 163,322
General partners' interest .......................................... 6,551 6,666
Accumulated other comprehensive loss ................................ (917) --
------------- -------------
Total partners' capital ......................................... 311,961 318,634
------------- -------------
Total liabilities and partners' capital ......................... $ 514,664 $ 392,719
============= =============

The accompanying notes are an integral part of these financial statements.

NATURAL RESOURCE PARTNERS L. P.

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER UNIT DATA)
(UNAUDITED)

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2003
------------- -------------

Revenues:
Coal royalties ........................................................ $ 20,796 $ 55,393
Property taxes ........................................................ 1,330 3,519
Minimums recognized as revenue ........................................ 347 1,606
Override royalties .................................................... 152 813
Other ................................................................. 914 2,117
------------- -------------
Total revenues .................................................... 23,539 63,448
Operating costs and expenses:
Depletion and amortization ............................................ 6,848 19,021
General and administrative ............................................ 2,197 6,504
Taxes other than income ............................................... 1,676 4,257
Override payments ..................................................... -- 386
Coal royalty payments ................................................. 263 576
------------- -------------
Total operating costs and expenses ................................ 10,984 30,744
------------- -------------
Income from operations 12,555 32,704
Other income (expense)
Interest expense ...................................................... (2,499) (4,096)
Interest income ....................................................... 56 159
Loss from interest rate hedge ......................................... -- (499)
------------- -------------
Net income ................................................................ $ 10,112 $ 28,268
============= =============

General partners' net income .......................................... $ 202 $ 565
============= =============
Limited partners' net income .......................................... $ 9,910 $ 27,703
============= =============
Basic and diluted net income per limited partner unit:
Common ................................................................ $ .44 $ 1.22
============= =============
Subordinated .......................................................... $ .44 $ 1.22
============= =============
Weighted average number of units outstanding:
Common ................................................................ 11,354 11,354
============= =============
Subordinated .......................................................... 11,354 11,354
============= =============

The accompanying notes are an integral part of these financial statements.

NATURAL RESOURCE PARTNERS L. P.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

NINE MONTHS
ENDED
SEPTEMBER 30,
2003
-------------

Cash flows from operating activities:
Net income .............................................................. $ 28,268
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion and amortization ........................................... 19,021
Non-cash interest charge ............................................. 14
Change in operating assets and liabilities:
Accounts receivable .................................................. (1,105)
Other assets ......................................................... (2,068)
Accounts payable and accrued liabilities ............................. 3,236
Deferred revenue ..................................................... (241)
Accrued incentive plan expenses ...................................... 703
Property and franchise taxes payable ................................. (580)
-------------
Net cash provided by operating activities ....................... 47,248
-------------
Cash flows from investing activities:
Acquisition of property ................................................. (123,709)
-------------
Net cash used in investing activities ........................... (123,709)
-------------
Cash flows from financing activities:
Proceeds from loans ..................................................... 298,100
Repayment of loans ...................................................... (172,600)
Distributions to partners ............................................... (34,024)
Settlement of hedge included in other comprehensive loss ................ (931)
-------------
Net cash provided by financing activities ....................... 90,545
-------------
Net increase in cash ...................................................... 14,084
Cash at beginning of period ............................................... 7,753
-------------
Cash at end of period ..................................................... $ 21,837
=============
Supplemental cash flow information:
Cash paid during the period for interest ................................ $ 1,753
=============

The accompanying notes are an integral part of these financial statements.

NATURAL RESOURCE PARTNERS L. P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND ORGANIZATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 2003 are not necessarily indicative of the results that may be
expected for future periods.

The balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date but does not include all the footnotes
required by generally accepted accounting principles for complete financial
statements.

For further information, refer to the consolidated financial statements
and footnotes for the period from commencement of operations (October 17, 2002)
through December 31, 2002 included in the Natural Resource Partners L.P. Form
10-K, as filed on March 28, 2003.

Natural Resource Partners L.P. (the "Partnership"), a Delaware limited
partnership, was formed in April 2002 to own and manage certain coal royalty
producing properties contributed to the Partnership by Western Pocahontas
Properties Limited Partnership, ("WPP"), Great Northern Properties Limited
Partnership, ("GNP"), New Gauley Coal Corporation, ("NGCC") and Arch Coal, Inc.
(collectively "predecessors" or "predecessor companies"). The predecessor
companies contributed assets to the Partnership on October 17, 2002. There were
no operations in the Partnership prior to the contribution of the assets from
the predecessor companies.

The chief executive officer of the Partnership's managing general
partner controls the general partners of WPP and GNP and is the controlling
shareholder of NGCC. He also controls the general partner of the Partnership. In
accordance with EITF 87-21 , "Change of Accounting Basis in Master Limited
Partnership Transactions," the assets of WPP, GNP and NGCC were contributed to
the Partnership at historical costs. The assets contributed by Arch Coal, Inc.,
which consisted solely of land and coal reserves, were recorded at their fair
values.

The Partnership engages principally in the business of owning and
managing coal properties in the three major coal-producing regions of the United
States: Appalachia, the Illinois Basin and the Western United States. The
Partnership does not operate any mines. The Partnership leases coal reserves
through its wholly owned subsidiary, NRP (Operating) LLC, ("NRP Operating"), to
experienced mine operators under long-term leases that grant the operators the
right to mine the Partnership's coal reserves in exchange for royalty payments.
The Partnership's lessees are generally required to make payments to the
Partnership based on the higher of a percentage of the gross sales price or a
fixed price per ton of coal sold, in addition to a minimum payment.

The general partner of the Partnership is NRP (GP) LP, a Delaware
limited partnership, whose general partner is GP Natural Resource Partners LLC,
a Delaware limited liability company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NEW ACCOUNTING STANDARDS

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred, with the associated asset retirement cost being
capitalized as a part of the carrying amount of the long-lived asset. SFAS No.
143 also includes disclosure requirements that provide a description of asset
retirement obligations and a reconciliation of changes in the components of
those obligations. The operators of mines on our leased property are responsible
for asset retirement obligations. Therefore, the adoption of SFAS No. 143 on
January 1, 2003 did not have a material impact on the Partnership's financial
position or results of operations.

SFAS No. 4. The provisions of this Statement related to the rescission of SFAS
No. 4 shall be applied in fiscal years beginning after May 15, 2002. Adoption of
SFAS No. 145 on January 1, 2003 did not have a material impact on the
Partnership's financial position or results of operations.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which supersedes EITF No. 94-3,
"Liability Recognition for Certain Employment Termination Benefits and Other
Costs to Exit an Activity." SFAS No. 146 requires companies to record
liabilities for costs associated with exit or disposal activities to be
recognized only when the liability is incurred instead of at the date of
commitment to an exit or disposal activity. Adoption of this standard is
effective for exit or disposal activities that are initiated after December 31,
2002. The adoption of this standard did not have a significant impact on the
Partnership's financial statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends SFAS
No. 133 as a result of:

- Decisions previously made as part of the Derivatives
Implementation Group (DIG) process,

- Changes made in connection with other Board projects dealing
with financial instruments, and

- Deliberations in connection with issues raised in relation to
the application of the definition of a derivative.

SFAS No. 149 is effective for contracts entered into or modified after
June 30, 2003, and for hedging relationships designated after June 30, 2003.
However, the provisions of SFAS No. 149 that merely represent the codification
of previous Derivatives Implementation Group decisions are already effective and
should continue to be applied in accordance with their prior respective
effective dates. Management does not expect SFAS No. 149 to have a material
adverse impact on the Partnership's results of operations, financial position or
liquidity.

SFAS No. 150, "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity" was issued in May 2003. SFAS No.
150 requires certain financial instruments that embody obligations of the issuer
and have characteristics of both liabilities and equity to be classified as
liabilities. Many of these instruments previously were classified as equity or
temporary equity and as such, SFAS No. 150 represents a significant change in
practice in the accounting for a number of financial instruments, including
mandatorily redeemable equity instruments and certain equity derivatives that
frequently are used in connection with share repurchase programs.

SFAS No. 150 is effective for public companies for all financial
instruments created or modified after May 31, 2003, and to other instruments at
the beginning of the first interim period beginning after June 15, 2003 (July 1,
2003 for calendar quarter companies). The adoption of SFAS No. 150 did not have
a material impact on the Partnership's results of operations, financial position
or liquidity.

On January 17, 2003, FASB issued Interpretation No. 46 "Consolidation
of Variable Interest Entities"("FIN No. 46"), which addresses consolidation by
business enterprises of variable interest entities. FIN No. 46 clarifies the
application of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements", to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN No. 46 applies
immediately to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that
date. It applies in the first fiscal year or interim period beginning after
December 15, 2003, to variable interest entities in which an enterprise holds a
variable interest that it acquired before February 1, 2003. Management does not
expect FIN No. 46 to have a material adverse impact on the Partnership's results
of operations, financial position or liquidity.

3. ACQUISITIONS

In July 2003, the Partnership completed its acquisition of
approximately 78 million tons of proven coal reserves and an overriding royalty
interest on additional coal from subsidiaries of PinnOak Resources, LLC for $58
million. The $58 million purchase price had been placed into an escrow account
on June 30, 2003 in connection with the execution of the purchase and sale
agreement. The transaction was initially funded through the Partnership's
existing credit facility. On September 19, 2003, $50 million of the borrowings
was converted to long-term debt in connection with the Partnership's commitment
to issue additional senior notes under the Note Purchase Agreement dated June
19, 2003.

4. PROPERTY AND EQUIPMENT

Property and equipment includes:

SEPTEMBER 30, DECEMBER 31,
2003 2002
------------- -------------
(UNAUDITED)
(IN THOUSANDS)

Land ...................................................................... $ 13,532 $ 13,532
Coal properties ........................................................... 535,143 411,434
Other ..................................................................... 8,464 8,464
------------- -------------
$ 557,139 $ 433,430
============= =============

5. REVOLVING CREDIT FACILITY

In connection with the Partnership's initial public offering, its
wholly owned operating subsidiary, NRP Operating, entered into a three-year,
$100 million revolving credit facility. On April 4, 2003, NRP Operating
increased the borrowing capacity under the credit facility to $175 million. The
amended credit facility includes increased commitments from the original bank
syndicate, led by PNC Bank, as well as commitments from three new banks. The
revolving credit facility includes a $12.0 million distribution loan sub-limit
that can be used for funding quarterly distributions. The remainder of the
revolving credit facility is available for general limited partnership and
limited liability company purposes, including future acquisitions, but may not
be used to fund quarterly distributions.

