##### 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 June 30, 2008
 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
    
    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
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONITEM 1. Financial StatementsConsolidated Balance Sheets as of June 30, 2008 and December 31, 2007
    
    
    4Consolidated Statements of Income For the Three and Six Months Ended June 30,
2008 and 2007
    
    
    5Consolidated Statements of Cash Flows For the Six Months Ended June 30,
2008 and 2007
    
    
    6Notes to Consolidated Financial Statements
    
    
    7ITEM 2. Managements Discussion and Analysis of Financial Condition and
Results of OperationsExecutive Overview
    
    
    13Results of Operations
    
    
    16Liquidity and Capital Resources
    
    
    20Related Party Transactions
    
    
    22Environmental
    
    
    22ITEM 3. Quantitative And Qualitative Disclosures About Market Risk
    
    
    23ITEM 4. Controls And Procedures
    
    
    23PART II. OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    24ITEM 1A. Risk Factors
    
    
    24ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24ITEM 3. Defaults Upon Senior Securities
    
    
    24ITEM 4. Submission Of Matters to a Vote of Security Holders
    
    
    24ITEM 5. Other Information
    
    
    24ITEM 6. Exhibits
    
    
    25Signatures
    
    
    26Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 1350Certification of CFO Pursuant to Section 1350
  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)
 June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    60,454
    
    
    $
    58,341Restricted cash
    
    
    6,240
    
    
    
    6,240Accounts receivable, net of allowance for doubtful accounts
    
    
    32,851
    
    
    
    27,643Accounts receivable  affiliate
    
    
    4,768
    
    
    
    1,005Other
    
    
    491
    
    
    
    1,009Total current assets
    
    
    104,804
    
    
    
    94,238Land
    
    
    24,343
    
    
    
    24,343Plant and equipment, net
    
    
    66,680
    
    
    
    61,441Coal and other mineral rights, net
    
    
    1,001,995
    
    
    
    1,030,088Intangible assets, net
    
    
    104,691
    
    
    
    106,222Loan financing costs, net
    
    
    2,889
    
    
    
    3,098Other assets, net
    
    
    535
    
    
    
    601Total assets
    
    $
    1,305,937
    
    
    $
    1,320,031LIABILITIES AND PARTNERS CAPITALCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    2,995
    
    
    $
    2,567Accounts payable  affiliate
    
    
    105
    
    
    
    104Current portion of long-term debt
    
    
    17,234
    
    
    
    17,234Accrued incentive plan expenses  current portion
    
    
    5,235
    
    
    
    3,993Property, franchise and other taxes payable
    
    
    5,425
    
    
    
    6,415Accrued interest
    
    
    6,011
    
    
    
    6,276Total current liabilities
    
    
    37,005
    
    
    
    36,589Deferred revenue
    
    
    39,012
    
    
    
    36,286Asset retirement obligations
    
    
    39
    
    
    
    39Accrued incentive plan expenses
    
    
    6,305
    
    
    
    6,469Long-term debt
    
    
    486,514
    
    
    
    496,057Partners capital:Common units
    
    
    723,935
    
    
    
    731,113General partners interest
    
    
    13,658
    
    
    
    14,177Holders of incentive distribution rights
    
    
    142
    
    
    
    Accumulated other comprehensive loss
    
    
    (673
    )
    
    
    (699
    )Total partners capital
    
    
    737,062
    
    
    
    744,591Total liabilities and partners capital
    
    $
    1,305,937
    
    
    $
    1,320,031
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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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)Revenues:Coal royalties
    
    $
    60,026
    
    
    $
    40,733
    
    
    $
    109,178
    
    
    $
    81,706Aggregate royalties
    
    
    1,933
    
    
    
    1,944
    
    
    
    5,295
    
    
    
    3,689Coal processing fees
    
    
    1,757
    
    
    
    1,112
    
    
    
    3,654
    
    
    
    2,030Transportation fees
    
    
    3,361
    
    
    
    845
    
    
    
    5,010
    
    
    
    1,306Oil and gas royalties
    
    
    1,933
    
    
    
    1,278
    
    
    
