NATURAL RESOURCE PARTNERS LP 10-Q

nrp20230331_10q.htm   Table of Contents   UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549   FORM 10-Q   ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   For the quarterly period ended  March 31, 2023 or   ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934               Commission file number:   001-31465       NATURAL RESOURCE PARTNERS LP   (Exact name of registrant as specified in its charter)     Delaware 35-2164875 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1415 Louisiana Street, Suite 3325 Houston , Texas 77002 (Address of principal executive offices) (Zip Code) ( 713 ) 751-7507 (Registrant ’ s telephone number, including area code)           Securities registered pursuant to Section 12(b) of the Act:   Title of each class   Trading Symbol(s)   Name of each exchange on which registered Common Units representing limited partner interests   NRP   New York Stock Exchange   Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   ☒    No  ☐   Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes   ☒   No ☐   Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of "accelerated filer", "large accelerated filer", "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.   Large Accelerated Filer ☐ Accelerated Filer   ☒ Non-accelerated Filer ☐ Smaller Reporting Company   ☐     Emerging Growth Company   ☐   If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐   Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐     No  ☒   APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:   Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes ☐    No  ☐   APPLICABLE ONLY TO CORPORATE ISSUERS   Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.       Table of Contents     NATURAL RESOURCE PARTNERS, L.P. TABLE OF CONTENTS       Page Part I. Financial Information Item   1. Consolidated Financial Statements     Consolidated Balance Sheets 1   Consolidated Statements of Comprehensive Income 2   Consolidated Statements of Partners ’  Capital 3   Consolidated Statements of Cash Flows 4   Notes to Consolidated Financial Statements 5 Item   2. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations 17 Item   3. Quantitative and Qualitative Disclosures About Market Risk 25 Item   4. Controls and Procedures 25 Part II. Other Information Item   1. Legal Proceedings 26 Item   1A. Risk Factors 26 Item   2. Unregistered Sales of Equity Securities and Use of Proceeds 26 Item   3. Defaults Upon Senior Securities 26 Item   4. Mine Safety Disclosures 26 Item   5. Other Information 26 Item   6. Exhibits 26   Signatures 27   i Table of Contents       PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS   NATURAL RESOURCE PARTNERS L.P. CONSOLIDATED BALANCE SHEETS       March 31,     December 31,       2023     2022   (In thousands, except unit data)   (Unaudited)         ASSETS                 Current assets                 Cash and cash equivalents   $ 17,655     $ 39,091   Accounts receivable, net     36,513       42,701   Other current assets, net     3,216       1,822   Total current assets   $ 57,384     $ 83,614   Land     24,008       24,008   Mineral rights, net     408,371       412,312   Intangible assets, net     14,613       14,713   Equity in unconsolidated investment     295,361       306,470   Long-term contract receivable, net     28,309       28,946   Other long-term assets, net     7,622       7,068   Total assets   $ 835,668     $ 877,131   LIABILITIES AND CAPITAL                 Current liabilities                 Accounts payable   $ 1,452     $ 1,992   Accrued liabilities     3,466       11,916   Accrued interest     1,252       989   Current portion of deferred revenue     7,450       6,256   Current portion of long-term debt, net     39,055       39,076   Total current liabilities   $ 52,675     $ 60,229   Deferred revenue     38,833       40,181   Long-term debt, net     133,821       129,205   Other non-current liabilities     6,124       5,472   Total liabilities   $ 231,453     $ 235,087   Commitments and contingencies (see Note 13)                     Class A Convertible Preferred Units ( 202,501 and 250,000 units issued and outstanding at March 31, 2023 and December 31, 2022, respectively, at $ 1,000 par value per unit; liquidation preference of $ 1,850 per unit at March 31, 2023 and December 31, 2022) (See Note 3)   $ 133,316     $ 164,587   Partners’ capital                 Common unitholders’ interest (12,634,642 and 12,505,996 units issued and outstanding at March 31, 2023 and December 31, 2022, respectively)   $ 417,401     $ 404,799   General partner’s interest     6,400       5,977   Warrant holders’ interest     47,964       47,964   Accumulated other comprehensive income (loss)     ( 866 )     18,717   Total partners’ capital   $ 470,899     $ 477,457   Total liabilities and partners' capital   $ 835,668     $ 877,131         The accompanying notes are an integral part of these consolidated financial statements.     1 Table of Contents     NATURAL RESOURCE PARTNERS L.P. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)       For the Three Months Ended March 31,   (In thousands, except per unit data)   2023     2022   Revenues and other income                 Royalty and other mineral rights   $ 76,271     $ 71,083   Transportation and processing services     3,598       3,796   Equity in earnings of Sisecam Wyoming     19,254       14,837   Gain on asset sales and disposals     96       —   Total revenues and other income   $ 99,219     $ 89,716                     Operating expenses                 Operating and maintenance expenses   $ 7,163     $ 8,076   Depreciation, depletion and amortization     4,083       3,868   General and administrative expenses     5,845       4,467   Asset impairments     —       19   Total operating expenses   $ 17,091     $ 16,430                     Income from operations   $ 82,128     $ 73,286                     Interest expense, net   $ ( 2,853 )   $ ( 9,387 )                   Net income   $ 79,275     $ 63,899   Less: income attributable to preferred unitholders     ( 6,661 )     ( 7,500 ) Less: redemption of preferred units     ( 16,228 )     —   Net income attributable to common unitholders and the general partner   $ 56,386     $ 56,399                     Net income attributable to common unitholders   $ 55,258     $ 55,271   Net income attributable to the general partner     1,128       1,128                     Net income per common unit (see Note 5)                 Basic   $ 4.40     $ 4.45   Diluted     3.44       3.11                     Net income   $ 79,275     $ 63,899   Comprehensive income (loss) from unconsolidated investment and other     ( 19,583 )     2,545   Comprehensive income   $ 59,692     $ 66,444         The accompanying notes are an integral part of these consolidated financial statements.     2 Table of Contents     NATURAL RESOURCE PARTNERS L.P. CONSOLIDATED STATEMENTS OF PARTNERS ’ CAPITAL (Unaudited)                                       Accumulated                                               Other     Total       Common Unitholders     General     Warrant     Comprehensive     Partners'   (In thousands)   Units     Amounts     Partner     Holders     Income (Loss)     Capital   Balance at December 31, 2022     12,506     $ 404,799     $ 5,977     $ 47,964     $ 18,717     $ 477,457   Net income (1)     —       77,690       1,585       —       —       79,275   Redemption of preferred units     —       ( 15,904 )     ( 324 )     —       —       ( 16,228 ) Distributions to common unitholders and the general partner     —       ( 40,082 )     ( 818 )     —       —       ( 40,900 ) Distributions to preferred unitholders     —       ( 7,924 )     ( 162 )     —       —       ( 8,086 ) Issuance of unit-based awards     129       —       —       —       —       —   Unit-based awards amortization and vesting, net     —       ( 1,178 )     —       —       —       ( 1,178 ) Capital contribution     —       —       142       —       —       142   Comprehensive loss from unconsolidated investment and other     —       —       —       —       ( 19,583 )     ( 19,583 ) Balance at March 31, 2023     12,635     $ 417,401     $ 6,400     $ 47,964     $ ( 866 )   $ 470,899             (1) Net income includes $6.7 million of income attributable to preferred unitholders that accumulated during the period, of which $6.5 million is allocated to the common unitholders and $0.1 million is allocated to the general partner.                                       Accumulated                                               Other     Total       Common Unitholders     General     Warrant     Comprehensive     Partners'   (In thousands)   Units     Amounts     Partner     Holders     Income     Capital   Balance at December 31, 2021     12,351     $ 203,062     $ 1,787     $ 47,964     $ 3,211     $ 256,024   Net income (1)     —       62,621       1,278       —       —       63,899   Distributions to common unitholders and the general partner     —       ( 5,559 )     ( 113 )     —       —       ( 5,672 ) Distributions to preferred unitholders     —       ( 7,603 )     ( 155 )     —       —       ( 7,758 ) Issuance of unit-based awards     155       —       —       —       —       —   Unit-based awards amortization and vesting, net     —       ( 1,754 )     —       —       —       ( 1,754 ) Capital contribution     —       —       112       —       —       112   Comprehensive income from unconsolidated investment and other     —       —       —       —       2,545       2,545   Balance at March 31, 2022     12,506     $ 250,767     $ 2,909     $ 47,964     $ 5,756     $ 307,396             (1) Net income includes $7.5 million of income attributable to preferred unitholders that accumulated during the period, of which $7.4 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.       