What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-03-15 compared with 2021-03-15 · 119 added, 158 removed, 302 unchanged (48% of the section changed)

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• Liquidity and Capital Resources

• Off-Balance Sheet Transactions

• Environmental Regulation

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Cash flow cushion represents net cash provided by (used in) operating activities of continuing operations plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivables;

less maintenance and expansion capital expenditures, cash flow used in acquisition costs classified as investing or financing activities, one-time beneficial items, mandatory Opco debt repayments, preferred unit distributions and redemption of PIK units and common unit distributions.

Cash flow cushion is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities.

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Executive Overview

We are a diversified natural resource company engaged principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and own a non-controlling 49% interest in Ciner Wyoming LLC ("Ciner Wyoming"), a trona ore mining and soda ash production business.

We are a diversified natural resource company engaged principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and own a non-controlling 49% interest in Sisecam Wyoming LLC ("Sisecam Wyoming"), formerly known as Ciner Wyoming, a trona ore mining and soda ash production business.

Our common units trade on the New York Stock Exchange under the symbol "NRP." Our business is organized into two operating segments:

Coal Royalty and Other —consists primarily of coal royalty properties and coal-related transportation and processing assets.

Other assets include industrial mineral royalty properties, aggregates royalty properties, oil and gas royalty properties and timber.

Our coal reserves are primarily located in Appalachia, the Illinois Basin and the Northern Powder River Basin in the United States.

Our industrial minerals and aggregates properties are located in various states across the United States, our oil and gas royalty assets are primarily located in Louisiana and our timber assets are primarily located in West Virginia.

Soda Ash —consists of our 49% non-controlling equity interest in Ciner Wyoming, a trona ore mining and soda ash production business located in the Green River Basin of Wyoming.

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

We expect royalties generated from coal mining operations on our properties and our interest in the Ciner Wyoming soda ash business to generate the substantial majority of our cash flow over the next years.

However, over the past year, we have been evaluating our existing portfolio of assets for opportunities to generate alternative sources of revenues without substantial capital investment by us.

For example, our surface and mineral acreage owned across the United States may contain geologic formations that are suitable for the long-term sequestration and storage of carbon.

To the extent a viable carbon sequestration project is developed on or near our property, we may be able to lease that property as storage in exchange for rent payments.

We are also exploring opportunities to lease our surface acreage for renewable energy projects, such as solar arrays and wind farms.

In addition, we are assessing our forest timber assets for carbon sequestration project potential whereby we would obtain and sell carbon offset credits in exchange for agreements for long-term forest preservation.

There can be no assurance, however, that any of these potential projects will succeed or generate substantial cash flow to NRP.

Mineral Rights (formerly named Coal Royalty and Other segment) — consists of approximately 13 million acres of mineral interests and other subsurface rights across the United States.

If combined in a single tract, our ownership would cover roughly 20,000 square miles.

Our ownership provides critical inputs for the manufacturing of steel, electricity and basic building materials, as well as opportunities for carbon sequestration and renewable energy.

We are working to strategically redefine our business as a key player in the transitional energy economy in the years to come.

Soda Ash —consists of our 49% non-controlling equity interest in Sisecam Wyoming, a trona ore mining and soda ash production business located in the Green River Basin of Wyoming.

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

Corporate and Financing includes functional corporate departments that do not earn revenues.

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Operating Segments

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

(In thousands) Mineral Rights Soda Ash Corporate and Financing Total

Revenues and other income $ 194,493 $ 21,871 $ — $ 216,364

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Business Outlook and Quarterly Distributions

The global COVID-19 pandemic has had a significant negative impact on demand for steel, electricity and glass, which translates to lower demand for the coal and soda ash that our properties produce.

While demand for metallurgical and thermal coals and soda ash began to rebound during the second half of 2020, prices remain below pre-pandemic levels, and the coal and soda ash markets remain challenged.

We are unable to predict the ultimate severity or duration of the COVID-19 pandemic or its impact on our or Ciner Wyoming's business.

We ended the year with $199.8 million of liquidity consisting of $99.8 million of cash and cash equivalents and $100.0 million of borrowing capacity under our Opco Credit Facility and generated $88.7 million of free cash flow during the year ended December 31, 2020.

As a result, we believe we have the financial flexibility to navigate the effects of the pandemic on our business.

We continue to employ remote work protocols and are conducting business as usual despite the pandemic.

Despite our liquidity level at the end of the year, our consolidated leverage ratio has risen since early 2020 and was 4.6x at December 31, 2020.

We generated $121.8 million of net cash provided by operating activities and $123.0 million of free cash flow during the year ended December 31, 2021 and ended the year with $235.5 million of liquidity consisting of $135.5 million of cash and cash equivalents and $100 million of borrowing capacity under our Opco Credit Facility.

The indenture governing our 2025 parent company notes restricts us from paying more than one-half of the quarterly distribution on our preferred units in cash if our consolidated leverage ratio exceeds 3.75x.

Accordingly, the Board of Directors of our general partner has declared a distribution on our preferred units to be paid one-half in kind through the issuance of additional preferred units (“PIK units”) for the past two quarters.

