What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-15 compared with 2020-02-27 · 372 added, 430 removed, 772 unchanged (51% of the section changed)

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Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Ciner Wyoming, is based solely on the report of the other auditors.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2020 expressed an unqualified opinion thereon.

Adoption of ASU No.

The Partnership adopted ASU No.

2014-09, “Revenue from Contracts with Customers (Topic 606)” effective January 1, 2018.

As a result, for the years ended December 31, 2018 and 2019, the Partnership changed its method for revenue recognition related to royalty lease arrangements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 15, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Impairment Assessment of Mineral Rights and Intangible Assets

Description of the Matter At December 31, 2020, the Partnership's Mineral Rights, net and Intangible assets, net totaled a combined $478 million.

During 2020, the Partnership recorded $136 million of mineral rights impairment expense.

As more fully described in Note 2 to the consolidated financial statements, the Partnership evaluates its long-lived assets for possible impairment periodically or whenever events or changes in circumstances indicate an asset's net book value may not be recoverable ("triggering events").

If deemed to be impaired, impairment is measured based on the estimated fair value, usually determined using the present value of projected future cash flows, compared to the asset’s book value.

Auditing the Partnership's impairment assessment involved our subjective judgment because, in determining the fair value of assets, management uses estimates that include, among others, assumptions about forecasted coal and aggregates prices and future production using mineral reserve or other relevant information reported by the third-party mine operators.

Significant uncertainty exists with these assumptions, given the long term nature of the forecast period and estimation of future market prices.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Partnership’s impairment review process, including the processes to determine the fair value of the asset groups.

This included evaluating controls over the Partnership's budgetary and forecasting process used to develop the estimated future cash flows.

We also tested controls over management's review of the data used in the impairment analysis and review of the significant assumptions such as forecasted production and pricing.

To test the estimated fair value of the assets, we performed audit procedures that included, among others, assessing methodologies and testing significant assumptions.

We compared forecasted coal and aggregates prices to available market information and compared royalty rate inputs to customer contracts.

We tested production estimates through corroborating reserve information and mining plans to available third-party mine operators or publicly available information.

We considered possible contradictory information by comparing to historical results and projections utilized in other management analyses for going concern and estimated credit losses.

/s/ Ernst & Young LLP

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Houston, Texas

February 27, 2020

March 15, 2021

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Managers and Members of

To the Board of Managers and Members of

Ciner Wyoming LLC

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Opinion on the Financial Statements

We have audited the accompanying balance sheets of Ciner Wyoming LLC (“the Company”) as of December 31, 2019 and 2018 , and the related statements of operations and comprehensive income, members’ equity, and cash flows for each of the three years in the period ended December 31, 2019 , and the related notes included in Exhibit 99.1 (collectively referred to as the "financial statements").

We have audited the accompanying balance sheets of Ciner Wyoming LLC (the "Company") as of December 31, 2020 and 2019, the related statements of operations and comprehensive income, members' equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes that are included in Exhibit 99.1 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Agreements and Transactions with Affiliates – Refer to Notes 1, 2, 8, 12, and 13 to the financial statements

Critical Audit Matter Description

The Company is a subsidiary in a global group structure and agreements directly between the Company and other affiliates, or indirectly between affiliates that the Company does not control, can have a significant impact on recorded amounts or disclosures in the Company's financial statements, including any commitments and contingencies between the Company and affiliates or, potentially, third parties.

Performing audit procedures to evaluate the Company’s identification of upstream affiliate relationships, transactions, and commitments and contingencies outside of the U.S.

and the impact of such matters on the financial statements represents a critical audit matter because of the increased auditor judgment necessary to perform audit procedures related to these matters and evaluate the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s identification of upstream affiliate relationships, transactions, and commitments and contingencies outside of the U.S.

and the impact of such matters on the financial statements included the following, among others:

• We tested the effectiveness of controls over the Company’s affiliate process, including controls over the identification of the Company’s affiliate relationships, transactions, and commitments and contingencies outside of the U.S.

• We read publicly available financial filings and news sources related to the Company and its affiliates outside of the U.S.

and listened to the parent company (Ciner Resources LP) quarterly investor relations calls for information related to potential new affiliates and transactions between the Company and affiliates.

• We inspected director and executive officer questionnaires from the parent company directors and officers to identify any affiliate matters.

• We searched the general ledger for potential transactions with affiliates.

• We read significant new or amended agreements and contracts of the Company to identify new affiliate relationships, transactions, or commitments and contingencies, and evaluated management’s analyses regarding the accounting and disclosure of such arrangements.

• We inquired of executive officers, key members of management, and the Board of Managers regarding affiliate relationships, transactions and commitments and contingencies.

• We confirmed with the ultimate parent company that the affiliate relationships, transactions, and commitments and contingencies identified and disclosed by the Company were complete.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

February 27, 2020

March 15, 2021

We have served as the Company’s auditor since 2008.

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Cash and cash equivalents $ 99,790 $ 98,265

Restricted cash

Accounts receivable, net 12,322 30,869

Prepaid expenses and other, net

Other current assets, net 5,080 1,244

Current assets of discontinued operations — 1,706

Total current assets $ 117,192 $ 132,084

Land 24,008 24,008

Mineral rights, net 460,373 605,096

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Equity in unconsolidated investment 262,514 263,080

Long-term contract receivable

Other assets, net

Long-term contract receivable, net 33,264 36,963

Other long-term assets, net 7,067 6,989

Total assets $ 921,877 $ 1,085,907

LIABILITIES AND CAPITAL

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Commitments and contingencies (see Note 15)

Class A Convertible Preferred Units (250,000 units issued and outstanding at $1,000 par value per unit;

liquidation preference of $1,500 per unit)

Class A Convertible Preferred Units ( 253,750 and 250,000 units issued and outstanding at December 31, 2020 and 2019, respectively, at $ 1,000 par value per unit;

liquidation preference of $ 1,700 per unit and $ 1,500 per unit at December 31, 2020 and 2019, respectively)

$ 168,337 $ 164,587

Partners’ capital

Common unitholders’ interest (12,261,199 and 12,249,469 units issued and outstanding at December 31, 2019 and 2018, respectively)

Common unitholders’ interest ( 12,261,199 units issued and outstanding at December 31, 2020 and 2019)

$ 136,927 $ 271,471

General partner’s interest 459 3,270

Warrant holders’ interest 66,816 66,816

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss) 322 ( 2,594 )

Total partners’ capital $ 204,524 $ 338,963

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Years Ended December 31,

For the Year Ended December 31,

(In thousands, except per unit data) 2020 2019 2018

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Total operating expenses $ 184,171 $ 212,614 $ 85,974

Income from operations

Income (loss) from operations $ ( 43,851 ) $ 51,321 $ 192,538

Other expenses, net

Interest expense, net $ ( 40,968 ) $ ( 47,453 ) $ ( 70,178 )

Debt modification expense

Loss on extinguishment of debt — ( 29,282 ) —

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income attributable to preferred unitholders ( 30,225 ) ( 30,000 ) ( 30,000 )

Net income (loss) attributable to common unitholders and general partner

Net income (loss) attributable to common unitholders and the general partner $ ( 115,044 ) $ ( 54,458 ) $ 109,537

Net income (loss) attributable to common unitholders $ ( 112,743 ) $ ( 53,369 ) $ 107,346

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Income (loss) from continuing operations per common unit (see Note 6)

Basic $ ( 9.20 ) $ ( 4.43 ) $ 7.35

Diluted ( 9.20 ) ( 4.43 ) 5.90

Net income (loss) per common unit (see Note 6)

Basic $ ( 9.20 ) $ ( 4.35 ) $ 8.77

Diluted ( 9.20 ) ( 4.35 ) 6.76

Net income (loss) $ ( 84,819 ) $ ( 24,458 ) $ 140,047

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CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

Common Unitholders

General Partner

Warrant Holders

Common Unitholders General Partner Warrant Holders Accumulated

Comprehensive

Partners' Capital Excluding Non-Controlling Interest

Non-Controlling Interest

Total Capital

(In thousands)

Income (Loss) Partners' Capital Excluding Non-Controlling Interest Non-Controlling Interest Total Capital

(In thousands) Units Amounts

Balance at December 31, 2017 12,232 $ 199,851 $ 1,857 $ 66,816 $ ( 3,313 ) $ 265,211 $ ( 3,394 ) $ 261,817

Cumulative effect of adoption of accounting standard — 69,057 1,409 — — 70,466 — 70,466

Net income (1)

— 136,746 2,791 — — 139,537 510 140,047

Distributions to common unitholders and general partner — ( 22,036 ) ( 450 ) — — ( 22,486 ) — ( 22,486 )

Distributions to preferred unitholders — ( 29,660 ) ( 605 ) — — ( 30,265 ) — ( 30,265 )

Issuance of warrants

Comprehensive loss from unconsolidated investment and other

Issuance of unit-based awards 17 546 — — — 546 — 546

Unit-based awards amortization and vesting — 560 — — — 560 — 560

Comprehensive income (loss) from unconsolidated investment and other — 49 12 — ( 149 ) ( 88 ) ( 51 ) ( 139 )

Balance at December 31, 2018 12,249 $ 355,113 $ 5,014 $ 66,816 $ ( 3,462 ) $ 423,481 $ ( 2,935 ) $ 420,546

Cumulative effect of adoption of accounting standard

Net income (2)

— ( 23,969 ) ( 489 ) — — ( 24,458 ) — ( 24,458 )

Distributions to common unitholders and general partner — ( 32,487 ) ( 663 ) — — ( 33,150 ) — ( 33,150 )

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Balance at December 31, 2019 12,261 $ 271,471 $ 3,270 $ 66,816 $ ( 2,594 ) $ 338,963 $ ( 2,935 ) $ 336,028

Cumulative effect of adoption of accounting standard (See Note 18) — ( 3,833 ) ( 78 ) — — ( 3,911 ) — ( 3,911 )

— ( 83,123 ) ( 1,696 ) — — ( 84,819 ) — ( 84,819 )

Distributions to common unitholders and general partner — ( 16,552 ) ( 338 ) — — ( 16,890 ) — ( 16,890 )

Distributions to preferred unitholders — ( 29,511 ) ( 602 ) — — ( 30,113 ) — ( 30,113 )

Acquisition of non-controlling interest in BRP — ( 4,747 ) ( 97 ) — — ( 4,844 ) 2,935 ( 1,909 )

Issuance of unit-based awards — — — — — — — —

Unit-based awards amortization and vesting — 3,222 — — — 3,222 — 3,222

Comprehensive income (loss) from unconsolidated investment and other

Comprehensive income from unconsolidated investment and other — — — — 2,916 2,916 — 2,916

Balance at December 31, 2020 12,261 $ 136,927 $ 459 $ 66,816 $ 322 $ 204,524 $ — $ 204,524

Net income includes $25.5 million attributable to preferred unitholders that accumulated during the period, of which $24.9 million is allocated to the common unitholders and $0.5 million is allocated to the general partner.