The accompanying notes are an integral part of these consolidated financial statements.     3 Table of Contents     NATURAL RESOURCE PARTNERS L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)       For the Three Months Ended March 31,   (In thousands)   2023     2022   Cash flows from operating activities                 Net income   $ 79,275     $ 63,899   Adjustments to reconcile net income to net cash provided by operating activities:                 Depreciation, depletion and amortization     4,083       3,868   Distributions from unconsolidated investment     10,780       13,230   Equity earnings from unconsolidated investment     ( 19,254 )     ( 14,837 ) Gain on asset sales and disposals     ( 96 )     —   Asset impairments     —       19   Bad debt expense     ( 610 )     1,028   Unit-based compensation expense     2,491       1,448   Amortization of debt issuance costs and other     25       375   Change in operating assets and liabilities:                 Accounts receivable     7,061       ( 7,579 ) Accounts payable     ( 541 )     ( 60 ) Accrued liabilities     ( 8,805 )     ( 7,156 ) Accrued interest     263       7,250   Deferred revenue     ( 154 )     ( 7,316 ) Other items, net     ( 1,618 )     ( 1,838 ) Net cash provided by operating activities   $ 72,900     $ 52,331                     Cash flows from investing activities                 Proceeds from asset sales and disposals   $ 101     $ —   Return of long-term contract receivable     598       —   Capital expenditures     ( 2 )     —   Net cash provided by investing activities   $ 697     $ —                     Cash flows from financing activities                 Debt borrowings   $ 94,200     $ —   Debt repayments     ( 89,696 )     ( 16,697 ) Distributions to common unitholders and the general partner     ( 40,900 )     ( 5,672 ) Distributions to preferred unitholders     ( 7,500 )     ( 7,500 ) Redemption of preferred units     ( 48,085 )     —   Redemption of preferred units paid-in-kind     —       ( 19,579 ) Other items, net     ( 3,052 )     ( 2,813 ) Net cash used in financing activities   $ ( 95,033 )   $ ( 52,261 )                   Net increase (decrease) in cash and cash equivalents   $ ( 21,436 )   $ 70   Cash and cash equivalents at beginning of period     39,091       135,520   Cash and cash equivalents at end of period   $ 17,655     $ 135,590                     Supplemental cash flow information:                 Cash paid for interest   $ 2,474     $ 1,644       The accompanying notes are an integral part of these consolidated financial statements.     4 Table of Contents     NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)   1.      Basis of Presentation   Nature of Business   Natural Resource Partners L.P. (the "Partnership") engages 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 owns a non-controlling 49 % interest in Sisecam Wyoming LLC ("Sisecam Wyoming"), a trona ore mining and soda ash production business. The Partnership is organized into two operating segments further described in Note 6. Segment Information . The Partnership’s operations are conducted through, and its operating assets are owned by, its subsidiaries. The Partnership owns its subsidiaries through  one  wholly owned operating company, NRP (Operating) LLC ("Opco"). As used in these Notes to Consolidated Financial Statements, the terms "NRP," "we," "us" and "our" refer to Natural Resource Partners L.P. and its subsidiaries, unless otherwise stated or indicated by context.   Principles of Consolidation and Reporting   The accompanying unaudited Consolidated Financial Statements of the Partnership have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and with Rule 10 - 01 of Regulation S- X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2022 and notes thereto included in the Partnership's Annual Report on Form 10 -K, which was filed with the SEC on March 3, 2023.    Recently Adopted Accounting Standard   On January 1, 2023, NRP adopted Accounting Standards Update ("ASU")  2020 - 06, Debt – Debt with Conversion and Other Options (Subtopic 470 - 20 ) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 - 40 ) (“ASU 2020 - 06 )”. The ASU includes targeted improvements to earnings per share, which the Partnership adopted on a modified retrospective basis. The adoption of this ASU did not have a material impact on the Partnership’s Consolidated Financial Statements. See Note 5. Net Income Per Common Unit for the calculations of our basic and diluted net income per common unit. See Note 3. Class A Convertible Preferred Units and Warrants for disclosures related to our convertible preferred units and warrants.     5 Table of Contents NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (Unaudited)   2.      Revenues from Contracts with Customers   The following table presents the Partnership's Mineral Rights segment revenues by major source:       For the Three Months Ended March 31,   (In thousands)   2023     2022   Coal royalty revenues   $ 58,023     $ 55,449   Production lease minimum revenues     613       1,592   Minimum lease straight-line revenues     4,503       4,783   Carbon neutral initiative revenues     2,118       —   Property tax revenues     1,470       1,472   Wheelage revenues     3,869       3,717   Coal overriding royalty revenues     188       258   Lease amendment revenues     851       880   Aggregates royalty revenues     753       770   Oil and gas royalty revenues     3,588       1,814   Other revenues     295       348   Royalty and other mineral rights revenues   $ 76,271     $ 71,083   Transportation and processing services revenues (1)     3,598       3,796   Total Mineral Rights segment revenues   $ 79,869     $ 74,879             ( 1 ) Transportation and processing services revenues from contracts with customers as defined under ASC 606 was $ 2.9  million and $ 3.1  million for the three months ended March 31, 2023 and 2022 , respectively. The remaining transportation and processing services revenues of $ 0.7  million and $ 0.7  million for the three months ended March 31, 2023 and 2022 , respectively, related to other NRP-owned infrastructure leased to and operated by third -party operators accounted for under other guidance. See Note 15. Financing Transaction   for more information.   The following table details the Partnership's Mineral Rights segment receivables and liabilities resulting from contracts with customers:       March 31,     December 31,   (In thousands)   2023     2022   Receivables                 Accounts receivable, net   $ 32,706     $ 39,004   Other current assets, net (1)     1,947       —   Other long-term assets, net (2)     75       75                     Contract liabilities                 Current portion of deferred revenue   $ 7,450     $ 6,256   Deferred revenue     38,833       40,181             ( 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.   The following table shows the activity related to the Partnership's Mineral Rights segment deferred revenue:        For the Three Months Ended March 31,   (In thousands)   2023     2022   Balance at beginning of period (current and non-current)   $ 46,437     $ 61,862   Increase due to minimums and lease amendment fees     7,770       5,059   Recognition of previously deferred revenue     ( 7,924 )     ( 12,375 ) Balance at end of period (current and non-current)   $ 46,283     $ 54,546     The Partnership's non-cancelable annual minimum payments due under the lease terms of its coal and aggregates royalty leases are as follows as of  March 31, 2023 (in thousands):    Lease Term (1) Weighted Average Remaining Years Annual Minimum Payments 0 - 5 years 1.9 $ 21,939 5 - 10 years 3.3   7,547 10+ years 12.3   27,121 Total 7.1 $ 56,607           ( 1 ) Lease term does not include renewal periods.     6 Table of Contents NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (Unaudited)   3.       Class A Convertible Preferred Units and Warrants   On March 2, 2017, NRP issued $ 250 million of Class A Convertible Preferred Units representing limited partner interests in NRP (the "preferred units") to certain entities controlled by funds affiliated with The Blackstone Group Inc. (collectively referred to as "Blackstone") and certain affiliates of GoldenTree Asset Management LP (collectively referred to as "GoldenTree") (together the "preferred purchasers") pursuant to a Preferred Unit and Warrant Purchase Agreement. NRP issued 250,000 preferred units to the preferred purchasers at a price of $ 1,000 per preferred unit (the "per unit purchase price"), less a 2.5 % structuring and origination fee. The preferred units entitle the preferred purchasers to receive cumulative distributions at a rate of 12 % of the purchase price per year, up to one half of which NRP may pay in additional preferred units (such additional preferred units, the "PIK units"). The preferred units have a perpetual term, unless converted or redeemed as described below.   NRP also issued two tranches of warrants (the "warrants") to purchase common units to the preferred purchasers (warrants to purchase 1.75 million common units with a strike price of $ 22.81 and warrants to purchase 2.25 million common units with a strike price of $ 34.00 ). The warrants may be exercised by the holders thereof at any time before the eighth anniversary of the closing date. Upon exercise of the warrants, NRP may, at its option, elect to settle the warrants in common units or cash, each on a net basis.   