Transcript Natural Resource Partners

Natural Resource Partners L.P.
Morgan Stanley Small Cap Executive Conference
New York
June 14, 2007
Forward-Looking Statements
The statements made by representatives of Natural Resource Partners
L.P. (“NRP”) during the course of this presentation that are not
historical facts are forward-looking statements. Although NRP believes
that the assumptions underlying these statements are reasonable,
investors are cautioned that such forward-looking statements are
inherently uncertain and necessarily involve risks that may affect NRP’s
business prospects and performance, causing actual results to differ
from those discussed during the presentation.
Such risks and uncertainties include, by way of example and not of
limitation: general business and economic conditions; decreases in
demand for coal; changes in our lessees’ operating conditions and
costs; changes in the level of costs related to environmental protection
and operational safety; unanticipated geologic problems; problems
related to force majeure; potential labor relations problems; changes in
the legislative or regulatory environment; and lessee production cuts.
These and other applicable risks and uncertainties have been described
more fully in NRP’s 2006 Annual Report on Form 10-K. NRP undertakes
no obligation to publicly update any forward-looking statements,
whether as a result of new information or future events.
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NRP – A Lower Risk Proxy for the Coal Industry
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2.1 billion tons of coal reserves
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69 lessees produce approximately 5% of the US production
from our 187 leases
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Three major coal producing regions in eleven states
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2007 estimated production: 60 million tons to 65 million tons
(metallurgical – 22% steam – 78%)
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2007 estimated total revenues - $222 million to $238 million
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How NRP Differs from a Coal Producer
• NRP revenue is tied to a coal miner’s top line revenue
• Increased mining costs can be NRP’s friend
• Production cuts at one mine can keep prices higher across the
entire industry sector which improves NRP’s top line
• NRP has no maintenance capital expenditures
• NRP has low G&A expenses
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Diverse Portfolio of Properties
Aggregate Reserves
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70 million tons
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Coal Reserves
2.1 billion tons at 12/31/06
24% Met / 76% Steam
60% Low Sulfur / 36% Compliance
Coal Producing Basins in U.S.
States in which NRP has Coal Reserves
States in which NRP has Aggregates
States in which NRP has both Coal Reserves and Coal Handling Facilities
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Active Acquisition History
Over the last four years
• Completed 28 acquisitions totaling ~$1.1 billion
• Diversified our portfolio of properties and lessees
• Established two new growth platforms within the last year
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Recent Acquisition History
Cline
8.92 million Common and
Class B units
Reserves, Transportation
Agreements, and Future
Development Opportunities
Bluestone
$20 million
20 million tons
D.D. Shepard
$110 million
80 million tons
12/04/06 12/18/06
Quadrant
$26.5 million
70 million tons of
aggregates
12/29/06
Westmoreland
$12.7 million
Override on 225
million tons
Dingess-Rum
4.8 million
common units
92 million tons
01/04/07
Taggart
Eckman, WV
Coal Handling
Facilities
$16.2 million
Preparation Plant,
Rail Load-out
01/16/07
Mettiki
$10.2 million &
500,000 common units
35 million tons
02/23/07
04/02/07
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05/18/07
Acquisition Opportunities
• Our sponsor owns over 20 billion tons of currently nonproducing coal that must be offered to NRP when any property
reaches a value of $10 million
• Right to acquire 3 billion tons of reserves from Cline
Resources
• Deals come to us due to our relationships
• Agreement with Taggart (formerly Sedgman) on coal
preparation plants and coal handling facilities
• Opportunities in other qualified asset classes
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Increased Quarterly Distributions
 Increased distributions 16 out of 17 quarters since IPO, 78% overall
Distributions
$0.50
$0.40
$0.30
$0.20
$0.10
4Q 06
2Q 06
4Q 05
2Q 05
4Q 05
2Q 04
4Q 03
2Q 03
4Q 02
$0.00
Distributions have been adjusted for the April 07 two-for-one unit split
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NRP Financial Profile
Market Capitalization ($36 per unit):
$2.3 billion
Enterprise Value:
$2.8 billion
Distribution per Unit (1Q 2007):
$0.455 quarterly
$1.82 annualized
Senior Notes (3/31/2007):
$472 million
Drawn on Revolver (3/31/2007):
$0 million
Cash on Balance Sheet (3/31/2007):
$62 million
Units Outstanding: (4/19/07):
64.9 million
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Investment Highlights
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A lower risk proxy for the coal industry
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Attractive portfolio of long-life, diverse properties
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Lease to operators with diverse customer base
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Distribution supported by stable, royalty-based cash flows
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No direct exposure to mining operating costs or risks
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Demonstrated ability to grow asset base and distributions
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Well-positioned for growth via coal and mineral acquisitions
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Two new growth platforms in addition to coal reserves
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