To the extent our leverage ratio continues to exceed 3.75x, which we expect for the foreseeable future, we will be required to continue to pay one-half of the required preferred distributions in kind and will be unable to redeem any PIK units until our consolidated leverage ratio falls below 3.75x.

Distributions on the outstanding PIK units will accrue and accumulate at 12% per year until such PIK units are redeemed.

In addition, pursuant to the terms of our partnership agreement, to the extent we have any PIK units outstanding after January 1, 2022, we will be prohibited from paying any common unit distributions until the PIK units are redeemed in full.

Future distributions on NRP's common and preferred units will be determined on a quarterly basis by the Board of Directors.

The Board of Directors considers numerous factors each quarter in determining cash distributions, including profitability, cash flow, debt service obligations, covenants in our debt and partnership agreements, market conditions and outlook, estimated unitholder income tax liability and the level of cash reserves that the Board determines is necessary for future operating and capital needs.

Coal Royalty and Other Business Segment

Demand for steel and electricity began to rebound in the third quarter and the outlook for our coal businesses has improved, though sales volumes and prices for coal sold from our properties in the fourth quarter remained below pre-pandemic levels.

We expect coal markets to remain volatile during 2021, in part as a result of ongoing uncertainties with the COVID-19 pandemic.

Accordingly, the Board of Directors of our general partner had declared a distribution on our preferred units to be paid one-half in kind through the issuance of additional preferred units (“PIK units”) in 2021 when our leverage ratio exceeded 3.75x.

Our consolidated leverage ratio fell below 3.75x during the fourth quarter of 2021 to 2.7x at December 31, 2021, allowing us to fully redeem at par all 19,321 paid-in-kind preferred units for $19.6 million in cash in accordance with their terms and including accrued interest, and to continue to pay common unit distributions in the first quarter of 2022.

Therefore, as of the date of this report, no paid-in-kind preferred units remain outstanding and $250 million of 12.0% Class A Convertible Preferred U nits remain outstanding.

While our leverage ratio is expected to stay below 3.75x for the foreseeable future, future distributions on our common and preferred units will be determined on a quarterly basis by the Board of Directors.

The Board of Directors considers numerous factors each quarter in determining cash distributions, including profitability, cash flow, debt service obligations, market conditions and outlook, estimated unitholder income tax liability and the level of cash reserves that the Board determines is necessary for future operating and capital needs.

Mineral Rights Business Segment

We have changed the name of our Coal Royalty and Other business segment to Mineral Rights.

This name change highlights our vast mineral ownership interests as well as our intensifying focus on leveraging the Partnership's asset footprint across the United States, including subsurface carbon sequestration rights, to become a key player in the transitional energy economy for the years to come.

There has been no change to the composition of this reportable business segment or the structure of our internal organization in connection with this name change.

Metallurgical coal markets have rebounded significantly from the lows seen in 2020 to record high pricing and the outlook remains strong as steel demand driven by global economic recovery is more than offsetting challenges related to the COVID-19 pandemic.

Domestic and export thermal coal markets have also significantly improved from the lows seen in 2020, however we did not have meaningful sensitivity to thermal coal price movements in 2021 since the substantial majority of our thermal cash flows were fixed pursuant to a contract with Foresight Energy Resources LLC ("Foresight") that went into effect as they emerged from bankruptcy in 2020.

That contract expired at the end of 2021 and we began receiving traditional royalty payments in January 2022.

While we may benefit from improved thermal coal demand and pricing in the near term, thermal coal markets still face the long-term challenges presented by competition from natural gas and the secular shift to renewable energy.

Our lessees sold 27.8 million tons of coal from our properties in 2021 and we derived approximately 65% of our coal royalty revenues and approximately 50% of our coal royalty sales volumes from metallurgical coal during the same period.

Revenues and other income in 2020 were lower by $87.3 million as compared to the prior year.

This decrease is primarily a result of a weakened market for metallurgical coal as compared to the prior year due to a decline in global steel demand.

As a result, both sales volumes and prices for metallurgical coal sold were lower in 2020 compared to the prior year.

Prices for metallurgical coal have rebounded from the lows seen in the second quarter, but are not currently above pre-pandemic levels.

In addition, weaker domestic and export thermal coal markets compared to the prior year period resulted in lower revenues from our thermal coal properties.

Domestic and export thermal coal markets remained challenged by lower utility demand, continued low natural gas prices and the secular shift to renewable energy.

Our thermal coal business results are largely dependent on our various lease agreements with Foresight.

In June 2020, we entered into lease amendments with Foresight pursuant to which Foresight agreed to pay us fixed cash payments of $48.75 million in 2020 and $42.0 million in 2021 to satisfy all obligations arising out of the existing various coal mining leases and transportation infrastructure fee agreements between us and Foresight for calendar years 2020 and 2021.

These amendments provide us cash flow certainty for our thermal coal business through 2021.

During 2020 we received all of the $48.75 million due to us from Foresight.

Revenues and other income in 2021 were higher by $64.9 million as compared to the prior year.