After March 2, 2022 and prior to March 2, 2025, the holders of the preferred units may elect to convert up to 33 % of the outstanding preferred units in any 12 -month period into common units if the volume weighted average trading price of our common units (the "VWAP") for the 30 trading days immediately prior to date notice is provided is greater than $ 51.00 . In such case, the number of common units to be issued upon conversion would be equal to the per unit purchase price plus the value of any accrued and unpaid distributions divided by an amount equal to a 7.5 % discount to the VWAP for the 30 trading days immediately prior to the notice of conversion. 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.   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. The “liquidation value” will be an amount equal to the greater of: ( 1 ) (a) the per unit purchase price multiplied by (i) prior to March 2, 2020, 1.50 , (ii) on or after March 2, 2020 and prior to March 2, 2021, 1.70 and (iii) on or after March 2, 2021, 1.85 , less (b)(i) all preferred unit distributions previously made by NRP and (ii) all cash payments previously made in respect of redemption of any PIK units; and ( 2 ) the per unit purchase price plus the value of all accrued and unpaid distributions.   To the extent the holders of the preferred units have not elected to convert their preferred units before March 2, 2029, NRP has the right to force conversion of the preferred units at a price 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.   In addition, NRP has the ability to redeem at any time (subject to compliance with its debt agreements) all or any portion of the preferred units and any outstanding PIK units for cash. The redemption price for each outstanding PIK unit is $ 1,000 plus the value of any accrued and unpaid distributions per PIK unit. The redemption price for each preferred unit is the liquidation value divided by the number of outstanding preferred units. The preferred units are redeemable at the option of the preferred purchasers only upon a change in control.   The terms of the preferred units contain certain restrictions on NRP's ability to pay distributions on its common units. To the extent that either (i) NRP's consolidated Leverage Ratio, as defined in the Partnership's Fifth Amended and Restated Partnership Agreement dated March 2, 2017 ( the "restated partnership agreement"), is greater than 3.25x, or (ii) the ratio of NRP's Distributable Cash Flow (as defined in the Restated Partnership Agreement) to cash distributions made or proposed to be made is less than 1.2x (in each case, with respect to the most recently completed four -quarter period), NRP may not increase the quarterly distribution above $ 0.45 per quarter without the approval of the holders of a majority of the outstanding preferred units. 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.   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. In addition, Blackstone has certain approval rights over certain matters as identified in the restated partnership agreement. GoldenTree also has more limited approval rights that will expand once Blackstone's ownership goes below the minimum preferred unit threshold (as defined below). These approval rights are not transferrable without NRP's consent. In addition, the approval rights held by Blackstone and GoldenTree will terminate at such time that Blackstone (together with their affiliates) or GoldenTree (together with their affiliates), as applicable, no longer own at least 20 % of the total number of preferred units issued on the closing date, together with all PIK units that have been issued but not redeemed (the "minimum preferred unit threshold").   At the closing, pursuant to the Board Representation and Observation Rights Agreement, the Preferred Purchasers received certain board appointment and observation rights, and Blackstone appointed one director and one observer to the Board of Directors.   NRP also entered into a registration rights agreement (the "preferred unit and warrant registration rights agreement") with the preferred purchasers, pursuant to which NRP is required to file (i) a shelf registration statement to register the common units issuable upon exercise of the warrants and to cause such registration statement to become effective not later than 90 days following the closing date and (ii) a shelf registration statement to register the common units issuable upon conversion of the preferred units and to cause such registration statement to become effective not later than the earlier of the fifth anniversary of the closing date or 90 days following the first issuance of any common units upon conversion of preferred units (the "registration deadlines"). In addition, the preferred unit and warrant registration rights agreement gives the preferred purchasers piggyback registration and demand underwritten offering rights under certain circumstances. The shelf registration statement to register the common units issuable upon exercise of the warrants became effective on April 20, 2017. 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.     7 Table of Contents NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (Unaudited)   Accounting for the Preferred Units and Warrants   Classification   The preferred units are accounted for as temporary equity on NRP's Consolidated Balance Sheets due to certain contingent redemption rights that may be exercised at the election of preferred purchasers. The warrants are accounted for as equity on NRP's Consolidated Balance Sheets.   Initial Measurement   The net transaction price was allocated to the preferred units and warrants based on their relative fair values at inception date. 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.   Subsequent Measurement   Preferred Units   Subsequent adjustment of the preferred units will not occur until NRP has determined that the conversion or redemption of all or a portion of the preferred units is probable of occurring. Once conversion or redemption becomes probable of occurring, the carrying amount of the preferred units will be accreted to their redemption value over the period from the date the feature is probable of occurring to the date the preferred units can first be converted or redeemed.    In  February 2023, the Partnership received a notice from holders of the Class A Preferred Units exercising their right to either convert or redeem, at the election of NRP, an aggregate of 47,499 Class A Preferred Units. The Partnership chose to redeem the preferred units for $ 47.5 million in cash rather than issuing common units. Of the originally issued 250,000 Class A Preferred Units, 202,501 Class A Preferred Units remain outstanding as of March 31, 2023.   Activity related to the preferred units is as follows:       Units     Financial   (In thousands, except unit data)   Outstanding     Position   Balance at December 31, 2021     269,321     $ 183,908   Redemption of preferred units paid-in-kind     ( 19,321 )     ( 19,321 ) Balance at December 31, 2022     250,000     $ 164,587   Redemption of preferred units     ( 47,499 )     ( 31,271 ) Balance at March 31, 2023     202,501     $ 133,316     Warrants   As of March 31, 2023  and December 31, 2022 there were 3.0 million warrants outstanding, which included warrants to purchase 0.75  million common units at a strike price of $ 22.81 and warrants to purchase 2.25  million common units with a strike price of $ 34.00 . These warrants had a $ 48.0 million carrying value included in warrant holders' interest within partners' capital on the Partnership's Consolidated Balance Sheets at March 31, 2023 and December 31, 2022.  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. The net basis will be equal to the difference between the Partnership's common unit price and the strike price of the warrant. Once warrant exercise occurs, the difference between the carrying amount of the warrants and the net settlement amount will be allocated on a pro-rata basis to the common unitholders and general partner.   Embedded Features   Certain embedded features within the preferred unit and warrant purchase agreement are accounted for at fair value and are remeasured each quarter. See Note 10.   Fair Value Measurements  for further information regarding valuation of these embedded derivatives.     8 Table of Contents NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (Unaudited)   4.      Common and Preferred Unit Distributions   The Partnership makes cash distributions to common and preferred unitholders on a quarterly basis, subject to approval by the Board of Directors of GP Natural Resource Partners LLC (the "Board of Directors"). NRP recognizes both common unit and preferred unit distributions on the date the distribution is declared.   Distributions made on the common units and the general partner's general partner ("GP") interest are made on a pro-rata basis in accordance with their relative percentage interests in the Partnership. The general partner is entitled to receive 2 % of such distributions.   Income available to common unitholders and the general partner is reduced by preferred unit distributions that accumulated during the period. NRP reduced net income available to common unitholders and the general partner by $ 6.7  million and $ 7.5  million during the three months ended March 31, 2023 and 2022 , respectively, as a result of accumulated preferred unit distributions earned during the period. Of the $ 6.7 million in accumulated preferred unit distributions earned during March 31, 2023, $ 0.6 million was paid in February 2023 in connection with the preferred units that were redeemed. Income available to common unitholders and the general partner is also reduced by the difference between the fair value of the consideration paid upon redemption and the carrying value of the preferred units. As such, NRP reduced net income available to common unitholders and the general partner by $ 16.2 million during the three months ended March 31, 2023.    