##### 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 March 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 001-34815
 Oxford Resource Partners, LP
  Delaware
    
    77-0695453(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)
 41 South High Street, Suite 3450, Columbus, Ohio 43215
 (614) 643-0314
 YES þ NO o
 Yes
o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 YES o NO þ




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##### 



TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    
    
    1Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010
    
    
    1Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010
    
    
    2Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010
    
    
    3Condensed Consolidated Statements of Partners Capital for the Three Months Ended March 31, 2011 and 2010
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    16ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    34ITEM 4. CONTROLS AND PROCEDURES
    
    
    34PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    35ITEM 1A. RISK FACTORS
    
    
    35ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    35ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    35ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    35ITEM 5. OTHER INFORMATION
    
    
    37ITEM 6. EXHIBITS
    
    
    37EX-31.1EX-31.2EX-32.1EX-32.2
   i




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PART I. FINANCIAL INFORMATION
 
 Item 1.
    
    Condensed Consolidated Financial Statements (Unaudited)
 OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (UNAUDITED)
 (in thousands, except for unit data)
 March 31,
    
    
    December 31,2011
    
    
    2010ASSETSCash and cash equivalents
    
    $
    3,740
    
    
    $
    889Trade accounts receivable
    
    
    30,330
    
    
    
    28,108Inventory
    
    
    15,432
    
    
    
    12,640Advance royalties
    
    
    939
    
    
    
    924Prepaid expenses and other current assets
    
    
    931
    
    
    
    1,023Total current assets
    
    
    51,372
    
    
    
    43,584Property, plant and equipment, net
    
    
    200,012
    
    
    
    198,694Advance royalties
    
    
    7,503
    
    
    
    7,693Other long-term assets
    
    
    11,333
    
    
    
    11,100Total assets
    
    $
    270,220
    
    
    $
    261,071LIABILITIESCurrent maturities of long-term debt
    
    $
    11,355
    
    
    $
    7,249Accounts payable
    
    
    34,001
    
    
    
    26,074Asset retirement obligations  current portion
    
    
    8,476
    
    
    
    6,450Deferred revenue  current portion
    
    
    780
    
    
    
    780Accrued taxes other than income taxes
    
    
    1,744
    
    
    
    1,643Accrued payroll and related expenses
    
    
    2,057
    
    
    
    2,625Other current liabilities
    
    
    3,134
    
    
    
    2,952Total current liabilities
    
    
    61,547
    
    
    
    47,773Long-term debt
    
    
    101,025
    
    
    
    95,737Asset retirement obligations
    
    
    7,691
    
    
    
    6,537Other long-term liabilities
    
    
    2,083
    
    
    
    2,261Total liabilities
    
    
    172,346
    
    
    
    152,308Commitments
and Contingencies (Note 10)PARTNERS CAPITALLimited Partner unitholders (20,632,899 and 20,610,983 units
outstanding as of March 31, 2011 and December 31, 2010,
respectively)
    
    
    94,908
    
    
    
    105,684General Partner unitholder (420,853 and 420,633 units outstanding
as of March 31, 2011 and December 31, 2010, respectively)
    
    
    (277
    )
    
    
    (63
    )Total Oxford Resource Partners, LP Capital
    
    
    94,631
    
    
    
    105,621Noncontrolling interest
    
    
    3,243
    
    
    
    3,142Total partners capital
    
    
    97,874
    
    
    
    108,763Total liabilities and partners capital
    
    $
    270,220
    
    
    $
    261,071
 See accompanying notes to condensed consolidated financial statements.
  1




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OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
 (in thousands, except for unit data)
 Three Months EndedMarch 31,2011
    
    
    2010RevenueCoal sales
    
    $
    83,304
    
    
    $
    76,756Transportation revenue
    
    
    10,442
    
    
    
    9,530Royalty and non-coal revenue
    
    
    2,320
    
    
    
    1,774Total revenue
    
    
    96,066
    
    
    
    88,060Costs and expensesCost of coal
sales (excluding depreciation, depletion and amortization, shown separately)
    
    
    62,617
    
    
    
    55,186Cost of purchased coal
    
    
    5,127
    
    
    
    7,859Cost of transportation
    
    
    10,442
    
    
    
    9,530Depreciation, depletion and amortization
    
    
    12,111
    
    
    
    8,777Selling, general and administrative expenses
    
    
    3,966
    
    
    
    3,535Total costs and expenses
    
    
    94,263
    
    
    
    84,887Income from operations
    
    
    1,803
    
    
    
    3,173Interest income
    
    
    1
    
    
    
    1Interest expense
    
    
    (2,003
    )
    
    
    (1,833
    )Net income (loss)
    
    
    (199
    )
    
    
    1,341Less: net income attributable to noncontrolling interest
    
    
    (1,571
    )
    
    
    (1,628
    )Net loss attributable to Oxford Resource
Partners, LP unitholders
    
    $
    (1,770
    )
    