    3,378
    
    
    
    2,536Property taxes
    
    
    3,105
    
    
    
    2,645
    
    
    
    5,497
    
    
    
    4,873Minimums recognized as revenue
    
    
    149
    
    
    
    331
    
    
    
    456
    
    
    
    785Override royalties
    
    
    2,006
    
    
    
    1,023
    
    
    
    4,505
    
    
    
    2,041Other
    
    
    1,322
    
    
    
    1,186
    
    
    
    2,674
    
    
    
    2,338Total revenues
    
    
    75,592
    
    
    
    51,097
    
    
    
    139,647
    
    
    
    101,304Operating costs and expenses:Depreciation, depletion and amortization
    
    
    16,748
    
    
    
    12,527
    
    
    
    31,807
    
    
    
    24,279General and administrative
    
    
    6,890
    
    
    
    5,559
    
    
    
    11,039
    
    
    
    12,193Property, franchise and other taxes
    
    
    4,098
    
    
    
    3,524
    
    
    
    7,747
    
    
    
    6,625Transportation costs
    
    
    408
    
    
    
    27
    
    
    
    529
    
    
    
    70Coal royalty and override payments
    
    
    343
    
    
    
    382
    
    
    
    652
    
    
    
    668Total operating costs and expenses
    
    
    28,487
    
    
    
    22,019
    
    
    
    51,774
    
    
    
    43,835Income from operations
    
    
    47,105
    
    
    
    29,078
    
    
    
    87,873
    
    
    
    57,469Other income (expense)Interest expense
    
    
    (7,064
    )
    
    
    (7,133
    )
    
    
    (14,424
    )
    
    
    (14,460
    )Interest income
    
    
    312
    
    
    
    686
    
    
    
    756
    
    
    
    1,503Net income
    
    $
    40,353
    
    
    $
    22,631
    
    
    $
    74,205
    
    
    $
    44,512Net income attributable to:General partner
    
    $
    6,647
    
    
    $
    3,074
    
    
    $
    11,862
    
    
    $
    5,893Other holders of incentive distribution rights
    
    $
    3,144
    
    
    $
    1,412
    
    
    $
    5,928
    
    
    $
    2,695Limited partners
    
    $
    30,562
    
    
    $
    18,145
    
    
    $
    56,415
    
    
    $
    35,924Basic and diluted net income per limited partner unit
    
    $
    0.47
    
    
    $
    0.28
    
    
    $
    0.87
    
    
    $
    0.56Weighted average number of units outstanding
    
    
    64,891
    
    
    
    64,886
    
    
    
    64,891
    
    
    
    64,094
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NATURAL RESOURCE PARTNERS L.P.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Six Months EndedJune 30,2008
    
    
    2007(Unaudited)Cash flows from operating activities:Net income
    
    $
    74,205
    
    
    $
    44,512Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation, depletion and amortization
    
    
    31,807
    
    
    
    24,279Non-cash interest charge
    
    
    235
    
    
    
    209Loss from disposition of assets
    
    
    32
    
    
    
    Change in operating assets and liabilities:Accounts receivable
    
    
    (8,971
    )
    
    
    (2,799
    )Other assets
    
    
    584
    
    
    
    557Accounts payable and accrued liabilities
    
    
    429
    
    
    
    (294
    )Accrued interest
    
    
    (265
    )
    
    
    2,597Deferred revenue
    
    
    2,726
    
    
    
    7,917Accrued incentive plan expenses
    
    
    1,078
    
    
    
    (633
    )Property, franchise and other taxes payable
    
    
    (990
    )
    
    
    259Net cash provided by operating activities
    
    
    100,870
    
    
    
    76,604Cash flows from investing activities:Acquisition of land, coal and other mineral rights
    
    
    
    
    
    
    (24,233
    )Acquisition or construction of plant and equipment
    
    
    (7,454
    )
    
    
    (8,400
    )Cash placed in restricted accounts
    
    
    
    
    
    
    (6,240
    )Net cash used in investing activities
    
    
    (7,454
    )
    
    
    (38,873
    )Cash flows from financing activities:Proceeds from loans
    
    
    