This increase is primarily a result of stronger metallurgical coal demand and pricing in 2021.

We continue to identify alternative revenue sources across our large portfolio of land, mineral and timber assets.

The types of opportunities include the sequestration of carbon dioxide underground and in standing forests, and the generation of electricity using geothermal, solar and wind energy.

We executed our first carbon neutral project in the fourth quarter of 2021 through the sale of 1.1 million carbon offset cred its which represents 1.1 million tonnes of carbon sequestered in approximately 39,000 acres of our forestland in West Virginia.

In the first quarter of 2022, we were able to execute another such project through the previously announced partnership with Denbury which provides opportunity for development of a world-class subsurface CO 2 sequestration hub on Alabama's Gulf Coast.

The agreement provides Denbury with the exclusive rights to develop a subsurface CO 2 sequestration site on approximately 75,000 acres of underground pore space controlled by us in Baldwin County, near Mobile, Alabama, with estimated CO 2 storage potential of over 300 million metric tons.

We expect this 75,000-acre project, if developed, to be the first of what will potentially be numerous subsurface sequestration projects conducted on the approximately 3.5 million acres where we own the rights to sequester CO 2 underground across the United States.

Our ability to create value and provide important benefits to the environment through alternative revenue sources continues to expand through transactions such as these and we are pleased to be on the forefront of subsurface carbon sequestration.

While the timing and likelihood of additional cash flows being realized from further activities is uncertain, we believe our large ownership footprint throughout the United States will provide additional opportunities to create value in this regard with minimal capital investment.

Soda Ash Business Segment

Ciner Wyoming has been negatively impacted by the COVID-19 pandemic as lower demand for glass in the global auto, beverage container, and construction industries reduced demand for soda ash.

Revenues and other income in 2020 were lower by $36.4 million compared to the prior year primarily due to a combination of lower pricing and volumes sold.

However, demand for glass began to rebound in the third quarter and the outlook for our soda ash business has improved.

While Ciner Wyoming's business has yet to recover to pre-COVID levels, overall sales volumes increased and overall production volumes increased over second quarter 2020 lows, though global prices remain depressed.

While we believe our facility is competitively positioned as one of the lowest cost producers of soda ash in the wor ld, we expect the market to remain volatile as a result of ongoing uncertainties with the COVID-19 pandemic.

In order to have financial flexibility during the COVID-19 pandemic, Ciner Wyoming suspended quarterly distributions in the third quarter of 2020.

Ciner Wyoming will continue to evaluate, on a quarterly basis, whether to reinstate the distribution.

Ciner Wyoming’s ability to pay future quarterly distributions will be dependent in part on its cash reserves, liquidity, total debt levels and anticipated capital expenditures.

When considering the significant investment required by Ciner Wyoming’s previously announced expansion project and the infrastructure improvements designed to increase overall efficiency, combined with the COVID-19 pandemic’s negative impact on Ciner Wyoming’s financial results, Ciner Wyoming has reprioritized the timing of the significant capital expenditure items in order to increase financial and liquidity flexibility until it has more clarity and visibility into the ongoing impact of the COVID-19 pandemic on its business.

In December, a publicly-traded Turkish conglomerate named Sisecam acquired a majority stake in the managing partner of our soda ash business, which is now known as Sisecam Wyoming LLC.

Sisecam brings extensive experience and knowledge to our soda ash partnership given its soda ash operating experience in Turkey, Bulgaria and Europe, as well as its container and flat glass manufacturing around the world.

We look forward to working with Sisecam to build on the significant value realized by the soda ash partnership with the Ciner Group, which continues to own a minority stake in the partnership.

Sisecam Wyoming's business continues to recover to pre-COVID-19 levels.

While we believe Sisecam Wyoming's facility is competitively positioned as one of the lowest cost producers of soda ash in the world, we expect the market to remain volatile as a result of ongoing uncertainties with the COVID-19 pandemic.

Soda ash revenues and other income in 2021 were higher by $11.1 million compared to the prior year period as demand and pricing for soda ash continues to improve globally from the lows caused by the COVID-19 pandemic.

As a result of the soda ash segment's improved performance, Sisecam Wyoming reinstated regular quarterly cash distributions in the fourth quarter of 2021, which were previously suspended since the third quarter of 2020.

Accordingly, we received a $7.4 million distribution in the fourth quarter of 2021.

We also received a special distribution of $3.9 million in the first quarter of 2021, for $11.3 million in total distributions from Sisecam Wyoming in 2021 as compared to $14.2 million of regular quarterly distributions received in 2020.

In addition, strong fourth quarter 2021 soda ash demand and pricing resulted in further improved operating results and we received a $13.2 million quarterly distribution with respect to these strong fourth quarter 2021 operating results in February 2022.