    $
    (287
    )Net loss allocated to general partner
    
    $
    (35
    )
    
    $
    (6
    )Net loss allocated to limited partners
    
    $
    (1,735
    )
    
    $
    (281
    )Net loss per limited partner unit:Basic
    
    $
    (0.08
    )
    
    $
    (0.02
    )Dilutive
    
    $
    (0.08
    )
    
    $
    (0.02
    )Weighted average number of limited partner units outstanding:Basic
    
    
    20,621,793
    
    
    
    11,973,402Dilutive
    
    
    20,621,793
    
    
    
    11,973,402Distributions paid per limited partner unit
    
    $
    0.4375
    
    
    $
    0.2300
 See accompanying notes to condensed consolidated financial statements.
  2




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OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 (in thousands)
 Three Months EndedMarch 31,2011
    
    
    2010CASH FLOWS FROM OPERATING ACTIVITIES:Net loss attributable to Oxford Resource Partners, LP unitholders
    
    $
    (1,770
    )
    
    $
    (287
    )Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:Depreciation, depletion and amortization
    
    
    12,111
    
    
    
    8,777Interest rate swap or rate cap adjustment to market
    
    
    (1
    )
    
    
    33Loan fee amortization
    
    
    319
    
    
    
    168Non-cash equity compensation expense
    
    
    364
    
    
    
    304Advanced royalty recoupment
    
    
    309
    
    
    
    600Loss on disposal of property and equipment
    
    
    166
    
    
    
    175Noncontrolling interest in subsidiary earnings
    
    
    1,571
    
    
    
    1,628Increase in assets:Accounts receivable
    
    
    (2,222
    )
    
    
    (5,435
    )Inventory
    
    
    (2,146
    )
    
    
    (1,589
    )Other assets
    
    
    (189
    )
    
    
    (3,068
    )Increase (decrease) in liabilities:Accounts payable and other liabilities
    
    
    7,906
    
    
    
    9,457Asset retirement obligations
    
    
    1,045
    
    
    
    293Provision for below-market contracts and deferred revenue
    
    
    (244
    )
    
    
    (2,715
    )Net cash provided by operating activities
    
    
    17,219
    
    
    
    8,341CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (10,387
    )
    
    
    (4,995
    )Purchase of mineral rights and land
    
    
    (1,035
    )
    
    
    (2,116
    )Mine development costs
    
    
    (1,196
    )
    
    
    (775
    )Royalty advances
    
    
    (134
    )
    
    
    (144
    )Insurance proceeds
    
    
    
    
    
    
    1,223Proceeds from sale of property and equipment
    
    
    
    
    
    
    25Change in restricted cash
    
    
    (339
    )
    
    
    (3,498
    )Net cash used in investing activities
    
    
    (13,091
    )
    
    
    (10,280
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payments on borrowings
    
    
    (1,606
    )
    
    
    (344
    )Advances on line of credit
    
    
    11,000
    
    
    
    3,000Capital contributions from partners
    
    
    5
    
    
    
    25Distributions to noncontrolling interest
    
    
    (1,470
    )
    
    
    Distributions to partners
    
    
    (9,206
    )
    
    
    (2,818
    )Net cash used in financing activities
    
    
    (1,277
    )
    
    
    (137
    )Net increase (decrease) in cash
    
    
    2,851
    
    
    
    (2,076
    )CASH AND CASH EQUIVALENTS, beginning of period
    
    
    889
    
    
    
    3,366CASH AND CASH EQUIVALENTS, end of period
    
    $
    3,740
    
    
    $
    1,290
 See accompanying notes to condensed consolidated financial statements.
  3




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OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
 (UNAUDITED)
 (in thousands, except for unit data)
 Limited Partner
    
    
    
    
    
    
    
    
    
    
    Non-
    
    
    TotalCommon
    
    
    Subordinated
    
    
    General Partner
    
    
    controlling
    
    
    PartnersUnits
    
    
    Capital
    
    
    Units
    
    
    Capital
    
    
    Units
    
    
    Capital
    
    
    Interest
    
    
    CapitalBalance at December 31, 2009
    
    
    
    
    
    
    
    
    
    
    11,964,547
    
    
    $
    53,960
    
    
    
    242,023
    
    
    $
    1,085
    
    
    $
    2,067
    
    
    $
    57,112Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (281
    )
    
    
    
    
    
    
    (6
    )
    
    
    1,628
    
    
    
    1,341Partners contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,584
    
    
    
    25
    
    
    
    
    
    
    
    25Partners distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,762
    )
    
    
    
    
    
    
    (56
    )
    
    
    
    
    
    
    (2,818
    )Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    304
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    304Issuance of units to Long-Term Incentive Plan participants
upon vesting
    
    
    
    
    
    
    
    
    
    
    21,201
    
    
    
    (101
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (101
    )Balance at March 31, 2010
    