    
    
    
    255,400Deferred financing costs
    
    
    
    
    
    
    (1,286
    )Repayment of loans
    
    
    (9,543
    )
    
    
    (235,542
    )Distributions to partners
    
    
    (81,760
    )
    
    
    (70,464
    )Contribution by general partner
    
    
    
    
    
    
    2,645Net cash used in financing activities
    
    
    (91,303
    )
    
    
    (49,247
    )Net increase (decrease) in cash and cash equivalents
    
    
    2,113
    
    
    
    (11,516
    )Cash and cash equivalents at beginning of period
    
    
    58,341
    
    
    
    66,044Cash and cash equivalents at end of period
    
    $
    60,454
    
    
    $
    54,528Supplemental cash flow information:Cash paid during the period for interest
    
    $
    14,450
    
    
    $
    11,627Non-cash investing activities:Equity issued in business combinations
    
    
    
    
    
    $
    350,741Liability assumed in business combination
    
    
    
    
    
    
    1,989
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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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Earnings per Share
  . Plant and Equipment
  June 30,
    
    
    December 31,2008
    
    
    2007(In thousands)(Unaudited)Construction in process
    
    $
    17,881
    
    
    $
    11,238Plant and equipment at cost
    
    
    55,535
    
    
    
    54,758Accumulated depreciation
    
    
    (6,736
    )
    
    
    (4,555
    )Net book value
    
    $
    66,680
    
    
    $
    61,441
 Six months endedJune 30,2008
    
    
    2007(In thousands)(Unaudited)Total depreciation expense on plant and equipment
    
    $
    2,184
    
    
    $
    1,807
 4. Coal and Other Mineral Rights
  June 30,
    
    
    December 31,2008
    
    
    2007(In thousands)(Unaudited)Coal and other mineral rights
    
    $
    1,247,814
    
    
    $
    1,247,814Less accumulated depletion and amortization
    
    
    (245,819
    )
    
    
    (217,726
    )Net book value
    
    $
    1,001,995
    
    
    $
    1,030,088
 Six months endedJune 30,2008
    
    
    2007(In thousands)(Unaudited)Total depletion and amortization expense on coal and other mineral interests
    
    $
    28,093
    
    
    $
    21,708
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5. Intangible Assets
  June 30, 2008
    
    
    December 31, 2007Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(In thousands)
    
    
    (In thousands)(Unaudited)Finite-lived intangible assetsAbove market transportation contracts
    
    $
    82,276
    
    
    $
    2,238
    
    
    $
    82,276
    
    
    $
    1,045Above market coal leases
    
    
    25,281
    
    
    
    628
    
    
    
    25,281
    
    
    
    290$
    107,557
    
    
    $
    2,866
    
    
    $
    107,557
    
    
    $
    1,335
  Estimated amortization expense (In thousands)For remainder of year ended December 31, 2008
    
    $
    2,729For year ended December 31, 2009
    
    
    4,810For year ended December 31, 2010
    
    
    5,862For year ended December 31, 2011
    
    
    5,862For year ended December 31, 2012
    
    
    5,862For year ended December 31, 2013
    
    
    5,862
 6. Long-Term Debt
  June 30,
    
    
    December 31,2008
    
    
    2007(In thousands)(Unaudited)$300 million floating rate revolving credit facility, due March 2012
    
    $
    48,000
    
    
    $
    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
    
    
    49,750
    
    
    
    55,8005.05% senior notes, with semi-annual interest payments in January
and July, with scheduled principal payments beginning July 2008,
maturing in July 2020
    
    
    100,000
    
    
    
    100,0005.31% utility local improvement obligation, with annual principal
and interest payments, maturing in March 2021
    
    
    2,498
    
    
    
    2,6915.55% senior notes, with semi-annual interest payments in June and
December, with annual principal payments in June, maturing in June
2023
    
    
    43,500
    
    
    
    46,8005.82% senior notes, with semi-annual interest payments in March and
September, with scheduled principal payments beginning March 2010,
maturing in March 2024
    
    
    225,000
    
    
    
