UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    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
(State or other jurisdiction of 
incorporation or organization)
    
    35-2164875
(I.R.S. Employer
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)
 þ o
 o o
  þ Large Accelerated Filer
    

o Accelerated Filer
    
    o Non-accelerated Filer
    

o Smaller Reporting Company(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONITEM 1. Financial Statements
    
    
    4Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008
    
    
    4Consolidated Statements of Income For the Three and Six Months Ended June 30,
2009 and 2008
    
    
    5Consolidated Statements of Cash Flows For the Six Months Ended June 30,
2009 and 2008
    
    
    6Notes to Consolidated Financial Statements
    
    
    7ITEM 2. Managements Discussion and Analysis of Financial Condition and
Results of OperationsExecutive Overview
    
    
    15Results of Operations
    
    
    15Liquidity and Capital Resources
    
    
    18Related Party Transactions
    
    
    22Environmental
    
    
    2425ITEM 3. Quantitative And Qualitative Disclosures About Market Risk
    
    
    25ITEM 4. Controls And Procedures
    
    
    25PART II. OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    26ITEM 1A. Risk Factors
    
    
    26ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26ITEM 3. Defaults Upon Senior Securities
    
    
    26ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    26ITEM 5. Other Information
    
    
    26ITEM 6. Exhibits
    
    
    27Signatures
    
    
    28
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Forward-Looking Statements
     3




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##### 



Part I. Financial Information
 
 Item 1. Financial Statements
 NATURAL RESOURCE PARTNERS L.P.CONSOLIDATED BALANCE SHEETS
(In thousands)
 June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    81,495
    
    
    $
    89,928Accounts receivable, net of allowance for doubtful accounts
    
    
    26,293
    
    
    
    31,883Accounts
receivable  affiliate
    
    
    3,906
    
    
    
    1,351Other
    
    
    704
    
    
    
    934Total current assets
    
    
    112,398
    
    
    
    124,096Land
    
    
    24,343
    
    
    
    24,343Plant and equipment, net
    
    
    71,130
    
    
    
    67,204Coal and other mineral rights, net
    
    
    1,133,023
    
    
    
    979,692Intangible assets, net
    
    
    163,610
    
    
    
    102,828Loan financing costs, net
    
    
    3,120
    
    
    
    2,679Other assets, net
    
    
    461
    
    
    
    498Total assets
    
    $
    1,508,085
    
    
    $
    1,301,340LIABILITIES AND PARTNERS CAPITALCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    804
    
    
    $
    861Accounts
payable  affiliates
    
    
    175
    
    
    
    365Current portion of long-term debt
    
    
    32,235
    
    
    
    17,235Accrued
incentive plan expenses  current portion
    
    
    3,982
    
    
    
    3,179Property, franchise and other taxes payable
    
    
    4,543
    
    
    
    6,122Accrued interest
    
    
    10,328
    
    
    
    6,419Total current liabilities
    
    
    52,067
    
    
    
    34,181Deferred revenue
    
    
    49,064
    
    
    
    40,754Accrued incentive plan expenses
    
    
    5,007
    
    
    
    4,242Long-term debt
    
    
    606,280
    
    
    
    478,822Partners capital:Common units outstanding: (69,451,136 in 2009, 64,891,136 in 2008)
    
    
    769,892
    
    
    
    719,341General partners interest
    
    
    14,218
    
    
    
    13,579Holders of incentive distribution rights
    
    
    12,180
    
    
    
    11,069Accumulated other comprehensive loss
    
    
    (623
    )
    
    
    (648
    )Total partners capital
    
    
    795,667
    
    
    
    743,341Total liabilities and partners capital
    
    $
    1,508,085
    
    
    $
    1,301,340
  4




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NATURAL RESOURCE PARTNERS L.P.CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per unit data)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)Revenues:Coal royalties
    
    $
    46,380
    
    
    $
    60,026
    
    
    $
    98,987
    
    
    $
    109,178Aggregate royalties
    
    
    1,347
    
    
    
    1,933
    
    
    
    2,997
    
    
    
    5,295Coal processing fees
    
    
    2,400
    
    
    
    1,757
    
    
    
    4,300
    
    
    
    3,654Transportation fees
    
    
    3,489
    
    
    
    3,361
    
    
    