    
    
    
    
    $
    
    
    
    
    11,985,748
    
    
    $
    51,120
    
    
    
    244,607
    
    
    $
    1,048
    
    
    $
    3,695
    
    
    $
    55,863Balance at December 31, 2010
    
    
    10,330,603
    
    
    $
    145,592
    
    
    
    10,280,380
    
    
    $
    (39,908
    )
    
    
    420,633
    
    
    $
    (63
    )
    
    $
    3,142
    
    
    $
    108,763Net income (loss)
    
    
    
    
    
    
    (871
    )
    
    
    
    
    
    
    (864
    )
    
    
    
    
    
    
    (35
    )
    
    
    1,571
    
    
    
    (199
    )Partners contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220
    
    
    
    5
    
    
    
    
    
    
    
    5Partners distributions
    
    
    
    
    
    
    (4,527
    )
    
    
    
    
    
    
    (4,495
    )
    
    
    
    
    
    
    (184
    )
    
    
    (1,470
    )
    
    
    (10,676
    )Equity-based compensation
    
    
    
    
    
    
    364
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    364Issuance of units to Long -Term
Incentive Plan participants
upon vesting
    
    
    21,916
    
    
    
    (383
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (383
    )Balance at March 31, 2011
    
    
    10,352,519
    
    
    $
    140,175
    
    
    
    10,280,380
    
    
    $
    (45,267
    )
    
    
    420,853
    
    
    $
    (277
    )
    
    $
    3,243
    
    
    $
    97,874
 See accompanying notes to condensed consolidated financial statements.
  4




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OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  NOTE 1: ORGANIZATION AND PRESENTATION
 Significant Relationships Referenced in Notes to Condensed Consolidated Financial Statements
(Unaudited)
 
    
    We, us, our, or the Partnership means the business and operations of Oxford Resource Partners, LP, the parent entity, as well as its consolidated subsidiaries.
    
    ORLP means Oxford Resource Partners, LP, individually as the parent entity, and not on a consolidated basis.
    
    Our GP means Oxford Resources GP, LLC, the general partner of Oxford Resource Partners, LP.
 Organization
      5




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OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (CONTINUED)
 NOTE 1: ORGANIZATION AND PRESENTATION (continued)
  Basis of Presentation and Principles of Consolidation
   Initial Public Offering
    Unit Split
   6




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OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (CONTINUED)
 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Significant Accounting Policies
  New Accounting Standards Issued
 Fair Value Measurements and Disclosures 
Improving Disclosures about Fair Value Measurements
 Business Combinations  Disclosure of
Supplementary Pro Forma Information for Business Combinations
 NOTE 3: ACQUISITION
    7




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OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (CONTINUED)
 NOTE 4: INVENTORY
  March 31,
    
    
    December 31,2011
    
    
    2010Coal
    
    $
    8,106,000
    
    
    $
    6,451,000Fuel
    
    
    2,083,000
    
    
    
    1,836,000Supplies and spare parts
    
    
    5,243,000
    
    
    
    4,353,000Total
    
    $
    15,432,000
    
    
    $
    12,640,000
 NOTE 5: PROPERTY, PLANT AND EQUIPMENT, NET
  March 31,
    
    
    December 31,2011
    
    
    2010Property, plant and equipment, grossLand
    
    $
    3,374,000
    
    
    $
    3,374,000Coal reserves
    
    
    55,285,000
    
    
    
    54,250,000Mine development costs
    
    
    15,568,000
    
    
    
    12,237,000Total property
    
    
    74,227,000
    
    
    
    69,861,000Buildings and tipple
    
    
    2,113,000
    
    
    
    2,084,000Machinery and equipment
    
    
    207,090,000
    
    
    
    199,924,000Vehicles
    
    
    4,324,000
    
    
    
    4,267,000Furniture and fixtures
    
    
    1,548,000
    
    
    
    1,477,000Railroad sidings
    
    
    160,000
    
    
    
    160,000Total property, plant and equipment, gross
    
    
    289,462,000
    
    
    
    277,773,000Less: accumulated depreciation, depletion and amortization
    
    
    89,450,000
    
    
    
    79,079,000Total property, plant and equipment, net
    
    $
    200,012,000
    
    
    $
    198,694,000
  Three Months EndedMarch 31,2011
    
    
    2010Expense type:Depreciation
    
    $
    9,099,000
    
    
    $
    6,950,000Depletion
    
    
    1,499,000
    
    
    
    1,329,000Amortization
    
    
    1,445,000
    
    
    
    413,000
  8




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OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (CONTINUED)
 NOTE 6: ASSET RETIREMENT OBLIGATIONS
     March 31, 2011
    
    
    December 31, 2010Beginning balance
    
    $
    12,987,000
    
    
    $
    13,343,000Accretion expense
    
    
    447,000
    
    
    
    836,000Payments
    
    
    (311,000
    )
    