Results of Operations

Years Ended December 31, 2020 and 2019 Compared

Year Ended December 31, 2021 and 2020 Compared

Revenues and Other Income

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For the Year Ended December 31,

Operating Segment (In thousands) 2020 2019 Decrease Percentage Change

Coal Royalty and Other $ 129,592 $ 216,846 $ (87,254) (40) %

Operating Segment (In thousands) 2021 2020 Increase Percentage Change

Mineral Rights $ 194,493 $ 129,592 $ 64,901 50 %

Soda Ash 21,871 10,728 11,143 104 %

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The changes in revenues and other income is discussed for each of the operating segments below:

Coal Royalty and Other

Mineral Rights

The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income:

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Northern Powder River Basin 3,151 1,738 1,413 81 %

Gulf Coast 55 — 55 100 %

Total coal sales volumes 27,779 16,766 11,013 66 %

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Northern Powder River Basin 3.54 3.50 0.04 1 %

Gulf Coast 0.60 — 0.60 100 %

Combined average coal royalty revenue per ton 4.47 3.70 0.77 21 %

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Northern Powder River Basin 11,151 6,086 5,065 83 %

Gulf Coast 33 — 33 100 %

Unadjusted coal royalty revenues 124,296 62,013 62,283 100 %

Coal royalty adjustment for minimum leases (20,207) (10,145) (10,062) (99) %

(10,145) (1,356) (8,789) (648) %

Total coal royalty revenues $ 104,089 $ 51,868 $ 52,221 101 %

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Production lease minimum revenues $ 14,269 $ 21,749 $ (7,480) (34) %

$ 21,749 $ 24,068 $ (2,319) (10) %

Minimum lease straight-line revenues 20,564 16,796 3,768 22 %

Forest CO 2 sequestration revenues

13,790 — 13,790 100 %

Property tax revenues 5,786 6,287 (501) (8) %

Wheelage revenues 10,065 7,025 3,040 43 %

Property tax revenues 6,028 5,786 242 4 %

Coal overriding royalty revenues 4,367 4,977 (610) (12) %

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Total other revenues $ 81,107 $ 68,298 $ 12,809 19 %

Coal royalty and other $ 120,166 $ 191,069 $ (70,903) (37) %

Royalty and other mineral rights $ 185,196 $ 120,166 $ 65,030 54 %

Transportation and processing services revenues 9,052 8,845 207 2 %

Gain on asset sales and disposals 245 581 (336) (58) %

Total Coal Royalty and Other segment revenues and other income $ 129,592 $ 216,846 $ (87,254) (40) %

(1) Effective January 1, 2020, certain revenues previously classified as coal royalty revenues are classified as production lease minimum revenues or minimum lease straight-line revenues due to contract modifications with Foresight Energy Resources LLC ("Foresight") that fixed consideration paid to us over a two-year period.

Total Mineral Rights segment revenues and other income $ 194,493 $ 129,592 $ 64,901 50 %

Coal Royalty Revenues

Total coal royalty revenues decreased $57.7 million from 2019 to 2020 driven by weakened coal markets that resulted in lower coal sales volumes and pricing.

The discussion of these decreases by region is as follows:

Approximately 65% of coal royalty revenues and approximately 50% of coal royalty sales volumes were derived from metallurgical coal during the year ended December 31, 2021.

Total coal royalty revenues increased $52.2 million from 2020 to 2021 primarily as a result of stronger metallurgical coal demand and pricing in 2021.

The discussion of these increases by region is as follows:

• Appalachia :

Sales volumes decreased 37% and coal royalty revenues decreased $44.0 million primarily due to weakened coal demand compounded by the COVID-19 pandemic.

Coal royalty revenues increased $45.2 million primarily due to a 30% increase in sales volumes in addition to higher sales prices as compared to the prior year.

• Illinois Basin :

Sales volumes increased 54% due to increased activity at the Hillsboro and Williamson mines, while coal royalty revenues decreased $2.3 million primarily due to the idling of our Macoupin property.

Additionally, during the year ended December 31, 2020, certain revenues previously classified as coal royalty revenues are classified as production lease minimum revenues or minimum lease straight-line revenues due to contract modifications with Foresight that fixed consideration paid to us over a two-year period.

Coal royalty revenues increased $11.9 million primarily due to a 178% increase in sales volumes.

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

As a result of these amendments, actual revenues recognized from Foresight were flat period-over-period.

• Northern Powder River Basin :

Sales volumes decreased 43% and coal royalty revenues decreased $2.7 million primarily due to our lessee mining off of our property in accordance with its mine plan in 2020, partially offset by a 21% increase in sales prices year-over-year.

Coal royalty revenues increased $5.1 million primarily due to an 81% increase in sales volumes as our lessee mined on our property more during 2021 as compared to 2020.

Other Revenues

Other revenues decreased $13.2 million from 2019 to 2020 primarily due to the following:

• A $8.5 million decrease in coal overriding royalty revenues primarily as a result of production at the Williamson mine moving off of non-NRP owned coal (on which we receive overriding royalties) and back onto NRP-owned coal reserves.

As a result, this decrease in coal overriding royalty revenues was offset by an increase in coal royalty revenues;

• A $4.5 million decrease in lease amendment revenues year-over-year.

Transportation and Processing Services Revenues

Transportation and processing services revenues decreased $10.4 million primarily due to the temporary cessation of production at the Macoupin mine where we own loadout and other transportation assets in addition to decreased production of non-NRP-owned coal at the Williamson mine where we also own loadout and other transportation assets.