The following table shows the cash distributions declared and paid to common and preferred unitholders during the three months ended March 31, 2023 and 2022 , respectively:                                                 Common Units     Preferred Units                   Total Distribution (1)             Total Distribution   Month Paid   Period Covered by Distribution   Distribution per Unit     (In thousands)     Distribution per Unit     (In thousands)   2023                                     February 2023   October 1 - December 31, 2022   $ 0.75     $ 9,571     $ 30.00     $ 7,500   February 2023 (2)   January 1 - February 8, 2023     —       —       12.33       586   March 2023 (3)   Special Distribution     2.43       31,329       —       —                                         2022                                     February 2022   October 1 - December 31, 2021   $ 0.45     $ 5,672     $ 30.00     $ 7,500             ( 1 ) Totals include the amount paid to NRP's general partner in accordance with the general partner's 2% general partner interest. ( 2 ) Relates to accrued distribution paid upon the redemption of 47,499 preferred units in February 2023. ( 3 ) Special distribution was made to help cover unitholder tax liabilities associated with owning NRP's common units during 2022.     9 Table of Contents NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (Unaudited)   5.      Net Income Per Common Unit   Basic net income per common unit is computed by dividing net income, after considering income attributable to preferred unitholders, the difference between the fair value of the consideration paid upon redemption and the carrying value of the preferred units and the general partner’s general partner interest, by the weighted average number of common units outstanding. Diluted net income per common unit includes the effect of NRP's preferred units, warrants, and unvested unit-based awards if the inclusion of these items is dilutive.   The dilutive effect of the preferred units is calculated using the if-converted method. 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 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 income per common unit for the  three months ended March 31, 2023  includes the assumed conversion of the remaining preferred units while it does not include the assumed conversion of the preferred units that were redeemed during the first quarter of 2023 as the inclusion of these units would be anti-dilutive. The calculation of diluted net income per common unit for the  three months ended March 31, 2022  includes 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. The calculation of diluted net income per common unit for the three months ended March 31, 2023  and 2022 includes the net settlement of warrants to purchase 0.75  million common units at a strike price of $ 22.81 and the net settlement of warrants to purchase 2.25  million common units with a strike price of $ 34.00 .   The following table reconciles the numerator and denominator of the basic and diluted net income per common unit computations and calculates basic and diluted net income per common unit:       For the Three Months Ended March 31,   (In thousands, except per unit data)   2023     2022   Basic net income per common unit                 Net income attributable to common unitholders   $ 55,258     $ 55,271   Weighted average common units—basic     12,570       12,415   Basic net income per common unit   $ 4.40     $ 4.45                     Diluted net income per common unit                 Weighted average common units—basic     12,570       12,415   Plus: dilutive effect of preferred units     3,778       6,974   Plus: dilutive effect of warrants     1,255       531   Plus: dilutive effect of unvested unit-based awards     209       240   Weighted average common units—diluted     17,812       20,160                     Net income   $ 79,275     $ 63,899   Less: income attributable to preferred unitholders     ( 586 )     —   Less: redemption of preferred units     ( 16,228 )     —   Diluted net income attributable to common unitholders and the general partner   $ 62,461     $ 63,899   Less: diluted net income attributable to the general partner     ( 1,249 )     ( 1,278 ) Diluted net income attributable to common unitholders   $ 61,212     $ 62,621                     Diluted net income per common unit   $ 3.44     $ 3.11       10 Table of Contents NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (Unaudited)   6.      Segment Information   The Partnership's segments are strategic business units that offer distinct products and services to different customers in different geographies within the U.S. and that are managed accordingly. NRP has the following two operating segments:   Mineral Rights —consists of mineral interests and other subsurface rights across the United States. NRP's ownership provides critical inputs for the manufacturing of steel, electricity and basic building materials, as well as opportunities for carbon sequestration and renewable energy. The Partnership is working to strategically redefine its business as a key player in the transitional energy economy in the years to come.   Soda Ash —consists of the Partnership's  49 % non-controlling equity interest in Sisecam Wyoming, a trona ore mining operation and soda ash refinery in the Green River Basin of Wyoming. Sisecam Wyoming mines trona and processes it into soda ash that is sold both domestically and internationally to 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. These allocated costs generally include salaries and benefits, insurance, property taxes, legal, royalty, information technology and shared facilities services and are included in operating and maintenance expenses on the Partnership's Consolidated Statements of Comprehensive Income.   Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment and are included in general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income.   The following table summarizes certain financial information for each of the Partnership's business segments:       Operating Segments                   (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   For the Three Months Ended March 31, 2023                                 Revenues   $ 79,869     $ 19,254     $ —     $ 99,123   Gain on asset sales and disposals     96       —       —       96   Operating and maintenance expenses     7,005       158       —       7,163   Depreciation, depletion and amortization     4,079       —       4       4,083   General and administrative expenses     —       —       5,845       5,845   Asset impairments     —       —       —       —   Interest expense, net     —       —       2,853       2,853   Net income (loss)     68,881       19,096       ( 8,702 )     79,275                                     For the Three Months Ended March 31, 2022                                 Revenues   $ 74,879     $ 14,837     $ —     $ 89,716   Operating and maintenance expenses     8,025       51       —       8,076   Depreciation, depletion and amortization     3,868       —       —       3,868   General and administrative expenses     —       —       4,467       4,467   Asset impairments     19       —       —       19   Interest expense, net     —       —       9,387       9,387   Net income (loss)     62,967       14,786       ( 13,854 )     63,899       11 Table of Contents NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (Unaudited)   7.      Equity Investment    The Partnership accounts for its 49 % investment in Sisecam Wyoming using the equity method of accounting. Activity related to this investment is as follows:        For the Three Months Ended March 31,   (In thousands)   2023     2022   Balance at beginning of period   $ 306,470     $ 276,004   Income allocation to NRP’s equity interests (1)     20,364       16,065   Amortization of basis difference     ( 1,110 )     ( 1,228 ) Other comprehensive income (loss)     ( 19,583 )     2,545   Distribution     ( 10,780 )     ( 13,230 ) Balance at end of period   $ 295,361     $ 280,156             ( 1 ) Amounts reclassified into income out of accumulated other comprehensive loss were $ 20.6 million and $ 1.7 million for the  three months ended March 31, 2023 and 2022 , respectively.   The following table represents summarized financial information for Sisecam Wyoming as derived from their respective unaudited financial statements for the three months ended March 31, 2023 and 2022 :       For the Three Months Ended March 31,   (In thousands)   2023     2022   Net sales   $ 207,128     $ 163,437   Gross profit     49,055       39,765   Net income     41,560       32,786       8.      