##### Table of Contents



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 September 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.
  Delaware
    
    35-2164875(State or other jurisdiction of
    
    (I.R.S. Employerincorporation 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)
 þ o
 o o
  þ  Large accelerated filer
    
    o  Accelerated filer
    
    o  Non-accelerated filer 
(Do not check if a smaller reporting company)
    
    o  Smaller reporting company
 o þ




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##### 



TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONITEM 1. Financial StatementsConsolidated Balance Sheets as of September 30, 2009 and December 31, 2008
    
    
    4Consolidated Statements of Income For the Three and Nine Months Ended September 30,
2009 and 2008
    
    
    5Consolidated Statements of Cash Flows For the Nine Months Ended September 30,
2009 and 2008
    
    
    6Notes to Consolidated Financial Statements
    
    
    7ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsExecutive Overview
    
    
    16Results of Operations
    
    
    20Liquidity and Capital Resources
    
    
    24Related Party Transactions
    
    
    26Environmental
    
    
    27ITEM 3. Quantitative And Qualitative Disclosures About Market Risk
    
    
    27ITEM 4. Controls And Procedures
    
    
    27PART II. OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    28ITEM 1A. Risk Factors
    
    
    28ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29ITEM 3. Defaults Upon Senior Securities
    
    
    29ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    29ITEM 5. Other Information
    
    
    29ITEM 6. Exhibits
    
    
    30Signatures
    
    
    31EX-31.1EX-31.2EX-32.1EX-32.2
  2




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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)
 September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    60,880
    
    
    $
    89,928Accounts receivable, net of allowance for doubtful accounts
    
    
    29,873
    
    
    
    31,883Accounts receivable  affiliate
    
    
    2,211
    
    
    
    1,351Other
    
    
    254
    
    
    
    934Total current assets
    
    
    93,218
    
    
    
    124,096Land
    
    
    24,343
    
    
    
    24,343Plant and equipment, net
    
    
    69,087
    
    
    
    67,204Coal and other mineral rights, net
    
    
    1,157,092
    
    
    
    979,692Intangible assets, net
    
    
    162,779
    
    
    
    102,828Loan financing costs, net
    
    
    3,005
    
    
    
    2,679Other assets, net
    
    
    599
    
    
    
    498Total assets
    
    $
    1,510,123
    
    
    $
    1,301,340LIABILITIES AND PARTNERS CAPITALCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    927
    
    
    $
    861Accounts payable  affiliates
    
    
    156
    
    
    
    365Obligation related to acquisition
    
    
    11,843
    
    
    
    Current portion of long-term debt
    
    
    32,235
    
    
    
    17,235Accrued incentive plan expenses  current portion
    
    
    4,235
    
    
    
    3,179Property, franchise and other taxes payable
    
    
    4,490
    
    
    
    6,122Accrued interest
    
    
    3,362
    
    
    
    6,419Total current liabilities
    
    
    57,248
    
    
    
    34,181Deferred revenue
    
    
    51,060
    
    
    
    40,754Accrued incentive plan expenses
    
    
    5,594
    
    
    
    4,242Long-term debt
    
    
    620,587
    
    
    
    478,822Partners capital:Common units outstanding: (69,451,136 in 2009, 64,891,136 in 2008)
    
    
    757,550
    
    
    
    719,341General partners interest
    
    
    13,717
    
    
    
    13,579Holders of incentive distribution rights
    
    
    4,977
    
    
    
    11,069Accumulated other comprehensive loss
    
    
    (610
    )
    
    
    (648
    )Total partners capital
    
    
    775,634
    
    
    
    743,341Total liabilities and partners capital
    
    $
    1,510,123
    
    
    $
    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
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)Revenues:Coal royalties
    
    $
    49,307
    
    
    $
    58,323
    
    
    $
    148,294
    
    
    $
    167,501Aggregate royalties
    
    
    1,700
    
    
    
    2,280
    
    
    
    4,697
    
    
    
    7,575Coal processing fees
    
    
    1,508
    
    
    
    2,044
    
    
    
    5,808
    
    
    
    5,698Transportation fees
    
    
    3,049
    
    
    