    5,585
    
    
    
    5,010Oil and gas royalties
    
    
    953
    
    
    
    1,933
    
    
    
    2,446
    
    
    
    3,378Property taxes
    
    
    2,514
    
    
    
    3,105
    
    
    
    5,725
    
    
    
    5,497Minimums recognized as revenue
    
    
    67
    
    
    
    149
    
    
    
    290
    
    
    
    456Override royalties
    
    
    1,336
    
    
    
    2,006
    
    
    
    3,884
    
    
    
    4,505Other
    
    
    1,001
    
    
    
    1,322
    
    
    
    2,006
    
    
    
    2,674Total revenues
    
    
    59,487
    
    
    
    75,592
    
    
    
    126,220
    
    
    
    139,647Operating costs and expenses:Depreciation, depletion and amortization
    
    
    21,996
    
    
    
    16,748
    
    
    
    35,074
    
    
    
    31,807General and administrative
    
    
    5,834
    
    
    
    6,890
    
    
    
    13,340
    
    
    
    11,039Property, franchise and other taxes
    
    
    3,151
    
    
    
    4,098
    
    
    
    7,126
    
    
    
    7,747Transportation costs
    
    
    473
    
    
    
    408
    
    
    
    741
    
    
    
    529Coal royalty and override payments
    
    
    372
    
    
    
    343
    
    
    
    861
    
    
    
    652Total operating costs and expenses
    
    
    31,826
    
    
    
    28,487
    
    
    
    57,142
    
    
    
    51,774Income from operations
    
    
    27,661
    
    
    
    47,105
    
    
    
    69,078
    
    
    
    87,873Other income (expense):Interest expense
    
    
    (10,675
    )
    
    
    (7,064
    )
    
    
    (18,754
    )
    
    
    (14,424
    )Interest income
    
    
    96
    
    
    
    312
    
    
    
    178
    
    
    
    756Net income
    
    $
    17,082
    
    
    $
    40,353
    
    
    $
    50,502
    
    
    $
    74,205Net income attributable to:General partner
    
    $
    98
    
    
    $
    611
    
    
    $
    539
    
    
    $
    1,116Holders of incentive distribution rights
    
    $
    12,180
    
    
    $
    9,822
    
    
    $
    23,561
    
    
    $
    18,399Limited partners
    
    $
    4,804
    
    
    $
    29,920
    
    
    $
    26,402
    
    
    $
    54,690Basic and diluted net income per limited partner unit
    
    $
    0.07
    
    
    $
    0.46
    
    
    $
    0.40
    
    
    $
    0.84Weighted average number of units outstanding
    
    
    66,946
    
    
    
    64,891
    
    
    
    65,924
    
    
    
    64,891
  5




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NATURAL RESOURCE PARTNERS L.P.CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Six Months EndedJune 30,2009
    
    
    2008(Unaudited)Cash flows from operating activities:Net income
    
    $
    50,502
    
    
    $
    74,205Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation, depletion and amortization
    
    
    35,074
    
    
    
    31,807Non-cash interest charge, net
    
    
    1,010
    
    
    
    235Loss from disposition of assets
    
    
    
    
    
    
    32Change in operating assets and liabilities:Accounts receivable
    
    
    1,865
    
    
    
    (8,971
    )Other assets
    
    
    267
    
    
    
    584Accounts payable and accrued liabilities
    
    
    (247
    )
    
    
    429Accrued interest
    
    
    3,909
    
    
    
    (265
    )Deferred revenue
    
    
    8,310
    
    
    
    2,726Accrued incentive plan expenses
    
    
    1,568
    
    
    
    1,078Property, franchise and other taxes payable
    
    
    (1,579
    )
    
    
    (990
    )Net cash provided by operating activities
    
    
    100,679
    
    
    
    100,870Cash flows from investing activities:Acquisition of land, coal and other mineral rights
    
    
    (95,641
    )
    
    
    Acquisition or construction of plant and equipment
    
    
    (1,157
    )
    
    
    (7,454
    )Net cash used in investing activities
    
    
    (96,798
    )
    
    
    (7,454
    )Cash flows from financing activities:Proceeds from loans
    
    
    303,000
    
    
    
    Deferred financing costs
    
    
    (661
    )
    