Mineral Rights, Net   The Partnership’s mineral rights consist of the following:       March 31, 2023     December 31, 2022   (In thousands)   Carrying Value     Accumulated Depletion     Net Book Value     Carrying Value     Accumulated Depletion     Net Book Value   Coal properties   $ 661,812     $ ( 272,743 )   $ 389,069     $ 661,812     $ ( 269,037 )   $ 392,775   Aggregates properties     8,655       ( 3,520 )     5,135       8,655       ( 3,410 )     5,245   Oil and gas royalty properties     12,354       ( 9,720 )     2,634       12,354       ( 9,600 )     2,754   Other     13,145       ( 1,612 )     11,533       13,150       ( 1,612 )     11,538   Total mineral rights, net   $ 695,966     $ ( 287,595 )   $ 408,371     $ 695,971     $ ( 283,659 )   $ 412,312     Depletion expense related to the Partnership’s mineral rights is included in depreciation, depletion and amortization on its Consolidated Statements of Comprehensive Income and totaled $ 3.9  million and $ 3.7  million for the three months ended March 31, 2023 and 2022, respectively.   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. 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. This analysis is based on historic, current and future performance and considers both quantitative and qualitative information. As a result of the analysis, the Partnership did not have any asset impairments during the three months ended March 31, 2023 and recorded an immaterial impairment expense during the three months ended March 31, 2022.     12 Table of Contents NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (Unaudited)   9.      Debt, Net   The Partnership's debt consists of the following:       March 31,     December 31,   (In thousands)   2023     2022   Opco credit facility   $ 91,200     $ 70,000   Opco Senior Notes                 5.55 % with semi-annual interest payments in June and December, with annual principal payments in June, due June 2023   $ 2,366     $ 2,366   4.73 % with semi-annual interest payments in June and December, with annual principal payments in December, due December 2023     6,004       6,004   5.82 % with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024     12,684       25,368   8.92 % with semi-annual interest payments in March and September, with annual principal payments in March, due March 2024     4,011       8,023   5.03 % with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026     45,683       45,683   5.18 % with semi-annual interest payments in June and December, with annual principal payments in December, due December 2026     11,643       11,643   Total Opco Senior Notes   $ 82,391     $ 99,087   Total debt at face value   $ 173,591     $ 169,087   Net unamortized debt issuance costs     ( 715 )     ( 806 ) Total debt, net   $ 172,876     $ 168,281   Less: current portion of long-term debt     ( 39,055 )     ( 39,076 ) Total long-term debt, net   $ 133,821     $ 129,205     Opco Debt   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 BRP LLC and NRP Trona LLC. As of March 31, 2023 and December 31, 2022 , Opco was in compliance with the terms of the financial covenants contained in its debt agreements.   Opco Credit Facility   In August 2022, the Partnership entered into the Fifth Amendment (the "Fifth Amendment) to the Opco Credit Facility (the "Opco Credit Facility"). The Fifth Amendment extended the term of the Opco Credit Facility until August 2027. Lender commitments under the Opco Credit Facility increased to $ 130.0 million. The Opco Credit Facility contains financial covenants requiring Opco to maintain:   • A leverage ratio of consolidated indebtedness to EBITDDA (in each case as defined in the Opco Credit Facility) not to exceed 3.0x; provided, and   • an interest coverage ratio of consolidated EBITDDA to the sum of consolidated interest expense and consolidated lease expense (in each case as defined in the Opco Credit Facility) of not less than 3.5 to 1.0.   As of December 31, 2022, the Partnership had $ 70.0 million in borrowings outstanding under the Opco Credit Facility. During the three months ended March 31, 2023, the Partnership borrowed $ 94.2 million and repaid $ 73.0 million, resulting in $ 91.2  million in borrowings outstanding under the Opco Credit Facility as of March 31, 2023. The weighted average interest rate for the borrowings outstanding under the Opco Credit Facility for the three months ended March 31, 2023 was 8.14 %. During the three months ended March 31, 2022, the Partnership did not have any borrowings outstanding under the Opco Credit Facility. The Partnership had $ 38.8  million and $ 60.0 million of available borrowing capacity as of March 31, 2023 and December 31, 2022, respectively.   The Opco Credit Facility is collateralized and secured by liens on certain of Opco’s assets with carrying values of $ 323.0  million and $ 326.4 million classified as mineral rights, net and other long-term assets, net on the Partnership’s Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 , respectively.   Opco Senior Notes       Opco has issued several series of private placement senior notes (the "Opco Senior Notes") with various interest rates and principal due dates. As of March 31, 2023 and December 31, 2022 , the Opco Senior Notes had cumulative principal balances of $ 82.4  million and $ 99.1 million, respectively. Opco made mandatory principal payments of $ 16.7  million during the three months ended March 31, 2023 and 2022 .   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 March 31, 2023 .     13 Table of Contents NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (Unaudited)   10.      Fair Value Measurements   Fair Value of Financial Assets and Liabilities   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.   The following table shows the carrying value and estimated fair value of the Partnership's debt and contract receivable:               March 31, 2023     December 31, 2022       Fair Value     Carrying     Estimated     Carrying     Estimated   (In thousands)   Hierarchy Level     Value     Fair Value     Value     Fair Value   Debt:                                         Opco Senior Notes (1)     3     $ 81,676     $ 77,587     $ 98,281     $ 96,060   Opco Credit Facility (2)     3       91,200       91,200       70,000       70,000                                             Assets:                                         Contract receivable, net (current and long-term) (3)     3     $ 30,783     $ 25,615     $ 31,371     $ 24,833             ( 1 ) The fair value of the Opco Senior Notes at March 31, 2023 and December 31, 2022 were estimated by management utilizing the present value replacement method incorporating the interest rate of the Opco Credit facility at March 31, 2023 and December 31, 2022, respectively. ( 2 ) The fair value of the Opco Credit Facility approximates the outstanding borrowing amount because the interest rates are variable and reflective of market rates and the terms of the credit facility allow the Partnership to repay the debt at any time without penalty. ( 3 ) 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 March 31, 2023 and December 31, 2022 .   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. Level 3 valuation of the embedded derivatives are based on numerous factors including the likelihood of the event occurring. The embedded derivatives are revalued quarterly and changes in their fair value would be recorded in other expenses, net on the Partnership's Consolidated Statements of Comprehensive Income. The embedded derivatives had zero value as of March 31, 2023 and December 31, 2022 .     11.      Related Party Transactions   Affiliates of our General Partner   The Partnership’s general partner does not receive any management fee or other compensation for its management of NRP. However, in accordance with the partnership agreement, the general partner and its affiliates are reimbursed for services provided to the Partnership and for expenses incurred on the Partnership’s behalf. Employees of Quintana Minerals Corporation ("QMC") and Western Pocahontas Properties Limited Partnership ("WPPLP"), affiliates of the Partnership, provide their services to manage the Partnership's business. QMC and WPPLP charge the Partnership the portion of their employee salary and benefits costs related to their employee services provided to NRP. These QMC and WPPLP employee management service costs are presented as operating and maintenance expenses and general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income. NRP also reimburses overhead costs incurred by its affiliates, including Quintana Infrastructure Development ("QID"), to manage the Partnership's business. These overhead costs include certain rent, information technology, administration of employee benefits and other corporate services incurred by or on behalf of the Partnership’s general partner and its affiliates and are presented as operating and maintenance expenses and general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income.   Direct general and administrative expenses charged to the Partnership by QMC, WPPLP and QID are included on the Partnership's Consolidated Statement of Comprehensive Income as follows:       For the Three Months Ended March 31,   (In thousands)   2023     2022   Operating and maintenance expenses   $ 1,719     $ 1,659   General and administrative expenses     1,320       1,240     The Partnership had accounts payable to QMC of $ 0.4  million on its Consolidated Balance Sheets at  March 31, 2023 and December 31, 2022 , and $ 0.8  million and $ 1.0 million of accounts payable to WPPLP at March 31, 2023 and December 31, 2022 , respectively.   During the three months ended March 31, 2023 and 2022 , the Partnership recognized $ 2.0  million and $ 1.6  million, respectively, in operating and maintenance expenses on its Consolidated Statements of Comprehensive Income related to an overriding royalty agreement with WPPLP.   