On June 19, 2003, simultaneous with NRP Operating's issuance of senior
notes, NRP Operating adopted a second amendment to its credit facility. This
amendment permitted NRP Operating to issue senior unsecured notes through a
private placement in an amount up to $175 million, with a portion of the
proceeds to be used to reduce the outstanding balance on the revolving credit
facility. This amendment also increased the leverage ratio from 2.75 to 1.00 to
3.50 to 1.00. At September 30, 2003, NRP Operating had $8.0 million outstanding
under this credit facility.

6. LONG TERM SENIOR NOTES

On June 19, 2003, NRP Operating issued $125 million of senior unsecured
notes and on September 19, 2003 issued an additional $50 million of senior notes
at the same interest rates. The senior notes include:

- $60 million of 5.55% senior notes due 2023, with a 10-year
average life;

- $80 million of 4.91% senior notes due 2018, with a 7.5-year
average life; and

- $35 million of 5.55% senior notes due 2013

Proceeds from the private placement were used to repay borrowings under
NRP Operating's existing revolving credit facility and for expenses associated
with the transaction. In anticipation of the private placement on May 12, 2003,
NRP Operating entered into a treasury rate hedge with respect to $50 million of
the senior notes. In conjunction with the closing of the private placement, NRP
Operating paid $1.4 million to settle this treasury rate hedge. Of the $1.4
million paid for the settlement, approximately $0.9 million will be amortized
into expense over 20 years, and the balance of approximately $0.5 million has
been expensed currently and classified as other income (expense) in the income
statement.

7. RELATED PARTY TRANSACTIONS

Quintana Minerals Corporation, a company controlled by Corbin J.
Robertson, Jr., Chairman and CEO of the Partnership's general partner, provided
certain administrative services to the Partnership and charged it for direct
costs related to the administrative services. The total expenses charged to the
Partnership under this arrangement were approximately $0.2 million and
approximately $0.5 million for the three and nine months ended September 30,
2003. These costs are reflected in the general and administrative expenses in
the accompanying statements of income.

Western Pocahontas Properties Limited Partnership provides certain
administrative services for the Partnership and allocated a portion of its
overhead for the period ending September 30, 2003 to the Partnership. The total
expenses charged to the Partnership under this arrangement were approximately
$0.5 million and approximately $1.5 million for the three and nine months ended
September 30, 2003. These costs are reflected in the general and administrative
expenses in the accompanying statements of income.

At September 30, 2003, the Partnership had accounts payable to
affiliates of approximately $0.3 million, which includes overhead reimbursements
to Quintana Minerals Corporation and Western Pocahontas Properties of
approximately $0.1 million and $0.2 million, respectively.

8. COMMITMENTS AND CONTINGENCIES

LEGAL

The Partnership 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 claims will not have a material effect on the
Partnership's financial position, liquidity or operations.

Environmental Compliance

The operations conducted on the Partnership's properties by its lessees
are subject to environmental laws and regulations adopted by various
governmental authorities in the jurisdictions in which these operations are
conducted. As an owner of surface interests in some properties, the Partnership
may be liable for certain environmental conditions occurring at the surface
properties. The terms of substantially all of the Partnership's coal leases
require the lessee to comply with all applicable laws and regulations, including
environmental laws and regulations. Lessees post reclamation bonds assuring that
reclamation will be completed as required by the relevant permit, and
substantially all of the leases require the lessee to indemnify the Partnership
against, among other things, environmental liabilities. Some of these
indemnifications survive the termination of the lease. Because the Partnership
has no employees, Western Pocahontas employees make regular visits to the mines
to ensure compliance with lease terms, but the duty to comply with all
regulations rests with the lessees. Management believes that the Partnership's
lessees will be able to comply with existing regulations and does not expect any
lessee's failure to comply with environmental laws and regulations to have a
material impact on its financial condition or results of operations. The
Partnership has neither incurred, nor is aware of, any material environmental
charges imposed on it related to its properties for the period ended September
30, 2003. The Partnership is not associated with any environmental contamination
that may require remediation costs. However, lessees do conduct reclamation work
on the properties under lease to them. Because the Partnership is not the
permittee of the mines being reclaimed, it is not responsible for the costs
associated with these reclamation operations. In addition, West Virginia has
established a fund to satisfy any shortfall in our lessees' reclamation
obligations. The Partnership is also indemnified by WPP, GNP, NGCC and Arch
Coal, Inc., jointly and severally, until October 17, 2005 against environmental
and tax liabilities attributable to the ownership and operation of the assets
contributed to the Partnership prior to the closing of the initial public
offering. The environmental indemnity is limited to a maximum of $10.0 million.

9. MAJOR LESSEES

The Partnership depends on a few lessees for a significant portion of
its revenues. Revenues from major lessees that exceed ten percent of total
revenues are as follows:

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2003 SEPTEMBER 30, 2003
REVENUES PERCENT REVENUES PERCENT
-------- ------- -------- -------
(IN THOUSANDS) (IN THOUSANDS)
(UNAUDITED) (UNAUDITED)

Lessee A .................................................................. $ 3,757 16% $ 10,570 17%
Lessee B .................................................................. $ 2,142 9% $ 7,583 12%
Lessee C .................................................................. $ 2,333 10% $ 6,623 10%
Lessee D .................................................................. $ 2,288 10% $ 6,536 10%

10. INCENTIVE PLANS

Prior to the Partnership's initial public offering, GP Natural Resource
Partners LLC adopted the Natural Resource Partners Long-Term Incentive Plan (the
"Long-Term Incentive Plan") for employees and directors of GP Natural Resource
Partners LLC and its affiliates who perform services for the Partnership. The
compensation committee of GP Natural Resource Partners LLC's board of directors
administers the Long-Term Incentive Plan. Subject to the rules of the exchange
upon which the common units are listed at the time, the board of directors and
the compensation committee of the board of directors have the right to alter or
amend the Long-Term Incentive Plan or any part of the Long-Term Incentive Plan
from time to time. Except upon the occurrence of unusual or nonrecurring events,
no change in any outstanding grant may be made that would materially reduce the
benefit intended to be made available to a participant without the consent of
the participant.

On August 19, 2003, the compensation committee amended the Long-Term
Incentive Plan to provide only for the issuance of phantom units that are
payable solely in cash. In connection with the amendment to the Long-Term
Incentive Plan, the compensation committee terminated all of the existing option
grants and issued to all of the holders of terminated options a number of
phantom units equivalent in value to the terminated options.

A phantom unit entitles the grantee to receive the fair market value in
cash of a common unit upon the vesting of the phantom unit. The compensation
committee may make grants under the Long-Term Incentive Plan to employees and
directors containing such terms as the compensation committee determines. The
compensation committee will determine the period over which the phantom units
granted to employees and directors will vest. In addition, the phantom units
will vest upon a change in control of the Partnership, the general partner, or
GP Natural Resource Partners LLC. If a grantee's employment or membership on the
board of directors terminates for any reason, the grantee's phantom units will
be automatically forfeited unless and to the extent the compensation committee
provides otherwise.

GP Natural Resource Partners LLC adopted the Natural Resource Partners
Annual Incentive Compensation Plan (the "Annual Incentive Plan") in October
2002. The Annual Incentive Plan is designed to enhance the performance of GP
Natural Resource Partners LLC's and its affiliates' key employees by rewarding
them with cash awards for achieving annual financial and operational performance
objectives. The compensation committee in its discretion may determine
individual participants and payments, if any, for each year. The board of
directors of GP Natural Resource Partners LLC may amend or change the Annual
Incentive Plan at any time. The Partnership reimburses GP Natural Resource
Partners LLC for payments and costs incurred under the Annual Incentive Plan.

At September 30, 2003, 155,303 phantom units have been granted under
the Long-Term Incentive Plan. The Partnership accrued expenses to be reimbursed
to GP Natural Resource Partners LLC of $1.5 million for the nine months ended
September 30, 2003 related to these plans.

11. SUBSEQUENT EVENTS

The Pinnacle mine in West Virginia, on the Partnership's reserves under
lease to Pinnacle Mining Company, LLC, has been idled since early September.
According to Pinnacle's management, the closure of the mine is due to a
ventilation disruption most likely caused by a lightning strike to a borehole in
a mined out area of the mine. After having established an inert atmosphere in
the mine,

Pinnacle has now begun to ventilate the mine to determine the current status of
the disruption. Pinnacle's management continues to work with the appropriate
state and federal agencies, as well as the employees' union, to reopen the mine.
However, it is uncertain when the mine can be brought back into production. The
idling of the mine had a minimal impact on the Partnership's third quarter
results because Pinnacle continued to ship coal from its inventory for several
weeks after the mine shut down. Prior to the disruption, the Partnership's
estimated fourth quarter 2003 royalty from the mine was approximately $1.6
million.

On October 23, 2003, the Partnership declared a quarterly distribution of
$0.5375 per unit payable on November 14, 2003 to unitholders of record on
November 3, 2003. This distribution represents an increase of $0.015 over the
previous quarterly distribution and equates to an annualized distribution of
$2.15 per unit.

WESTERN POCAHONTAS PROPERTIES LIMITED PARTNERSHIP

STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2002
------------- -------------

Revenues:
Coal royalties ....................................................... $ 5,907 $ 16,220
Timber royalties ..................................................... 1,002 2,620
Gain on sale of property ............................................. 7 92
Property taxes ....................................................... 548 1,186
Other ................................................................ 383 1,128
------------- -------------
Total revenues .................................................. 7,847 21,246
Expenses:
General and administrative ........................................... 644 2,193
Taxes other than income .............................................. 610 1,392
Depreciation, depletion and amortization ............................. 1,324 3,337
------------- -------------
Total expenses .................................................. 2,578 6,922
------------- -------------
Income from operations .................................................... 5,269 14,324
Other income (expenses):
Interest expense ..................................................... (1,591) (4,520)
Interest income ...................................................... 33 106
Reversionary interest ................................................ -- (561)
------------- -------------
Net income ................................................................ $ 3,711 $ 9,349
============= =============

The accompanying notes are an integral part of these financial statements.