    
    Repayment of loans
    
    
    (160,542
    )
    
    
    (9,543
    )Retirement of obligation related to purchase of coal reserves
and infrastructure
    
    
    (60,000
    )
    
    
    Costs associated with issuance of units
    
    
    (21
    )
    
    
    Distributions to partners
    
    
    (94,090
    )
    
    
    (81,760
    )Net cash used in financing activities
    
    
    (12,314
    )
    
    
    (91,303
    )Net increase (decrease) in cash and cash equivalents
    
    
    (8,433
    )
    
    
    2,113Cash and cash equivalents at beginning of period
    
    
    89,928
    
    
    
    58,341Cash and cash equivalents at end of period
    
    $
    81,495
    
    
    $
    60,454Supplemental cash flow information:Cash paid during the period for interest
    
    $
    13,760
    
    
    $
    14,450Non-cash investing activities:Equity issued for acquisitions
    
    $
    95,910
    
    
    $
    Liability assumed in acquisitions
    
    
    1,170
    
    
    
    Non-cash financing activities:Obligation related to purchase of coal reserves and infrastructure
    
    
    59,220
    
    
    
    
  6




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NATURAL RESOURCE PARTNERS L.P.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation and Organization
      2. Recent Accounting Pronouncements
  Interim
Disclosures about Fair Value of Financial Instrument Disclosures about Fair Value of Financial Instruments Interim Financial Reporting
  7




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3. Significant Acquisitions
 Gatling Ohio
 Macoupin 
 8




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4. Plant and Equipment
  June 30,
    
    
    December 31,2009
    
    
    2008(In thousands)(Unaudited)Construction in process
    
    $
    
    
    
    $
    8,524Plant and equipment at cost
    
    
    84,732
    
    
    
    68,197Accumulated depreciation
    
    
    (13,602
    )
    
    
    (9,517
    )Net book value
    
    $
    71,130
    
    
    $
    67,204
 Six months endedJune 30,2009
    
    
    2008(In thousands)(Unaudited)Total depreciation expense on plant and equipment
    
    $
    4,085
    
    
    $
    2,184
 5. Coal and Other Mineral Rights
  June 30,
    
    
    December 31,2009
    
    
    2008(In thousands)(Unaudited)Coal and other mineral rights
    
    $
    1,423,023
    
    
    $
    1,253,314Less accumulated depletion and amortization
    
    
    (290,000
    )
    
    
    (273,622
    )Net book value
    
    $
    1,133,023
    
    
    $
    979,692
 Six months endedJune 30,2009
    
    
    2008(In thousands)(Unaudited)Total depletion and amortization expense on coal and other mineral rights
    
    $
    29,443
    
    
    $
    28,093
  6. Intangible Assets
  June 30, 2009
    
    
    December 31, 2008Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(In thousands)
    
    
    (In thousands)(Unaudited)Finite-lived intangible assetsAbove market transportation contracts
    
    $
    127,169
    
    
    $
    4,876
    
    
    $
    82,276
    
    
    $
    3,683Above market coal leases
    
    
    42,717
    
    
    
    1,400
    
    
    
    25,281
    
    
    
    1,046$
    169,886
    
    
    $
    6,276
    
    
    $
    107,557
    
    
    $
    4,729
   9




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For remainder of year ended December 31, 2009
    
    $
    2,283For year ended December 31, 2010
    
    
    5,936For year ended December 31, 2011
    
    
    6,447For year ended December 31, 2012
    
    
    6,470For year ended December 31, 2013
    
    
    6,470For year ended December 31, 2014
    
    
    6,470
 7. Long-Term Debt
  June 30,
    
    
    December 31,2009
    
    
    2008(In thousands)(Unaudited)$300 million floating rate revolving credit facility, due March 2012
    
    $
    
    
    
    $
    48,0005.55% senior notes, with semi-annual interest payments in June and
December, maturing June 2013
    
    
    35,000
    
    
    
    35,0004.91% senior notes, with semi-annual interest payments in June and
December, with annual principal payments in June, maturing in June 2018
    
    
    43,700
    
    
    
    49,7508.38% senior notes, with semi-annual interest payments in March and
September, with scheduled principal payments beginning March 2013,
maturing in March 2019
    
    
    150,000
    
    
    