Corbin J. Robertson, Jr. owns 85 % of the general partner of Great Northern Properties Limited Partnership ("GNP"), a privately held company primarily engaged in owning and managing mineral properties and surface leases. At both March 31, 2023 and December 31, 2022 the Partnership had $ 0.03 million of accounts receivable from GNP included in accounts receivable, net on its Consolidated Balance Sheets related to amounts collected for surface leases that belong to NRP.     14 Table of Contents NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (Unaudited)   12.      Major Customers   Revenues from customers that exceeded 10 percent of total revenues for any of the periods presented below are as follows:       For the Three Months Ended March 31,       2023     2022   (In thousands)   Revenues     Percent     Revenues     Percent   Alpha Metallurgical Resources, Inc. (1)   $ 24,218       24 %   $ 27,743       31 % Foresight Energy Resources LLC ("Foresight") (1)   $ 12,529       13 %   $ 11,250       13 %           ( 1 ) Revenues from Alpha Metallurgical Resources, Inc. and Foresight are included within the Partnership's Mineral Rights segment.     13.      Commitments and Contingencies   NRP is involved, from time to time, in various legal proceedings arising in the ordinary course of business. 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.     14.      Unit-Based Compensation   During the three months ended March 31, 2023, the Partnership granted service, performance and market-based awards under its  2017  Long-Term Incentive Plan and during the three months ended March 31, 2022, the Partnership granted service-based awards. The Partnership's service and performance-based awards are valued using the closing price of NRP's common units as of the grant date while the Partnership's market-based awards are valued using a Monte Carlo simulation. The grant date fair value of these awards granted during the three months ended March 31, 2023 and 2022 was $ 15.9 million and $ 7.9 million, respectively. Total unit-based compensation expense associated with these awards was $ 2.5  million and $ 1.4 million for the three months ended March 31, 2023 and 2022, respectively, and is included in general and administrative expenses and operating and maintenance expenses on the Partnership's Consolidated Statements of Comprehensive Income. The unamortized cost associated with unvested outstanding awards as of March 31, 2023 is $ 20.2  million, which is to be recognized over a weighted average period of 2.5  years. The unamortized cost associated with unvested outstanding awards as of  December 31, 2022 was $ 6.3 million.   A summary of the unit activity in the outstanding grants during  2023 is as follows:   (In thousands)   Common Units     Weighted Average Grant Date Fair Value per Common Unit   Outstanding at January 1, 2023     386     $ 28.96   Granted     278     $ 56.94   Fully vested and issued     ( 184 )   $ 26.30   Outstanding at March 31, 2023     480     $ 46.20       15 Table of Contents NATURAL RESOURCE PARTNERS L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (Unaudited)   15.      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. 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 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.     16.      Credit Losses   The Partnership is exposed to credit losses through collection of its short-term 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, 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 March 31, 2023 and December 31, 2022 , NRP had the following current expected credit loss (“CECL”) allowance related to its receivables and long-term contract receivable:       March 31, 2023     December 31, 2022   (In thousands)   Gross     CECL Allowance     Net     Gross     CECL Allowance     Net   Receivables   $ 42,410     $ ( 3,874 )   $ 38,536     $ 47,237     $ ( 4,461 )   $ 42,776   Long-term contract receivable     29,325       ( 1,016 )     28,309       29,984       ( 1,038 )     28,946   Total   $ 71,735     $ ( 4,890 )   $ 66,845     $ 77,221     $ ( 5,499 )   $ 71,722     NRP recorded ($ 0.6  million) and $ 1.0 million in operating and maintenance expenses on its Consolidated Statements of Comprehensive Income related to the change in the CECL allowance during the three months ended March 31, 2023 and 2022, respectively.   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 reconciliation, bankruptcy monitoring, lessee audits and dispute resolution. The Partnership may employ legal counsel or collection specialists to pursue recovery of defaulted receivables.     17.      Subsequent Events   The following represents material events that have occurred subsequent to March 31, 2023 through the time of the Partnership’s filing of its Quarterly Report on Form 10 -Q with the SEC:   Common Unit and Preferred Unit Distributions   In May 2023, the Board of Directors declared a distribution of $ 0.75 per common unit with respect to the  first quarter of 2023 . The Board of Directors also declared a $ 6.1 million cash distribution on NRP's outstanding preferred units with respect to the first quarter of 2023 .     16 Table of Contents     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   The following review of operations for the three month periods ended March 31, 2023 and 2022 should be read in conjunction with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements included in this Form 10-Q and with the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Management’s Discussion and Analysis included in the Natural Resource Partners L.P. Annual Report on Form 10-K for the year ended December 31, 2022.   As used herein, unless the context otherwise requires: "we," "our," "us" and the "Partnership" refer to Natural Resource Partners L.P. and, where the context requires, our subsidiaries. References to "NRP" and "Natural Resource Partners" refer to Natural Resource Partners L.P. only, and not to NRP (Operating) LLC or any of Natural Resource Partners L.P.’s subsidiaries. References to "Opco" refer to NRP (Operating) LLC, a wholly owned subsidiary of NRP, and its subsidiaries. NRP Finance Corporation ("NRP Finance") is a wholly owned subsidiary of NRP and was a co-issuer with NRP on the 9.125% senior notes due 2025 (the "2025 Senior Notes").   INFORMATION REGARDING FORWARD-LOOKING STATEMENTS   Statements included in this 10-Q may constitute forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such forward-looking statements include, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on our common and preferred units; our business strategy; our liquidity and access to capital and financing sources; our financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected future performance by our lessees; Sisecam Wyoming LLC’s ("Sisecam Wyoming's") trona mining and soda ash refinery operations; distributions from our soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving us, and of scheduled or potential regulatory or legal changes; and global and U.S. economic conditions.   These forward-looking statements speak only as of the date hereof and are made based upon our current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. You should not put undue reliance on any forward-looking statements. See " Item 1A. Risk Factors " included in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022 for important factors that could cause our actual results of operations or our actual financial condition to differ.   NON-GAAP FINANCIAL MEASURES   Adjusted EBITDA   Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) less equity earnings from unconsolidated investment; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income or loss, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. For a description of Opco's debt agreements, see Note 9. Debt, Net in the Notes to Consolidated Financial Statements included herein as well as in "Item 8. Financial Statements and Supplementary Data—Note 11. Debt, Net" in our Annual Report on Form 10-K for the year ended December 31, 2022. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.   Distributable Cash Flow   Distributable cash flow ("DCF") represents net cash provided by (used in) operating activities plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from asset sales and disposals, including sales of discontinued operations, and return of long-term contract receivable; less maintenance capital expenditures. DCF 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. DCF may not be calculated the same for us as for other companies. In addition, DCF presented below is not calculated or presented on the same basis as distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. DCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.   Free Cash Flow   Free cash flow ("FCF") represents net cash provided by (used in) operating activities plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivable; less maintenance and expansion capital expenditures and cash flow used in acquisition costs classified as investing or financing activities. FCF is calculated before mandatory debt repayments. FCF 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. FCF may not be calculated the same for us as for other companies. FCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.   Leverage Ratio   Leverage ratio represents the outstanding principal of our debt at the end of the period divided by the last twelve months' Adjusted EBITDA as defined above. We believe that leverage ratio is a useful measure to management and investors to evaluate and monitor our indebtedness relative to our ability to generate income to service such debt and in understanding trends in our overall financial condition. Leverage ratio may not be calculated the same for us as for other companies and is not a substitute for, and should not be used in conjunction with, GAAP financial ratios.      