WESTERN POCAHONTAS PROPERTIES LIMITED PARTNERSHIP

STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

NINE MONTHS
ENDED
SEPTEMBER 30,
2002
-------------

Cash flows from operating activities:
Net income .............................................................. $ 9,349
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, depletion and amortization .............................. 3,337
Gain on sale of property .............................................. (92)
Change in operating assets and liabilities
Accounts receivable ................................................ (2,559)
Other assets ....................................................... (67)
Accrued liabilities ................................................ (106)
Deferred revenues .................................................. 756
Reversionary interest payable ...................................... (865)
-------------
Net cash provided by operating activities ........................ 9,753
Cash flows from investing activities:
Proceeds from sale of properties ........................................ 92
Capital expenditures .................................................... (35,120)
-------------
Net cash used in investing activities ............................ (35,028)
Cash flows from financing activities:
Proceeds from financing ................................................. 45,000
Deferred financing costs ................................................ (1,287)
Repayment of notes payable .............................................. (7,848)
Repayment of debt ....................................................... (2,204)
Distributions to partners ............................................... (6,800)
Cash placed in restricted accounts, net ................................. (45)
Cash placed in escrow ................................................... 1,000
-------------
Net cash provided by financing activities ........................ 27,816
-------------
Net increase in cash and cash equivalents ................................. 2,541
Cash and cash equivalents at beginning of period .......................... 4,415
-------------
Cash and cash equivalents at end of period ................................ $ 6,956
=============
Supplemental cash flow information:
Cash paid during the period for interest ................................ $ 4,520
=============

The accompanying notes are an integral part of these financial statements.

WESTERN POCAHONTAS PROPERTIES LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND ORGANIZATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 2002 are not necessarily indicative of the results that may be
expected for future periods.

For further information, refer to the financial statements and
footnotes of Western Pocahontas Properties Limited Partnership for the period
through October 16, 2002 included in the Natural Resource Partners L.P. Form
10-K, as filed on March 28, 2003.

Western Pocahontas Properties Limited Partnership (the "Partnership"),
a Delaware limited partnership, was formed in 1986 to own and manage land and
mineral rights and timber located in West Virginia, Kentucky, Alabama, Maryland
and Indiana. Western Pocahontas Corporation ("WPC"), a Texas corporation, serves
as the general partner. All items of income and loss of the Partnership are
allocated 1% to the general partner and 99% to the limited partners.

The Partnership enters into leases with various third-party operators
for the right to mine coal reserves and harvest timber on the Partnership's land
in exchange for royalty payments. Generally, the coal lessees make payments to
the Partnership based on the greater of a percentage of the gross sales price or
a fixed price per ton of coal they sell, subject to minimum annual or quarterly
payments. The timber lessees make payments to the Partnership based on
pre-determined rates per board foot harvested.

In connection with the formation of Natural Resource Partners L.P. and
its initial public offering of limited partnership units, the Partnership
transferred certain coal royalty producing properties that were currently under
lease to coal mine operators to Natural Resource Partners L.P. on October 17,
2002, at historical cost. The Partnership also transferred a portion of its
deferred revenue and long-term debt to Natural Resource Partners L.P. and
retained a coal reserve property that is leased to a third party and is
experiencing permitting problems. Additionally, the Partnership retained
unleased coal reserve properties, surface land and timberlands.

2. RELATED PARTY TRANSACTIONS

A company controlled by the owner of WPC provides certain
administrative services to the Partnership and charges the Partnership for the
direct costs related to the administrative services. The total expenses charged
to the Partnership under this arrangement were approximately $99,000 and
$290,000 for the three and nine month periods ended September 30, 2002,
respectively. These costs are reflected in the general and administrative
expenses in the accompanying statements of income.

The Partnership has a management contract to provide certain
management, engineering and accounting services to Great Northern Properties
Limited Partnership ("GNP"), a limited partnership which has certain common
ownership with the Partnership. The contract provides for a $250,000 annual fee,
which is intended to reimburse the Partnership for its expense. The fees for the
three and nine month periods ended September 30, 2002, were $62,500 and
$187,500, respectively, and are included in other revenue in the accompanying
statement of income. The contract may be canceled upon 90 days advance notice by
GNP.

GREAT NORTHERN PROPERTIES LIMITED PARTNERSHIP

STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2002
------------- -------------

Revenues:
Coal royalties ....................................................... $ 1,928 $ 5,370
Lease and easement income ............................................ 86 468
Other ................................................................ 36 112
------------- -------------
Total revenues .................................................. 2,050 5,950
Expenses:
General and administrative ........................................... 145 418
Taxes other than income .............................................. 24 68
Depletion and amortization ........................................... 662 1,865
------------- -------------
Total expenses .................................................. 831 2,351
------------- -------------
Income from operations .................................................... 1,219 3,599
Other income (expenses):
Interest expense ..................................................... (591) (1,732)
Interest income ...................................................... 37 102
------------- -------------
Net income ................................................................ $ 665 $ 1,969
============= =============

The accompanying notes are an integral part of these financial statements.

GREAT NORTHERN PROPERTIES LIMITED PARTNERSHIP

STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

NINE MONTHS
ENDED
SEPTEMBER 30,
2002
-------------

Cash flows from operating activities:
Net income .............................................................. $ 1,969
Adjustments to reconcile net income to net cash provided by
operating activities:
Depletion and amortization ........................................... 1,865
Deferred revenue ..................................................... 33
Change in operating assets and liabilities
Accounts receivable ................................................ (90)
Other assets ....................................................... (8)
Accounts payable and accrued interest .............................. (45)
-------------
Net cash provided by operating activities ....................... 3,724
-------------
Cash flows from investing activities:
Net cash provided by investing activities ....................... --
-------------
Cash flows from financing activities:
Repayment of debt ....................................................... (1,125)
Partners' distributions ................................................. (661)
Cash placed in restricted accounts, net ................................. (2,269)
-------------
Net cash used in financing activities ........................... (4,055)
-------------
Net increase in cash and cash equivalents ................................. (331)
Cash and cash equivalents at beginning of period .......................... 749
-------------
Cash and cash equivalents at end of period ................................ $ 418
=============
Supplemental cash flow information:
Cash paid during the period for interest ................................ $ 1,729
=============

The accompanying notes are an integral part of these financial statements.

GREAT NORTHERN PROPERTIES LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND ORGANIZATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 2002 are not necessarily indicative of the results that may be
expected for future periods.

For further information, refer to the financial statements and
footnotes of Great Northern Properties Limited Partnership for the period
through October 16, 2002 included in the Natural Resource Partners L.P. Form
10-K, as filed on March 28, 2003.

Great Northern Properties Limited Partnership (the "Partnership"), a
Delaware limited partnership, was formed in 1992 to own and manage land and
mineral rights located in Montana, North Dakota, Wyoming, Illinois and
Washington. GNP Management Corporation ("GNP"), a Delaware corporation, serves
as its general partner. All items of income and loss of the Partnership are
allocated 1% to the general partner and 99% to the limited partners. In 1999, a
limited partner's interest in the Partnership was redeemed by the partners for
$1,000.

The Partnership enters into leases with various coal mine operators for
the right to mine coal reserves on the Partnership's land in exchange for
royalty payments. Generally, the lessees make payments to the Partnership based
on the greater of a percentage of the gross sales price or a fixed price per ton
of coal they sell, subject to minimum annual or quarterly payments.

2. RELATED PARTY TRANSACTIONS

The Partnership has a management contract to receive management,
engineering and accounting services from Western Pocahontas Properties Limited
Partnership ("WPP"), a limited partnership which has some common ownership with
the Partnership. The contract provides for a $250,000 fee to be paid annually,
of which $62,500 and $187,500 are reflected in general and administrative
expenses in the statements of income for the three and six month periods ended
September 30, 2002, respectively. The contract may be canceled upon 90 days
advance notice to the Partnership.

NEW GAULEY COAL CORPORATION

STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2002
------------- -------------

Revenues:
Coal royalties ....................................................... $ 398 $ 1,336
Other ................................................................ 20 72
------------- -------------
Total revenues .................................................. 418 1,408
Expenses:
General and administrative ........................................... (5) 54
Taxes other than income .............................................. 27 38
Depletion and amortization ........................................... 48 127
------------- -------------
Total expenses .................................................. 70 219
------------- -------------
Income from operations .................................................... 348 1,189
Other income (expenses):
Interest expense ..................................................... (31) (95)
Interest income ...................................................... 7 22
Reversionary interest ................................................ (69) (103)
------------- -------------
Net income ................................................................ $ 255 $ 1,013
============= =============

The accompanying notes are an integral part of these financial statements.

NEW GAULEY COAL CORPORATION

STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

NINE MONTHS
ENDED
SEPTEMBER 30,
2002
-------------

Cash flows from operating activities:
Net income .............................................................. $ 1,013
Adjustments to reconcile net income to net cash
provided by operating activities:
Depletion and amortization ........................................... 127
Decrease in deferred revenues ........................................ (251)
Change in operating assets and liabilities
Accounts receivable ................................................ (23)
Other assets ....................................................... (6)
Accrued liabilities ................................................ (19)
-------------
Net cash provided by operating
activities .................................................... 841
-------------
Cash flows from investing activities:
Net cash used in investing activities ........................... --
-------------
Cash flows from financing activities:
Repayment of debt ....................................................... (74)
Dividends ............................................................... (400)
-------------
Net cash used in financing activities ........................... (474)
-------------
Net increase in cash and cash equivalents ................................. 367
Cash and cash equivalents at beginning of period .......................... 399
-------------
Cash and cash equivalents at end of period ................................ $ 766
=============
Supplemental cash flow information:
Cash paid during the period for interest ................................ $ 95
=============

The accompanying notes are an integral part of these financial statements.

NEW GAULEY COAL CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND ORGANIZATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 2002 are not necessarily indicative of the results that may be
expected for future periods.