    
    (3,430,000
    )Revisions in estimated cash flows
    
    
    3,044,000
    
    
    
    2,238,000Total asset retirement obligations
    
    
    16,167,000
    
    
    
    12,987,000Less current portion
    
    
    8,476,000
    
    
    
    6,450,000Noncurrent liability
    
    $
    7,691,000
    
    
    $
    6,537,000
   9




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OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (CONTINUED)
 NOTE 7: FAIR VALUE OF FINANCIAL INSTRUMENTS
   Fair Value Measurement at March 31, 2011Quoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Liabilities
    
    
    Observable Inputs
    
    
    InputsDescription
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Interest rate swap agreement
    
    $
    
    
    
    $
    (107,000
    )
    
    $
    
 Fair Value Measurement at December 31, 2010Quoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Liabilities
    
    
    Observable Inputs
    
    
    InputsDescription
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Interest rate swap agreement
    
    $
    
    
    
    $
    (108,000
    )
    
    $
    
  Cash and cash equivalents, trade accounts receivable and accounts payable:
 Fixed rate debt:
 Variable rate debt:
  March 31, 2011
    
    
    December 31, 2010Carrying
    
    
    
    
    
    
    CarryingAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFixed rate debt
    
    $
    12,880,000
    
    
    $
    12,990,000
    
    
    $
    12,986,000
    
    
    $
    12,926,000Variable rate debt
    
    
    99,500,000
    
    
    
    99,500,000
    
    
    
    90,000,000
    
    
    
    90,000,000
  10




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OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (CONTINUED)
 NOTE 8: LONG-TERM INCENTIVE PLAN
   WeightedAverageGrant DateUnits
    
    
    Fair ValueUnvested balance at December 31, 2010
    
    
    124,480
    
    
    $
    7.80Granted
    
    
    48,152
    
    
    $
    24.49Issued
    
    
    (21,916
    )
    
    $
    11.98Surrendered
    
    
    (14,616
    )
    
    $
    9.37Unvested balance at March 31, 2011
    
    
    136,100
    
    
    $
    12.86
  NOTE 9: EARNINGS PER UNIT
     11




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OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (CONTINUED)
 NOTE 9: EARNINGS PER UNIT (continued)
  Three Months EndedMarch 31,2011
    
    
    2010(in thousands, except for unitand per unit amounts)Limited partner unitsAverage units outstanding:Basic
    
    
    20,621,793
    
    
    
    11,973,402Effect of equity-based compensation
    
    
    n/a
    
    
    
    n/aDiluted
    
    
    20,621,793
    
    
    
    11,973,402Net loss allocated to limited partnersBasic
    
    $
    (1,735
    )
    
    $
    (281
    )Diluted
    
    $
    (1,735
    )
    
    $
    (281
    )Net loss per limited partner unitBasic
    
    $
    (0.08
    )
    
    $
    (0.02
    )Diluted
    
    $
    (0.08
    )
    
    $
    (0.02
    )General partner unitsAverage units outstanding:Basic and diluted
    
    
    420,779
    
    
    
    242,285Net loss allocated to general partnerBasic
    
    $
    (35
    )
    
    $
    (6
    )Diluted
    
    $
    (35
    )
    
    $
    (6
    )Net loss per general partner unitBasic
    
    $
    (0.08
    )
    
    $
    (0.02
    )Diluted
    
    $
    (0.08
    )
    
    $
    (0.02
    )Anti-dilutive units (1)
    
    
    45,466
    
    
    
    63,119
 (1)
    
    Anti-dilutive units are not used in calulating dilutive average units.
  12




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##### Table of Contents



OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (CONTINUED)
 NOTE 10: COMMITMENTS AND CONTINGENCIES
 Coal Sales Contracts
  Purchase Commitments
  Transportation
  401(k) Plan
  Performance Bonds
  Legal
   13




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##### Table of Contents



OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (CONTINUED)
 NOTE 10: COMMITMENTS AND CONTINGENCIES (continued)
 Guarantees
  NOTE 11: RELATED PARTY TRANSACTIONS
      14




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##### Table of Contents



OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (CONTINUED)
 NOTE 12: SUPPLEMENTAL CASH FLOW INFORMATION
 Three Months EndedMarch 31,2011
    
    
    2010Cash paid for:Interest
    
    $
    1,540,000
    
    
    $
    1,711,000Non-cash activities:Market value of common units vested in LTIP
    
    
    949,000
    
    
    
    288,000Accounts payable for purchase of property and equipment as of March 31
    
    
    2,571,000
    
    
    