    5.05% senior notes, with semi-annual interest payments in January and
July, with scheduled principal payments beginning July 2008, maturing in
July 2020
    
    
    92,308
    
    
    
    92,3085.31% utility local improvement obligation, with annual principal and
interest payments, maturing in March 2021
    
    
    2,307
    
    
    
    2,4995.55% senior notes, with semi-annual interest payments in June and
December, with annual principal payments in June, maturing in June 2023
    
    
    40,200
    
    
    
    43,5005.82% senior notes, with semi-annual interest payments in March and
September, with scheduled principal payments beginning March 2010,
maturing in March 2024
    
    
    225,000
    
    
    
    225,0008.92% senior notes, with semi-annual interest payments in March and
September, with scheduled principal payments beginning March 2014,
maturing in March 2024
    
    
    50,000
    
    
    
    Total debt
    
    
    638,515
    
    
    
    496,057Less  current portion of long term debt
    
    
    (32,235
    )
    
    
    (17,235
    )Long-term debt
    
    $
    606,280
    
    
    $
    478,822
    8. Fair Value Measurements
  10




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
    
    Level 1  Quoted prices in active markets for identical assets or liabilities.
    
    Level 2  Observable inputs other than Level 1 prices, such as quoted prices for
similar assets or liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by observable market data
for substantially the full term of the assets or liabilities.
    
    Level 3  Unobservable inputs that are supported by little or no market activity
and that are significant to the fair value of the assets or liabilities. Level 3
assets and liabilities include financial instruments whose value is determined
using pricing models, discounted cash flow methodologies, or similar techniques, as
well as instruments for which the determination of fair value requires significant
management judgment or estimation.
  9. Net Income Per Unit Attributable to Limited Partners and Adoption of EITF Issue 07-04
 Application of the Two-Class Method under FASB
Statement No. 128 to Master Limited Partnerships
 10. Related Party Transactions
 Reimbursements to Affiliates of its General Partner
   11




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Transactions with Cline Affiliates
     Quintana Capital Group GP, Ltd.
    11. Commitments and Contingencies
 Legal
  12




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Environmental Compliance
  12. Major Lessees
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Revenues
    
    Percent
    
    Revenues
    
    Percent
    
    Revenues
    
    Percent
    
    Revenues
    
    Percent(Dollars in thousands)(Unaudited)Lessee A
    
    $
    10,308
    
    
    
    17.3
    %
    
    $
    8,393
    
    
    
    11.1
    %
    
    $
    16,553
    
    
    
    13.1
    %
    
    $
    11,459
    
    
    
    8.2
    %Lessee B
    
    
    4,837
    
    
    
    8.1
    %
    
    
    9,158
    
    
    
    12.1
    %
    
    
    12,145
    
    
    
    9.6
    %
    
    
    16,356
    
    
    
    11.7
    %
 13. Incentive Plans
    Outstanding grants at the beginning of the period
    
    
    571,284Grants during the period
    
    
    207,366Grants vested and paid during the period
    
    
    (125,052
    )Forfeitures during the period
    
    
    Outstanding grants at the end of the period
    
    
    653,598
 13




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14. Distributions
  15. Subsequent Events
  Acquisitions
  Distributions
  14




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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 February 27, 2009.
 
 Executive Overview
 Our Business
     Current Market Conditions and our Liquidity
   Current Results
  15




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Political, Legal and Regulatory Environment
      Distributable Cash Flow
  16




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Reconciliation of GAAP Net cash provided by operating activities  to Non-GAAP Distributable cash flow  (In thousands)
 For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,(Unaudited)2009
    
    
    2008
    
    
    2009
    
    
    2008Net cash provided by operating activities
    
    $
    57,127
    
    
    $
    61,667
    
    
    $
    100,679
    
    
    $
    100,870Less scheduled principal payments
    
    
    (9,350
    )
    
    
    (9,350
    )
    
    
    (9,542
    )
    
    
    (9,543
    )Less reserves for future principal payments
    
    
    (8,059
    )
    
    
    (4,308
    )
    
    
    (16,118
    )
    
    
    (8,616
    )Add reserves used for scheduled principal payments
    
    
    9,350
    
    
    
    9,350
    
    
    
    9,542
    
    
    