    3,183
    
    
    
    8,634
    
    
    
    8,193Oil and gas royalties
    
    
    1,203
    
    
    
    2,201
    
    
    
    3,649
    
    
    
    5,579Property taxes
    
    
    3,311
    
    
    
    2,263
    
    
    
    9,036
    
    
    
    7,760Minimums recognized as revenue
    
    
    775
    
    
    
    737
    
    
    
    1,065
    
    
    
    1,193Override royalties
    
    
    2,077
    
    
    
    3,133
    
    
    
    5,961
    
    
    
    7,638Other
    
    
    1,032
    
    
    
    2,032
    
    
    
    3,038
    
    
    
    4,706Total revenues
    
    
    63,962
    
    
    
    76,196
    
    
    
    190,182
    
    
    
    215,843Operating costs and expenses:Depreciation, depletion and amortization
    
    
    12,952
    
    
    
    17,042
    
    
    
    48,026
    
    
    
    48,849General and administrative
    
    
    4,586
    
    
    
    1,732
    
    
    
    17,926
    
    
    
    12,771Property, franchise and other taxes
    
    
    4,273
    
    
    
    2,822
    
    
    
    11,399
    
    
    
    10,569Transportation costs
    
    
    403
    
    
    
    431
    
    
    
    1,144
    
    
    
    960Coal royalty and override payments
    
    
    353
    
    
    
    287
    
    
    
    1,214
    
    
    
    939Total operating costs and expenses
    
    
    22,567
    
    
    
    22,314
    
    
    
    79,709
    
    
    
    74,088Income from operations
    
    
    41,395
    
    
    
    53,882
    
    
    
    110,473
    
    
    
    141,755Other income (expense):Interest expense
    
    
    (10,762
    )
    
    
    (6,912
    )
    
    
    (29,516
    )
    
    
    (21,336
    )Interest income
    
    
    18
    
    
    
    368
    
    
    
    196
    
    
    
    1,124Net income
    
    $
    30,651
    
    
    $
    47,338
    
    
    $
    81,153
    
    
    $
    121,543Net income attributable to:General partner
    
    $
    513
    
    
    $
    738
    
    
    $
    1,052
    
    
    $
    1,854Holders of incentive distribution rights
    
    $
    4,977
    
    
    $
    10,446
    
    
    $
    28,538
    
    
    $
    28,845Limited partners
    
    $
    25,161
    
    
    $
    36,154
    
    
    $
    51,563
    
    
    $
    90,844Basic and diluted net income per limited partner unit
    
    $
    0.36
    
    
    $
    0.55
    
    
    $
    0.77
    
    
    $
    1.40Weighted average number of units outstanding
    
    
    69,451
    
    
    
    64,891
    
    
    
    67,113
    
    
    
    64,891
  5




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NATURAL RESOURCE PARTNERS L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Nine Months EndedSeptember 30,2009
    
    
    2008(Unaudited)Cash flows from operating activities:Net income
    
    $
    81,153
    
    
    $
    121,543Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation, depletion and amortization
    
    
    48,026
    
    
    
    48,849Non-cash interest charge, net
    
    
    1,336
    
    
    
    266Loss from disposition of assets
    
    
    
    
    
    
    32Change in operating assets and liabilities:Accounts receivable
    
    
    (20
    )
    
    
    (11,294
    )Other assets
    
    
    579
    
    
    
    892Accounts payable and accrued liabilities
    
    
    (143
    )
    
    
    447Accrued interest
    
    
    (3,214
    )
    
    
    (3,199
    )Deferred revenue
    
    
    10,306
    
    
    
    3,989Accrued incentive plan expenses
    
    
    2,408
    
    
    
    (506
    )Property, franchise and other taxes payable
    
    
    (1,632
    )
    
    
    (1,876
    )Net cash provided by operating activities
    
    
    138,799
    
    
    
    159,143Cash flows from investing activities:Acquisition of land, coal and other mineral rights
    
    
    (114,986
    )
    
    
    Acquisition or construction of plant and equipment
    
    
    (1,157
    )
    