For further information, refer to the financial statements and
footnotes of New Gauley Coal Corporation for the period through October 16, 2002
included in the Natural Resource Partners L.P. Form 10-K, as filed on March 28,
2003.

New Gauley Coal Corporation (the "Company"), a West Virginia subchapter
S corporation, was incorporated in 1918 to own and manage land and mineral
rights. The Company owns property in Alabama and West Virginia.

The Company enters into leases with various coal mine operators for the
right to mine coal reserves on the Company's land in exchange for royalty
payments. Generally, the lessees make payments to the Company based on the
greater of a percentage of the gross sales price or a fixed price per ton of
coal they sell, subject to minimum annual or quarterly payments.

In connection with the formation of Natural Resource Partners L.P. and
its initial public offering of limited partnership units, the Company
transferred certain coal royalty producing properties that were currently under
lease to coal mine operators to Natural Resource Partners L.P. on October 17,
2002, at historical cost. The Company transferred a portion of its deferred
revenue and long-term debt to Natural Resource Partners L.P. and retained
unleased coal reserve properties and surface land.

ARCH COAL CONTRIBUTED PROPERTIES

STATEMENTS OF REVENUES AND DIRECT COSTS AND EXPENSES
(IN THOUSANDS)
(UNAUDITED)

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2002
------------- -------------

Revenues
Coal royalties................................. $ 4,971 $ 13,851
Other royalties................................ 369 1,294
Property taxes................................. 268 806
--------- -----------
Total revenues............................ 5,608 15,951
--------- -----------
Direct Costs and Expenses
Depletion...................................... 1,634 4,603
Property taxes................................. 268 806
Other expense.................................. 101 512
--------- -----------
Total expenses............................ 2,003 5,921
--------- -----------
Excess of revenue over direct costs and expenses.... $ 3,605 $ 10,030
========= ===========

The accompanying notes are an integral part of these financial statements.

ARCH COAL CONTRIBUTED PROPERTIES

NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Ark Land Company ("Ark Land") is a wholly owned subsidiary of Arch
Coal, Inc. ("Arch Coal"). Ark Land owns and manages land and mineral rights
primarily located in the Western, Central Appalachian and the Illinois Basins.
In conjunction with the formation of Natural Resource Partners L.P. ("NRP"), Ark
Land contributed a number of owned land and coal interests on which coal leasing
activity occurs ("Contributed Properties") to NRP. Ark Land retained owned land
and mineral reserves with no leasing activity as well as other land and mineral
reserves controlled through leasing arrangements.

The Contributed Properties was not a legal entity and, except for
revenues earned from the properties and certain direct costs and expenses of the
properties and assets acquired and liabilities assumed, no separate financial
information was maintained. The Contributed Properties did not maintain
stand-alone corporate treasury, legal, tax, human resources, general
administration and other similar corporate support functions. Corporate general
and administrative expenses have not been allocated to the Contributed
Properties, nor were they allocated in connection with the preparation of the
accompanying statement because there was not sufficient information to develop a
reasonable cost allocation.

The accompanying Statement of Revenues and Direct Costs and Expenses is
not intended to be a complete presentation of the results of operations of the
Contributed Properties. The accompanying statement has been prepared to comply
with the requirements of the Securities and Exchange Commission for inclusion in
the quarterly report on Form 10-Q of NRP. For further information, refer to the
financial statements and footnotes of Arch Coal Contributed Properties for the
period through October 16, 2002 included in Natural Resource Partners L.P. Form
10-K, as filed on March 28, 2003.

In connection with the formation of Natural Resource Partners L.P. and
the consummation of its initial public offering of limited partnership units,
Arch Coal transferred certain coal royalty producing properties that were
currently under lease to coal mine operators to Natural Resource Partners L.P.
on October 17, 2002 at fair market value.

2. RELATED PARTY TRANSACTIONS

Certain of the Contributed Properties were leased to affiliates of Arch
Coal that mine on the properties. Contracted royalty rates from these affiliates
("affiliate royalties") for the three and nine months ended September 30, 2002
were 6.5% of the gross sales price of coal sold from the property using
underground mining methods and 7.5% of the gross sales price of coal sold from
the property using surface mining methods, which are similar to those that are
received from third parties. Affiliate royalties amounted to $2.5 and $7.3
million for the three and nine months ended September 30, 2002.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion of the financial condition and results of
operations should be read in conjunction with the historical financial
statements and notes thereto included elsewhere in this filing and the financial
statements and footnotes included in the Natural Resource Partners L.P. Form
10-K, as filed on March 28, 2003. For more detailed information regarding the
basis of presentation for the following financial information, see the notes to
the historical financial statements.

After the Introduction, there is a separate section for each of Natural
Resource Partners L.P., Western Pocahontas Properties Limited Partnership, Great
Northern Properties Limited Partnership, New Gauley Coal Corporation
(collectively, the "WPP Group") and the Arch Coal Contributed Properties. The
Arch Coal Contributed Properties include the properties contributed to us by Ark
Land Company, a subsidiary of Arch Coal, Inc.

INTRODUCTION

Natural Resource Partners L.P. is a master limited partnership formed
by the WPP Group and Arch Coal, Inc. We engage principally in the business of
owning and managing coal properties in the three major coal-producing regions of
the United States: Appalachia, the Illinois basin and the Western United States.
We completed our initial public offering in October 2002.

We lease coal reserves to experienced mine operators under long-term
leases that grant the operators the right to mine our coal reserves in exchange
for royalty payments. As of September 30, 2003, our reserves were located on 49
separate properties and were subject to 107 leases with 46 lessees. For the nine
months ended September 30, 2003, approximately 62% of the coal produced from our
properties came from underground mines and 38% came from surface mines. As of
September 30, 2003, approximately 64% of our reserves were low sulfur coal.
Included in our low sulfur reserves is compliance coal, which meets the
standards imposed by the Clean Air Act and constitutes at least 20% of our
reserves. Coal produced from our properties is burned in electric power plants
located east of the Mississippi River and in Montana and Minnesota. In the nine
months ended September 30, 2003, our lessees produced 33.4 million tons of coal
from our properties and our coal royalty revenues totaled $55.4 million. We also
recognized $1.6 million in minimum royalties from our lessees.

Our revenue and profitability are almost entirely dependent on our
lessees' ability to mine and market our coal reserves. Coal royalties are paid
to us on the basis of a percentage of the sales price of the coal, subject to a
minimum royalty per ton. In addition, our leases specify minimum monthly,
quarterly or annual royalties. These minimum royalties are generally recoupable
over a specified period of time (usually three to five years) if sufficient
royalties are generated from coal production in future periods. We do not
recognize these minimum coal royalties as revenue until the applicable
recoupment period has expired or they are recouped through production. Until
recognized as revenue, these minimum royalties are carried as deferred revenue,
a liability on the balance sheet.

The majority of our coal is produced by nine publicly held companies
with professional and sophisticated sales departments. We estimate that 80% of
our coal is sold by our lessees under coal supply contracts that have terms of
one year or more. Coal supply contracts with terms of one year or more are
becoming increasingly rare. Thus, our coal royalty revenue stream is
increasingly affected by changes in market price of coal. Coal prices are based
on supply and demand, specific coal characteristics, economics of alternative
fuel, and overall domestic and international economic conditions.

During the first nine months of 2003, approximately 23% of our coal
royalty revenues were from metallurgical coal. Prices of metallurgical coal have
remained relatively stable in the past two years. Metallurgical coal, because of
its unique chemical characteristics, is usually priced higher than steam coal.
Metallurgical coal can also be used as steam coal. However, some metallurgical
coal mines on our properties may only operate profitably if all or a portion of
their production is sold as metallurgical coal. If the operators of these mines
are unable to sell metallurgical coal, these mines may not be economically
viable and may close. In addition to coal royalty revenue, we generate nominal
revenue from rentals, royalties on oil and gas and coalbed methane leases, an
overriding royalty arrangement and wheelage payments, which are toll payments
for the right to transport third-party coal over or through our property.

Most lessees are required to reimburse us for property taxes paid on
the leased property. These property tax reimbursements are shown as revenue in
the financial statements. The corresponding property tax expenses are included
as "taxes other than income." Property tax expenses are higher than property tax
revenue because certain properties are unleased and, therefore, no
reimbursements are received.

General and administrative expenses include salary and benefits, rent,
expenses and other costs related to managing the properties. An affiliate
charges the WPP Group for certain finance, tax, treasury and insurance expenses.
The Arch Coal Contributed Properties did not maintain stand-alone corporate
treasury, legal, tax, human resources, general administration or other similar
corporate support functions. Corporate general and administrative expenses were
not previously allocated to the Arch Coal Contributed Properties because there
was not sufficient information to develop a reasonable cost allocation. We
reimburse the general partner and its affiliates for direct and indirect
expenses they incur on our behalf, including general and administrative
expenses.

Depletion and amortization consist primarily of depletion on the coal
properties. Depletion of coal reserves is calculated on a unit-of-production
basis on each property and thus fluctuates from period to period depending on
where coal is produced during the period.

ACQUISITIONS

PinnOak Acquisition. In July 2003, the Partnership completed its
acquisition of approximately 78 million tons of proven coal reserves and an
overriding royalty interest on additional coal from subsidiaries of PinnOak
Resources, LLC for $58 million. The $58 million purchase price had been placed
into an escrow account on June 30, 2003 in connection with the execution of the
purchase and sale agreement. The transaction was initially funded through the
Partnership's existing credit facility. On September 19, 2003, $50 million of
the borrowings was converted to long-term debt in connection with the
Partnership's commitment to issue additional senior notes under the Note
Purchase Agreement dated June 19, 2003.

CRITICAL ACCOUNTING POLICIES

Coal Royalties. We recognize coal royalty revenues on the basis of tons
of coal sold by our lessees and the corresponding revenue from those sales.
Generally, the lessees make payments to us based on the greater of a percentage
of the gross sales price or a fixed price per ton of coal they sell, subject to
minimum monthly, quarterly or annual payments. These minimum royalty payments
are generally recoupable over certain time periods. We initially record minimum
payments as deferred revenue and recognize them as coal royalty revenues either
when the lessee recoups the minimum payment through production or when the
period during which the lessee is allowed to recoup the minimum payment expires.