    9,543Distributable cash flow
    
    $
    49,068
    
    
    $
    57,359
    
    
    $
    84,561
    
    
    $
    92,254
 Acquisitions
  Gatling Ohio
 Massey  Jewell Smokeless
 Macoupin.
 Coal Properties.
 Mid-Vol Coal Preparation Plant
 Licking River Preparation Plant
 17




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Results of Operations
 Three Months Ended
    
    
    Increase
    
    
    PercentageJune 30,
    
    
    (Decrease)
    
    
    Change2009
    
    
    2008(In thousands, except percent and per ton data)(Unaudited)Coal:Coal royalty revenuesAppalachiaNorthern
    
    $
    2,890
    
    
    $
    4,902
    
    
    $
    (2,012
    )
    
    
    (41
    )%Central
    
    
    30,308
    
    
    
    42,974
    
    
    
    (12,666
    )
    
    
    (29
    )%Southern
    
    
    4,809
    
    
    
    3,802
    
    
    
    1,007
    
    
    
    26
    %Total Appalachia
    
    
    38,007
    
    
    
    51,678
    
    
    
    (13,671
    )
    
    
    (26
    )%Illinois Basin
    
    
    6,570
    
    
    
    5,923
    
    
    
    647
    
    
    
    11
    %Northern Powder River Basin
    
    
    1,803
    
    
    
    2,425
    
    
    
    (622
    )
    
    
    (26
    )%Total
    
    $
    46,380
    
    
    $
    60,026
    
    
    $
    (13,646
    )
    
    
    (23
    )%Production (tons)AppalachiaNorthern
    
    
    967
    
    
    
    1,927
    
    
    
    (960
    )
    
    
    (50
    )%Central
    
    
    6,989
    
    
    
    9,629
    
    
    
    (2,640
    )
    
    
    (27
    )%Southern
    
    
    798
    
    
    
    930
    
    
    
    (132
    )
    
    
    (14
    )%Total Appalachia
    
    
    8,754
    
    
    
    12,486
    
    
    
    (3,732
    )
    
    
    (30
    )%Illinois Basin
    
    
    1,956
    
    
    
    2,293
    
    
    
    (337
    )
    
    
    (15
    )%Northern Powder River Basin
    
    
    1,074
    
    
    
    1,314
    
    
    
    (240
    )
    
    
    (18
    )%Total
    
    
    11,784
    
    
    
    16,093
    
    
    
    (4,390
    )
    
    
    (27
    )%Average gross royalty per tonAppalachiaNorthern
    
    $
    2.99
    
    
    $
    2.54
    
    
    $
    0.45
    
    
    
    18
    %Central
    
    
    4.34
    
    
    
    4.46
    
    
    
    (0.12
    )
    
    
    (3
    )%Southern
    
    
    6.03
    
    
    
    4.09
    
    
    
    1.94
    
    
    
    47
    %Total Appalachia
    
    
    4.34
    
    
    
    4.14
    
    
    
    0.20
    
    
    
    5
    %Illinois Basin
    
    
    3.36
    
    
    
    2.58
    
    
    
    0.78
    
    
    
    30
    %Northern Powder River Basin
    
    
    1.68
    
    
    
    1.85
    
    
    
    (0.17
    )
    
    
    (9
    )%Combined average gross
royalty per ton
    
    
    3.94
    
    
    
    3.73
    
    
    
    0.21
    
    
    
    6
    %Aggregates:Royalty revenue
    
    $
    1,047
    
    
    $
    1,633
    
    
    $
    (586
    )
    
    
    (36
    )%Aggregate royalty bonus
    
    $
    300
    
    
    $
    300
    
    
    $
    
    
    
    
    Production
    
    
    791
    
    
    
    1,238
    
    
    
    447
    
    
    
    (36
    )%Average base royalty per ton
    
    $
    1.32
    
    
    $
    1.32
    
    
    $
    
    
    
    
    
 Coal Royalty Revenues and Production
 Appalachia.
 Illinois Basin
 18




---



##### 



Northern Powder River Basin
 Aggregates Royalty Revenues and Production
 19




---



##### 



Results of Operations
 Six Months Ended
    
    
    Increase
    
    
    PercentageJune 30,
    
    
    (Decrease)
    
    
    Change2009
    
    
    2008(In thousands, except percent and per ton data)(Unaudited)Coal:Coal royalty revenuesAppalachiaNorthern
    