Net income (loss) includes $30.0 million attributable to preferred unitholders that accumulated during the period, of which $29.4 million is allocated to the common unitholders and $0.6 million is allocated to the general partner.

(1) Net income (loss) includes $ 30.0 million of income attributable to preferred unitholders that accumulated during the period, of which $ 29.4 million is allocated to the common unitholders and $ 0.6 million is allocated to the general partner.

(2) Net loss includes $ 30.2 million of income attributable to preferred unitholders that accumulated during the period, of which $ 29.6 million is allocated to the common unitholders and $ 0.6 million is allocated to the general partner.

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31,

For the Year Ended December 31,

(In thousands) 2020 2019 2018

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Gain on asset sales and disposals ( 581 ) ( 6,498 ) ( 2,441 )

Debt modification expense

Loss on extinguishment of debt — 29,282 —

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Proceeds from asset sales and disposals 623 6,500 2,449

Return of long-term contract receivables

Return of long-term contract receivable 2,122 1,743 3,061

Acquisition of non-controlling interest in BRP ( 1,000 ) — —

Acquisition of mineral rights — ( 22 ) —

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Net cash provided by investing activities $ 1,680 $ 7,592 $ 190,628

NATURAL RESOURCE PARTNERS L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31,

(In thousands)

Cash flows from financing activities

Proceeds from issuance of preferred units and warrants, net

Debt borrowings $ — $ 300,000 $ 35,000

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Net cash used in financing activities $ ( 89,429 ) $ ( 252,668 ) $ ( 203,348 )

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash of continuing operations at beginning of period

NATURAL RESOURCE PARTNERS L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended December 31,

(In thousands) 2020 2019 2018

Net increase (decrease) in cash and cash equivalents $ 1,525 $ ( 107,765 ) $ 176,203

Cash and cash equivalents of continuing operations at beginning of period $ 98,265 $ 206,030 $ 26,980

Cash and cash equivalents of discontinued operations at beginning of period — — 2,847

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Cash and cash equivalents at beginning of period $ 98,265 $ 206,030 $ 29,827

Cash and cash equivalents of continuing operations at end of period $ 99,790 $ 98,265 $ 206,030

cash and cash equivalents of discontinued operations at end of period — — —

Cash, cash equivalents and restricted cash of continuing operations at end of period

Cash and cash equivalents at end of period $ 99,790 $ 98,265 $ 206,030

Supplemental cash flow information:

Cash paid during the period for interest of continuing operations

Cash paid during the period for interest $ 39,830 $ 58,597 $ 64,991

Non-cash investing and financing activities:

Issuance of 2022 Senior Notes in exchange for 2018 Senior Notes

Plant, equipment, mineral rights and other funded with accounts payable or accrued liabilities $ 970 $ — $ —

Preferred unit distributions paid-in-kind 3,750 — —

The accompanying notes are an integral part of these consolidated financial statements.

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The Consolidated Financial Statements include the accounts of Natural Resource Partners L.P.

and its wholly owned subsidiaries, as well as BRP LLC ("BRP"), a joint venture with International Paper Company controlled by the Partnership.

and its wholly owned subsidiaries.

The Partnership has an equity investment in Ciner Wyoming through which it is able to exercise significant influence over but does not control the investee and is not the primary beneficiary of the investee’s activities and is accounted for using the equity method.

Intercompany transactions and balances have been eliminated.

Certain reclassifications have been made to prior year amounts on the Consolidated Balance Sheets, Consolidated Statements of Comprehensive Income (Loss) and Consolidated Statements of Cash Flows to conform with current year presentation.

These reclassifications had no impact on previously reported total assets, total liabilities, partners' capital, net income (loss) or cash flows from operating, investing or financing activities.

Use of Estimates

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Fair Value Measurements for further details.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

There are three levels of inputs that may be used to measure fair value:

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or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

• 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 assets and liabilities 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.

Cash, Cash Equivalents and Restricted Cash

Cash and Cash Equivalents

The Partnership considers all highly liquid short-term investments with an original maturity of three months or less to be cash equivalents

Restricted cash at December 31, 2018 included cash proceeds received from the sale of the Partnership's construction aggregates business that the Partnership used to repay debt in 2019.

Allowance for Doubtful Accounts

The Partnership records an allowance for doubtful accounts for its accounts receivables and notes receivables which it determines to be uncollectible based on the specific identification method.

The Partnership records an allowance for doubtful accounts for its accounts receivable and notes receivable comprised of estimated credit risk and non-credit risk (e.g., legal disputes) losses.

Receivables are written off when collection efforts are exhausted and future recovery is doubtful.

The allowance for doubtful accounts receivable is included in accounts receivable, net and the allowance for doubtful accounts for notes receivable is included in prepaid expenses and other, net on the Partnership's Consolidated Balance Sheets, respectively.

The allowance for doubtful accounts related to accounts receivables was $0.4 million at December 31, 2019 .

The allowance for doubtful accounts related to notes receivables was $1.2 million at December 31, 2019 and 2018.

Beginning January 1, 2020 upon adoption of ASU No.

2016-13, the Partnership includes an allowance for current expected credit losses ("CECL") on its financial assets based on the loss-rate method.

NRP assesses the likelihood of collection of its receivables utilizing historical loss rates, current market conditions that include the estimated impact of the global COVID-19 pandemic, industry and macroeconomic factors, reasonable and supportable forecasts and facts or circumstances of individual customers and properties.

Credit Losses for more information.

The total allowance related to accounts receivables included in accounts receivables, net on the Partnership's Consolidated Balance Sheets was $ 1.7 million and $ 0.4 million at December 31, 2020 and 2019, respectively.

The total allowance related to short-term notes receivables included in other current assets, net on the Partnership's Consolidated Balance Sheets was $ 0.6 million and $ 1.2 million at December 31, 2020 and 2019, respectively.

The total allowance related to the Partnership's long-term financing receivable included in long-term contract receivable, net on the Consolidated Balance Sheets was $ 1.6 million at December 31, 2020.

The Partnership recorded bad debt expense of $ 4.0 million, $ 7.5 million and $( 0.1 ) million included in operating and maintenance expenses on its Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2020, 2019 and 2018, respectively.

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Asset Impairment

The Partnership has developed procedures to evaluate its long-lived assets for possible impairment periodically or whenever events or changes in circumstances indicate an asset's net book value may not be recoverable.

The Partnership has developed procedures to evaluate its long-lived assets, including intangible assets, for possible impairment periodically or whenever events or changes in circumstances indicate an asset's net book value may not be recoverable.

Potential events or circumstances include, but are not limited to, specific events such as a reduction in economically recoverable reserves or production ceasing on a property for an extended period.

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Accrued Liabilities

Included in accrued liabilities on the Partnership's Consolidated Balance Sheets at December 31, 2019 were $3.7 million of accrued employee costs and $5.0 million of other accrued liabilities, which includes property and franchise taxes and disputed well liabilities.

Included in accrued liabilities on the Partnership's Consolidated Balance Sheets at December 31, 2020 were $ 3.7 million of accrued employee costs and $ 4.0 million of other accrued liabilities, which primarily includes property taxes.

These amounts were $ 3.7 million and $ 5.0 million of accrued employee costs and other accrued liabilities, respectively, at December 31, 2019.

Other accrued liabilities at December 31, 2019 primarily included property taxes and disputed well liabilities.

Revenue Recognition

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Most of NRP’s coal and aggregates royalty leases require the lessee to pay quarterly or annual minimum amounts, either made in advance or arrears, which are generally recoupable through actual royalty production over certain time periods that generally range from three to five years.

In accordance with previous accounting standards in effect prior to January 1, 2018, the Partnership recognized all coal and aggregates royalty revenues over the lease term based on production.

The recognition of revenue from minimum payments was deferred until either recoupment through royalty production occurred or when the recoupment period expired for unrecouped minimums.

In accordance with the accounting standard in effect subsequent to January 1, 2018 ("ASC 606"), management has defined NRP's coal and aggregates royalty lease performance obligation as providing the lessee the right to mine and sell NRP's coal or aggregates over the lease term.

The Partnership then evaluated the likelihood that consideration NRP expected to receive from its lessees resulting from production would exceed consideration expected to be received from minimum payments over the lease term.

The Partnership has defined its coal and aggregates royalty lease performance obligation as providing the lessee the right to mine and sell its coal or aggregates over the lease term.

NRP then evaluated the likelihood that consideration it expected to receive from its lessees resulting from production would exceed consideration expected to be received from minimum payments over the lease term.

As a result of this evaluation, revenue recognition from the Partnership's royalty-based leases is based on either production or minimum payments as follows:

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The payment of and reimbursement of property taxes is included in operating and maintenance expenses and in coal royalty and other revenues, respectively, on the Consolidated Statements of Comprehensive Income (Loss).

Transportation Revenues and Expenses

The Partnership records transportation and processing revenues and pays transportation and processing costs to an affiliate of Foresight Energy LP to operate equipment on behalf of the Partnership.

The revenues and expenses related to these transactions are recorded as transportation and processing services revenues and operating and maintenance expenses, respectively, on the Consolidated Statements of Comprehensive Income (Loss).

Related Party Transactions for more information.

Unit-Based Compensation

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These costs are amortized over the term of the respective line-of-credit or debt arrangements.

Deferred financing costs related to the Partnership's revolving credit facility are included in other assets, net on the Partnership's Consolidated Balance Sheets.

Deferred financing costs related to the Partnership's revolving credit facility are included in other long-term assets, net on the Partnership's Consolidated Balance Sheets.

Deferred financing costs related to the Partnership's note agreements are included as a direct deduction from the carrying amount of the debt liability in current portion of long-term debt, net or long-term debt, net on the Partnership's Consolidated Balance Sheets.

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Recently Adopted Accounting Standards

On January 1, 2019, NRP adopted Accounting Standards Codification (ASC) 842, Leases, and all the related amendments (the “new lease standard” and "ASC 842") and recognized assets and liabilities on its Consolidated Balance Sheet for the present value of the rights and obligations created by all leases with terms of more than 12 months.

This standard does not apply to leases that explore for or use minerals, oil, natural gas and similar non-regenerative resources, including the intangible right to explore for those natural resources and rights to use the land in which those natural resources are contained.

The guidance also required disclosures designed to give financial statement users information on the amount, timing and uncertainty of cash flows arising from leases.

The guidance was adopted by NRP on January 1, 2019 using a modified retrospective approach.

The Partnership is a lessee in one lease that is accounted for as an operating lease under the new lease standard, and the adoption of the new lease standard did not have a material impact to the Partnership's Consolidated Financial Statements.