Depletion. We deplete coal properties on a unit-of-production basis by
lease, based upon coal mined in relation to the net cost of the mineral
properties and estimated proved and probable tonnage in those properties. We
estimate proven and probable coal reserves with the assistance of third-party
mining consultants and involve the use of estimation techniques and
recoverability assumptions. Our estimates of coal reserves are updated
periodically and may result in adjustments to coal reserves and depletion rates
that are recognized prospectively.

NEW ACCOUNTING STANDARDS

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred with the associated asset retirement cost being capitalized
as a part of the carrying amount of the long-lived asset. SFAS No. 143 also
includes disclosure requirements that provide a description of asset retirement
obligations and a reconciliation of changes in the components of those
obligations. The operators of mines on our leased property are responsible for
asset retirement obligations. Therefore, the adoption of SFAS No. 143 on January
1, 2003 did not have a material impact on our financial position or results of
operations.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses the
accounting and reporting for the impairment or disposal of long-lived assets and
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of" and APB Opinion No. 30, "Reporting the
Results of Operations -- Reporting the Effects of the Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions." The objective of SFAS No. 144 is to establish one accounting
model for long-lived assets to be disposed of by sale as well as resolve
implementation issues related to SFAS No. 121. The adoption of SFAS No. 144,
effective January 1, 2002, did not have a material impact on our financial
position or results of operations.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44 and 62, Amendment of FASB Statement No. 13, and Technical
Corrections." Among other things, SFAS No. 145 requires gains and losses on
extinguishments of debt to be classified as income or loss from continuing
operations rather than as extraordinary items as previously required under SFAS
No. 4. The provisions of this Statement related to the rescission of SFAS No. 4
shall be applied in fiscal years beginning after May 15, 2002. Adoption of SFAS
No. 145 on January 1, 2003 did not have a material impact on our financial
position or results of

operations.

In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs
Associated with Exit or Disposal Activities", which supercedes EITF No. 94-3,
"Liability Recognition for Certain Employment Termination Benefits and Other
Costs to Exit an Activity". SFAS No. 146 requires companies to record
liabilities for costs associated with exit or disposal activities to be
recognized only when the liability is incurred instead of at the date of
commitment to an exit or disposal activity. Adoption of this standard is
effective for exit or disposal activities that are initiated after December 31,
2002. The adoption of this standard is not expected to have a significant impact
on our financial statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." SFAS 149 amends SFAS 133
as a result of:

- Decisions previously made as part of the Derivatives Implementation
Group (DIG) process,

- Changes made in connection with other Board projects dealing with
financial instruments, and

- Deliberations in connection with issues raised in relation to the
application of the definition of a derivative.

On January 17, 2003, FASB issued Interpretation No. 46 ("FIN 46")
"Consolidation of Variable Interest Entities "FIN No. 46"", which addresses
consolidation by business enterprises of variable interest entities. FIN No. 46
clarifies the application of Accounting Research Bulletin No. 51, "Consolidated
Financial Statements", to certain entities in which equity investors do not have
the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN No. 46 applies
immediately to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that
date. It applies in the first fiscal year or interim period beginning after
December 15, 2003, to variable interest entities in which an enterprise holds a
variable interest that it acquired before February 1, 2003. Management does not
expect FIN No. 46 to have a material adverse impact on the Partnership's results
of operations, financial position or liquidity.

RESULTS OF OPERATIONS

NATURAL RESOURCE PARTNERS L.P.

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2003
------------- -------------
(IN THOUSANDS, EXCEPT PER TON DATA)
(UNAUDITED)

Revenues:
Coal royalties....................................... $ 20,796 $ 55,393
Property taxes....................................... 1,330 3,519
Minimums recognized as revenue....................... 347 1,606
Override royalties................................... 152 813
Other................................................ 914 2,117
----------- -----------
Total revenues....................................... 23,539 63,448
Expenses:
Depletion and amortization........................... 6,848 19,021
General and administrative........................... 2,197 6,504
Taxes other than income.............................. 1,676 4,257
Override payments.................................... -- 386
Coal royalty payments................................ 263 576
----------- -----------
Total expenses....................................... 10,984 30,744
----------- -----------
Income from operations................................. 12,555 32,704
Other income (expense):
Interest expense..................................... (2,499) (4,096)
Interest income...................................... 56 159
Loss from interest rate hedge........................ -- (499)
----------- -----------
Net income............................................. $ 10,112 $ 28,268
=========== ===========
Other Data:
Coal royalties
Appalachia........................................... $ 18,247 $ 47,846
Illinois Basin....................................... 938 2,773
Northern Powder River Basin.......................... 1,611 4,774
----------- -----------
Total............................................. $ 20,796 $ 55,393
=========== ===========
Production
Appalachia........................................... 10,081 27,041
Illinois Basin....................................... 818 2,368
Northern Powder River Basin.......................... 1,292 3,976
----------- -----------
Total............................................. 12,191 33,385
=========== ===========
Average gross royalty per ton
Appalachia........................................... $ 1.81 $ 1.77
Illinois Basin....................................... 1.15 1.17
Northern Powder River Basin.......................... 1.25 1.20
----------- -----------
Total $ 1.71 $ 1.66
=========== ===========

THREE MONTHS ENDED SEPTEMBER 30, 2003

Revenues. For the three month period ending September 30, 2003, coal
royalty revenues were $20.8 million on 12.2 million tons of coal produced.
Approximately 83% of the coal tonnage produced came from the Appalachian region,
11% from the Northern Powder River Basin and 6% from the Illinois Basin. The
results include coal royalty revenues generated from our acquisition of 78
million tons of coal reserves from PinnOak Resources in June 2003.

Expenses. For the three month period ending September 30, 2003, total
expenses were $11.0 million, including depletion and amortization of $6.8
million, or 62%, general and administrative expense of $2.2 million, or 20%,
taxes other than income of $1.7 million, or 15%, and coal royalty payments of
$0.3 million, or 3%. General and administrative expenses consist of compensation

expense of $1.5 million, including $0.7 million for accrued incentive plan
expenses, all of which will be reimbursed to the general partner. Also
contributing to general and administrative expense were charges relating to the
year-end audit, tax returns and annual report expense. Taxes other than income
include property taxes of $1.2 million and state franchise taxes of $0.2
million.

NINE MONTHS ENDED SEPTEMBER 30, 2003

Revenues. For the nine months ended September 30, 2003, coal royalty
revenues were $55.4 million on 33.4 million tons of coal produced. Approximately
81% of the coal tonnage produced came from the Appalachian region, 12% from the
Northern Powder River Basin and 7% from the Illinois Basin. The results include
coal royalty revenues generated from our acquisition of an overriding interest
from Alpha Natural Resources in February 2003, over 300 million tons of coal
reserves from Alpha Natural Resources in April 2003, and 78 million tons of coal
reserves from PinnOak Resources in July 2003.

Expenses. For the nine months ended September 30, 2003, total expenses
were $30.7 million, including depletion and amortization of $19.0 million, or
62%, general and administrative expense of $6.5 million, or 21%, and taxes other
than income of $4.3 million, or 14%, and coal royalty payments of $0.6 million,
or 3%. General and administrative expenses consist of compensation expense of
$4.0 million, including $1.5 million for accrued incentive plan expenses, all of
which will be reimbursed to the general partner.

THREE AND NINE MONTH COMPARISON OF OPERATING STATISTICS

The following table sets forth coal royalty revenues, production, and
average gross royalty per ton from our properties for the three and nine months
ending September 30, 2003 and 2002, respectively. The coal royalty revenues and
production for 2002 are from properties that were contributed to us on October
17, 2002. Coal royalty revenues were generated from the properties in each of
the following areas: Appalachia, Illinois Basin and Northern Powder River Basin.

OPERATING STATISTICS
(IN THOUSANDS, EXCEPT PER TON DATA)
(UNAUDITED)

THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------

Coal Royalties
Appalachia ................... $ 18,247 $ 10,333 $ 47,846 $ 28,859
Illinois Basin ............... 938 818 2,773 2,102
Northern Powder River Basin .. 1,611 1,555 4,774 4,214
-------- -------- -------- --------
Total ................... $ 20,796 $ 12,706 $ 55,393 $ 35,175
======== ======== ======== ========
Production
Appalachia ................... 10,081 5,730 27,041 16,065
Illinois Basin ............... 818 678 2,368 1,696
Northern Powder River Basin .. 1,292 1,454 3,976 3,836
-------- -------- -------- --------
Total ................... 12,191 7,862 33,385 21,597
======== ======== ======== ========
Average gross royalty per ton
Appalachia ................... $ 1.81 $ 1.80 $ 1.77 $ 1.80
Illinois Basin ............... 1.15 1.21 1.17 1.24
Northern Powder River Basin .. 1.25 1.07 1.20 1.10
-------- -------- -------- --------
Total ................... $ 1.71 $ 1.62 $ 1.66 $ 1.63
======== ======== ======== ========

THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 2002

Coal royalty revenues for the three months ended September 30, 2003
were $20.8 million compared to $12.7 million for the three months ended
September 30, 2002, an increase of $8.1 million, or 64%. Production increased by
4.3 million tons, or 54%, from 7.9 million tons to 12.2 million tons. The
increases in production and coal royalties were primarily due to:

Appalachia. Production from the properties we acquired from El Paso in
December 2002, Alpha Natural Resources in February and April 2003, and PinnOak
in July 2003 resulted in production of 4.6 million tons and coal royalty
revenues of $8.1 million. Production from our Eunice property increased from
384,000 tons to 726,000 tons and coal royalty revenues increased from $650,000
to $1.2 million due to a longwall mine moving onto the property from adjacent
property. On our West Fork property, production increased from 626,000 tons to
792,000 tons, and coal royalty revenues increased from $1.4 to $1.7 million due
to higher shipments from inventory during the current quarter. On our Campbells
Creek property, production decreased from 286,000 tons to 145,000 tons and
royalty revenues decreased from $519,000 to $304,000 due to the idling of one
production unit in the mine. On our Pardee property, production decreased from
332,000 tons to 202,000 tons, and coal royalty revenues decreased from $614,000
to $429,000 due to a lower proportion of the underground mine tonnage being
produced from our property.