    
    (9,952
    )Net cash used in investing activities
    
    
    (116,143
    )
    
    
    (9,952
    )Cash flows from financing activities:Proceeds from loans
    
    
    325,000
    
    
    
    Deferred financing costs
    
    
    (661
    )
    
    
    Repayment of loans
    
    
    (168,235
    )
    
    
    (17,235
    )Retirement of obligation related to acquisitions
    
    
    (63,000
    )Costs associated with issuance of units
    
    
    (21
    )
    
    
    Distributions to partners
    
    
    (144,787
    )
    
    
    (125,885
    )Net cash used in financing activities
    
    
    (51,704
    )
    
    
    (143,120
    )Net increase (decrease) in cash and cash equivalents
    
    
    (29,048
    )
    
    
    6,071Cash and cash equivalents at beginning of period
    
    
    89,928
    
    
    
    58,341Cash and cash equivalents at end of period
    
    $
    60,880
    
    
    $
    64,412Supplemental cash flow information:Cash paid during the period for interest
    
    $
    31,316
    
    
    $
    24,179Non-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
    
    $
    74,022
    
    
    
    
  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
    7




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3. Significant Acquisitions
 Colt
 Blue Star
 Gatling Ohio
 Massey  Jewell Smokeless
 8




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Macoupin 
 4. Plant and Equipment
 The Partnerships plant and equipment consist of the following:
 September 30,
    
    
    December 31,2009
    
    
    2008(In thousands)(Unaudited)Construction in process
    
    $
    
    
    
    $
    8,524Plant and equipment at cost
    
    
    84,732
    
    
    
    68,197Accumulated depreciation
    
    
    (15,645
    )
    
    
    (9,517
    )Net book value
    
    $
    69,087
    
    
    $
    67,204
 Nine months endedSeptember 30,2009
    
    
    2008(In thousands)(Unaudited)Total depreciation expense on plant and equipment
    
    $
    6,128
    
    
    $
    3,707
 5. Coal and Other Mineral Rights
  September 30,
    
    
    December 31,2009
    
    
    2008(In thousands)(Unaudited)Coal and other mineral rights
    
    $
    1,457,171
    
    
    $
    1,253,314Less accumulated depletion and amortization
    
    
    (300,079
    )
    
    
    (273,622
    )Net book value
    
    $
    1,157,092
    
    
    $
    979,692
 Nine months endedSeptember 30,2009
    
    
    2008(In thousands)(Unaudited)Total depletion and amortization expense on coal and other mineral rights
    
    $
    39,521
    
    
    $
    42,718
  9




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6. Intangible Assets
  September 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
    
    
    $
    5,055
    
    
    $
    82,276
    
    
    $
    3,683Above market coal leases
    
    
    42,717
    
    
    
    2,052
    
    
    
    25,281
    
    
    
    1,046$
    169,886
    
    
    $
    7,107
    
    
    $
    107,557
    
    
    $
    4,729
    For remainder of year ended December 31, 2009
    
    $
    1,372For year ended December 31, 2010
    
    
    5,026For year ended December 31, 2011
    
    
    5,390For year ended December 31, 2012
    
    
    5,390For year ended December 31, 2013
    
    
    5,390For year ended December 31, 2014
    
    
    5,390
 7. Long-Term Debt
  September 30,
    
    
    December 31,2009
    
    
    2008(In thousands)(Unaudited)$300 million floating rate revolving credit facility, due March 2012
    
    $
    22,000
    
    
    $
    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 annual principal payments in July, maturing in July 2020
    
    
    84,615
    
    
    
    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
    
    
    652,822
    
    
    
    496,057Less  current portion of long term debt
    
    
    (32,235
    )
    
    
    (17,235
    )Long-term debt
    
    $
    620,587
    
    
    $
    478,822
 10




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8. Fair Value Measurements
   
    
    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 Two-Class Method
  11




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10. Related Party Transactions
 Reimbursements to Affiliates of its General Partner
   Transactions with Cline Affiliates
     Quintana Capital Group GP, Ltd.
  12




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11. Commitments and Contingencies
 Legal
  Environmental Compliance
  Acquisition
  13