    225,000Total debt
    
    
    503,748
    
    
    
    513,291Less  current portion of long term debt
    
    
    (17,234
    )
    
    
    (17,234
    )Long-term debt
    
    $
    486,514
    
    
    $
    496,057
  9




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7. Net Income Per Unit Attributable to Limited Partners
  8. Related Party Transactions
 Reimbursements to Affiliates of its General Partner
   Transactions with Cline Affiliates
   Quintana Energy Partners, L.P.
   10




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9. Commitments and Contingencies
 Legal
  Environmental Compliance
  10. Major Lessee
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Revenues
    
    Percent
    
    Revenues
    
    Percent
    
    Revenues
    
    Percent
    
    Revenues
    
    PercentLessee A
    
    
    9,158
    
    
    
    12.1
    %
    
    
    4,931
    
    
    
    9.7
    %
    
    
    16,356
    
    
    
    11.7
    %
    
    
    10,670
    
    
    
    10.5
    %
 11. Incentive Plans
   11




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Outstanding grants at the beginning of the period
    
    
    507,466Grants during the period
    
    
    171,328Grants vested and paid during the period
    
    
    (105,230
    )Forfeitures during the period
    
    
    Outstanding grants at the end of the period
    
    
    573,564
    12. Distributions
  13. Subsequent Events
  12




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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 28, 2007.
 
 Executive Overview
 Our Business
     Current Results
    13




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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 Quarter Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)Net cash provided by operating activities
    
    $
    61,667
    
    
    $
    45,861
    
    
    $
    100,870
    
    
    $
    76,604Less scheduled principal payments
    
    
    (9,350
    )
    
    
    (9,350
    )
    
    
    (9,543
    )
    
    
    (9,350
    )Less reserves for future principal payments
    
    
    (4,308
    )
    
    
    (2,400
    )
    
    
    (8,616
    )
    
    
    (4,800
    )Add reserves used for scheduled principal payments
    
    
    9,350
    
    
    
    9,400
    
    
    
    9,543
    
    
    
    9,400Distributable cash flow
    
    $
    57,359
    
    
    $
    43,511
    
    
    $
    92,254
    
    
    $
    71,854
 Acquisitions
  Licking River Preparation Plant
 Massey Energy
 National Resources
 Cheyenne Resources
 14




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Mid-Vol Coal Preparation Plant
 Mettiki
 Westmoreland.
 Dingess-Rum
 Cline
 15




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##### Table of Contents



Results of Operations
 Three Months Ended
    
    
    Increase
    
    
    PercentageJune 30,
    
    
    (Decrease)
    
    
    Change2008
    
    
    2007(In thousands, except percent and per ton data)(Unaudited)Coal:Coal royalty revenuesAppalachiaNorthern
    
    $
    4,902
    
    
    $
    4,353
    
    
    $
    549
    
    
    
    13
    %Central
    
    
    42,974
    
    
    
    28,339
    
    
    
    14,635
    
    
    
    52
    %Southern
    
    
    3,802
    
    
    
    4,989
    
    
    
    (1,187
    )
    
    
    (24
    %)Total Appalachia
    
    
    51,678
    
    
    
    37,681
    
    
    
    13,997
    
    
    
    37
    %Illinois Basin
    
    
    5,923
    
    
    
    1,365
    
    
    
    4,558
    
    
    
    334
    %Northern Powder River Basin
    
    
    2,425
    
    
    
    1,687
    
    
    
    738
    
    
    
    44
    %Total
    
    $
    60,026
    
    
    $
    40,733
    
    
    
    19,293
    
    
    
    47
    %Production (tons)AppalachiaNorthern
    
    
    1,927
    
    
    
    1,901
    
    
    
    26
    
    
    
    1
    %Central
    
    
    9,629
    
    
    
    8,855
    
    
    
    774
    
    
    
    9
    %Southern
    
    
    930
    
    
    
    1,297
    
    
    
    (367
    )
    
    
    (28
    %)Total Appalachia
    
    
    12,486
    
    
    
    12,053
    
    
    
    433
    
    
    