Illinois Basin. On our Cummings/Hocking Wolford property, production
increased from 280,000 tons to 470,000 tons, and coal royalty revenues increased
from $281,000 to $467,000 due to a higher proportion of production being on our
property instead of adjacent property.

Northern Powder River. Production from our Western Energy property
increased from 994,000 tons to 1.1 million tons, and coal royalty revenues
increased from $982,000 to $1.1 million. This increase was due to a higher
proportion of the production coming from our property instead of adjacent
property, which is typical of the variations in production resulting from the
checkerboard ownership of this mine. This was offset by lower production at our
Big Sky property from 461,000 tons to 145,000 tons and coal royalty revenues
decreased from $427,000 to $135,000. This was also due to a higher proportion of
tonnage being mined from adjacent property.

NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED WITH THE NINE MONTHS ENDED
SEPTEMBER 30, 2002

Coal royalty revenues for the nine months ended September 30, 2003 were
$55.4 million compared to $35.2 million for the nine months ended September 30,
2002, an increase of $20.2 million, or 57%. Production increased by 11.8 million
tons, or 55%, from 21.6 million tons to 33.4 million tons. The increases in
production and coal royalties were primarily due to:

Appalachia. Production from the properties we acquired from El Paso in
December 2002, Alpha Natural Resources in February and April 2003, and PinnOak
in June 2003 resulted in production of 9.9 million tons and coal royalty
revenues of $16.4 million. Production from our West Fork property increased from
1.3 million tons to 2.1 million tons, and coal royalty revenues increased from
$3.0 million to $4.6 million because a longwall mine moved onto our property
from adjacent property. On our Davis Lumber property, production increased from
zero tons to 458,000 tons, and coal royalty revenues increased from $0 to
$623,000 due to the resumption of mining at a temporarily idled mine.

Illinois Basin. On our Cummings/Hocking Wolford property, production
increased from 706,000 tons to 1.3 million tons, and coal royalty revenues
increased from $704,000 to $1.4 million due to a higher proportion of production
being on our property instead of adjacent property.

Northern Powder River. Production from our Western Energy property
increased from 2.4 million tons to 3.3 million tons, and coal royalty revenues
increased from $2.9 million to $4.1 million. This increase was due to a higher
proportion of the production coming from our property instead of adjacent
property, which is typical of the variations in production resulting from the
checkerboard ownership of this mine. This was partially offset by a decrease in
production at our Big Sky property where production decreased from 1.4 million
tons to 713,000 tons, and coal royalty revenues decreased from $1.3 million to
$660,000. This decrease was due to a higher proportion of the production coming
from adjacent property, which is typical of the variations in production
resulting from the checkerboard ownership of this mine.

WESTERN POCAHONTAS PROPERTIES LIMITED PARTNERSHIP

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2002
------------- -------------
(IN THOUSANDS, EXCEPT
PER TON DATA)
(UNAUDITED)

Revenues:
Coal royalties....................................... $ 5,907 $ 16,220
Timber royalties..................................... 1,002 2,620
Gain on sale of property............................. 7 92
Property taxes....................................... 548 1,186
Other................................................ 383 1,128
---------- -----------
Total revenues.................................. 7,847 21,246
Expenses:
General and administrative........................... 644 2,193
Taxes other than income.............................. 610 1,392
Depreciation, depletion and amortization............. 1,324 3,337
---------- -----------
Total expenses.................................. 2,578 6,922
---------- -----------
Income from operations.................................... 5,269 14,324
Other income (expenses):
Interest expense..................................... (1,591) (4,520)
Interest income...................................... 33 106
Reversionary interest................................ -- (561)
---------- -----------
Net income................................................ $ 3,711 $ 9,349
========== ===========

Production................................................ 3,280 9,008
Average gross royalty per ton............................. $ 1.80 $ 1.80

THREE MONTHS ENDED SEPTEMBER 30, 2002

Revenues. Total revenues for the three months ended September 30, 2002
were $7.8 million, of which coal royalty revenues were $5.9 million, or 76%.
Coal production during the period was 3.3 million tons, with an average gross
royalty rate per ton of $1.80. The following properties were the major
contributors to revenue:

Appalachia. Production from our West Fork property was 626,000 tons,
which generated coal royalty revenues of $1.4 million. Production from our
Evans-Laviers property was 890,000 tons, which generated coal royalty revenues
of $1.1 million. Production from our Eunice property was 384,000 tons, which
generated coal royalty revenues of $650,000. Production from our Dorothy
property was 380,000 tons, which generated coal royalty revenues of $767,000.
Fourteen other properties contributed 1.0 million tons generating $1.9 million
in revenue.

Timber revenues for the three months ended September 30, 2002 were $1.0
million. Other revenues were $0.4 million, including $0.1 million for wheelage
income.

Expenses. Aggregate expenses for the three months ended September 30,
2002 were $2.6 million, including $0.6 million of general and administrative
expenses and $1.3 million of expenses related to depletion and amortization.

Other Income (Expense). Interest expense was $1.6 million for three
months ended September 30, 2002.

Net Income. Net income was $3.7 million for the three months ended
September 30, 2002.

NINE MONTHS ENDED SEPTEMBER 30, 2002

Revenues. Total revenues for the nine months ended September 30, 2002
were $21.2 million, of which coal royalty revenues were

$16.2 million, or 76%. Coal production during the period was 9.0 million tons,
with an average gross royalty rate per ton of $1.80. The following properties
were the major contributors to revenue:

Appalachia. Production from our Eunice property was 1.7 million tons,
which generated coal royalty revenues of $3.0 million. Production from our
Evans-Laviers property was 2.5 million tons, which generated coal royalty
revenues of $3.2 million. Production from our West Fork property was 1.3 million
tons, which generated coal royalty revenues of $3.0 million. Fifteen other
properties contributed 2.7 million tons generating $5.4 million in coal royalty
revenues. Production from our Eunice property was 1.7 million tons, which
generated coal royalty revenues of $3.0 million. Production from our Dorothy
property was 776,000 tons, which generated coal royalty revenues of $1.6
million.

Timber revenues for the nine months ended September 30, 2002 were $2.6
million. Other revenues were $2.4 million, including $1.2 million in property
tax revenues for amounts reimbursed by our lessees. Other income was $1.2
million, of which $0.4 million was from wheelage income, $0.3 million was
attributable to lease and easement income and another $0.2 million was from
management fees charged to Great Northern Properties Limited Partnership for the
nine months ended September 30, 2002.

Expenses. Aggregate expenses for the nine months ended September 30,
2002 were $6.9 million, including $2.2 million of general and administrative
expenses and $3.3 million of expenses related to depletion and amortization.

Other Income (Expense). Interest expense was $4.5 million for nine
months ended September 30, 2002.

Reversionary Interest. The previous owner of Western Pocahontas
Properties Limited Partnership's coal and timber properties (CSX Corporation and
certain of its affiliates) retained a reversionary interest in those properties
whereby it received either a 25% or 28% interest in the properties and the net
revenues of the properties after July 1, 2001, and in the net proceeds of any
property sale occurring prior to July 1, 2001. Western Pocahontas purchased the
reversionary interest related to its Kentucky properties in December 2001 and
the remainder of the interest in March 2002. For the nine months ended September
30, 2002, Western Pocahontas incurred $0.6 million of expenses related to the
reversionary interest.

Net Income. Net income was $9.3 million for the nine months ended
September 30, 2002.

GREAT NORTHERN PROPERTIES LIMITED PARTNERSHIP

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2002
------------- -------------
(IN THOUSANDS, EXCEPT
PER TON DATA)
(UNAUDITED)

Revenues:
Coal royalties...................................... $ 1,928 $ 5,370
Lease and easement income........................... 86 468
Other............................................... 36 112
----------- -----------
Total revenues................................. 2,050 5,950
Expenses:
General and administrative.......................... 145 418
Taxes other than income............................. 24 68
Depletion and amortization.......................... 662 1,865
----------- -----------
Total expenses................................. 831 2,351
----------- -----------
Income from operations................................... 1,219 3,599
Other income (expenses):
Interest expense.................................... (591) (1,732)
Interest income..................................... 37 102
----------- -----------
Net income............................................... $ 665 $ 1,969
=========== ===========

Production............................................... 1,832 5,422
Average gross royalty per ton............................ $ 1.05 $ .99

THREE MONTHS ENDED SEPTEMBER 30, 2002

Revenues. Total revenues for the three months ended September 30, 2002
were $2.1 million, of which coal royalty revenues were $1.9 million, or 90%.
Coal production for the period was 1.8 million tons, with average gross royalty
rate per ton of $1.05. Coal royalty revenues were attributed to the following:

Northern Powder River. Production from our Western Energy property was
994,000 tons, which generated coal royalty revenues of $1.1 million. Production
from our Big Sky property was 461,000 tons, which generated coal royalty
revenues of $427,000.

Expenses totaled $0.8 million of which includes $0.1 million of general
and administrative expenses that primarily consist of $62,500 of fees paid to
Western Pocahontas Properties under a management agreement and $0.7 million of
depletion and amortization.

Other Income (Expense). Interest expense was $0.6 million for the three
months ended September 30, 2002.

Net Income. Net income was $0.7 million for the three months ended
September 30, 2002.

NINE MONTHS ENDED SEPTEMBER 30, 2002

Revenues. Total revenues for the nine months ended September 30, 2002
were $6.0 million, of which coal royalty revenues were $5.4 million or 90%. Coal
production for nine months ended September 30, 2002 was 5.4 million tons, with
average gross royalty rate per ton of $0.99. Coal royalty revenues were
attributed to the following:

Northern Powder River. Production from our Western Energy property was
2.4 million tons, which generated coal royalty revenues of $2.8 million.
Production from our Big Sky property was 1.4 million tons, which generated coal
royalty revenues of $1.3 million.

Expenses totaled $2.4 million, which includes $0.4 million of general
and administrative expenses that primarily consist of $187,500 of fees paid to
Western Pocahontas Properties under a management agreement and $1.9 million of
depletion and amortization.