    3,074,000
 NOTE 13: SEGMENT INFORMATION
  NOTE 14: SUBSEQUENT EVENTS
   15




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Cautionary Statement Regarding Forward-Looking Statements
  
    
    our production levels, margins earned and level of operating costs;
 
    
    weakness in global economic conditions or in our customers industries;
 
    
    changes in governmental regulation of the mining industry or the electric power
industry and the increased costs of complying with those changes;
 
    
    decreases in demand for electricity and changes in coal consumption patterns of U.S.
electric power generators;
 
    
    our dependence on a limited number of customers;
 
    
    our inability to enter into new long-term coal sales contracts at attractive prices
and the renewal and other risks associated with our existing long-term coal sales
contracts, including risks related to adjustments to price, volume or other terms of
those contracts;
 
    
    difficulties in collecting our receivables because of credit or financial problems of
major customers, and customer bankruptcies, cancellations or breaches of existing
contracts, or other failures to perform;
 
    
    our ability to acquire additional coal reserves;
 
    
    our ability to respond to increased competition within the coal industry;
 
    
    fluctuations in coal demand, prices and availability due to labor and transportation
costs and disruptions, equipment availability, governmental laws and regulations,
including those related to emissions from coal-fired plants, and other factors;
 
    
    significant costs imposed on our mining operations by extensive environmental laws and
regulations, and greater than expected environmental regulation, costs and liabilities;
 
    
    legislation, and regulatory and related court decisions and interpretations, including
issues related to climate change and miner health and safety;
 
    
    a variety of operational, geologic, permitting, labor and weather-related factors,
including those related to both our mining operations and our underground coal reserves
that we do not operate;
  16




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##### Table of Contents




    
    limitations in the cash distributions we receive from our majority-owned subsidiary,
Harrison Resources, and the ability of Harrison Resources to acquire additional reserves
on economical terms from CONSOL Energy in the future;
 
    
    the potential for inaccuracies in our estimates of our coal reserves, which could
result in lower than expected revenues or higher than expected costs;
 
    
    the accuracy of the assumptions underlying our reclamation and mine closure
obligations;
 
    
    liquidity constraints, including those resulting from the cost or unavailability of
financing due to current capital market conditions;
 
    
    risks associated with major mine-related accidents;
 
    
    results of litigation, including claims not yet asserted;
 
    
    our ability to attract and retain key management personnel;
 
    
    greater than expected shortage of skilled labor;
 
    
    our ability to maintain satisfactory relations with our employees; and
 
    
    failure to obtain, maintain or renew our security arrangements, such as surety bonds
or letters of credit, in a timely manner and on acceptable terms.
   17




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##### Table of Contents



Overview
    Initial Public Offering
  Credit Facility
  Evaluating Our Results of Operations
  
    
    our coal production, sales volume and average sales prices, which drive our coal
sales revenue;
 
    
    our cost of coal sales;
 
    
    our cost of purchased coal;
 
    
    our adjusted EBITDA, a non-GAAP financial measure; and
 
    
    our distributable cash flow, a non-GAAP financial measure.
  18




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##### Table of Contents



Coal Production, Sales Volume and Sales Prices
    % ChangeThreeMonthsEndedMarch 31,Three Months Ended
    
    
    2011March 31,
    
    
    vs.2011
    
    
    2010
    
    
    2010(tons in thousands)Tons of coal produced (clean)
    
    
    1,951
    
    
    
    1,806
    
    
    
    8.1
    %Increase (decrease) in inventory
    
    
    29
    
    
    
    28
    
    
    
    3.9
    %Tons of coal purchased
    
    
    141
    
    
    
    258
    
    
    
    -45.4
    %Tons of coal sold
    
    
    2,063
    
    
    
    2,036
    
    
    
    1.4
    %Tons sold under long-term contracts(1)
    
    
    92.9
    %
    
    
    98.8
    %
    
    
    -6.0
    %Average sales price per ton
    
    $
    40.37
    
    
    $
    37.71
    
    
    
    7.1
    %
 (1)
    
    Represents the percentage of the tons of coal we sold that were delivered under
long-term coal sales contracts.
  19




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##### Table of Contents



Cost of Coal Sales
  % ChangeThreeMonthsEndedMarch 31,Three Months Ended
    
    
    2011March 31,
    
    
    vs.2011
    
    
    2010
    
    
    2010(tons in thousands)Cost of coal sales per ton produced
    
    $
    32.57
    
    
    $
    31.04
    
    
    
    4.9
    %Tons of coal produced (clean)
    
    
    1,951
    
    
    
    1,806
    
    
    
    8.1
    %
 Cost of Purchased Coal
   % ChangeThreeMonthsEndedMarch 31,Three Months Ended
    
    
    2011March 31,
    
    
    vs.2011
    
    
    2010
    
    
    2010(tons in thousands)Cost of purchased coal per ton
    
    $
    36.44
    
    
    $
    30.51
    
    
    
    19.4
    %Tons of coal purchased
    
    
    141
    
    
    
    258
    
    
    