For lease agreements entered into or reassessed after the adoption of ASC 842, the Partnership elected to not combine lease and non-lease components.

Leases for more information.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Recently Issued Accounting Standards

Credit Losses

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326).

The new standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

On January 1, 2020, the Partnership adopted ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326), and all the related amendments ("the new credit loss standard").

The Partnership recognized a $ 3.9 million cumulative effect of adoption in the opening balance of partners' capital on January 1, 2020 as a result of the adoption of the new credit loss standard.

The new standard replaces today's "incurred loss" model with an "expected credit loss" model that requires entities to estimate an expected lifetime credit loss on financial assets, including trade accounts receivable.

The guidance is effective for annual and interim periods beginning after December 15, 2019 and is to be adopted using a modified retrospective approach.

As a result of implementation of the new standard the Partnership expects to record an approximate $5 million reduction of its financial assets and a corresponding decrease in Partners' Capital on January 1, 2020.

NRP does not expect this standard to have a material effect on its Consolidated Financial Statements subsequent to adoption.

Credit Losses for more information.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Revenues from Contracts with Customers

The following table represents the Partnership's Coal Royalty and Other segment revenues by major source:

Year Ended December 31,

For the Year Ended December 31,

(In thousands) 2020 2019 2018

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Coal royalty and other revenues

$ 120,166 $ 191,069 $ 178,878

Transportation and processing services revenues (1)

8,845 19,279 23,887

Total coal royalty and other segment revenues $ 129,011 $ 210,348 $ 202,765

Coal royalty and other revenues from contracts with customers as defined under ASC 606.

Transportation and processing services revenues from contracts with customers as defined under ASC 606 was $9.6 million and $13.2 million for the year ended December 31, 2019 and 2018 , respectively.

The remaining transportation and processing services revenues of $9.7 million and $10.7 million for the year ended December 31, 2019 and 2018 , respectively, related to other NRP-owned infrastructure leased to and operated by third-party operators accounted for under other guidance.

Financing Transaction and Note 19.

Leases for more information.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(1) Transportation and processing services revenues from contracts with customers as defined under ASC 606 was $ 5.0 million, $ 9.6 million and $ 13.2 million for the year ended December 31, 2020, 2019 and 2018, respectively.

The remaining transportation and processing services revenues of $ 3.8 million, $ 9.7 million and $ 10.7 million for the year ended December 31, 2020, 2019 and 2018, respectively, related to other NRP-owned infrastructure leased to and operated by third-party operators accounted for under other guidance.

Financing Transaction for more information.

The following table details the Partnership's Coal Royalty and Other segment receivables and liabilities resulting from contracts with customers:

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Accounts receivable, net $ 10,193 $ 27,915

Prepaid expenses and other (1)

Other current assets, net (1)

Other long-term assets, net (2)

Contract liabilities

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Deferred revenue 50,069 47,213

Prepaid expenses and other includes notes receivable from contracts with customers.

(1) Other current assets, net includes short-term notes receivables from contracts with customers.

(2) Other long-term assets, net includes long-term lease amendment fee receivables from contracts with customers.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The following table shows the activity related to the Partnership's Coal Royalty and Other segment deferred revenue:

Year Ended December 31,

For the Year Ended December 31,

(In thousands) 2020 2019 2018

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Balance at end of period (current and non-current) $ 61,554 $ 51,821 $ 52,553

The Partnership's non-cancelable annual minimum payments due under the lease terms of its coal and aggregates royalty and overriding royalty leases are as follows (in thousands):

The Partnership's non-cancelable annual minimum payments due under the lease terms of its coal and aggregates royalty and overriding royalty leases are as follows as of December 31, 2020 (in thousands):

Lease Term (1)

Weighted Average Remaining Years as of December 31, 2019

Annual Minimum Payments (2)

Weighted Average Remaining Years Annual Minimum Payments (2)

0 - 5 years 4.4 $ 13,349

5 - 10 years 5.4 8,022

10+ years 13.7 30,130

Total 9.6 $ 51,501

(1) Lease term does not include renewal periods.

Annual minimum payments do not include $5.0 million from a coal infrastructure lease that is accounted for as a financing transaction.

(2) Annual minimum payments do not include $ 19.3 million of the $ 40.0 million of annual fixed consideration owed to NRP in 2021 resulting from contract modifications entered into during the second quarter of 2020.

Additionally, $ 5.0 million of this remaining $ 19.3 million relates to a coal infrastructure lease that is accounted for as a financing transaction.

Financing Transaction for additional information.

Discontinued Operations

In December 2018, the Partnership sold VantaCore Partners LLC, its construction aggregates materials business for $205 million , before customary purchase price adjustments and transaction expenses, and recorded a gain of $13.1 million , and in July 2016, the Partnership sold its non-operated oil and gas working interest assets.

The Partnership's exit from both its construction aggregates business and non-operated oil and gas working interest business represented strategic shifts to reduce debt and focus on its Coal Royalty and Other and Soda Ash business segments.

As a result, the Partnership classified the assets and liabilities, operating results and cash flows of these businesses as discontinued operations on its Consolidated Balance Sheets, Consolidated Statements of Comprehensive Income (Loss) and Consolidated Statements of Cash Flows for all periods presented.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The following table presents the carrying amounts of the Partnership's assets and liabilities of discontinued operations on the Consolidated Balance Sheets:

(In thousands)

Construction Aggregates

Current assets

Accounts receivable, net

Total assets of discontinued operations

Current liabilities

Accounts payable

Accrued liabilities

Total liabilities of discontinued operations

The following tables present summarized financial results of the Partnership's discontinued operations on the Consolidated Statements of Comprehensive Income (Loss):

For the Year Ended December 31, 2019

(In thousands)

Construction Aggregates

Revenues and other income

Gain on asset sales and disposals

Total revenues and other income

Operating expenses

Operating and maintenance expenses

Total operating expenses

Income from discontinued operations

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

For the Year Ended December 31, 2018

(In thousands)

Construction Aggregates

Revenues and other income

Construction aggregates

Road construction and asphalt paving services

Gain on asset sales and disposals

Total revenues and other income

Operating expenses

Operating and maintenance expenses

Depreciation, depletion and amortization

Asset impairments

Total operating expenses

Interest expense

Income (loss) from discontinued operations

For the Year Ended December 31, 2017

(In thousands)

Construction Aggregates

Revenues and other income

Construction aggregates

Road construction and asphalt paving services

Gain (loss) on asset sales and disposals

Total revenues and other income

Operating expenses

Operating and maintenance expenses

Depreciation, depletion and amortization

Asset impairments

Total operating expenses

Interest expense

Income (loss) from discontinued operations

Capital expenditures related to the Partnership's discontinued operations were $10.9 million and $7.6 million during the years ended December 31, 2018 and 2017 , respectively, of which $0.9 million and $0.3 million were funded with accounts payable or accrued liabilities during 2018 and 2017 , respectively.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Class A Convertible Preferred Units and Warrants

10 unchanged sentences

Rather than have the preferred units convert to common units in accordance with the provisions of this paragraph, NRP would have the option to elect to redeem the preferred units proposed to be converted for cash at a price equal to the per unit purchase price plus the value of any accrued and unpaid distributions.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

On or after March 2, 2025, the holders of the preferred units may elect to convert the preferred units to common units at a conversion rate equal to the Liquidation Value divided by an amount equal to a 10 % discount to the VWAP for the 30 trading days immediately prior to the notice of conversion.

10 unchanged sentences

In addition, if at any time after January 1, 2022, any PIK units are outstanding, NRP may not make distributions on its common units until it has redeemed all PIK units for cash.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The holders of the preferred units have the right to vote with holders of NRP’s common units on an as-converted basis and have other customary approval rights with respect to changes of the terms of the preferred units.

8 unchanged sentences

If the shelf registration statement to register the common units issuable upon conversion of the preferred units is not effective by the applicable registration deadline, NRP will be required to pay the preferred purchasers liquidated damages in the amounts and upon the term set forth in the preferred unit and warrant registration rights agreement.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Accounting for the Preferred Units and Warrants

5 unchanged sentences

NRP allocated the transaction issuance costs to the preferred units and warrants primarily on a pro-rata basis based on their relative inception date allocated values.

The preferred units and warrants were initially recognized as follows:

(In thousands)

March 2, 2017

Transaction price, gross

Structuring, origination and other fees to preferred purchasers

Transaction costs to other third parties

Transaction price, net

Allocation of net transaction price

Preferred units, net

Warrant holders interest, net

Transaction price, net

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Subsequent Measurement

2 unchanged sentences

Activity related to the preferred units is as follows:

(In thousands, except unit data)

Units Outstanding

Balance at December 31, 2016

Issuance of preferred units, net

Distribution paid-in-kind

(In thousands, except unit data) Units Outstanding Financial

Balance at December 31, 2017 258,844 $ 173,431

1 unchanged sentence

Balance at December 31, 2018 and 2019 250,000 $ 164,587

Distribution paid-in-kind 3,750 3,750

Balance at December 31, 2020 $ 253,750 $ 168,337

Subsequent adjustment of the warrants will not occur until the warrants are exercised, at which time, NRP may, at its option, elect to settle the warrants in common units or cash, each on a net basis.

9 unchanged sentences

Income (loss) available to common unitholders and the general partner is reduced by preferred unit distributions that accumulated during the period.

NRP reduced net income (loss) available to common unitholders and the general partner by $30.0 million during the years ended December 31, 2019 and 2018 and $25.5 million during the year ended December 31, 2017 as a result of accumulated preferred unit distributions earned during the period.

During the three months ended March 31, 2018, the Partnership redeemed all of the outstanding PIK units, which resulted in an $8.8 million cash payment during the period.

This $8.8 million cash payment is not included in the table below.

NRP reduced net income (loss) available to common unitholders and the general partner by $ 30.2 million during the year ended December 31, 2020 and $ 30.0 million during the years ended December 31, 2019 and 2018 as a result of accumulated preferred unit distributions earned during the period.

In May 2020, the Partnership paid in kind one-

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The following table shows the distributions declared and paid to common and preferred unitholders during the years ended December 31, 2019 , 2018 and 2017 , respectively:

Preferred Units

Period Covered by Distribution

Total Distribution (1)

half of the preferred unit distribution related to the three months ended March 31, 2020.

In June 2020, the Partnership redeemed all of the outstanding preferred units paid in kind.

Additionally, in November 2020, the Partnership paid in kind one-half of the preferred unit distribution related to the three months ended September 30, 2020.

During the three months ended March 31, 2018, the Partnership redeemed all of the outstanding PIK units related to the year ended December 31, 2017, which resulted in an $ 8.8 million cash payment during the year ended December 31, 2018.

This $ 8.8 million cash payment is not included in the table below.