Gain on Asset Sales and Disposals

Gain on asset sales and disposals decreased $5.9 million primarily due to the disposal of certain mineral rights assets during the third quarter of 2019.

Revenues and other income related to our Soda Ash segment decreased $36.4 million primarily due to a combination of lower pricing and volumes sold.

Ciner Wyoming was negatively impacted by the COVID-19 pandemic as lower demand for glass in the global auto, beverage container, and construction industries reduced demand for soda ash.

Operating and Other Expenses

The following table presents the significant categories of our consolidated operating and other expenses:

Other revenues increased $12.8 million from 2020 to 2021 primarily due to $13.8 million of forest CO 2 sequestration revenues recognized in 2021 as a result of the sale of 1.1 million carbon offset credits which represents 1.1 million tonnes of carbon sequestered in our forestland in West Virginia .

This increase was partially offset by a decrease in production lease minimum revenues as a result of lower breakage revenues recognized in 2021.

Revenues and other income related to our Soda Ash segment increased $11.1 million compared to the prior year as demand and pricing for soda ash continues to improve globally from the lows caused by the COVID-19 pandemic.

Operating Expenses

The following table presents the significant categories of our consolidated operating expenses:

For the Year Ended

December 31, Decrease Percentage Change

December 31, Increase (Decrease) Percentage Change

(In thousands) 2021 2020

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Total operating expenses $ 68,586 $ 184,171 $ (115,585) (63) %

Other expenses, net

Interest expense, net $ 40,968 $ 47,453 $ (6,485) (14) %

Loss on extinguishment of debt — 29,282 (29,282) (100) %

Total other expenses, net $ 40,968 $ 76,735 $ (35,767) (47) %

Total operating expenses decreased by $28.4 million primarily due to the following:

• Asset impairments decreased $12.3 million from 2019 to 2020.

Asset impairments in the year ended December 31, 2020 were primarily due to weakened coal markets that resulted in termination of certain coal leases, changes to lessee mine plans resulting in permanent moves off certain of our coal properties and decreased oil and gas drilling activity which negatively impacted the outlook for NRP's frac sand properties.

Asset impairments in the year ended December 31, 2019 primarily resulted from 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 mineral rights and intangible assets.

• Operating and maintenance expenses include costs to manage the Coal Royalty and Other and Soda Ash segments and primarily consist of royalty, tax, employee-related and legal costs and bad debt expense.

These costs decreased $7.9 million primarily due to a decrease in bad debt expense in addition to lower costs related to an overriding royalty agreement with Western Pocahontas Properties Limited Partnership ("WPPLP").

The coal royalty expense NRP pays to WPPLP is fully offset by the coal royalty revenue NRP receives from this property.

• Depreciation, depletion and amortization expense decreased $5.7 million due to lower coal sales volumes at certain properties.

• General and administrative expenses decreased $2.4 million primarily due to decreased legal expenses year-over-year.

Total other expenses, net decreased $35.8 million primarily due to the following:

• Loss on extinguishment of debt of $29.3 million in 2019 related to the 105.25% premium paid to redeem the 2022 Senior Notes in the second quarter of 2019 as well as the write-off of unamortized debt issuance costs and debt discount related to the 2022 Senior Notes.

• Interest expense, net decreased $6.5 million primarily due to lower debt balances in 2020 as a result of debt repayments made over the past twelve months.

Total operating expenses decreased by $115.6 million primarily due to a $130.8 million decrease in asset impairments.

Asset impairments in 2021 primarily related to a lease termination while asset impairments in 2020 were due to weakened coal markets that resulted in termination of certain coal leases, changes to lessee mine plans resulting in permanent moves off certain of our coal properties and decreased oil and gas drilling activity which negatively impacted the outlook for NRP's frac sand properties.

This decrease was partially offset by a $9.9 million increase in depreciation, depletion and amortization expense primarily as a result of increased production at certain Illinois Basin coal properties.

The remaining cost increases primarily related to increased incentive compensation expense as a result of significantly improved Partnership operating results year-over-year and increased overriding royalty expense due to higher coal sales and royalty revenue in 2021.

Adjusted EBITDA (Non-GAAP Financial Measure)

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Operating Segments

For the Year Ended (In thousands) Coal Royalty and Other Soda Ash Corporate and Financing Total

For the Year Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total

December 31, 2021

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interest expense, net 79 — 40,889 40,968

loss on extinguishment of debt — — 29,282 29,282

depreciation, depletion and amortization 9,198 — — 9,198

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Adjusted EBITDA $ 104,982 $ 14,025 $ (14,293) $ 104,714

Adjusted EBITDA decreased $94.5 million primarily due to the following:

• Coal Royalty and Other Segment

◦ Adjusted EBITDA decreased $79.4 million primarily as a result of weaker coal markets in the year ended December 31, 2020.

• Soda Ash Segment

◦ Adjusted EBITDA decreased $17.6 million as a result of lower cash distributions received from Ciner Wyoming during the year ended December 31, 2020.