    -45.4
    %
  20




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##### Table of Contents



Adjusted EBITDA
   
    
    our financial performance without regard to financing methods, capital structure
or income taxes;
 
    
    our ability to generate cash sufficient to pay interest on our indebtedness and
to make distributions to our unitholders and our general partner;
 
    
    our compliance with certain credit facility financial covenants; and
 
    
    our ability to fund capital expenditure projects from operating cash flow.
 Distributable Cash Flow
  Factors That Impact Our Business
   21




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22




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##### Table of Contents



Results of Operations
 Factors Affecting the Comparability of Our Results of Operations
  Summary
  Three Months EndedMarch 31,2011
    
    
    2010(in thousands, unaudited)Statement of Operations Data:Revenue:Coal sales
    
    $
    83,304
    
    
    $
    76,756Transportation revenue
    
    
    10,442
    
    
    
    9,530Royalty and non-coal revenue
    
    
    2,320
    
    
    
    1,774Total revenue
    
    
    96,066
    
    
    
    88,060Costs and expenses:Cost of coal sales (excluding depreciation,
depletion and amortization, shown separately)
    
    
    62,617
    
    
    
    55,186Cost of purchased coal
    
    
    5,127
    
    
    
    7,859Cost of transportation
    
    
    10,442
    
    
    
    9,530Depreciation, depletion and amortization
    
    
    12,111
    
    
    
    8,777Selling, general and administrative expenses
    
    
    3,966
    
    
    
    3,535Total costs and expenses
    
    
    94,263
    
    
    
    84,887Income from operations
    
    
    1,803
    
    
    
    3,173Interest income
    
    
    1
    
    
    
    1Interest expense
    
    
    (2,003
    )
    
    
    (1,833
    )Net income (loss)
    
    
    (199
    )
    
    
    1,341Net income attributable to noncontrolling interest
    
    
    (1,571
    )
    
    
    (1,628
    )Net loss attributable to Oxford Resource
Partners, LP unitholders
    
    $
    (1,770
    )
    
    $
    (287
    )Other Financial DataAdjusted EBITDA
    
    $
    13,987
    
    
    $
    10,888Distributable cash flow(1)
    
    $
    5,479
 
 (1)
    
    We do not calculate distributable cash flow with respect to the periods
prior to becoming a publicly traded limited partnership during the second half of 2010.
  23




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##### Table of Contents



Reconciliation to GAAP Measures
  Reconciliation
of net loss attributable to Oxford Resource Partners, LP 
unitholders to adjusted EBITDA and distributable cash flow:
 Three Months EndedMarch 31,2011
    
    
    2010(in thousands, unaudited)Net loss attributable to Oxford Resource
Partners, LP unitholders
    
    $
    (1,770
    )
    
    $
    (287
    )PLUS:Interest expense, net of interest income
    
    
    2,002
    
    
    
    1,832Depreciation, depletion and amortization
    
    
    12,111
    
    
    
    8,777Non-cash equity-based compensation expense
    
    
    364
    
    
    
    304Non-cash loss on asset disposals
    
    
    166
    
    
    
    175Change in fair value of future asset
retirement obligations
    
    
    1,358
    
    
    
    712LESS:Amortization of below-market coal
sales contracts
    
    
    244
    
    
    
    625Adjusted EBITDA
    
    $
    13,987
    
    
    $
    10,888LESS:Cash interest expense, net of interest income
    
    
    1,539Estimated reserve replacement expenditures
    
    
    1,331Other maintenance capital expenditures
    
    
    5,638Distributable cash flow(1)
    
    $
    5,479
 (1)
    
    We do not calculate distributable cash flow with respect to
the periods prior to becoming a publicly traded limited partnership
during the second half of 2010.
  24




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##### Table of Contents



Quarter Ended March 31, 2011 Compared to Quarter Ended March 31, 2010
 Overview.
 Coal Production.
 Sales Volume.
 Average Sales Price Per Ton
 Coal Sales Revenue.
 Royalty and Non-Coal Revenue
 Cost of Coal Sales (Excluding DD&A).
 Cost of Purchased Coal
 Depreciation, Depletion and Amortization (DD&A).
 Selling, General and Administrative Expenses (SG&A).
  25




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##### Table of Contents



Transportation Revenue and Expenses
 Interest Expense
 Net Income Attributable to Noncontrolling Interest
 Liquidity and Capital Resources
   
    
    our working capital;
 
    
    cash generated from operations;
 
    
    borrowings available under our $175 million credit facility;
 
    
    issuance of additional partnership units; and
 
    
    debt offerings.
    26




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##### Table of Contents



Cash Flows
  Three Months EndedMarch 31,2011
    
    
    2010Net cash provided by (used in)Operating activities
    
    $
    17,219
    
    
    $
    8,341Investing activities
    
    
    (13,091
    )
    
    
    (10,280
    )Financing activities
    
    
    (1,277
    )
    