The following table shows the cash distributions declared and paid to common and preferred unitholders during the years ended December 31, 2020, 2019 and 2018, respectively:

Common Units Preferred Units

Date Paid Period Covered by Distribution Distribution

per Unit Total Distribution (1)

(In thousands)

Distribution per Unit

Total Distribution

Distribution per Unit Total Distribution

(In thousands)

February 2019

October 1 - December 31, 2018

February 2020 October 1 - December 31, 2019 $ 0.45 $ 5,630 $ 30.00 $ 7,500

May 2020 January 1 - March 31, 2020 — — 15.00 3,750

June 2020 (2)

January 1 - March 31, 2020 — — 15.45 3,863

August 2020 April 1 - June 30, 2020 0.45 5,630 30.00 7,500

November 2020 July 1 - September 30, 2020 0.45 5,630 15.00 3,750

February 2019 October 1 - December 31, 2018 $ 0.45 $ 5,625 $ 30.00 $ 7,500

May 2019 January 1 - March 31, 2019 0.45 5,630 30.00 7,500

Special Distribution 0.85 10,635 — —

April 1 - June 30, 2019

November 2019

July 1 - September 30, 2019

February 2018

October 1 - December 31, 2017

January 1 - March 31, 2018

April 1 - June 30, 2018

November 2018

July 1 - September 30, 2018

February 2017

October 1 - December 31, 2016

January 1 - March 31, 2017

April 1 - June 30, 2017

November 2017

July 1 - September 30, 2017

Totals include the amount paid to NRP's general partner in accordance with the general partner's 2% general partner interest.

The special distribution of $0.85 per common unit was made to cover the common unitholders’ tax liability resulting from the sale of NRP’s construction aggregates business in December 2018.

August 2019 April 1 - June 30, 2019 0.45 5,630 30.00 7,500

November 2019 July 1 - September 30, 2019 0.45 5,630 30.00 7,500

February 2018 October 1 - December 31, 2017 $ 0.45 $ 5,617 $ 30.00 $ 7,765

May 2018 January 1 - March 31, 2018 0.45 5,623 30.00 7,500

August 2018 April 1 - June 30, 2018 0.45 5,623 30.00 7,500

November 2018 July 1 - September 30, 2018 0.45 5,623 30.00 7,500

(1) Total common unit distribution includes the amount paid to NRP's general partner in accordance with the general partner's 2 % general partner interest.

(2) Redemption of preferred units paid in kind plus accrued interest.

(3) Special distribution was made to cover the common unitholders' tax liability resulting from the sale of NRP's construction aggregates business in December 2018.

Net Income (Loss) Per Common Unit

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Under the if-converted method, the preferred units are assumed to be converted at the beginning of the period, and the resulting common units are included in the denominator of the diluted net income (loss) per unit calculation for the period being presented.

Distributions declared in the period and undeclared distributions on the preferred units that accumulated during the period are added back to the numerator for purposes of the if-converted calculation.

The calculation of diluted net loss per common unit for the year ended December 31, 2019 did not include the assumed conversion of the preferred units because the impact would have been anti-dilutive.

The calculation of diluted net income (loss) per common unit for the years ended December 31, 2018 and 2017 included the assumed conversion of the preferred units.

The dilutive effect of the warrants is calculated using the treasury stock method, which assumes that the proceeds from the exercise of these instruments are used to purchase common units at the average market price for the period.

Due to NRP's net loss during the year ended December 31, 2019, the dilutive effect of the warrants were not included as the impact would have been anti-dilutive.

The calculation of the dilutive effect of the warrants for the years ended December 31, 2018 and 2017 included the net settlement of warrants to purchase 1.75 million common units with a strike price of $22.81 but did not include the net settlement of warrants to purchase 2.25 million common units with a strike price of $34.00 because the impact would have been anti-dilutive.

Distributions declared in the period and undeclared distributions on the preferred units that accumulated during the period are added back to the numerator

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

for purposes of the if-converted calculation.

The calculation of diluted net loss per common unit for the years ended December 31, 2020 and 2019 do not include the assumed conversion of the preferred units because the impact would have been anti-dilutive.

The calculation of diluted net income per common unit for the year ended December 31, 2018 includes the assumed conversion of the preferred units.

Due to NRP's net loss during the years ended December 31, 2020 and 2019, the dilutive effect of the warrants were not included as the impact would have been anti-dilutive.

The calculation of the dilutive effect of the warrants for the year ended December 31, 2018 included the net settlement of warrants to purchase 1.75 million common units with a strike price of $ 22.81 but did not include the net settlement of warrants to purchase 2.25 million common units with a strike price of $ 34.00 because the impact would have been anti-dilutive.

The following tables reconcile the numerators and denominators of the basic and diluted net income (loss) per common unit computations and calculates basic and diluted net income (loss) per common unit:

Year Ended December 31,

For the Year Ended December 31,

(In thousands, except per unit data) 2020 2019 2018

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income attributable to preferred unitholders ( 30,225 ) ( 30,000 ) ( 30,000 )

Net income (loss) from continuing operations attributable to common unitholders and general partner

Net income (loss) from continuing operations attributable to common unitholders and the general partner $ ( 115,044 ) $ ( 55,414 ) $ 91,850

net loss (income) from continuing operations attributable to the general partner 2,301 1,108 ( 1,837 )

6 unchanged sentences

income attributable to preferred unitholders ( 30,225 ) ( 30,000 ) ( 30,000 )

Net income (loss) attributable to common unitholders and general partner

Net income (loss) attributable to common unitholders and the general partner $ ( 115,044 ) $ ( 54,458 ) $ 109,537

net loss (income) attributable to the general partner 2,301 1,089 ( 2,191 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Year Ended December 31,

For the Year Ended December 31,

(In thousands, except per unit data) 2020 2019 2018

7 unchanged sentences

net income attributable to non-controlling interest — — ( 510 )

net income attributable to preferred unitholders

Diluted net income (loss) from continuing operations attributable to common unitholders and general partner

income attributable to preferred unitholders ( 30,225 ) ( 30,000 ) —

Diluted net income (loss) from continuing operations attributable to common unitholders and the general partner $ ( 115,044 ) $ ( 55,414 ) $ 121,850

net loss (income) from continuing operations attributable to the general partner 2,301 1,108 ( 2,437 )

3 unchanged sentences

net income attributable to non-controlling interest — — ( 510 )

net income attributable to preferred unitholders

Diluted net income (loss) attributable to common unitholders and general partner

income attributable to preferred unitholders ( 30,225 ) ( 30,000 ) —

Diluted net income (loss) attributable to common unitholders and the general partner $ ( 115,044 ) $ ( 54,458 ) $ 139,537

diluted net loss (income) attributable to the general partner 2,301 1,089 ( 2,791 )

15 unchanged sentences

Soda Ash —consists of the Partnership's 49 % non-controlling equity interest in Ciner Wyoming, a trona ore mining operation and soda ash refinery in the Green River Basin of Wyoming.

Ciner Resources LP, the Partnership's operating partner, mines the trona, processes it into soda ash, and distributes the soda ash both domestically and internationally to the glass and chemicals industries.

Ciner Wyoming mines trona and processes it into soda ash that is sold both domestically and internationally into the glass and chemicals industries.

Direct segment costs and certain other costs incurred at the corporate level that are identifiable and that benefit the Partnership's segments are allocated to the operating segments accordingly.

6 unchanged sentences

Operating Segments

(In thousands)

Coal Royalty and Other

Corporate and Financing

(In thousands) Coal Royalty and Other Soda Ash Corporate and Financing Total

For the Year Ended December 31, 2020

Revenues $ 129,011 $ 10,728 $ — $ 139,739

Gain on asset sales and disposals 581 — — 581

5 unchanged sentences

Net income (loss) from continuing operations ( 40,180 ) 10,543 ( 55,182 ) ( 84,819 )

Income from discontinued operations

As of December 31, 2020

Total assets of continuing operations $ 656,505 $ 262,514 $ 2,858 $ 921,877

Total assets of discontinued operations

For the Year Ended December 31, 2019

Gain on litigation settlement

Revenues $ 210,348 $ 47,089 $ — $ 257,437

Gain on asset sales and disposals 6,498 — — 6,498

10 unchanged sentences

For the Year Ended December 31, 2018

Revenues $ 202,765 $ 48,306 $ — $ 251,071

Gain on litigation settlement 25,000 — — 25,000

Gain on asset sales and disposals 2,441 — — 2,441

15 unchanged sentences

Income allocation to NRP’s equity interests (1)

15,205 52,016 53,095

Amortization of basis difference ( 4,477 ) ( 4,927 ) ( 4,789 )

Other comprehensive income (loss) 2,916 790 ( 138 )

Distribution ( 14,210 ) ( 31,850 ) ( 46,550 )

Balance at end of period $ 262,514 $ 263,080 $ 247,051

(1) Includes reclassifications of accumulated other comprehensive loss to income allocation to NRP equity interest of $ 1.7 million, $ 0.6 million and $ 0.5 million for the year ended December 31, 2020, 2019 and 2018, respectively.

The difference between the amount at which the investment in Ciner Wyoming is carried and the amount of underlying equity in Ciner Wyoming's net assets was $135.8 million and $140.8 million as of December 31, 2019 and 2018 , respectively.

The difference between the amount at which the investment in Ciner Wyoming is carried and the amount of underly ing equity in Ciner Wyoming's net assets was $ 131.4 million and $ 135.8 million as of December 31, 2020 and 2019, respectively.

This excess basis relates to property, plant and equipment and right to mine assets.

4 unchanged sentences

(In thousands) 2020 2019 2018

Net sales $ 392,231 $ 522,843 $ 486,759

Gross profit 54,838 131,712 104,053

Net income 31,030 106,155 108,357

The financial position of Ciner Wyoming is summarized as follows:

8 unchanged sentences

The Partnership’s mineral rights consist of the following:

(In thousands)

Carrying Value

Accumulated Depletion

Net Book Value

Carrying Value

Accumulated Depletion

Net Book Value

(In thousands) Carrying Value Accumulated Depletion Net Book Value Carrying Value Accumulated Depletion Net Book Value

Coal properties $ 785,623 $ ( 346,773 ) $ 438,850 $ 981,352 $ ( 420,448 ) $ 560,904

1 unchanged sentence

Oil and gas royalty properties 12,354 ( 8,593 ) 3,761 12,395 ( 7,887 ) 4,508

Other 13,154 ( 1,612 ) 11,542 13,156 ( 1,601 ) 11,555

Total mineral rights, net $ 820,170 $ ( 359,797 ) $ 460,373 $ 1,048,389 $ ( 443,293 ) $ 605,096

1 unchanged sentence

Sales of Mineral Rights

During the year ended December 31, 2020, the Partnership recorded a gain of $ 0.6 million included in gain on asset sales and disposals on the Consolidated Statements of Comprehensive Income (Loss) related to sales of multiple mineral reserves.