Other Income (Expense). Interest expense was $1.7 million for the nine
months ended September 30, 2002.

Net Income. Net income was $2.0 million for the nine months ended
September 30, 2002.

NEW GAULEY COAL CORPORATION

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2002
------------- -------------
(IN THOUSANDS, EXCEPT
PER TON DATA)
(UNAUDITED)

Revenues:
Coal royalties....................................... $ 398 $ 1,336
Other................................................ 20 72
--------- ---------
418 1,408
Expenses:
General and administrative........................... (5) 54
Taxes other than income.............................. 27 38
Depletion and amortization........................... 48 127
--------- ---------
Total expenses.................................. 70 219
--------- ---------
Income from operations.................................... 348 1,189
Other income (expenses):
Interest expense..................................... (31) (95)
Interest income...................................... 7 22
Reversionary interest................................ (69) (103)
--------- ---------
Net income................................................ $ 255 $ 1,013
========= =========

Production................................................ 134 445
Average gross royalty per ton............................. $ 2.97 $ 3.00

THREE MONTHS ENDED SEPTEMBER 30, 2002

Revenues. Total revenue for the three months ended September 30, 2003
was $418,000, of which coal royalty revenues were $398,000, or 95%, on
production of 134,000 tons. New Gauley has producing properties on two leases.
The Alabama property produced 79,000 tons, generating coal royalty revenues of
$273,000. Production from our West Virginia property was 55,000 tons, which
generated coal royalty revenues of $125,000.

Expenses. Aggregate expenses for the three months ended September 30,
2002, were $70,000 of which $48,000, or 69%, was from depletion and
amortization.

Net Income. Net income was $255,000 for the three months ended
September 30, 2002.

NINE MONTHS ENDED SEPTEMBER 30, 2002

Revenues. Total revenue for the nine months ended September 30, 2003
was $1,408,000, of which coal royalty revenues were $1,336,000, or 95%, on
production of 445,000 million tons. New Gauley has producing properties on two
leases. The Alabama property produced 233,000 tons, generating coal royalty
revenues of $802,000. Production from our West Virginia property was 212,000
tons, which generated coal royalty revenues of $519,000.

Expenses. Aggregate expenses for the nine months ended September 30,
2002, were $219,000 of which $127,000, or 58%, was from depletion and
amortization.

Net Income. Net income was $1,013,000 for the nine months ended
September 30, 2002.

ARCH COAL CONTRIBUTED PROPERTIES

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2002
------------- -------------
(IN THOUSANDS, EXCEPT
PER TON DATA)
(UNAUDITED)

Revenues
Coal royalties................................. $ 4,971 $ 13,851
Other royalties................................ 369 1,294
Property taxes................................. 268 806
--------- ---------
Total revenues............................ 5,608 15,951
--------- ---------
Expenses
Depletion...................................... 1,634 4,603
Property taxes................................. 268 806
Other expense.................................. 101 512
--------- ---------
Total expenses............................ 2,003 5,921
--------- ---------
Excess of revenue over direct costs and expenses.... $ 3,605 $ 10,030
========= =========
Production.......................................... 2,961 8,278
Average gross royalty per ton....................... $ 1.68 1.68

THREE MONTHS ENDED SEPTEMBER 30, 2002

Revenues. Revenues for the three months ended September 30, 2002 were
$5.6 million, of which coal royalty revenues were $5.0 million, or 89%, on
production of 3.0 million tons.

Appalachia. Production from our Lone Mountain property was 666,000
tons, which generated coal royalty revenues of $1.3 million. Production from our
Lynch property was 756,000 tons, which generated coal royalty revenues of $1.2
million. Production from our Pardee property was 332,000 tons, which generated
coal royalty revenues of $614,000. Production from our Campbells Creek property
was 286,000 tons, which generated coal royalty revenues of $519,000.

Direct costs and expenses. Direct costs and expenses for the three
months ended September 30, 2002 were $2.0 million, consisting of depletion of
$1.6 million, property taxes of $268,000 and other expense of $101,000.

NINE MONTHS ENDED SEPTEMBER 30, 2002

Revenues. Revenues for the nine months ended September 30, 2002 were
$16.0 million, of which coal royalty revenues were $13.9 million, or 86%, on
production of 8.3 million tons.

Appalachia. Production from our Lone Mountain property was 2.0 million
tons, which generated coal royalty revenues of $3.7 million. Production from our
Lynch property was 2.3 million tons, which generated coal royalty revenues of
$3.6 million. Production from our Pardee property was 978,000 tons, which
generated coal royalty revenues of $1.8 million. Production from our Campbells
Creek property was 832,000 tons, which generated coal royalty revenues of $1.5
million.

Direct costs and expenses. Direct costs and expenses for the nine
months ended September 30, 2002 were $5.9 million, consisting of depletion of
$4.6 million, property taxes of $806,000 and other expense of $512,000.

RELATED PARTY TRANSACTIONS

PARTNERSHIP AGREEMENT

Our general partner does not receive any management fee or other
compensation for its management of Natural Resource Partners. However, in
accordance with the partnership agreement, our general partner and its
affiliates are reimbursed for expenses incurred on our behalf. All direct
general and administrative expenses are charged to us as incurred. Indirect
general and administrative costs, including certain legal, accounting, treasury,
information technology, insurance, administration of employee benefits and other
corporate services incurred by our general partner and its affiliates are also
reimbursed. Cost reimbursements due our general partner may be substantial and
will reduce our cash available for distribution to unitholders. For the nine
months ended September 30, 2003, we have incurred expenses totaling $2.0 million
for services performed by Western Pocahontas Properties Limited Partnership and
Quintana Minerals Corporation, affiliates of our general partner.

AGREEMENTS WITH ARK LAND COMPANY

Concurrently with our initial public offering in October 2002, we
entered into four coal mining leases with Ark Land Company, a subsidiary of Arch
Coal, Inc. The Ark Land leases grant Ark Land the right to mine our coal on the
following properties:

- Lone Mountain located in Kentucky, which contains 47.1 million tons
of proven and probable reserves as of December 31, 2002;

- Pardee located in Kentucky and Virginia, which contains 20.4 million
tons of proven and probable reserves as of December 31, 2002;

- Boone/Lincoln located in West Virginia, which contains 18.5 million
tons of proven and probable reserves as of December 31, 2002; and

- Campbell's Creek located in West Virginia, which contains 9.8
million tons of proven and probable reserves as of December 31,
2002.

Coal royalty revenues payable under these leases for the three months
and nine months ended September 30, 2003 were $2.3 and $7.6 million,
respectively, representing 11% and 14% of our total coal royalty revenues. If no
production had taken place during the nine months ended September 30, 2003,
minimum royalties of $4.5 million would have been payable under the leases.

The Ark Land leases have an initial term of either eight or ten years,
each with an automatic year-to-year extension until the earlier to occur of (1)
delivery of notice by Ark Land that it will not renew the lease or (2) the
mining of all mineable and merchantable coal. The leases provide for payments to
us based on the higher of a percentage of the gross sales price or a fixed
minimum per ton of coal sold from our properties, with minimum annual royalty
payments. Under the Ark Land leases, minimum royalty payments are credited
against future production royalties.

The leases are intended to retain some of the legal rights Ark Land
possessed when it owned the properties. For this reason, the leases contain some
terms and provisions that are different from our third-party coal leases
negotiated at arm's length. Some of the more significant differences include:

- Ark Land has the ability to sublease the leased property without our
prior approval, although it remains responsible for sublessee
performance;

- minimum royalty payments from Ark Land continue to be payable during
the initial lease term even if all mineable and merchantable coal
has been mined from the property;

- royalties for coal sold to any affiliates may be based on a gross
selling price below the market value of the coal;

- the indemnities provided by Ark Land to us do not survive the
termination of the leases;

- we only have a limited ability to terminate the leases;

- Ark Land has royalty-free wheelage rights on the leased properties;
and

- the leases do not impose a legal duty to diligently mine the maximum
amount of coal possible from the leased property.

We believe that the production and minimum royalty rates contained in
the Ark Land leases are consistent with current market royalty rates.

On November 20, 2002 we amended the Pardee lease to include in that
lease a requirement that Ark Land pay us a non-recoupable quarterly rental
payment equal to quarterly minimums under a previous agreement that was
simultaneously terminated.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS AND CAPITAL EXPENDITURES

We satisfied our working capital requirements with cash generated from
operations. Funds for property acquisitions were obtained through borrowings.

We believe that cash generated from operations and our borrowing
capacity under our revolving credit facility will be sufficient to meet our
working capital requirements and anticipated capital expenditures, other than
for acquisitions, for the next several years. We are actively pursuing
additional property acquisitions; accordingly, in April of 2003, we increased
our revolving credit facility from $100 million to $175 million to provide for
additional acquisitions. We intend to fund any acquisitions with borrowings
under our revolving credit facility and proceeds from the issuance of common
units and debt. A minimal portion of our capital expenditures will be
maintenance capital expenditures. Our ability to satisfy any debt service
obligations, fund planned acquisitions and pay distributions to our unitholders
will depend upon our future operating performance, which will be affected by
prevailing economic conditions in the coal industry, changes in capital markets
and financial, business and other factors, some of which are beyond our control.
For a more complete discussion of factors that will affect cash flow we generate
from our operations, please read "Risks Related to Our Business." Our capital
expenditures, other than for acquisitions, have historically been minimal.

Net cash provided by operations during the nine months ended September
30, 2003 was $47.2 million, substantially all of which was from coal royalty
revenues.

Net cash used in investing activities during the nine months ended
September 30, 2003 was $123.7 million in connection with the acquisition of the
overriding interest in February for $11.9 million, the acquisition of 290,000
mineral acres from two subsidiaries of Alpha Natural Resources, LLC for $53.8
million, and $58 million for the acquisition of 78 million tons of proven coal
reserves from PinnOak Resources. These acquisitions were initially funded
primarily from our revolving credit facility, with the balance paid in cash.