    4
    %Illinois Basin
    
    
    2,293
    
    
    
    659
    
    
    
    1,634
    
    
    
    248
    %Northern Powder River Basin
    
    
    1,314
    
    
    
    861
    
    
    
    453
    
    
    
    53
    %Total
    
    
    16,093
    
    
    
    13,573
    
    
    
    2,520
    
    
    
    19
    %Average gross royalty per tonAppalachiaNorthern
    
    $
    2.54
    
    
    $
    2.29
    
    
    $
    0.25
    
    
    
    11
    %Central
    
    
    4.46
    
    
    
    3.20
    
    
    
    1.26
    
    
    
    39
    %Southern
    
    
    4.09
    
    
    
    3.85
    
    
    
    0.24
    
    
    
    6
    %Total Appalachia
    
    
    4.14
    
    
    
    3.13
    
    
    
    1.01
    
    
    
    32
    %Illinois Basin
    
    
    2.58
    
    
    
    2.07
    
    
    
    0.51
    
    
    
    25
    %Northern Powder River Basin
    
    
    1.85
    
    
    
    1.96
    
    
    
    (0.11
    )
    
    
    (6
    %)Combined average gross royalty per ton
    
    
    3.73
    
    
    
    3.00
    
    
    
    0.73
    
    
    
    24
    %Aggregates:Royalty revenue
    
    $
    1,633
    
    
    $
    1,780
    
    
    $
    (147
    )
    
    
    8
    %)Aggregate royalty bonus
    
    $
    300
    
    
    $
    164
    
    
    $
    136
    
    
    
    83
    %Production
    
    
    1,238
    
    
    
    1,531
    
    
    
    (293
    )
    
    
    (19
    %)Average base royalty per ton
    
    $
    1.32
    
    
    $
    1.16
    
    
    $
    0.16
    
    
    
    12
    %
 Coal Royalty Revenues and Production
 Appalachia.
   16




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Illinois Basin
 Northern Powder River Basin
 Aggregates Royalty Revenues, Reserves and Production
 17




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Results of Operations
 Six Months Ended
    
    
    Increase
    
    
    PercentageJune 30,
    
    
    (Decrease)
    
    
    Change2008
    
    
    2007(In thousands, except percent and per ton data)(Unaudited)Coal:Coal royalty revenuesAppalachiaNorthern
    
    $
    8,405
    
    
    $
    7,123
    
    
    $
    1,282
    
    
    
    18
    %Central
    
    
    77,271
    
    
    
    58,586
    
    
    
    18,685
    
    
    
    32
    %Southern
    
    
    9,300
    
    
    
    9,028
    
    
    
    272
    
    
    
    3
    %Total Appalachia
    
    
    94,976
    
    
    
    74,737
    
    
    
    20,239
    
    
    
    27
    %Illinois Basin
    
    
    8,556
    
    
    
    2,479
    
    
    
    6,077
    
    
    
    245
    %Northern Powder River Basin
    
    
    5,646
    
    
    
    4,490
    
    
    
    1,156
    
    
    
    26
    %Total
    
    $
    109,178
    
    
    $
    81,706
    
    
    $
    27,472
    
    
    
    34
    %Production (tons)AppalachiaNorthern
    
    
    3,264
    
    
    
    3,235
    
    
    
    29
    
    
    
    1
    %Central
    
    
    18,571
    
    
    
    18,095
    
    
    
    476
    
    
    
    3
    %Southern
    
    
    2,224
    
    
    
    2,330
    
    
    
    (106
    )
    
    
    (5
    %)Total Appalachia
    
    
    24,059
    
    
    
    23,660
    
    
    
    399
    
    
    
    2
    %Illinois Basin
    
    
    3,458
    
    
    
    1,161
    
    
    
    2,297
    
    
    
    198
    %Northern Powder River Basin
    
    
    3,045
    
    
    
    2,261
    
    
    
    784
    
    
    
    35
    %Total
    
    
    30,562
    
    
    
    27,082
    
    
    
    3,480
    
    
    
    13
    %Average gross royalty per tonAppalachiaNorthern
    
    $
    2.58
    
    
    $
    2.20
    
    
    $
    0.38
    
    
    