During the year ended December 31, 2019, the Partnership recorded a gain of $ 6.5 million included in gain on asset sales and disposals on the Consolidated Statements of Comprehensive Income (Loss) primarily related to the disposal of certain coal mineral rights with a $ 0 net book value.

During the years ended December 31, 2018 and 2017, the Partnership recorded a cumulative gain of $2.4 million and $3.5 million , respectively, included in gain on asset sales and disposals on the Consolidated Statements of Comprehensive Income (Loss) related to sales of multiple mineral reserves.

During the year ended December 31, 2018, the Partnership recorded a cumulative gain of $ 2.4 million included in gain on asset sales and disposals on the Consolidated Statements of Comprehensive Income (Loss) related to sales of multiple mineral reserves.

Impairment of Mineral Rights

3 unchanged sentences

Coal properties (1)

Aggregates and timber royalty properties (2)

The Partnership recorded $125.8 million of impairment expense during the year ended December 31, 2019 primarily due to deterioration in thermal coal markets, lessee capital constraints, thermal coal lease terminations, and expectations of further reductions in global and domestic thermal coal demand due to low natural gas prices and continued pressure on the electric power generation industry over emissions and climate change, resulting in reductions in expected cash flows (combination of lower expected coal sales volumes, sales prices, minimums and/or life of mine assumptions) on certain of our coal properties.

$ 114,302 $ 125,806 $ 5,259

Aggregates properties (2)

21,583 103 13,021

$ 135,885 $ 125,909 $ 18,280

(1) The Partnership recorded $ 114.3 million of impairment expense to impair certain assets during the year ended December 31, 2020 primarily related to weakened coal markets that resulted in termination of certain coal leases and changes to lessee mine plans resulting in permanent moves off certain of our coal properties.

The Partners hip recorded $ 125.8 million of impairment expense during the year ended December 31, 2019 primarily due to deterioration in thermal coal markets, lessee capital constraints, thermal coal lease terminations, and expectations of further reductions in global and domestic thermal coal demand due to low natural gas prices and continued pressure on the electric power generation industry over emissions and climate change, resulting in reductions in expected cash flows (combination of lower expected coal sales volumes, sales prices, minimums and/or life of mine assumptions) on certain of our coal properties.

During the year ended December 31, 2019, the Partnership recorded $ 36.0 million to fully impair certain coal properties.

2 unchanged sentences

The Partnership recorded $ 5.3 million of coal property impairments during the year ended December 31, 2018 primarily as a result of lease terminations, of which it recorded $ 5.0 million of impairment expense to fully impair certain coal properties during the three months ended December 31, 2018.

The Partnership recorded $0.6 million of coal property impairments during the year ended December 31, 2017.

NRP compared the net book value of its coal properties to estimated undiscounted future net cash flows.

NRP compared the net

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

book value of its coal properties to estimated undiscounted future net cash flows.

If the net book value exceeded the undiscounted future cash flows, the Partnership recorded an impairment for the excess of the net book value over fair value.

1 unchanged sentence

Significant inputs used to determine fair value include estimates of future cash flows from coal sales and minimum payments, discount rate and useful economic life.

Estimated cash flows are the

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

product of a process that began with current realized pricing as of the measurement date and included an adjustment for risk related to the future realization of cash flows.

The Partnership recorded $0.1 million of aggregates royalty property impairments during the year ended December 31, 2019 .

Estimated cash flows are the product of a process that began with current realized pricing as of the measurement date and included an adjustment for risk related to the future realization of cash flows.

(2) The Partnership recorded $ 21.6 million of aggregates royalty property impairments during the year ended December 31, 2020 primarily related to decreased oil and gas drilling activity which negatively impacted the outlook for NRP's frac sand properties.

Th e Partnership recorded $ 0.1 million of aggregates royalty property impairments during the year ended December 31, 2019.

During the three months ended December 31, 2018, the Partnership recorded $ 13.0 million of impairment expense related to an aggregates property that the Partnership owns and leases to its former construction aggregates business, which mines, produces and sells the aggregates.

The fair value of the impaired asset was reduced to $ 2.3 million at December 31, 2018 using a discount rate of 11 %.

The Partnership recorded $2.4 million of aggregates and timber royalty properties impairments during the year ended December 31, 2017.

NRP compared the net book value of its aggregates and timber properties to estimated undiscounted future net cash flows.

1 unchanged sentence

A discounted cash flow model was used to estimate fair value.

Significant inputs used to determine fair value include estimates of future cash flows from aggregates and timber sales and minimum payments, discount rate and useful economic life.

Significant inputs used to determine fair value include estimates of future cash flows from aggregates sales and minimum payments, discount rate and useful economic life.

While the Partnership's impairment evaluation as of December 31, 2020 incorporated an estimated impact of the global COVID-19 pandemic, there is significant uncertainty as to the severity and duration of this disruption.

If the impact is worse than we currently estimate, an additional impairment charge may be recognized in future periods.

Intangible Assets, Net

The Partnership's intangible assets consist of above-market coal royalty and related transportation contracts with subsidiaries of Foresight Energy pursuant to which the Partnership receives royalty payments for coal sales and throughput fees for the transportation and processing of coal.

The Partnership's intangible assets consist of above-market coal royalty and related transportation contracts with subsidiaries of Foresight Energy Resources LLC ("Foresight") pursuant to which the Partnership receives royalty payments for coal sales and throughput fees for the transportation and processing of coal.

The Partnership's intangible assets included on its Consolidated Balance Sheets are as follows:

6 unchanged sentences

These impairments are included in asset impairments on the Partnership's Consolidated Statements of Comprehensive Income (Loss) and resulted from deterioration in thermal coal markets, lessee capital constraints, and expectations of further reductions in global and domestic thermal coal demand due to low natural gas prices and continued pressure on the electric power generation industry over emissions and climate change, resulting in reductions in expected cash flows (combination of lower expected coal sales volumes, sales prices and/or life of mine assumptions) on certain of our intangible assets.

The estimates of amortization expense for the years ended December 31, as indicated below, are based on current mining plans and are subject to revision as those plans change in future periods.

(In thousands)

Estimated Amortization Expense

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The estimates of amortization expense for the years ended December 31, as indicated below, are based on current mining plans and are subject to revision as those plans change in future periods.

(In thousands) Estimated Amortization Expense

The Partnership's debt consists of the following:

1 unchanged sentence

9.125 % senior notes, with semi-annual interest payments in June and December, due June 2025 issued at par ("2025 Senior Notes")

10.500% senior notes, with semi-annual interest payments in March and September, due March 2022, $241 million issued at par and $105 million issued at 98.75% ("2022 Senior Notes")

$ 300,000 $ 300,000

Revolving credit facility $ — $ —

8.38% with semi-annual interest payments in March and September, with annual principal payments in March, due March 2019

5.05 % with semi-annual interest payments in January and July, with annual principal payments in July, due July 2020

1 unchanged sentence

4.73 % with semi-annual interest payments in June and December, with annual principal payments in December, due December 2023

18,013 24,016

5.82 % with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024

50,738 63,423

8.92 % with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024

16,047 20,059

5.03 % with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026

68,524 79,945

5.18 % with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026

17,464 20,375

Total Opco Senior Notes $ 177,880 $ 224,056

Total debt at face value $ 477,880 $ 524,056

Net unamortized debt discount

Net unamortized debt issuance costs ( 6,381 ) ( 7,858 )

2 unchanged sentences

Total long-term debt, net $ 432,444 $ 470,422

2025 Senior Notes

In April 2019, NRP and NRP Finance issued the 2025 Senior Notes and used the $300 million proceeds and $76 million of cash on hand to fund the redemption of the 2022 Senior Notes.

The 2025 Senior Notes were issued under an Indenture dated as of April 29, 2019 (the "2025 Indenture"), bear interest at 9.125% per year and mature on June 30, 2025.

Interest is payable semi-annually on June 30 and December 30 beginning December 30, 2019.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

2025 Senior Notes

The 2025 Senior Notes were issued under an Indenture dated as of April 29, 2019 (the "2025 Indenture"), bear interest at 9.125 % per year and mature on June 30, 2025.

Interest is payable semi-annually on June 30 and December 30.

NRP and NRP Finance have the option to redeem the 2025 Senior Notes, in whole or in part, at any time on or after October 30, 2021, at the redemption prices (expressed as percentages of principal amount) of 104.563 % for the 12-month period beginning October 30, 2021, 102.281 % for the 12-month period beginning October 30, 2022, and thereafter at 100.000 %, together, in each case, with any accrued and unpaid interest to the date of redemption.

6 unchanged sentences

None of NRP's subsidiaries guarantee the 2025 Senior Notes.

As of December 31, 2019 , NRP and NRP Finance were in compliance with the terms of the Indenture relating to their 2025 Senior Notes.

As of December 31, 2020 and 2019, NRP and NRP Finance were in compliance with the terms of the Indenture relating to their 2025 Senior Notes.

2022 Senior Notes

2 unchanged sentences

These expenses are included in loss on extinguishment of debt on the Partnership's Consolidated Statements of Comprehensive Income (Loss).

As of December 31, 2018 , NRP and NRP Finance were in compliance with the terms of the Indenture relating to their 2022 Senior Notes.

All of Opco’s debt is guaranteed by its wholly owned subsidiaries and is secured by certain of the assets of Opco and its wholly owned subsidiaries other than NRP Trona LLC.

9 unchanged sentences

• a rate equal to LIBOR plus an applicable margin ranging from 3.50 % to 4.50 %.

As of December 31, 2019 , the Partnership did not have any borrowings outstanding under the Opco Credit Facility and had $100.0 million in available borrowing capacity.

The weighted average interest rate for the borrowings outstanding under the Opco Credit Facility during the year ended December 31, 2018 was 6.23% .

Opco will incur a commitment fee on the unused portion of the revolving credit facility at a rate of 0.50% per annum.

Opco may prepay all amounts outstanding under the Opco Credit Facility at any time without penalty.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

During the years ended December 31, 2020 and 2019, the Partnership did not have any borrowings outstanding under the Opco Credit Facility and had $ 100.0 million in available borrowing capacity at both December 31, 2020 and 2019.

Opco will incur a commitment fee on the unused portion of the revolving credit facility at a rate of 0.50 % per annum.

Opco may prepay all amounts outstanding under the Opco Credit Facility at any time without penalty.

The Opco Credit Facility contains financial covenants requiring Opco to maintain:

5 unchanged sentences

In addition, Opco is required to use 75 % of the net cash proceeds of certain non-ordinary course asset sales to repay the Opco Credit Facility (without any corresponding commitment reduction) and use the remaining 25 % of the net cash proceeds to offer to repay its Senior Notes on a pro-rata basis, as described below under “—Opco Senior Notes.” The Opco Credit Facility also contains customary events of default, including cross-defaults under Opco’s Senior Notes.