Adjusted EBITDA increased $56.6 million primarily due to a $62.6 million increase in Adjusted EBITDA within our Mineral Rights segment as a result of higher revenues and other income during the year ended December 31, 2021 as discussed above.

This increase was partially offset by a $2.9 million decrease in Adjusted EBITDA within our Soda Ash segment as a result of lower cash distributions received from Sisecam Wyoming during the year ended December 31, 2021 as compared to the prior year and a $3.1 million decrease in Adjusted EBITDA within our Corporate and Financing segment as a result of increased general and administrative costs primarily due to increased incentive compensation as a result of significantly improved Partnership operating results year-over-year.

Distributable Cash Flow ("DCF"), Free Cash Flow ("FCF") and Cash Flow Cushion (Non-GAAP Financial Measures)

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Operating Segments

For the Year Ended (In thousands) Coal Royalty and Other Soda Ash Corporate and Financing Total

For the Year Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total

December 31, 2021

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Operating Segments

For the Year Ended (In thousands) Coal Royalty and Other Soda Ash Corporate and Financing Total

For the Year Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total

December 31, 2021

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proceeds from asset sales and disposals 249 — — 249

proceeds from sale of discontinued operations — — — (65)

return of long-term contract receivable 2,163 — — 2,163

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proceeds from asset sales and disposals (249) — — (249)

proceeds from sale of discontinued operations — — — 65

acquisition costs (1,000) — — (1,000)

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common unit distributions (22,645)

warrant cash settlement (9,183)

Cash flow cushion $ 36,172

Operating Segments

For the Year Ended (In thousands) Coal Royalty and Other Soda Ash Corporate and Financing Total

For the Year Ended (In thousands) Mineral Rights Soda Ash Corporate and Financing Total

December 31, 2020

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proceeds from sale of discontinued operations — — — 65

expansion capital expenditures (22) — — (22)

acquisition costs (1,000) — — (1,000)

Free cash flow $ 125,859 $ 14,037 $ (51,206) $ 88,690

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Cash flow cushion $ (739)

DCF and FCF decreased $54.7 million and $50.4 million, respectively, primarily due to the following:

• Coal Royalty and Other Segment

◦ DCF and FCF decreased $59.6 million and $54.7 million, respectively, primarily as a result of the weakened coal markets in the year ended December 31, 2020.

DCF was also impacted by a $5.9 million decrease in proceeds from asset sales and disposals compared to the year ended December 31, 2019.

• Soda Ash Segment

◦ DCF and FCF decreased $17.6 million as a result of lower cash distributions received from Ciner Wyoming during the year ended December 31, 2020.

• Corporate and Financing Segment

◦ DCF and FCF increased $21.9 million primarily due to lower cash paid for interest as a result of less debt outstanding in 2020.

Cash flow cushion decreased $8.5 million as a result of the decrease in FCF discussed above, partially offset by a decrease in mandatory Opco debt repayments and lower preferred unit and common unit distributions made during the year ended December 31, 2020.

For discussion of our Results of Operations comparing 2019 to 2 018, refer to our 2019 Annual Report on Form 10-K filed February 27, 2020 under Part II, "Item 7.

DCF and FCF increased $34.0 million and $34.3 million, respectively, primarily due to the increase in Mineral Rights segment DCF and FCF of $34.8 million and $35.1 million, respectively.

The increase in Mineral Rights DCF and FCF was primarily driven by stronger metallurgical coal demand and pricing in 2021 and $13.8 million of cash received in the fourth quarter of 2021 as a result of the sale of 1.1 million forest carbon offset credits.

Cash flow cushion increased $36.9 million as a result of the increase in FCF discussed above in addition to:

• $10.8 million lower preferred unit distributions in 2021 as we paid one-half of the distributions in kind through the issuance of PIK units during the year ended December 31, 2021;

• $6.8 million lower mandatory Opco debt repayments in 2021 as one series of Opco Senior Notes was fully repaid in 2020.

These increases in cash flow cushion were partially offset by:

• $9.2 million of cash used to settle the exercise of certain of our warrants in 2021;

• $5.8 million higher common unit distributions in 2021 as we suspended our common unit distribution for one quarter in 2020.

For discussion of our Results of Operations comparing 2020 to 2019, refer to our 2020 Annual Report on Form 10-K filed March 15, 2021 under Part II, "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations."

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We believe our liquidity position provides us with the flexibility to continue paying down debt and manage our business through the current market environment.

Years Ended December 31, 2020 and 2019 Compared

Cash flows provided by operating activities decreased $48.0 million, from $137.3 million in the year ended December 31, 2019 to $89.3 million in the year ended December 31, 2020 primarily related to lower operating cash flow as a result of the weakened coal markets in addition to lower cash distributions received from Ciner Wyoming in 2020, partially offset by less cash paid for interest in 2020 due to less debt outstanding.

Cash flows provided by investing activities decreased $5.9 million, from $7.6 million in the year ended December 31, 2019 to $1.7 million in the year ended December 31, 2020 primarily due to a $5.9 million decrease in proceeds from asset sales and disposals year-over-year.