    
    (137
    )
    Credit Facility
      27




---



##### Table of Contents



Capital Expenditures
   Off-Balance Sheet Arrangements
    Seasonality
   28




---



##### Table of Contents



Critical Accounting Policies
    Use of Estimates
  Allowance for Doubtful Accounts
  Inventory
 de minimus
  29




---



##### Table of Contents



Property, Plant and Equipment
  Buildings and tipple
    
    25-39 yearsMachinery and equipment
    
    7-12 yearsVehicles
    
    5-7 yearsFurniture and fixtures
    
    3-7 yearsRailroad siding
    
    7 years
   de minimus
 Advance Royalties
  Financial Instruments and Derivative Financial Instruments
      30




---



##### Table of Contents



Long-Lived Assets
  Identifiable Intangible Assets and Liabilities
   Asset Retirement Obligations
      31




---



##### Table of Contents



Income Taxes
   Revenue Recognition
    Below-Market Coal Sales Contracts
  Equity-Based Compensation
   32




---



##### Table of Contents



Earnings Per Unit
     33




---



##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  Commodity Price Risks
   Interest Rate Risks
  
 Item 4.
    
    Controls and Procedures
    34




---



##### 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.
    
    Mine Safety Disclosure
 Mine Safety and Health
    35




---



##### Table of Contents



Table: OXF-MSHA-1  Three Months Ended March 31, 2011
 (F)
    
    
    
    
    
    
    (H)(A)
    
    
    (B)
    
    
    (C)
    
    
    (D)
    
    
    (E)
    
    
    Proposed
    
    
    
    
    
    
    PendingSection
    
    
    Section
    
    
    Section
    
    
    Section
    
    
    Section
    
    
    Assess-
    
    
    (G)
    
    
    LegalMining Complex
    
    104
    
    
    104(b)
    
    
    104(d)
    
    
    110(b)(2)
    
    
    107(a)
    
    
    ments
    
    
    Fatalities
    
    
    ActionCadiz
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,087.00
    
    
    
    
    
    
    
    2Tuscarawas County
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,612.00
    
    
    
    
    
    
    
    Belmont County
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    100.00
    
    
    
    
    
    
    
    Plainfield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    100.00
    
    
    
    
    
    
    
    1New Lexington
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    1Harrison
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    Noble County
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    534.00
    
    
    
    
    
    
    
    Muhlenberg County
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    $
    2,793.00
    
    
    
    
    
    
    
    Totals
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    $
    6,226.00
    
    
    
    
    
    
    
    4
 (A)
    
    The total number of violations of mandatory health or safety standards that could
significantly and substantially contribute to the cause and effect of a coal or other mine
safety or health hazard under section 104 of the Mine Act (30 U.S.C. 814) for which the
operator received a citation from MSHA.(B)
    
    The total number of orders issued under section 104(b) of the Mine Act (30 U.S.C. 814(b)).(C)
    
    The total number of citations and orders for unwarrantable failure of the mine operator to
comply with mandatory health or safety standards under section 104(d) of the Mine Act (30
U.S.C. 814(d)).(D)
    
    The total number of flagrant violations under section 110(b)(2) of the Mine Act (30 U.S.C.
820(b)(2)).(E)
    
    The total number of imminent danger orders issued under section 107(a) of the Mine Act (30
U.S.C. 817(a)).(F)
    
    The total dollar value of proposed assessments from MSHA under the Mine Act (30 U.S.C. 801 et
seq.). Includes proposed assessments for non-S&S citations and proposed assessments received
in the current period for citations in prior periods.(G)
    
    The total number of mining-related fatalities.(H)
    
    Any pending legal action before the Commission involving such coal or other mine. See Table
OXF-MSHA-2 below for information regarding pending legal actions.
  36




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##### Table of Contents



Table: OXF-MSHA-2  Legal Actions Pending as of March 31, 2011
 Docket Number
    
    
    
    
    
    
    
    ProposedMSHA Mine Name
    
    
    
    
    
    
    
    CivilOxford Mine Complex/Name
    
    Citation
    
    
    Date
    
    PenaltyMSHA ID Number
    
    No.
    
    
    Issued
    
    Assessment
    
    
    StatusLAKE 2008-383 
Oxford Mining #3 
New Lexington/New Lexington 
33-04336
    
    
    7138351
    
    
    1/9/2008
    
    $
    1,400
    
    
    Petition for civil
penalty assessment
for a miner not
wearing a hard hat
outside of the
operating cab of
his equipment. The
Petition was served
on June 6, 2008 and
timely answered on
July 3, 2008. The
matter was set for
trial on April 26,
2011 before
Administrative Law
Judge (ALJ)
David F. Barbour.LAKE 2009-381-M 
Oxford Mining #2 
Plainfield/Adamsville* 
33-04213 
*Adamsville mine  reclaimed
    