The Opco Credit Facility is collateralized and secured by liens on certain of Opco’s assets with carrying values of $399.7 million and $548.9 million classified as mineral rights, net and other assets, net on the Partnership’s Consolidated Balance Sheets as of December 31, 2019 and 2018 , respectively.

The collateral includes (1) the equity interests in all of Opco’s wholly owned subsidiaries, other than NRP Trona LLC (which owns a 49% non-controlling equity interest in Ciner Wyoming), (2) the personal property and fixtures owned by Opco’s wholly owned subsidiaries, other than NRP Trona LLC, (3) Opco’s material coal royalty revenue producing properties, and (4) certain of Opco’s coal-related infrastructure assets.

The Opco Credit Facility is collateralized and secured by liens on certain of Opco’s assets with carrying values o f $ 364.5 million and $ 399.7 million classified as mineral rights, net and other long-term assets, net on the Partnership’s Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively.

The collateral includes (1) the equity interests in all of Opco’s wholly owned subsidiaries, other than BRP LLC and NRP Trona LLC (which owns a 49 % non-controlling equity interest in Ciner Wyoming), (2) the personal property and fixtures owned by Opco’s wholly owned subsidiaries, other than NRP Trona LLC, (3) Opco’s material coal royalty revenue producing properties, and (4) certain of Opco’s coal-related infrastructure assets.

Opco Senior Notes

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In addition, the Note Purchase Agreements include a covenant that provides that, in the event NRP Operating or any of its subsidiaries is subject to any additional or more restrictive covenants under the agreements governing its material indebtedness (including the Opco Credit Facility and all renewals, amendments or restatements thereof), such covenants shall be deemed to be incorporated by reference in the Note Purchase Agreements and the holders of the Notes shall receive the benefit of such additional or more restrictive covenants to the same extent as the lenders under such material indebtedness agreement.

The 8.92% Opco Senior Notes also provides that in the event that Opco’s leverage ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the Note Purchase Agreements) exceeds 3.75 to 1.00 at the end of any fiscal quarter, then in addition to all other interest accruing on these notes, additional interest in the amount of 2.00% per annum shall accrue on the notes for the two succeeding quarters and for as long thereafter as the leverage ratio remains above 3.75 to 1.00.

Opco has not exceeded the 3.75 to 1.00 ratio at the end of any fiscal quarter through December 31, 2019 .

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The 8.92 % Opco Senior Notes also provides that in the event that Opco’s leverage ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the Note Purchase Agreements) exceeds 3.75 to 1.00 at the end of any fiscal quarter, then in addition to all other interest accruing on these notes, additional interest in the amount of 2.00 % per annum shall accrue on the notes for the two succeeding quarters and for as long thereafter as the leverage ratio remains above 3.75 to 1.00.

Opco has not exceeded the 3.75 to 1.00 ratio at the end of any fiscal quarter through December 31, 2020.

In September 2016, Opco amended the Opco Senior Notes.

Under this amendment, Opco agreed to use certain asset sale proceeds to make mandatory prepayment offers on the Opco Senior Notes as follows:

until the earlier of the time that (1) Opco has sold $300 million of assets and (2) June 30, 2020, Opco will be required to make prepayment offers to the holders of the Opco Senior Notes using 25% of the net cash proceeds from certain asset sales;

after the earlier to occur of the dates above, Opco will be required to make prepayment offers to the holders of the Opco Senior Notes using an amount of net cash proceeds from certain asset sales that will be calculated pro-rata based on the amount of Opco Senior Notes then outstanding compared to the other total Opco senior debt outstanding that is being prepaid.

Under this amendment, Opco agreed to use certain asset sale proceeds to make mandatory prepayment offers to the holders of the Opco Senior Notes using an amount of net cash proceeds from certain asset sales that will be calculated pro-rata based on the amount of Opco Senior Notes then outstanding compared to the other total Opco senior debt outstanding that is being prepaid.

The mandatory prepayment offers described above will be made pro-rata across each series of outstanding Opco Senior Notes and will not require any make-whole payment by Opco.

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The consolidated principal payments due are set forth below:

(In thousands)

Credit Facility

(In thousands) Senior Notes Senior Notes Credit Facility Total

2021 $ — $ 39,396 $ — $ 39,396

2022 — 39,396 — 39,396

2023 — 39,396 — 39,396

2024 — 31,028 — 31,028

2025 300,000 14,332 — 314,332

Thereafter — 14,332 — 14,332

$ 300,000 $ 177,880 $ — $ 477,880

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Fair Value Measurements

Fair Value of Financial Assets and Liabilities

The Partnership’s financial assets and liabilities consist of cash and cash equivalents, restricted cash, contract receivable and debt.

The carrying amounts reported on the Consolidated Balance Sheets for cash and cash equivalents and restricted cash approximate fair value due to their short-term nature.

There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the years ended December 31, 2019 or 2018 .

The Partnership’s financial assets and liabilities consist of cash and cash equivalents, a contract receivable and debt.

The carrying amounts reported on the Consolidated Balance Sheets for cash and cash equivalents approximate fair value due to their short-term nature.

The Partnership uses available market data and valuation methodologies to estimate the fair value of its debt and contract receivable.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The following table shows the carrying amount and estimated fair value of the Partnership's debt and contract receivable:

(In thousands)

Fair Value Hierarchy Level

NRP 2025 Senior Notes

The following table shows the carrying value and estimated fair value of the Partnership's debt and contract receivable:

(In thousands) Fair Value Hierarchy Level Carrying

Value Estimated

Fair Value Carrying

Value Estimated

NRP 2025 Senior Notes 1 $ 295,160 $ 274,500 $ 294,084 $ 269,250

Opco Senior Notes (1)

3 176,339 162,760 222,114 201,090

Opco Credit Facility 3 — — — —

Contract receivable (current and long-term)

Contract receivable, net (current and long-term) (2)

3 $ 35,313 $ 27,025 $ 38,945 $ 33,460

(1) The fair value of the Opco Senior Notes are estimated by management using quotations obtained for the NRP 2025 Senior Notes on the closing trading prices near period end, which were at 92 % of par value at December 31, 2020.

(2) The fair value of the Partnership's contract receivable is determined based on the present value of future cash flow projections related to the underlying asset at a discount rate of 15 % at December 31, 2020.

NRP has embedded derivatives in the preferred units related to certain conversion options, redemption features and the change of control provision that are accounted for separately from the preferred units as assets and liabilities at fair value on the Partnership's Consolidated Balance Sheets.

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Intangible Assets, Net for additional disclosures related to the fair value associated with the impaired assets.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Related Party Transactions

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General and administrative expenses 3,539 3,548 3,658

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The Partnership had accounts payable to QMC of $0.4 million and $0.5 million on its Consolidated Balance Sheets as of December 31, 2019 and 2018 , respectively and $0.1 million of accounts payable to WPPLP as of December 31, 2019 .

The Partnership had accounts payable to QMC of $ 0.4 million on its Consolidated Balance Sheets as of December 31, 2020 and 2019 and $ 0.3 million and $ 0.1 million of accounts payable to WPPLP as of December 31, 2020 and 2019, respectively.

During the years ended December 31, 2020, 2019 and 2018, the Partnership recognized $ 0.4 million, $ 4.0 million and $ 5.4 million in operating and maintenance expenses, respectively, on its Consolidated Statements of Comprehensive Income (Loss) related to an overriding royalty agreement with WPPLP.

At December 31, 2019 and 2018 , the Partnership had $0.1 million and $1.4 million , respectively of accounts payable on its Consolidated Balance Sheets to WPPLP for this agreement.

At December 31, 2020, the Partnership had $ 0.3 million of other long-term assets, net on its Consolidated Balance Sheets related to a prepaid royalty for this agreement.

At December 31, 2019, the Partnership had $ 0.1 million of accounts payable to WPPLP on its Consolidated Balance Sheets related to this agreement.

Industrial Minerals Group LLC

Robertson, III, a Director of GP Natural Resource Partners LLC, owns a minority ownership interest in Industrial Minerals Group LLC (“Industrial Minerals”), which, through its subsidiaries, leases two of NRP's coal royalty properties in Central Appalachia.

Coal royalty related revenues from Industrial Minerals totaled $1.7 million , $0.8 million and $0.7 million for the years ended December 31, 2019 , 2018 and 2017 , respectively.

The Partnership had accounts receivable from Industrial Minerals of $0.7 million and $0.1 million on its Consolidated Balance Sheets as of December 31, 2019 and 2018 , respectively.

Prior to December 31, 2019, Corbin J.

Robertson, III, a Director of GP Natural Resource Partners LLC, held a minority ownership interest in Industrial Minerals Group LLC (“Industrial Minerals”), which, through its subsidiaries, leases one of NRP’s coal royalty properties in Central Appalachia.

Coal royalty related revenues from Industrial Minerals totaled $ 1.7 million and $ 0.8 million for the years ended December 31, 2019 and 2018, respectively.

The Partnership had accounts receivable from Industrial Minerals of $ 0.7 million on its Consolidated Balance Sheets as of December 31, 2019.

Quinwood Coal Company Royalty

In May 2017, a subsidiary of Alpha Natural Resources assigned two coal leases with us to Quinwood Coal Company ("Quinwood"), an entity wholly owned by Corbin J.

Robertson III.

Quinwood Coal Partners LP (“Quinwood”), an entity controlled by Corbin J.

Robertson, III, leases two coal properties from NRP in Central Appalachia.

Coal related revenues from Quinwood totaled $ 0.0 million, $ 0.2 million and $ 0.0 million for the years ended December 31, 2020, 2019 and 2018, respectively.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Quintana Capital Group GP, Ltd.

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During the second quarter of 2018, Corsa assigned its lease with NRP to a third party and is no longer deemed a related party as of such date.

Coal related revenues from Corsa totaled $0.5 million and $1.3 million for the years ended December 31, 2018 and 2017 , respectively.

Cline Affiliates and Foresight Energy

Chris Cline, both individually and through another affiliate, Adena Minerals, LLC ("Adena"), owned a 31% interest in NRP (GP) LP, NRP's general partner ("NRP GP"), through May 9, 2017.

On May 9, 2017, Adena sold its 31% limited partner interest in NRP GP to Great Northern Properties Limited Partnership (“GNPLP”) and WPPLP (the “Adena Sale”).

GNPLP and WPPLP are companies controlled by Corbin J.

Robertson, the Chairman and Chief Executive Officer of GP Natural Resource Partners LLC (the general partner of NRP GP) (“GP LLC”).

Upon closing of this transaction, NRP no longer considers the various companies affiliated with Chris Cline, including Foresight Energy to be affiliates of NRP.