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12. Major Lessees
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2009
    
    2008
    
    2009
    
    2008Revenues
    
    Percent
    
    Revenues
    
    Percent
    
    Revenues
    
    Percent
    
    Revenues
    
    Percent(Dollars in thousands)(Unaudited)Lessee A
    
    $
    9,091
    
    
    
    14
    %
    
    $
    8,495
    
    
    
    11
    %
    
    $
    25,644
    
    
    
    13
    %
    
    $19,953
    
    9%Lessee B
    
    
    6,184
    
    
    
    10
    %
    
    
    8,758
    
    
    
    12
    %
    
    
    18,329
    
    
    
    10
    %
    
    25,114
    
    12%
 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
   14




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14. Distributions
  15. Subsequent Events
  Distributions
  15




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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
     Our Current Liquidity Position
   Current Results
  16




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Political, Legal and Regulatory Environment
      17




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Distributable Cash Flow
   Reconciliation of GAAP Net cash provided by operating activities  to Non-GAAP Distributable cash flow  (In thousands)
 For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30,
    
    
    September 30,(Unaudited)2009
    
    
    2009
    
    
    2009
    
    
    2008Net cash provided by operating activities
    
    $
    38,120
    
    
    $
    58,273
    
    
    $
    138,799
    
    
    $
    159,143Less scheduled principal payments
    
    
    (7,693
    )
    
    
    (7,691
    )
    
    
    (17,235
    )
    
    
    (17,234
    )Less reserves for future principal payments
    
    
    (8,059
    )
    
    
    (4,308
    )
    
    
    (24,177
    )
    
    
    (12,924
    )Add reserves used for scheduled principal payments
    
    
    7,693
    
    
    
    7,691
    
    
    
    17,235
    
    
    
    17,234Distributable cash flow
    
    $
    30,061
    
    
    $
    53,965
    
    
    $
    114,622
    
    
    $
    146,219
 Acquisitions
  Colt
 Blue Star
 Gatling Ohio
 18




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Massey  Jewell Smokeless
 Macoupin.
 Coal Properties.
 Mid-Vol Coal Preparation Plant
 Licking River Preparation Plant
 19




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Results of Operations
 Three Months Ended
    
    
    Increase
    
    
    PercentageSeptember 30,
    
    
    (Decrease)
    
    
    Change2009
    
    
    2008(In thousands, except percent and per ton data)(Unaudited)Coal:Coal royalty revenuesAppalachiaNorthern
    
    $
    3,998
    
    
    $
    3,433
    
    
    $
    565
    
    
    
    16
    %Central
    
    
    33,688
    
    
    
    40,371
    
    
    
    (6,683
    )
    
    
    (17
    %)Southern
    
    
    4,849
    
    
    
    5,397
    
    
    
    (548
    )
    
    
    (10
    %)Total Appalachia
    
    
    42,535
    
    
    
    49,201
    
    
    
    (6,666
    )
    
    
    (14
    %)Illinois Basin
    
    
    5,413
    
    
    
    6,438
    
    
    
    (1,025
    )
    
    
    (16
    %)Northern Powder River Basin
    
    
    1,359
    
    
    
    2,684
    
    
    
    (1,325
    )
    
    
    (49
    %)Total
    
    $
    49,307
    
    
    $
    58,323
    
    
    $
    (9,016
    )
    
    
    (15
    %)Production (tons)AppalachiaNorthern
    
    
    1,238
    
    
    
    1,172
    
    
    
    66
    
    
    
    6
    %Central
    
    
    6,984
    
    
    
    8,859
    
    
    
    (1,875
    )
    
    
    (21
    %)Southern
    
    
    799
    
    
    
    1,015
    
    
    
    (216
    )
    
    
    (21
    %)Total Appalachia
    
    
    9,021
    
    
    
    11,046
    
    
    
    (2,025
    )
    
    
    (18
    %)Illinois Basin
    
    
    1,723
    
    
    
    2,441
    
    
    
    (718
    )
    
    
    (29
    %)Northern Powder River Basin
    
    
    539
    
    
    
    1,448
    
    
    