    7141549 
7141550
    
    
    11/3/2008 
11/10/2008
    
    $ $
    460 
460
    
    
    Petition for civil
penalty assessment
for two citations
regarding brake
lights on mobile
equipment. The
proposed civil
penalty assessment
became a final
order on January
16, 2009, but the
notice of contest
was mailed to an
incorrect address.
A Motion to Reopen
the Penalty
Assessment was
filed on March 19,
2009 and unopposed
by the Secretary of
Labor. The
Commission has
approved the
Motion, and the
matter was assigned
to ALJ Barbour
pending issuance of
a Petition for
Penalty Assessment.LAKE 2010 -576 
Snyder Mine 
Cadiz/County Road 29 
33-04414
    
    
    8017301
    
    
    8/31/2009
    
    $
    946
    
    
    Petition for civil
penalty assessment
for a rock truck
operator failing to
maintain control of
the vehicle and
crashing into the
highwall; the
driver sustained a
broken leg. The
Petition was served
on May 5, 2010 and
timely answered on
June 7, 2010. The
case was assigned
to ALJ Harner. The
parties conducted a
status conference
with the ALJ and
engaged in
settlement
discussions. The
parties exchanged
pre-hearing
information and
documents in
accordance with the
Commissions Order.
The matter was set
for trial along
with Lake 2010-577
on April 28, 2011.LAKE
2010-577
Snyder Mine
Cadiz/County Road 29
33-04414
    
    
    8024308
    
    
    2/3/2010
    
    $
    207
    
    
    Petition for civil
penalty assessment
for a dump truck
that did not give
an audible sound
when reverse was
engaged when
tested. The
Petition was served
on May 6, 2010 and
timely answered on
June 7, 2010. The
case was assigned
to ALJ Harner. The
parties conducted a
status conference
with the ALJ and
have engaged in
settlement
discussions. The
parties exchanged
pre-hearing
information and
documents in
accordance with the
Commissions Order.
The matter was set
for trial along
with Lake 2010-576
on April 28, 2011.
 
 Item 5.
    
    [Removed and Reserved]
 
 Item 6.
    
    Exhibits
   37




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##### Table of Contents



SIGNATURES
   OXFORD RESOURCE PARTNERS, LPBy: OXFORD RESOURCES GP, LLC, its general partnerBy:
    
    /s/ CHARLES C. UNGUREAN

Charles C. UngureanPresident and Chief Executive Officer(Principal Executive Officer)By:
    
    /s/ JEFFREY M. GUTMAN

Jeffrey M. GutmanSenior Vice President, Chief Financial Officer and Treasurer(Principal Financial Officer)
  38




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber

    
    Exhibit Description3.1
    
    
    Certificate of Limited Partnership of Oxford Resource
Partners, LP (incorporated by reference to Exhibit 3.1 to
the Registration Statement on Form S-1 (Commission File No.
333-165662) filed on March 24, 2010)3.2
    
    
    Third Amended and Restated Agreement of Limited Partnership
of Oxford Resource Partners, LP dated July 19, 2010
(incorporated by reference to Exhibit 3.1 to the Current
Report on Form 8-K (Commission File No. 001-34815) filed on
July 19, 2010)3.3
    
    
    Certificate of Formation of Oxford Resources GP, LLC
(incorporated by reference to Exhibit 3.3 to Amendment No.
1 to the Registration Statement on Form S-1 (Commission
File No. 333-165662) filed on April 21, 2010)3.4
    
    
    Third Amended and Restated Limited Liability Company
Agreement of Oxford Resources GP, LLC dated January 1, 2011
(incorporated by reference to Exhibit 3.2 to the Current
Report on Form 8-K (Commission File No. 001-34815) filed on
January 4, 2011)31.1
    *
    
    Certification of Charles C. Ungurean, President and Chief
Executive Officer of Oxford Resources GP, LLC, the general
partner of Oxford Resource Partners, LP, for the March 31,
2011 Quarterly Report on Form 10-Q, pursuant to Section 302
of the Sarbanes-Oxley Act of 200231.2
    *
    
    Certification of Jeffrey M. Gutman, Senior Vice President,
Chief Financial Officer and Treasurer of Oxford Resources
GP, LLC, the general partner of Oxford Resource Partners,
LP, for the March 31, 2011 Quarterly Report on Form 10-Q,
pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    *
    
    Certification of Charles C. Ungurean, President and Chief
Executive Officer of Oxford Resources GP, LLC, the general
partner of Oxford Resource Partners, LP, for the March 31,
2011 Quarterly Report on Form 10-Q, pursuant to Section 906
of the Sarbanes-Oxley Act of 200232.2
    *
    
    Certification of Jeffrey M. Gutman, Senior Vice President,
Chief Financial Officer and Treasurer of Oxford Resources
GP, LLC, the general partner of Oxford Resource Partners,
LP, for the March 31, 2011 Quarterly Report on Form 10-Q,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 *
    
    Filed herewith (or furnished, in the case of Exhibits 32.1 and 32.2).
  39