As a result, all transactions (including revenues, expenses and cash flows) after May 9, 2017 with the various companies affiliated with Chris Cline, including Foresight Energy, are considered to be third-party transactions.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Revenues and expenses related to transactions with Foresight Energy are included on the Partnership's Consolidated Statements of Comprehensive Income (Loss) as follows:

For the Year Ended December 31,

(In thousands)

Coal royalty and other (1)

Transportation and processing services (2)

Operating and maintenance expenses (3)

Included in 2017 coal royalty and other revenues was $21.2 million of related party revenues earned from Foresight Energy prior to May 9, 2017.

Included in 2017 transportation and processing services revenues was $6.0 million of related party revenues earned from Foresight Energy prior to May 9, 2017.

Included in 2017 operating and maintenance expenses was $0.5 million of related party expenses incurred from Foresight Energy prior to May 9, 2017.

Coal Royalty and Other Revenues

Various subsidiaries of Foresight Energy lease coal reserves from the Partnership.

In addition, NRP owns a contractual overriding royalty interest at Foresight Energy's Sugar Camp mine in the Illinois Basin which provides for payments based upon production from specific tons at Foresight Energy's Sugar Camp operations on certain reserves owned by another affiliate of Chris Cline.

Revenues related to these transactions are included in coal royalty and other revenues on the Partnership's Consolidated Statements of Comprehensive Income (Loss).

Transportation and Processing Services Revenues and Expenses

The Partnership owns transportation and processing infrastructure related to certain of its coal properties, including loadout and other transportation assets at Foresight Energy's Williamson and Macoupin mines in the Illinois Basin, for which it collects throughput fees.

These fees are included in transportation and processing services revenues on the Partnership's Consolidated Statements of Comprehensive Income (Loss).

NRP is responsible for operating and maintaining the rail loadout transportation assets at the Williamson mine and subcontracts the operating responsibilities to a subsidiary of Foresight Energy.

Expenses related to these operations are included in operating and maintenance expenses on the Partnership's Consolidated Statements of Comprehensive Income (Loss).

In addition, NRP owns rail loadout and associated infrastructure at the Sugar Camp mine, an Illinois Basin mine also operated by a subsidiary of Foresight Energy LP.

While the Partnership owns coal reserves at the Williamson and Macoupin mines, it does not own coal reserves at the Sugar Camp mine.

The infrastructure at the Sugar Camp mine is leased to a subsidiary of Foresight Energy and NRP collects minimums and throughput fees, which are considered a return of a financing receivable or included in transportation and processing services revenues on the Partnership's Consolidated Statements of Comprehensive Income (Loss).

Financing Transaction for more information.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Coal related revenues from Corsa totaled $ 0.5 million for the year ended December 31, 2018.

Major Customers

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For the Year Ended December 31,

(In thousands)

Foresight Energy (1)

Contura Energy (1) (2)

Revenues from Foresight Energy and Contura Energy are included within the Partnership's Coal Royalty and Other segment.

2020 2019 2018

(In thousands) Revenues Percent Revenues Percent Revenues Percent

Foresight (1) (2)

$ 35,704 26 % $ 58,923 23 % $ 54,595 22 %

Alpha Metallurgical Resources, Inc.

(formerly Contura Energy Inc.) (1) (3)

33,227 24 % 40,743 16 % 24,580 10 %

(1) Revenues from Foresight and Alpha Metallurgical Resources, Inc.

(formerly Contura Energy Inc.) are included within the Partnership's Coal Royalty and Other segment.

(2) In June 2020, the Partnership entered into lease amendments with Foresight pursuant to which Foresight agreed to pay NRP fixed cash payments to satisfy all obligations arising out of the existing various coal mining leases and transportation infrastructure fee agreements between the Partnership and Foresight for calendar years 2020 and 2021.

(3) In the fourth quarter of 2018, Contura Energy and Alpha Natural Resources merged.

Revenues during the year ended December 31, 2019 relate to the combined company, while revenues during the year ended December 31, 2018 do not include revenues from Alpha Natural Resources until the date of the merger.

Revenues during the year ended December 31, 2017 do not include revenues from Alpha Natural Resources.

Revenues during the year ended December 31, 2020 and 2019 relate to the combined company, while revenues during the year ended December 31, 2018 do not include revenues from Alpha Natural Resources until the date of the merger.

In February 2021, Contura Energy changed its name to Alpha Metallurgical Resources, Inc.

Commitments and Contingencies

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While the ultimate results of these proceedings cannot be predicted with certainty, Partnership management believes these ordinary course matters will not have a material effect on the Partnership’s financial position, liquidity or operations.

During 2019, NRP was also involved in the legal proceeding described below.

In January 2013, NRP acquired a non-controlling 48.51% general partner interest in OCI Wyoming, L.P.

("OCI LP") and all of the preferred stock and a portion of the common stock of OCI Wyoming Co.

("OCI Co") (which in turn owned a 1% limited partner interest in OCI LP) from Anadarko Holding Company and its subsidiary, Big Island Trona Company (together, "Anadarko").

The remaining general partner interest in OCI LP and common stock of OCI Co were owned by subsidiaries of OCI Chemical Corporation.

The acquisition agreement provided for additional contingent consideration of up to $50 million to be paid by NRP if certain performance criteria were met at OCI LP as defined in the purchase and sale agreement in any of the years 2013, 2014 or 2015.

For those years, NRP paid an aggregate of $11.5 million to Anadarko in full satisfaction of these contingent consideration payment obligations.

In July 2013, pursuant to a series of transactions in connection with an initial public offering by a subsidiary of OCI Chemical Corporation, the ownership structure in OCI LP was simplified.

In connection with such reorganization, NRP exchanged the stock of OCI Co for a limited partner interest in OCI LP.

Following the reorganization, NRP's interest in OCI LP remained at 49% , consisting of both limited and general partner interests.

The restructuring did not have any impact on the operations, revenues, management or control of OCI LP.

In July 2017, Anadarko filed a lawsuit against Opco and NRP Trona LLC in the District Court of Harris County, Texas, 157th Judicial District.

The complaint alleged that the transactions conducted in 2013 triggered an acceleration of NRP's obligation under the purchase agreement with Anadarko to pay additional contingent consideration in full and demanded immediate payment of such amount, together with interest, court costs and attorneys’ fees.

In November 2019, the trial court ruled in NRP’s favor in all respects, including that the internal restructuring that occurred did not trigger an acceleration of the contingent purchase price payment obligation under the purchase agreement with Anadarko.

Accordingly, the trial court ordered that Anadarko take nothing.

Anadarko did not appeal the trial court's ruling, and this case is concluded with no liability to the Partnership.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

In November 2019, the District Court of Harris County, Texas, 157th Judicial District, issued a ruling in the contingent consideration payment dispute that Anadarko Holding Company and its subsidiary, Big Island Trona Company (together, "Anadarko") brought against NRP in July 2017.

The Trial Court ruled in NRP's favor in all respects and ordered that Anadarko take nothing.

Anadarko did not appeal the trial court ruling, and accordingly this lawsuit was concluded in the first quarter of 2020 with no liability to the Partnership.

Environmental Compliance

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Business and Properties—Regulation and Environmental Matters ." As an owner of surface interests in some properties, the Partnership may be liable for certain environmental conditions occurring on the surface properties.

The terms of substantially all of the Partnership’s coal leases require the lessee to comply with all applicable laws and regulations, including environmental laws and regulations.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

terms of substantially all of the Partnership’s coal leases require the lessee to comply with all applicable laws and regulations, including environmental laws and regulations.

Lessees post reclamation bonds assuring that reclamation will be completed as required by the relevant permit, and substantially all of the leases require the lessee to indemnify the Partnership against, among other things, environmental liabilities.

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Unit-based awards under the 2017 LTIP are generally issued to certain employees and non-employee directors of the Partnership.

Awards granted to employees vest at the end of a 3 year period and awards granted to non-employee directors are immediately vested.

Awards granted to employees either vest 3 years following the grant date or vest ratably over the 3 year period following the grant date.

Awards granted to non-employee directors vest over a 1 year period.

Directors are given the option to take immediate issuance of the vested awards or defer such issuance until a later date.

Upon deferral of issuance, such units will continue to accumulate distribution equivalent rights ("DERs") until issuance.

In connection with the phantom unit awards, the CNG Committee also granted tandem DERs, which entitle the holders to receive distributions equal to the distributions paid on the Partnership’s common units between the date the units are granted and the vesting date.

The DERs are payable in cash upon vesting but may be subject to forfeiture if the grantee ceases employment prior to vesting.

The awards granted in 2020, 2019 and 2018 were valued using the closing price of NRP's units as of the grant date.

The grant date fair value of these awards granted during the years ended December 31, 2020, 2019 and 2018 were $ 3.5 million, $ 5.4 million and $ 2.2 million, respectively.

Total unit-based compensation expense associated with these awards was $ 3.6 million,$ 2.4 million and $ 1.1 million for the years ended December 31, 2020, 2019 and 2018, respectively, and is included in general and administrative expenses and operating and maintenance expenses on the Partnership's Consolidated Statements of

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The awards granted in 2019 and 2018 were valued using the closing price of NRP's units as of the grant date.

The grant date fair value of these awards granted during the years ended December 31, 2019 and 2018 were $5.4 million and $2.2 million , respectively.

Total unit-based compensation expense associated with these awards was $2.4 million and $1.1 million for the years ended December 31, 2019 and 2018 , respectively, and is included in general and administrative expenses and operating and maintenance expenses on the Partnership's Consolidated Statements of Comprehensive Income (Loss).

Comprehensive Income (Loss).

The unamortized cost associated with unvested outstanding awards as of December 31, 2020 is $ 3.7 million, which is to be recognized over a weighted average period of 1.6 years.

1 unchanged sentence

A summary of the unit activity in the outstanding grants during 2020 is as follows:

(In thousands)

Weighted Average Exercise Price

(In thousands) Common Units Weighted Average Exercise Price

Outstanding grants at January 1, 2020 157 $ 37.48

Granted 203 $ 17.20

Fully vested and issued — $ —

Forfeitures ( 5 ) $ 17.20

Outstanding at December 31, 2020 355 $ 26.20

Financing Transaction

The Partnership owns rail loadout and associated infrastructure at the Sugar Camp mine in the Illinois Basin operated by a subsidiary of Foresight Energy.

The infrastructure at the Sugar Camp mine is leased to a subsidiary of Foresight Energy and is accounted for as a financing transaction (the "Sugar Camp lease").

The Partnership owns rail loadout and associated infrastructure at the Sugar Camp mine in the Illinois Basin operated by a subsidiary of Foresight.

The infrastructure at the Sugar Camp mine is leased to a subsidiary of Foresight and is accounted for as a financing transaction (the "Sugar Camp lease").