    (909
    )
    
    
    (63
    %)Total
    
    
    11,283
    
    
    
    14,935
    
    
    
    (3,652
    )
    
    
    (24
    %)Average gross royalty per tonAppalachiaNorthern
    
    $
    3.23
    
    
    $
    2.93
    
    
    $
    0.30
    
    
    
    10
    %Central
    
    
    4.82
    
    
    
    4.56
    
    
    
    0.27
    
    
    
    6
    %Southern
    
    
    6.07
    
    
    
    5.32
    
    
    
    0.75
    
    
    
    14
    %Total Appalachia
    
    
    4.72
    
    
    
    4.45
    
    
    
    0.26
    
    
    
    6
    %Illinois Basin
    
    
    3.14
    
    
    
    2.64
    
    
    
    0.50
    
    
    
    19
    %Northern Powder River Basin
    
    
    2.52
    
    
    
    1.85
    
    
    
    0.67
    
    
    
    36
    %Combined average gross
royalty per ton
    
    
    4.37
    
    
    
    3.91
    
    
    
    0.46
    
    
    
    12
    %Aggregates:Royalty revenue
    
    $
    1,400
    
    
    $
    1,980
    
    
    $
    (580
    )
    
    
    (29
    %)Aggregate royalty bonus
    
    $
    300
    
    
    $
    300
    
    
    $
    
    
    
    
    Production
    
    
    1,148
    
    
    
    1,484
    
    
    
    (336
    )
    
    
    (23
    %)Average base royalty per ton
    
    $
    1.22
    
    
    $
    1.33
    
    
    $
    (0.11
    )
    
    
    (8
    %)
 Coal Royalty Revenues and Production
 Appalachia.
 Illinois Basin
 20




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##### Table of Contents



Northern Powder River Basin
 Aggregates Royalty Revenues and Production
 21




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##### Table of Contents



Nine Months Ended
    
    
    Increase
    
    
    PercentageSeptember 30,
    
    
    (Decrease)
    
    
    Change2009
    
    
    2008(In thousands, except percent and per ton data)(Unaudited)Coal:Coal royalty revenuesAppalachiaNorthern
    
    $
    9,931
    
    
    $
    11,838
    
    
    $
    (1,907
    )
    
    
    (16
    %)Central
    
    
    101,874
    
    
    
    117,642
    
    
    
    (15,768
    )
    
    
    (13
    %)Southern
    
    
    14,755
    
    
    
    14,697
    
    
    
    58
    
    
    
    <1
    %Total Appalachia
    
    
    126,560
    
    
    
    144,177
    
    
    
    (17,617
    )
    
    
    (12
    %)Illinois Basin
    
    
    16,234
    
    
    
    14,995
    
    
    
    1,239
    
    
    
    8
    %Northern Powder River Basin
    
    
    5,500
    
    
    
    8,329
    
    
    
    (2,829
    )
    
    
    (34
    %)Total
    
    $
    148,294
    
    
    $
    167,501
    
    
    $
    (19,207
    )
    
    
    (11
    %)Production (tons)AppalachiaNorthern
    
    
    3,304
    
    
    
    4,436
    
    
    
    (1,132
    )
    
    
    (26
    %)Central
    
    
    21,962
    
    
    
    27,430
    
    
    
    (5,468
    )
    
    
    (20
    %)Southern
    
    
    2,438
    
    
    
    3,239
    
    
    
    (801
    )
    
    
    (25
    %)Total Appalachia
    
    
    27,704
    
    
    
    35,105
    
    
    
    (7,401
    )
    
    
    (21
    %)Illinois Basin
    
    
    5,005
    
    
    
    5,899
    
    
    
    (894
    )
    
    
    (15
    %)Northern Powder River Basin
    
    
    2,840
    
    
    
    4,493
    
    
    
    (1,653
    )
    
    
    (37
    %)Total
    
    
    35,549
    
    
    
    45,497
    
    
    
    (9,948
    )
    
    
    (22
    %)Average gross royalty per tonAppalachiaNorthern
    
    $
    3.01
    
    
    $
    2.67
    
    
    $
    0.34
    
    
    