Cash flows used in financing activities decreased $163.2 million, from $252.7 million in the year ended December 31, 2019 to $89.4 million in the year ended December 31, 2020 primarily due to the following:

• $345.6 million used for the redemption of our 2022 Senior Notes in the second quarter of 2019;

• The $49.3 million prepayment of our Opco Senior Notes in the first quarter of 2019 made using proceeds from the sale of our construction aggregates business;

• $26.4 million in debt issuance costs and other primarily in 2019 primarily related to the 2019 debt refinancings;

• $16.3 million in lower common unit distributions in the year ended December 31, 2020 as a result of the special common unit distribution paid in 2019 to cover common unitholders' tax liability resulting from the sale of NRP's construction aggregates business in December 2018, and the suspension of the distribution on NRP's common units with respect to the first quarter of 2020.

• $3.6 million in lower preferred unit distributions in the year ended December 31, 2020 as a result of paying half of the distribution in kind through the issuance of additional preferred units during the fourth quarter of 2020.

These increases in cash flows used in financing activities were partially offset by the following:

• $300 million provided by the issuance of the 2025 Senior Notes in the second quarter of 2019.

For discussion of our Cash Flows comparing 2019 to 2018, refer to our 2019 Annual Report on Form 10-K filed February 27, 2020 under Part II, "Item 7.

Year Ended December 31, 2021 and 2020 Compared

Cash flows provided by operating activities increased $32.5 million, from $89.3 million in the year ended December 31, 2020 to $121.8 million in the year ended December 31, 2021 primarily related to increased coal royalty cash flow in 2021 as a result of stronger metallurgical coal demand and pricing in 2021, the sale of 1.1 million forest carbon offset credits in 2021 and lower cash paid for interest year-over-year.

These increases in cash provided by operating activities were partially offset by lower distributions from Sisecam Wyoming year-over-year.

Cash flows used in financing activities decreased $0.9 million, from $89.4 million in the year ended December 31, 2020 to $88.5 million in the year ended December 31, 2021 primarily due to a $10.8 million decrease in cash distributions to preferred unitholders as we paid one-half of our preferred unit distributions in kind through the issuance of 15.6 million preferred units in 2021.

Additionally, debt repayments decreased $6.8 million in 2021 as one series of Opco Senior Notes was fully repaid during the year ended December 31, 2020.

These decreases in cash flow used were partially offset by $9.2 million used to settle the exercise of certain of our warrants in 2021 in addition to a $5.8 million increase in distributions to common unitholders and the general partner as we suspended our common unit distribution in the second quarter of 2020.

For discussion of our Cash Flows comparing 2020 to 2019, refer to our 2020 Annual Report on Form 10-K filed March 15, 2021 under Part II, "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations."

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At December 31, 2021 we did not have any borrowings outstanding under the Opco Credit Facility and had $100.0 million in available borrowing capacity.

Off-Balance Sheet Transactions

We do not have any off-balance sheet arrangements with unconsolidated entities or related parties and accordingly, there are no off-balance sheet risks to our liquidity and capital resources from unconsolidated entities.

Inflation in the United States has been relatively low in recent years and did not have a material impact on operations for the years ended December 31, 2020, 2019 and 2018.

Inflation in the United States has been relatively low in previous years, and despite rising costs beginning in 2021, inflation did not have a material impact on operations for the years ended December 31, 2021, 2020 and 2019.

Environmental Regulation

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Actual results could differ from those estimates.

Coal Royalty and Other Segment Revenues

Mineral Rights Segment Revenues

Royalty-based leases.

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Leases for which we expect that consideration from production will be greater than consideration from minimums over the lease term.

Revenue recognition for these leases is recognized over time based on production as coal royalty revenues or aggregates royalty revenues, as applicable.

Revenue for these leases is recognized over time based on production as royalty revenues, as applicable.

Deferred revenue from minimums is recognized as royalty revenues when recoupment occurs or as production lease minimum revenues when the recoupment period expires.

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Leases for which we expect that consideration from minimums will be greater than consideration from production over the lease term.

Revenue recognition for these leases is recognized straight-line over the lease term based on the minimum consideration amount as minimum lease straight-line revenues.

Revenue for these leases is recognized straight-line over the lease term based on the minimum consideration amount as minimum lease straight-line revenues.

This evaluation is performed at the inception of the lease and only reassessed upon modification or renewal of the lease.

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Also included within oil and gas royalty revenues are lease bonus payments, which are generally paid upon the execution of a lease.

We also have overriding royalty revenue interests in coal reserves.

Revenues from these interests is recognized over time based on when the coal is sold.

We also have overriding royalty revenue interests in certain of our coal mineral rights.

Revenue from these interests is recognized over time based on when the coal is sold.

Forest CO 2 sequestration revenues.

Revenues related to the sale of our carbon offset credits that is recognized at a point in time upon execution of the transaction.

Wheelage revenues.

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Other revenues.

Other revenues consists primarily of rental payments and surface damage fees related to certain land we own and is recognized straight-line over time as it is earned.

Other revenues consists primarily of rental payments and surface damage fees related to certain land we own and are recognized straight-line over time as it is earned.

Other revenues also include property tax revenues.