    $
    5,933
    
    
    $
    8,405
    
    
    $
    (2,472
    )
    
    
    (29
    )%Central
    
    
    68,186
    
    
    
    77,271
    
    
    
    (9,085
    )
    
    
    (12
    )%Southern
    
    
    9,906
    
    
    
    9,300
    
    
    
    606
    
    
    
    7
    %Total Appalachia
    
    
    84,025
    
    
    
    94,976
    
    
    
    (10,951
    )
    
    
    (12
    )%Illinois Basin
    
    
    10,821
    
    
    
    8,556
    
    
    
    2,265
    
    
    
    26
    %Northern Powder River Basin
    
    
    4,141
    
    
    
    5,646
    
    
    
    (1,505
    )
    
    
    (27
    )%Total
    
    $
    98,987
    
    
    $
    109,178
    
    
    $
    (10,191
    )
    
    
    (9
    )%Production (tons)AppalachiaNorthern
    
    
    2,066
    
    
    
    3,264
    
    
    
    (1,198
    )
    
    
    (37
    )%Central
    
    
    14,978
    
    
    
    18,571
    
    
    
    (3,593
    )
    
    
    (19
    )%Southern
    
    
    1,639
    
    
    
    2,224
    
    
    
    (585
    )
    
    
    (26
    )%Total Appalachia
    
    
    18,683
    
    
    
    24,059
    
    
    
    (5,376
    )
    
    
    (22
    )%Illinois Basin
    
    
    3,282
    
    
    
    3,458
    
    
    
    (176
    )
    
    
    (5
    )%Northern Powder River Basin
    
    
    2,301
    
    
    
    3,045
    
    
    
    (744
    )
    
    
    (24
    )%Total
    
    
    24,266
    
    
    
    30,562
    
    
    
    (6,296
    )
    
    
    (21
    )%Average gross royalty per tonAppalachiaNorthern
    
    $
    2.87
    
    
    $
    2.58
    
    
    $
    0.29
    
    
    
    11
    %Central
    
    
    4.55
    
    
    
    4.16
    
    
    
    0.39
    
    
    
    9
    %Southern
    
    
    6.04
    
    
    
    4.18
    
    
    
    1.86
    
    
    
    44
    %Total Appalachia
    
    
    4.50
    
    
    
    3.95
    
    
    
    0.55
    
    
    
    14
    %Illinois Basin
    
    
    3.30
    
    
    
    2.47
    
    
    
    0.83
    
    
    
    34
    %Northern Powder River Basin
    
    
    1.80
    
    
    
    1.85
    
    
    
    (0.05
    )
    
    
    (3
    )%Combined average gross
royalty per ton
    
    
    4.08
    
    
    
    3.57
    
    
    
    0.51
    
    
    
    14
    %Aggregates:Royalty revenue
    
    $
    1,977
    
    
    $
    3,051
    
    
    $
    (1,074
    )
    
    
    (35
    )%Aggregate royalty bonus
    
    $
    1,020
    
    
    $
    2,244
    
    
    $
    (1,224
    )
    
    
    (55
    )%Production
    
    
    1,481
    
    
    
    2,392
    
    
    
    (911
    )
    
    
    (38
    )%Average base royalty per ton
    
    $
    1.33
    
    
    $
    1.28
    
    
    $
    0.05
    
    
    
    4
    %
 Coal Royalty Revenues and Production
 Appalachia.
 Illinois Basin
 20




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##### 



Northern Powder River Basin
 Aggregates Royalty Revenues and Production
 Other Operating Results
 Coal Processing and Transportation Revenues
  Oil and Gas Royalties
 Override revenues.
 Other revenues. ,
 Operating costs and expenses.
 
    
    Depreciation, depletion and amortization of $22.0 million and $16.7 million and $35.1
million and $31.8 million for the three and six month periods ended June 30, 2009 and 2008,
respectively. Excluding a onetime expense of $8.2 million for a terminated lease due to a
mine closure, depletion decreased as a result of lower total production for the first six
months of 2009.
    
    General and administrative expenses of $5.8 million and $6.9 million and $13.3 million
and $11.0 million for the three and six month periods ended June 30, 2009 and 2008,
respectively. The change in general and administrative expense is primarily due to accruals
under our long-term incentive plan attributable to fluctuations in our unit price.
    