Cash provided by financing activities for the nine months ended
September 30, 2003 was $90.6 million. During the first nine months we received
proceeds from additional borrowings of $298.1 million, which includes $123.1
million under our revolving credit facility and $175.0 million from the issuance
of our senior unsecured debt. These borrowings were partially offset by
repayments of debt on our revolving credit facility of $172.6 million. We paid
$0.9 million to settle an interest rate hedge entered into in connection with
issuance of our senior notes. For the nine months ended September 30, 2003, we
also paid cash distributions of $34.0 million to our partners.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

Credit Facility and Senior Notes. Our debt currently consists of:

- a $175 million revolving credit facility that matures in October
2005 and under which $8.0 million was outstanding at September
30, 2003;

- $60 million of 5.55% senior notes due 2023, with a 10-year
average life;

- $80 million of 4.91% senior notes due 2018, with a 7.5-year
average life; and

- $35 million of 5.55% senior notes due 2013.

On April 4, 2003, we increased the borrowing capacity under our credit
facility to $175 million, and the other terms of the credit facility remained
unchanged. The amended credit facility includes increased commitments from the
original bank syndicate, led by PNC Bank, as well as commitments from three new
banks. The revolving credit facility includes a $12.0 million distribution loan
sub-limit that can be used for funding quarterly distributions. The remainder of
the revolving credit facility is available for general limited partnership and
limited liability company purposes, including future acquisitions, but may not
be used to fund quarterly distributions.

On June 19, 2003 and simultaneous with NRP Operating's issuance of
senior notes, we adopted a second amendment to the credit facility. This
amendment permitted NRP Operating to issue unsecured notes through a private
placement in an amount up to $175 million, with a portion of the proceeds to be
used to reduce the outstanding balance on the revolving credit facility. Among
other items, this amendment increased the maximum leverage ratio from 2.75 to
1.00 to 3.50 to 1.0. Indebtedness under the revolving credit facility bears
interest, at our option, at either:

- the higher of the federal funds rate plus an applicable margin
ranging from 0.25% to 0.75% or the prime rate as announced by the
agent bank; or

- a rate equal to LIBOR plus an applicable margin ranging from 1.25%
to 2.25%.

At September 30, 2003, we had $8 million outstanding under the
revolving credit facility bearing interest at a LIBOR rate of 3.15%. We incur a
commitment fee on the unused portion of the revolving credit facility at a rate
of 0.50% per annum.

We incurred interest expense of $2.5 million and $4.1 million for the
three and nine-month periods ended September 30, 2003, respectively. Interest
expense for the three and nine-month periods ended September 30, 2003 included
credit facility fees of $157,000 and $292,000, respectively.

The following table reflects our long-term non-cancelable contractual
obligations as of September 30, 2003 (in millions):

PAYMENTS DUE BY PERIOD
----------------------------------------------------------------
CONTRACTUAL OBLIGATIONS 2003 2004 2005 2006 2007 THEREAFTER
----------------------- ---- ---- ---- ---- ---- ----------

Long-term debt (including current maturities) $ -- $ 9.35 $ 17.35 $ 9.35 $ 9.35 $ 137.6
======== ======== ======== ======== ======== ==========

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, which includes adverse changes in
commodity prices and interest rates as discussed below:

COMMODITY PRICE RISK

We are dependent upon the efficient 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. In previous years, a large portion of
these sales were under long term contracts. Current conditions in the coal
industry may make it difficult for our lessees to extend 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 coal royalty
revenues. As more coal is sold on the spot market, coal royalty revenues may
become more volatile due to fluctuations in spot coal prices.

INTEREST RATE RISK

Our exposure to changes in interest rates results from our current
borrowings under our revolving credit facility, which may be subject to variable
interest rates based upon LIBOR. In anticipation of the private placement on May
12, 2003, we entered into a treasury rate hedge with respect to $50 million of
the senior notes. In conjunction with the issuance of the senior notes, we paid
$1.4 million to settle this treasury rate hedge. Of the $1.4 million paid for
the settlement, approximately $0.9 million will be amortized into

expense over 20 years and the balance of $0.4 million, will be expensed
currently and classified as other income (expense) in the income statement. At
September 30, 2003, we had outstanding approximately $8.0 million in variable
interest rate debt. If LIBOR rates were to increase by 100 basis points, annual
interest expense would increase by $80,000, assuming the same principal amount
remained outstanding over the next twelve months.

INFLATION

Inflation in the United States has been relatively low in recent years
and did not have a material impact on operations for the nine months ended
September 30, 2003.

ENVIRONMENTAL

The operations of our lessees are subject to environmental laws and
regulations adopted by various governmental authorities in the jurisdictions in
which these operations are conducted. The terms of substantially all of our
leases impose liability on the relevant lessees for all environmental and
reclamation liabilities arising under those laws and regulations. All of our
lessees are required to post bonds to cover reclamation costs. In the event
these bonds are insufficient, some states, such as West Virginia, have
established funds to cover these shortfalls.

FORWARD-LOOKING STATEMENTS

Statements included in this Form 10-Q are 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 capital expenditures, acquisitions and dispositions, expected
commencement dates of coal mining, projected quantities of future coal
production by our lessees producing coal from our reserves leased, projected
demand or supply for coal that will affect sales levels, prices and royalties
realized by us.

These forward-looking statements are made based upon management's
current plans, expectations, estimates, assumptions and beliefs concerning
future events affecting us and therefore 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.
Please read "Risks Related to Our Business" below for important factors that
could cause our actual results of operations or our actual financial condition
to differ.

RISKS RELATED TO OUR BUSINESS

- We may not have sufficient cash from operations to pay the minimum
quarterly distribution following establishment of cash reserves and
payment of fees and expenses, including payments to our general
partner.

- A substantial or extended decline in coal prices could reduce our
coal royalty revenues.

- Our lessees' coal mining operations are subject to operating risks
that could result in lower coal royalty revenues to us.

- We depend on a limited number of primary operators for a
significant portion of our coal royalty revenues, and the loss of
or reduction in production from any of our operators could reduce
our coal royalty revenues.

- The increasing cost and lack of availability of reclamation bonds
that were purchased by our lessees could make it uneconomic or
impossible to mine our coal.

- We may not be able to terminate our leases if any of our lessees
declare bankruptcy, and we may experience delays and be unable to
replace lessees that do not make royalty payments.

- If our lessees do not manage their operations well, their
production volumes and our coal royalty revenues could decrease.

- Adverse developments in the coal industry could reduce our coal
royalty revenues and, due to our lack of asset diversification,

also substantially reduce our total revenues.

- Any decrease in the demand for metallurgical coal could result in
lower coal production by our lessees, which would thereby reduce
our coal royalty revenues.

- We may not be able to expand and our business will be adversely
affected if we are unable to replace or increase our reserves or
obtain other mineral reserves through acquisitions.

- Any change in fuel consumption patterns by electric power
generators resulting in a decrease in the use of coal could result
in lower coal production by our lessees, which would reduce our
coal royalty revenues.

- Current conditions in the coal industry may make it difficult for
our lessees to extend existing contracts or enter into supply
contracts with terms of one year or more, which could adversely
affect the stability and profitability of their operations and
adversely affect our coal royalty revenues.

- Competition within the coal industry may adversely affect the
ability of our lessees to sell coal, and excess production capacity
in the industry could put downward pressure on coal prices.

- Lessees could satisfy obligations to their customers with coal from
properties other than ours, depriving us of the ability to receive
amounts in excess of minimum royalty payments.

- Fluctuations in transportation costs and the availability or
reliability of transportation could reduce the production of coal
mined from our properties.

- Our reserve estimates depend on many assumptions that may be
inaccurate, which could materially adversely affect the quantities
and value of our reserves.

- Our lessees' work forces could become increasingly unionized in the
future.

- We may be exposed to changes in interest rates because our current
borrowings under our revolving credit facility may be subject to
variable interest rates generally based upon LIBOR.

- Our lessees are subject to federal, state and local laws and
regulations that may limit their ability to produce and sell coal
from our properties.

ITEM 4. 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
and 15d-15 of the Securities 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
producing the timely recording, processing, summarizing and reporting of
information and in accumulating and communicating of information to management
as appropriate to allow for timely decisions with regard to required disclosure.

No changes were made to NRP's internal control over financial reporting
during the last fiscal quarter that materially affected, or are reasonably
likely to materially affect, NRP's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are in the ordinary course of business, a party to various legal
proceedings. We do not believe the outcome of these proceedings, individually or
in the aggregate, will have a material adverse effect on our financial
condition, results of operations or cash flows.

ITEM 2. CHANGES IN SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

A. Exhibits

Exhibit Number Description
- -------------- -----------

10.1* Guaranty by Arch Coal, Inc. for the benefit of Natural Resource Partners L.P., dated October 21, 2003.

31.1* Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley.

31.2* Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley.

32.1** Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2** Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

*Filed herewith

** Furnished herewith

B. Reports on Form 8-K

A current report on Form 8-K was filed on July 1, 2003 in
connection with the execution of an Asset Purchase Agreement
with PinnOak Resources.

A current report on Form 8-K was filed on July 14, 2003 in
connection with our acquisition of coal reserves from PinnOak
Resources.

A current report on Form 8-K was furnished on August 7, 2003 in
connection with disclosure of second quarter earnings and our
outlook for 2003.

A current report on Form 8-K was furnished on September 12,
2003 in connection with a presentation made by management to
the RBC Capital Markets North American Energy and Power
Conference.

A current report on Form 8-K was filed on September 22, 2003 in
connection with our issuance of senior notes.

SIGNATURES

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: November 12, 2003

By: /s/ CORBIN J. ROBERTSON, JR.
----------------------------------------
Corbin J. Robertson, Jr.,
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)

Date: November 12, 2003

By: /s/ DWIGHT L. DUNLAP
----------------------------------------
Dwight L. Dunlap,
Chief Financial Officer and
Treasurer
(Principal Financial Officer)

Date: November 12, 2003

By: /s/ KENNETH HUDSON
----------------------------------------
Kenneth Hudson
Controller
(Principal Accounting Officer)

EXHIBIT INDEX

Exhibit Number Description
- -------------- -----------

10.1* Guaranty by Arch Coal, Inc. for the benefit of Natural Resource Partners L.P., dated October 21, 2003.

31.1* Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley.

31.2* Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley.

32.1** Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2** Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

*Filed herewith

** Furnished herewith