The majority of property taxes paid on our properties are reimbursable by the lessee and are recognized on a gross basis over time which reflects the reimbursement of property taxes by the lessee.

The majority of property taxes paid on our properties are reimbursable by the lessee and are recognized on a gross basis over time which affects the reimbursement of property taxes by the lessee.

Property taxes we pay are included in operating and maintenance expenses on our Consolidated Statements of Comprehensive Income (Loss).

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Consideration received to assign a lease to another party and related forfeited minimums will be recognized immediately upon the termination of the contract.

Fees from contract modifications are recognized in lease amendment revenues within coal royalty and other revenues on our Consolidated Statements of Comprehensive Income (Loss) while modifications in royalty rates and minimums will be recognized prospectively in accordance with the above lease classification.

Fees from contract modifications are recognized in lease amendment revenues within royalty and other mineral rights revenues on our Consolidated Statements of Comprehensive Income (Loss) while modifications in royalty rates and minimums will be recognized prospectively in accordance with the above lease classification.

Contract Assets and Liabilities from Contracts with Customers

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The long-term portion of deferred revenue relates to deferred revenue on production leases and lease amendment fees that are to be recognized as revenue on a straight-line basis beyond the next twelve months.

Due to uncertainty in the amount of deferred revenue that will be recouped and recognized as coal royalty revenues from production leases over the next twelve months, we are unable to estimate the current portion of deferred revenue.

Equity in Earnings of Ciner Wyoming.

Due to uncertainty in the amount of deferred revenue that will be recouped and recognized as royalty revenues from production leases over the next twelve months, we are unable to estimate the current portion of deferred revenue.

Equity in Earnings of Sisecam Wyoming.

We account for non-marketable equity investments using the equity method of accounting if the investment gives it the ability to exercise significant influence over, but not control of, an investee.

Our 49% investment in Ciner Wyoming is accounted for using this method.

Our 49% investment in Sisecam Wyoming is accounted for using this method.

Under the equity method of accounting, investments are stated at initial cost and are adjusted for subsequent additional investments and the proportionate share of earnings or losses and distributions.

The basis difference between the investment and the proportional share of investee's net assets is attributed to net tangible assets and is amortized over its estimated useful life.

The carrying value in Ciner Wyoming is recognized in equity in unconsolidated investment on our Consolidated Balance Sheets.

Our adjusted share of the earnings or losses of Ciner Wyoming and amortization of the basis difference is recognized in equity in earnings of Ciner Wyoming on the Consolidated Statements of Comprehensive Income (Loss).

We decrease our investment for our proportional share of distributions received from Ciner Wyoming.

The carrying value in Sisecam Wyoming is recognized in equity in unconsolidated investment on our Consolidated Balance Sheets.

Our adjusted share of the earnings or losses of Sisecam Wyoming and amortization of the basis difference is recognized in equity in earnings of Sisecam Wyoming on the Consolidated Statements of Comprehensive Income (Loss).

We decrease our investment for our proportional share of distributions received from Sisecam Wyoming.

These cash flows are reported utilizing the cumulative earnings approach.

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Mineral rights owned and leased are recorded at its original cost of construction or, upon acquisition, at fair value of the assets acquired.

Coal and aggregates mineral rights are depleted on a unit-of-production basis by lease, based upon minerals mined in relation to the net cost of the mineral properties and estimated proven and probable tonnage as defined by the SEC’s Industry Guide 7 and estimated by our internal reserve engineers.

The technologies and economic data used by our internal reserve engineers in the estimation of our proved reserves include, but are not limited to, drill logs, geophysical logs, geologic maps including isopach, mine, and coal quality, cross sections, statistical analysis, and available public production data.

There are numerous uncertainties inherent in estimating the quantities and qualities of recoverable reserves, including many factors

beyond our control.

Estimates of economically recoverable coal reserves depend upon a number of variable factors and assumptions, any one of which may, if incorrect, result in an estimate that varies considerably from actual results.

Coal and aggregates mineral rights are depleted on a unit-of-production basis by lease, based upon minerals mined in relation to the net cost of the mineral properties and estimated economic tonnage as estimated by our internal reserve engineers.

The technologies and economic data used by our internal reserve engineers in the estimation of our economic tonnage include, but are not limited to, drill logs, geophysical logs, geologic maps including isopach, mine, and coal quality, cross sections, statistical analysis, and available public production data.

There are numerous uncertainties inherent in estimating the quantities and qualities of economic tonnage, including many factors beyond our control.

Estimates of economically recoverable tonnage depend upon a number of variable factors and assumptions, any one of which may, if incorrect, result in an estimate that varies considerably from actual results.

Asset Impairment

We have developed procedures to evaluate our 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.

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

A long-lived asset is deemed impaired when the future expected undiscounted cash flows from its use and disposition is less than the asset's net book value.

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Recent Accounting Standards

For a discussion of recent accounting pronouncements, see the applicable section of " Item 8.

Financial Statements and Supplementary Data—Note 2.

Summary of Significant Accounting Policies " in the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

We do not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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 7. Management’s Discussion and Analysis