The Sugar Camp lease expires in 2032 with renewal options for up to 80 additional years.

Minimum payments are $ 5.0 million per year through the end of the lease term.

The $ 5.0 million due to the Partnership in 2020 and 2021 is included in the fixed cash payments from Foresight resulting from contract modifications entered into during the second quarter of 2020 as discussed in Note 14.

Major Customers .

The Partnership is also entitled to variable payments in the form of throughput fees determined based on the amount of coal transported and processed utilizing the Partnership's assets.

In the event the Sugar Camp lease is renewed beyond 2032, payments become a fixed $ 10 thousand per year for the remainder of the renewed term.

The following table shows certain amounts related to the Partnership's Sugar Camp lease through 2032:

(In thousands)

Accounts receivable

Contract receivable (current and long-term)

Unearned income

Projected remaining payments

Lessee Accounting

As of December 31, 2019 , the Partnership had one operating lease for an office building that is owned by WPPLP.

On January 1, 2019, the Partnership entered into a new lease of the building with a five -year base term and five additional five -year renewal options.

Upon lease commencement and as of December 31, 2019 , the Partnership was reasonably certain to exercise all renewal options included in the lease and capitalized the right-of-use asset and corresponding lease liability on its Consolidated Balance Sheet using the present value of the future lease payments over 30 years.

The Partnership's right-of-use asset and lease liability included within other assets and other non-current liabilities, respectively, on its Consolidated Balance Sheet totaled $3.5 million at both January 1, 2019 and December 31, 2019 .

During the year ended December 31, 2019 , the Partnership incurred total operating lease expenses of $0.5 million , included in both operating and maintenance expenses and general and administrative expenses on its Consolidated Statement of Comprehensive Income (Loss).

Credit Losses

The Partnership is exposed to credit losses through collection of its trade receivables resulting from contracts with customers and a long-term receivable resulting from a financing transaction with a customer.

The Partnership records an allowance for current expected credit losses on these receivables based on the loss-rate method.

NRP assessed the likelihood of collection of its receivables utilizing historical loss rates, current market conditions that included the estimated impact of the global COVID-19 pandemic, industry and macroeconomic factors, reasonable and supportable forecasts and facts or circumstances of individual customers and properties.

Examples of these facts or circumstances include, but are not limited to, contract disputes or renegotiations with the customer and evaluation of short and long-term economic viability of the contracted property.

For its long-term contract receivable, management reverts to the historical loss experience immediately after the reasonable and supportable forecast period ends.

As of December 31, 2020, NRP recorded the following current expected credit loss (“CECL”) related to its receivables and long-term contract receivable:

(In thousands) Gross CECL Allowance Net

Receivables $ 18,512 $ ( 2,358 ) $ 16,154

Long-term contract receivable 34,818 ( 1,554 ) 33,264

Total $ 53,330 $ ( 3,912 ) $ 49,418

NRP recorded $ 0.0 million in operating and maintenance expenses on its Consolidated Statement of Comprehensive Income (Loss) related to the change in CECL allowance during the year ended December 31, 2020.

NRP has procedures in place to monitor its ongoing credit exposure through timely review of counterparty balances against contract terms and due dates, account and financing receivable reconciliations, bankruptcy monitoring, lessee audits and dispute resolution.

The Partnership may employ legal counsel or collection specialists to pursue recovery of defaulted receivables.

NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

As of December 31, 2020, the Partnership had one operating lease for an office building that is owned by WPPLP.

On January 1, 2019, the Partnership entered into a new lease of the building with a five-year base term and five additional five-year renewal options.

Upon lease commencement and as of December 31, 2019 and 2020, the Partnership was reasonably certain to exercise all renewal options included in the lease and capitalized the right-of-use asset and corresponding lease liability on its Consolidated Balance Sheets using the present value of the future lease payments over 30 years.

The Partnership's right-of-use asset and lease liability included within other long-term assets, net and other non-current liabilities , respectively, on its Consolidated Balance Sheets totaled $ 3.5 million at both December 31, 2019 and 2020.

During the years ended December 31, 2020 and 2019, the Partnership incurred total operating lease expenses of $ 0.5 million, included in both operating and maintenance expenses and general and administrative expenses on its Consolidated Statements of Comprehensive Income (Loss).

The following table details the maturity analysis of the Partnership's operating lease liability and reconciles the undiscounted cash flows to the operating lease liability included on its Consolidated Balance Sheet:

Remaining Annual Lease Payments (In thousands)

December 31, 2019

Remaining Annual Lease Payments (In thousands) December 31, 2020

After 2025 11,114

Total lease payments (1)

2 unchanged sentences

(1) The remaining lease term of the Partnership's operating lease is 28 years.

The present value of the operating lease liability on the Partnership's Consolidated Balance Sheet was calculated using a 13.5% discount rate which represents the Partnership's estimated incremental borrowing rate under the lease.

(2) The present value of the operating lease liability on the Partnership's Consolidated Balance Sheets was calculated using a 13.5 % discount rate which represents the Partnership's estimated incremental borrowing rate under the lease.

As the Partnership's lease does not provide an implicit rate, the Partnership estimated the incremental borrowing rate at the time the lease was entered into by utilizing the rate of the Partnership's secured debt and adjusting it for factors that reflect the profile of borrowing over the 30 -year expected lease term.

Lessor Accounting

The Partnership owns loadout and other transportation assets at the Partnership's Macoupin property in the Illinois Basin which is operated by Foresight Energy.

The infrastructure at the Macoupin property is leased to a subsidiary of Foresight Energy and is accounted for as an operating lease under ASC 842.

The lease with Macoupin expires in January 2108.

From the inception of this lease in 2009 through January 2039, the lease provides that the Partnership is entitled to variable lease payments in the form of throughput fees determined based on the amount of coal transported and processed utilizing the Partnership's assets.

These fees are included in transportation and processing services revenues on the Partnership's Consolidated Statements of Comprehensive Income (Loss) and were $4.8 million , $5.0 million and $4.2 million in the years ended December 31, 2019 , 2018 and 2017 , respectively.

After January 2039, the lease provides that the Partnership is entitled to an annual rent of $10 thousand per year in place of the variable lease payments.

Discontinued Operations

In December 2018, the Partnership sold VantaCore Partners LLC, its construction aggregates materials business for $ 205 million, before customary purchase price adjustments and transaction expenses, and recorded a gain of $ 13.1 million, and in July 2016, the Partnership sold its non-operated oil and gas working interest assets.

NATURAL RESOURCE PARTNERS L.P.

SUPPLEMENTAL QUARTERLY INFORMATION

Quarterly Financial Data

The following table summarizes quarterly financial data for 2019:

(In thousands, except per unit data)

Gain (loss) on asset sales and disposals

Asset impairments

Income (loss) from operations

Loss on extinguishment of debt

Net income (loss) from continuing operations

Income (loss) from discontinued operations

Net income (loss)

Net income (loss) attributable to NRP

Net income (loss) attributable to common unitholders and general partner

Income (loss) from continuing operations per common unit

Net income (loss) per common unit

Weighted average number of common units outstanding (basic)

Weighted average number of common units outstanding (diluted)

During the second quarter of 2019 the Partnership incurred a $29.3 million loss on extinguishment of debt related to the 105.250% premium paid to redeem the 2022 Senior Notes as well as the write-off of unamortized debt issuance costs and debt discount related to the 2022 Senior Notes.

Debt, Net for more information.

During the fourth quarter of 2019 the Partnership recorded $147.7 million of asset impairments primarily related to its coal royalty properties and intangible assets.

Mineral Rights, Net and Note 11.

Intangible Assets, Net for more information.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

The following table presents the carrying amounts of the Partnership's assets and liabilities of discontinued operations on the Consolidated Balance Sheet at December 31, 2019:

(In thousands) Construction Aggregates NRP

Oil and Gas Total

Current assets

Accounts receivable, net $ — $ 1,706 $ 1,706

Total assets of discontinued operations $ — $ 1,706 $ 1,706

Current liabilities

Accounts payable $ 42 $ — $ 42

Accrued liabilities 23 — 23

Total liabilities of discontinued operations $ 65 $ — $ 65

The following tables present summarized financial results of the Partnership's discontinued operations on the Consolidated Statements of Comprehensive Income (Loss):

For the Year Ended December 31, 2019

(In thousands) Construction Aggregates NRP

Oil and Gas Total

Revenues and other income

Oil and gas $ — $ 2 $ 2

Gain on asset sales and disposals 280 — 280

Total revenues and other income $ 280 $ 2 $ 282

Operating expenses

Operating and maintenance expenses $ 27 $ 16 $ 43

Total operating expenses $ 27 $ 16 $ 43

Other income $ — $ 717 $ 717

Income from discontinued operations $ 253 $ 703 $ 956

NATURAL RESOURCE PARTNERS L.P.

SUPPLEMENTAL QUARTERLY INFORMATION

The following table summarizes quarterly financial data for 2018:

(In thousands, except per unit data)

Quarter (1)(2)(3)

Gain on litigation settlement

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

For the Year Ended December 31, 2018

(In thousands) Construction Aggregates NRP

Oil and Gas Total

Revenues and other income

Construction aggregates $ 116,066 $ — $ 116,066

Road construction and asphalt paving services 18,400 — 18,400

Oil and gas — ( 3 ) ( 3 )

Gain on asset sales and disposals 13,414 — 13,414

Total revenues and other income $ 147,880 $ ( 3 ) $ 147,877

Operating expenses

Operating and maintenance expenses $ 117,568 $ 134 $ 117,702

Depreciation, depletion and amortization 12,218 — 12,218

Asset impairments 232 — 232

Income from operations

Net income from continuing operations

Total operating expenses $ 130,018 $ 134 $ 130,152

Interest expense $ ( 38 ) $ — $ ( 38 )

Income (loss) from discontinued operations $ 17,824 $ ( 137 ) $ 17,687

Net income attributable to NRP

Net income attributable to common unitholders and general partner

Income from continuing operations per common unit

Net income per common unit

Weighted average number of common units outstanding (basic)

Weighted average number of common units outstanding (diluted)

During the fourth quarter of 2018 the Partnership recorded $25 million in other income related to the Hillsboro litigation settlement.

During the fourth quarter of 2018 the Partnership sold its construction aggregates business for $205 million , before customary purchase price adjustments and transaction expenses, and recorded a gain of $13.1 million included in income from discontinued operations on the Partnership's Consolidated Statements of Comprehensive Income (Loss).

Discontinued Operations for more information.

During the fourth quarter of 2018 the Partnership recorded $18.0 million in aggregates and coal property impairments.

Mineral Rights, Net for more information.

Capital expenditures related to the Partnership's discontinued operations were $ 10.9 million during the year ended December 31, 2018, of which $ 0.9 million were funded with accounts payable or accrued liabilities.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data