    Property, franchise and other taxes have decreased slightly for both the three and six
month periods ended June 30, 2009 when compared to the same period of 2008. This decrease
reflects lower West Virginia and Virginia property taxes offset partially by higher Kentucky
unmined mineral taxes. A substantial portion of our property taxes is reimbursed to us by
our lessees and is reflected as property tax revenue on our statement of income.
 Interest Expense.
 21




---



##### 



Liquidity and Capital Resources
 Cash Flows and Capital Expenditures
     Long-Term Debt
  
    
    $35 million of 5.55% senior notes due 2013;
    
    $43.7 million of 4.91% senior notes due 2018;
    
    $150 million of 8.38% senior notes due 2019;
    
    $92.3 million of 5.05% senior notes due 2020;
    
    $2.3 million of 5.31% utility local improvement obligation due 2021;
    
    $40.2 million of 5.55% senior notes due 2023;
    
    $225 million of 5.82% senior notes due 2024; and
    
    $50 million of 8.92% senior notes due 2024.
  Credit Facility.
 22




---



##### 




    
    the higher of the federal funds rate plus an applicable margin ranging from 0% to 0.50%
or the prime rate as announced by the agent bank; or
    
    at a rate equal to LIBOR plus an applicable margin ranging from 0.45% to 1.50%.
   
    
    a ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the credit
agreement) of 3.75 to 1.0 for the four most recent quarters; provided however, if during one
of those quarters we have made an acquisition, then the ratio shall not exceed 4.0 to 1.0
for the quarter in which the acquisition occurred and (1) if the acquisition is in the first
half of the quarter, the next two quarters or (2) if the acquisition is in the second half
of the quarter, the next three quarters; and
    
    a ratio of consolidated EBITDDA to consolidated fixed charges (consisting of consolidated
interest expense and consolidated lease operating expense) of 4.0 to 1.0 for the four most
recent quarters.
 Senior Notes.
  
    
    not permit debt secured by certain liens and debt of subsidiaries to exceed 10% of
consolidated net tangible assets (as defined in the note purchase agreement); and
    
    maintain the ratio of consolidated EBITDA to consolidated fixed charges (consisting of
consolidated interest expense and consolidated operating lease expense) at not less than 3.5
to 1.00.
  Shelf Registration Statement
  Off-Balance Sheet Transactions
  23




---



##### 



Related Party Transactions
 Reimbursements to Affiliates of our General Partner
   Transactions with Cline Affiliates
     Quintana Capital Group GP, Ltd.
    24




---



##### 



Environmental
  
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
  Commodity Price Risk
  Interest Rate Risk
  
 Item 4.
    
    Controls and Procedures
   25




---



##### 



Part II. Other Information
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  The adoption of climate change legislation by Congress could result in increased operating costs
and reduced demand for our coal.
   
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Defaults Upon Senior Securities
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  
 Item 5.
    
    Other Information
  26




---



##### 



Item 6.
    
    Exhibits
 3.1
    
    
    
    Amendment No. 1 to Third Amended and Restated Agreement of Limited
Partnership of NRP (GP) LP, dated as of May 20, 2009 (incorporated by
reference to the Current Report on Form 8-K filed on May 21, 2009).3.2*
    
    
    
    Amendment No. 2 to Third Amended and Restated Agreement of Limited
Partnership of NRP (GP) LP, dated as of June 30, 2009.31.1*
    
    
    
    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. § 1350.32.2**
    
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350.
 
 *
    
    Filed herewith. 27




---



##### 



SIGNATURES
  Date:  August 6, 2009
    NATURAL RESOURCE PARTNERS L.P.
By: NRP (GP) LP, its general partner
By: GP NATURAL RESOURCE
       PARTNERS LLC, its general partnerBy:
    /s/ Corbin J. Robertson, Jr.Corbin J. Robertson, Jr.,Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)Date:  August 6, 2009By:
    /s/ Dwight L. DunlapDwight L. Dunlap,Chief Financial Officer and
Treasurer
(Principal Financial Officer)Date:  August 6, 2009By:
    /s/ Kenneth HudsonKenneth HudsonController
(Principal Accounting Officer) 28