    17
    %Central
    
    
    4.16
    
    
    
    3.24
    
    
    
    0.92
    
    
    
    28
    %Southern
    
    
    4.18
    
    
    
    3.87
    
    
    
    0.31
    
    
    
    8
    %Total Appalachia
    
    
    3.95
    
    
    
    3.16
    
    
    
    0.79
    
    
    
    25
    %Illinois Basin
    
    
    2.47
    
    
    
    2.14
    
    
    
    0.33
    
    
    
    15
    %Northern Powder River Basin
    
    
    1.85
    
    
    
    1.99
    
    
    
    (0.14
    )
    
    
    (7
    %)Combined average gross royalty per ton
    
    
    3.57
    
    
    
    3.02
    
    
    
    0.55
    
    
    
    18
    %Aggregates:Royalty revenue
    
    $
    3,051
    
    
    $
    3,361
    
    
    $
    (310
    )
    
    
    (9
    %)Aggregate royalty bonus
    
    $
    2,244
    
    
    $
    328
    
    
    $
    1,916
    
    
    
    584
    %Production
    
    
    2,392
    
    
    
    2,872
    
    
    
    (480
    )
    
    
    (17
    %)Average base royalty per ton
    
    $
    1.28
    
    
    $
    1.17
    
    
    $
    0.11
    
    
    
    9
    %
 Coal Royalty Revenues and Production
 Appalachia.
  18




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##### Table of Contents



Illinois Basin
 Northern Powder River Basin
 Aggregates Royalty Revenues, Reserves 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 $16.7 million and $12.5 million for the
quarters ended June 30, 2008 and 2007 and
$31.8 million and $24.3 million for the six months ended June 30, 2008 and 2007, respectively.
Depletion increased as a result
 19




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##### Table of Contents



of higher total production for 2008 and a greater portion of the production on the new properties that we acquired in 2007 and at the end of 2006, which
are being depleted at much higher rates than our older properties.
 
    
    General and administrative expenses of $6.9 million and $11.0 million for the quarter and
six month periods ended June 30, 2008 compared to $5.6 million and $12.2 million for the
same periods during 2007. 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 approximately $0.6 million for the
quarter and $1.1 million year to date. The significant increase in 2008 was primarily due
to increases in West Virginia taxes on additional properties we have acquired. 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.
 
 Liquidity and Capital Resources
 Cash Flows and Capital Expenditures
     Long-Term Debt
  
    
    $48.0 million of our $300 million floating rate revolving credit facility, due March
2012;
    
    $35 million of 5.55% senior notes due 2013;
    
    $49.8 million of 4.91% senior notes due 2018;
    
    $100 million of 5.05% senior notes due 2020;
    
    $2.5 million of 5.31% utility local improvement obligation due 2021;
    
    $43.5 million of 5.55% senior notes due 2023; and
    
    $225 million of 5.82% senior notes due 2024.
 20




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##### Table of Contents



Credit Facility.
  
    
    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 1.0.
 Shelf Registration Statement
  Off-Balance Sheet Transactions
  21




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##### Table of Contents



Related Party Transactions
 Reimbursements to Affiliates of our General Partner
   Transactions with Cline Affiliates
   Quintana Energy Partners, L.P.
    
 Environmental
  22




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  Commodity Price Risk
  Interest Rate Risk
  
 Item 4. Controls and Procedures
   23




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##### Table of Contents



Part II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 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
  24




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##### Table of Contents



Item 6. Exhibits
 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. 25




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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: August 11, 2008By:
    
    /s/ Corbin J. Robertson, Jr.Corbin J. Robertson, Jr.,Chairman of the Board and
Chief Executive Officer(Principal Executive Officer)Date: August 11, 2008By:
    
    /s/ Dwight L. DunlapDwight L. Dunlap,Chief Financial Officer and
Treasurer(Principal Financial Officer)Date: August 11, 2008By:
    
    /s/ Kenneth HudsonKenneth HudsonController(Principal Accounting Officer)
 26




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##### Table of Contents



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.