    13
    %Central
    
    
    4.64
    
    
    
    4.29
    
    
    
    0.35
    
    
    
    8
    %Southern
    
    
    6.05
    
    
    
    4.54
    
    
    
    1.51
    
    
    
    33
    %Total Appalachia
    
    
    4.57
    
    
    
    4.11
    
    
    
    0.46
    
    
    
    11
    %Illinois Basin
    
    
    3.24
    
    
    
    2.54
    
    
    
    0.70
    
    
    
    28
    %Northern Powder River Basin
    
    
    1.94
    
    
    
    1.85
    
    
    
    0.08
    
    
    
    4
    %Combined
average gross royalty per ton
    
    
    4.17
    
    
    
    3.68
    
    
    
    0.49
    
    
    
    13
    %Aggregates:Royalty revenue
    
    $
    3,377
    
    
    $
    5,028
    
    
    $
    (1,651
    )
    
    
    (33
    %)Aggregate royalty bonus
    
    $
    1,320
    
    
    $
    2,544
    
    
    $
    (1,224
    )
    
    
    (48
    %)Production
    
    
    2,629
    
    
    
    3,876
    
    
    
    (1,247
    )
    
    
    (32
    %)Average base royalty per ton
    
    $
    1.28
    
    
    $
    1.30
    
    
    $
    (0.01
    )
    
    
    (1
    %)
 Coal Royalty Revenues and Production
 Appalachia.
 Illinois Basin
 22




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##### Table of Contents



Northern Powder River Basin
 Aggregates Royalty Revenues and Production
 Other Operating Results
 Coal Processing and Transportation Revenues
  Additional Revenues.
 Operating costs and expenses.
 
    
    Depreciation, depletion and amortization of $13.0 million and $17.0 million and $48.0
million and $48.8 million for the three and nine month periods ended September 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
nine months of 2009.
    
    General and administrative expenses of $4.6 million and $1.7 million and $17.9 million
and $12.8 million for the three and nine month periods ended September 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 increased for both the three and nine month
periods ended September 30, 2009 when compared to the same period of 2008. This increase
reflects higher West Virginia property taxes and 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.
 23




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##### Table of Contents



Liquidity and Capital Resources
 Cash Flows and Capital Expenditures
     Long-Term Debt
  
    
    $22 million of our $300 million floating rate revolving credit facility, due March 2012;
    
    $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;
    
    $84.6 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.
 24




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##### Table of Contents




    
    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
  25




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##### Table of Contents



Related Party Transactions
 Reimbursements to Affiliates of our General Partner
   Transactions with Cline Affiliates
     Quintana Capital Group GP, Ltd.
   26




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##### Table of Contents



Environmental
  
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
  Commodity Price Risk
  Interest Rate Risk
  
 Item 4.
    
    Controls and Procedures
   27




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##### Table of Contents



Part II. Other Information
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  The adoption of climate change legislation or regulations restricting emissions of
greenhouse gases could result in increased operating costs and reduced demand for our coal.
     28




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##### Table of Contents



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
  29




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##### Table of Contents



Item 6.
    
    Exhibits
 2.1
    
    
    
    Purchase and Sale Agreement, dated September 10, 2009, by and among
WPP LLC and Colt, LLC (incorporated by reference to Exhibit 2.1 to
Current Report on Form 8-K filed on September 11, 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.**
    
    Furnished herewith. 30




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##### Table of Contents



SIGNATURES
  NATURAL RESOURCE PARTNERS L.P.
By: NRP (GP) LP, its general partner
By: GP NATURAL RESOURCE
PARTNERS LLC, its general partnerDate: November 5, 2009By:/s/ Corbin J. Robertson, Jr.Corbin J. Robertson, Jr.,Chairman of the Board andChief Executive Officer(Principal Executive Officer)Date: November 5, 2009By:/s/ Dwight L. DunlapDwight L. Dunlap,Chief Financial Officer andTreasurer(Principal Financial Officer)Date: November 5, 2009By:/s/ Kenneth HudsonKenneth HudsonController(Principal Accounting Officer)
 
 31