17 Table of Contents   Introduction   The following discussion and analysis presents management's view of our business, financial condition and overall performance. Our discussion and analysis consists of the following subjects: •    Executive Overview •    Results of Operations •    Liquidity and Capital Resources •    Off-Balance Sheet Transactions •    Related Party Transactions •    Summary of Critical Accounting Estimates •    Recent Accounting Standards   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 Sisecam 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:   Mineral Rights —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 the 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. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment.   Our financial results by segment for the three months ended March 31, 2023 are as follows:       Operating Segments                   (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   Revenues and other income   $ 79,965     $ 19,254     $ —     $ 99,219   Net income (loss)   $ 68,881     $ 19,096     $ (8,702 )   $ 79,275   Adjusted EBITDA (1)   $ 72,960     $ 10,622     $ (5,845 )   $ 77,737                                     Cash flow provided by (used in) continuing operations                                 Operating activities   $ 73,858     $ 10,617     $ (11,575 )   $ 72,900   Investing activities   $ 699     $ —     $ (2 )   $ 697   Financing activities   $ (583 )   $ —     $ (94,450 )   $ (95,033 ) Distributable cash flow (1)   $ 74,557     $ 10,617     $ (11,577 )   $ 73,597   Free cash flow (1)   $ 74,456     $ 10,617     $ (11,577 )   $ 73,496             (1) See "—Results of Operations" below for reconciliations to the most comparable GAAP financial measures.   Current Results/Market Commentary   Financial Results and Quarterly Distributions   We generated $72.9 million of operating cash flow and $73.5 million of free cash flow during the three months ended March 31, 2023, and ended the quarter with $56.5 million of liquidity consisting of $17.7 million of cash and cash equivalents and $38.8 million of borrowing capacity under our Opco Credit Facility. As of March 31, 2023 our leverage ratio was 0.5 x.   In February 2023, we declared and paid a cash distribution of $0.75 per common unit of NRP with respect to the fourth quarter of 2022 as well as a $7.5 million cash distribution on the preferred units with respect to the fourth quarter of 2022. In March 2023, we declared and paid a special cash distribution of $2.43 per common unit to help cover unitholder tax liabilities associated with owning NRP's common units during 2022. 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.    In February 2023, we received a notice from holders of our Class A Preferred Units exercising their right to either convert or redeem, at the election of NRP, an aggregate of 47,499 Class A Preferred Units. We chose to redeem the preferred units for $47.5 million in cash rather than issuing common units. Of the originally issued 250,000 Class A Preferred Units, 202,501 Class A Preferred Units remain outstanding.     18 Table of Contents   Mineral Rights Business Segment   Revenues and other income in the first quarter of 2023 increased $5.1 million, or 7%, as compared to the prior year period primarily due to increased metallurgical coal sales volumes and revenue from carbon neutral initiatives. Cash provided by operating activities and free cash flow increased $25.7 million and $26.3 million, respectively, compared to the prior year quarter primarily due to the timing of minimum and royalty payments and prior year recoupments.     Metallurgical coal prices remain strong relative to historical norms, although pricing has declined from the record highs seen in 2022. Continued support for pricing is expected as operators are limited in their ability to increase production due to ongoing labor shortages, transportation and logistics challenges, difficulty of new mine permitting, and limited access to capital. While metallurgical prices have pulled back from the peaks reached last year, we continue to believe met prices will remain well-supported for the foreseeable future.    Thermal coal prices also reached record highs in 2022, but have declined significantly in recent months due to unusually warm weather in Europe and North America as well as lower natural gas prices. While we do not expect to see thermal prices rebound to last year’s levels, many of the factors that provided support to prices over the last year still exist. Boycotts of Russian coal continue to force European buyers to source coal from other regions, including the U.S. Operators will continue to be burdened by labor shortages, pressure from governments, regulators, activists, and capital providers, which will limit ability to increase thermal production to meet demand. China appears to be relaxing its three-year ban on Australian coal imports with the recent approvals for several Chinese companies to buy Australian coal. Additional demand from a Chinese economy emerging from a zero-COVID policy should provide additional support for prices. We expect these factors to keep thermal prices elevated relative to historical levels for the foreseeable future.    We continue to explore and identify carbon neutral revenue opportunities across our large portfolio of land, mineral, and timber assets, including the sequestration of carbon dioxide underground and in standing forests, and the generation of electricity using geothermal, solar, and wind energy. In the first quarter of 2023, we executed a new solar lease.    Soda Ash Business Segment   Revenues and other income in the first quarter of 2023 increased $4.4 million, or 30%, as compared to the prior year period primarily due to increased sales prices. Cash provided by operating activities and free cash flow in the first quarter of 2023 decreased $2.6 million as compared to the prior year period as Sisecam Wyoming paid a higher regular quarterly distribution in the first quarter of 2022 as compared to the first quarter of 2023.    International prices remained strong in the first quarter of 2023 reflecting a continued supply constrained market for soda ash. Domestic soda ash prices were also strong during the first quarter of 2023 versus the prior year quarter due to negotiated 2023 domestic prices converging to international soda ash prices.   Results of Operations   First Quarter of 2023 and 2022 Compared   Revenues and Other Income   The following table includes our revenues and other income by operating segment:       For the Three Months Ended March 31,             Percentage   Operating Segment (In thousands)   2023     2022     Increase     Change   Mineral Rights   $ 79,965     $ 74,879     $ 5,086       7 % Soda Ash     19,254       14,837       4,417       30 % Total   $ 99,219     $ 89,716     $ 9,503       11 %   The changes in revenues and other income are discussed for each of the operating segments below:     19 Table of Contents   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:       For the Three Months Ended March 31,     Increase     Percentage   (In thousands, except per ton data)   2023     2022     (Decrease)     Change   Coal sales volumes (tons)                                 Appalachia                                 Northern     379       428       (49 )     (11 )% Central     3,609       3,251       358       11 % Southern     582       361       221       61 % Total Appalachia     4,570       4,040       530       13 % Illinois Basin     1,310       1,502       (192 )     (13 )% Northern Powder River Basin     1,085       1,238       (153 )     (12 )% Gulf Coast     58       69       (11 )     (16 )% Total coal sales volumes     7,023       6,849       174       3 %                                   Coal royalty revenue per ton                                 Appalachia                                 Northern   $ 9.86     $ 10.14     $ (0.28 )     (3 )% Central     9.92       11.37       (1.45 )     (13 )% Southern     14.94       17.56       (2.62 )     (15 )% Illinois Basin     3.57       2.20       1.37       62 % Northern Powder River Basin     4.68       3.74       0.94       25 % Gulf Coast     0.57       0.55       0.02       4 % Combined average coal royalty revenue per ton     8.26       8.12       0.14       2 %                                   Coal royalty revenues                                 Appalachia                                 Northern   $ 3,737     $ 4,341     $ (604 )     (14 )% Central     35,806       36,980       (1,174 )     (3 )% Southern     8,697       6,340       2,357       37 % Total Appalachia     48,240       47,661       579       1 % Illinois Basin     4,675       3,303       1,372       42 % Northern Powder River Basin     5,075       4,632       443       10 % Gulf Coast     33       38       (5 )     (13 )% Unadjusted coal royalty revenues     58,023       55,634       2,389       4 % Coal royalty adjustment for minimum leases     —       (185 )     185       100 % Total coal royalty revenues   $ 58,023     $ 55,449     $ 2,574       5 %                                   Other revenues                                 Production lease minimum revenues   $ 613     $ 1,592     $ (979 )     (61 )% Minimum lease straight-line revenues     4,503       4,783       (280 )     (6 )% Carbon neutral initiative revenues     2,118       —       2,118       100 % Wheelage revenues     3,869       3,717       152       4 % Property tax revenues     1,470       1,472       (2 )     (0 )% Coal overriding royalty revenues     188       258       (70 )     (27 )% Lease amendment revenues     851       880       (29 )     (3 )% Aggregates royalty revenues     753       770       (17 )     (2 )% Oil and gas royalty revenues     3,588       1,814       1,774       98 % Other revenues     295       348       (53 )     (15 )% Total other revenues   $ 18,248     $ 15,634     $ 2,614       17 % Royalty and other mineral rights   $ 76,271     $ 71,083     $ 5,188       7 % Transportation and processing services revenues     3,598       3,796       (198 )     (5 )% Gain on asset sales and disposals     96       —       96       100 % Total Mineral Rights segment revenues and other income   $ 79,965     $ 74,879     $ 5,086       7 %     20 Table of Contents   Coal Royalty Revenues   Approximately 75% of coal royalty revenues and approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the three months ended March 31, 2023. Total coal royalty revenues increased $2.6 million as compared to the prior year quarter. The discussion by region is as follows:   • Appalachia:  Coal royalty revenues were essentially flat period-over-period as increased sales volumes more than offset the decrease in sales prices in the Southern Appalachia region.    • Illinois Basin:  Coal royalty revenues increased $1.4 million primarily due to increased sales prices during the three months ended March 31, 2023, as compared to the prior year quarter.   Other Revenues   Total other revenues increased $2.6 million during the three months ended March 31, 2023, as compared to the prior year quarter primarily due to a $2.1 million increase in carbon neutral initiative revenues. Carbon neutral initiative revenues recognized in 2023 primarily related to a subsurface CO 2 storage transaction.   Soda Ash   Revenues and other income related to our Soda Ash segment increased $4.4 million compared to the prior year quarter primarily as a result of increased sales prices compared to the prior year quarter.   Operating Expenses   The following table presents the significant categories of our consolidated operating expenses:       For the Three Months Ended March 31,     Increase     Percentage   (In thousands)   2023     2022     (Decrease)     Change   Operating expenses                                 Operating and maintenance expenses   $ 7,163     $ 8,076     $ (913 )     (11 )% Depreciation, depletion and amortization     4,083       3,868       215       6 % General and administrative expenses     5,845       4,467       1,378       31 % Asset impairments     —       19       (19 )     (100 )% Total operating expenses   $ 17,091     $ 16,430     $ 661       4 %   Total operating expenses were essentially flat period-over-period. The $1.4 million increase in general and administrative expenses, primarily related to increased incentive compensation expense, was partially offset by a $0.9 million decrease in operating and maintenance expenses, primarily driven by a decrease in bad debt expense.   Interest Expense, Net   Interest expense, net decreased $6.5 million as a result of less debt outstanding as compared to the prior year quarter.      21 Table of Contents   Adjusted EBITDA (Non-GAAP Financial Measure)   The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment:       Operating Segments                   For the Three Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   March 31, 2023                                 Net income (loss)   $ 68,881     $ 19,096     $ (8,702 )   $ 79,275   Less: equity earnings from unconsolidated investment     —       (19,254 )     —       (19,254 ) Add: total distributions from unconsolidated investment     —       10,780       —       10,780   Add: interest expense, net     —       —       2,853       2,853   Add: depreciation, depletion and amortization     4,079       —       4       4,083   Add: asset impairments     —       —       —       —   Adjusted EBITDA   $ 72,960     $ 10,622     $ (5,845 )   $ 77,737                                     March 31, 2022                                 Net income (loss)   $ 62,967     $ 14,786     $ (13,854 )   $ 63,899   Less: equity earnings from unconsolidated investment     —       (14,837 )     —       (14,837 ) Add: total distributions from unconsolidated investment     —       13,230       —       13,230   Add: interest expense, net     —       —       9,387       9,387   Add: depreciation, depletion and amortization     3,868       —       —       3,868   Add: asset impairments     19       —       —       19   Adjusted EBITDA   $ 66,854     $ 13,179     $ (4,467 )   $ 75,566     Net income increased $15.4 million primarily due to the decrease in interest expense, net and increase in revenues and other income, both discussed above. Adjusted EBITDA increased $2.2 million as compared to the prior year quarter primarily due to a $6.1 million increase in Adjusted EBITDA within our Mineral Rights segment as a result of higher revenues and other income and lower operating and maintenance expenses, both discussed above. The increase in Adjusted EBITDA within our Mineral Rights segment was partially offset by a $2.6 million decrease in Adjusted EBITDA within our Soda Ash segment primarily due to Sisecam Wyoming paying a higher quarterly distribution in the first quarter of 2022 as discussed above and a $1.4 decrease in Adjusted EBITDA within our Corporate and Financing segment due to higher general and administrative expenses as discussed above.   Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)   The following table presents the three major categories of the statement of cash flows by business segment:       Operating Segments                   For the Three Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   March 31, 2023                                 Cash flow provided by (used in)                                 Operating activities   $ 73,858     $ 10,617     $ (11,575 )   $ 72,900   Investing activities     699       —       (2 )     697   Financing activities     (583 )     —       (94,450 )     (95,033 )                                   March 31, 2022                                 Cash flow provided by (used in)                                 Operating activities   $ 48,176     $ 13,195     $ (9,040 )   $ 52,331   Investing activities     —       —       —       —   Financing activities     (614 )     —       (51,647 )     (52,261 )     22 Table of Contents   The following table reconciles net cash provided by (used in) operating activities (the most comparable GAAP financial measure) by business segment to DCF and FCF:       Operating Segments                   For the Three Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   March 31, 2023                                 Net cash provided by (used in) operating activities   $ 73,858     $ 10,617     $ (11,575 )   $ 72,900   Add: proceeds from asset sales and disposals     101       —       —       101   Add: return of long-term contract receivable     598       —       —       598   Less: maintenance capital expenditures     —       —       (2 )     (2 ) Distributable cash flow   $ 74,557     $ 10,617     $ (11,577 )   $ 73,597   Less: proceeds from asset sales and disposals     (101 )     —       —       (101 ) Free cash flow   $ 74,456     $ 10,617     $ (11,577 )   $ 73,496                                     March 31, 2022                                 Net cash provided by (used in) operating activities   $ 48,176     $ 13,195     $ (9,040 )   $ 52,331   Add: proceeds from asset sales and disposals     —       —       —       —   Add: return of long-term contract receivable     —       —       —       —   Distributable cash flow   $ 48,176     $ 13,195     $ (9,040 )   $ 52,331   Less: proceeds from asset sales and disposals     —       —       —       —   Free cash flow   $ 48,176     $ 13,195     $ (9,040 )   $ 52,331     Operating cash flow, DCF and FCF increased $20.6 million, $21.3 million and $21.2 million, respectively, primarily due to an increase in cash flow within our Mineral Rights segment, partially offset by a decrease in cash flow within our Soda Ash and Corporate and Financing segments. The discussion by segment is as follows:   • Mineral Rights Segment   ◦ Operating cash flow, DCF and FCF increased $25.7 million, $26.4 million and $26.3 million, respectively, primarily due to the timing of minimum and royalty payments and prior year recoupments.    • Soda Ash Segment   ◦ Operating cash flow, DCF and FCF decreased $2.6 million primarily due to Sisecam Wyoming paying a higher quarterly distribution in the first quarter of 2022 as discussed above.    • Corporate and Financing Segment    ◦ Operating cash flow, DCF and FCF decreased $2.5 million primarily due to increased cash paid for incentive compensation in the first quarter of 2023 because of the improved business performance in 2022 and higher cash paid for interest on credit facility borrowings in 2023.    Liquidity and Capital Resources   Current Liquidity   As of March 31, 2023, we had total liquidity of $56.5 million, consisting of $17.7 million of cash and cash equivalents and $38.8 million of borrowing capacity under our Opco Credit Facility. We have debt service obligations, including approximately $23 million of principal repayments on Opco’s senior notes, throughout the remainder of 2023. The following table calculates our leverage ratio as of March 31, 2023:        For the Three Months Ended           (In thousands)   June 30, 2022     September 30, 2022     December 31, 2022     March 31, 2023     Last 12 Months   Net income   $ 66,820     $ 74,555     $ 63,218     $ 79,275     $ 283,868   Less: equity earnings from unconsolidated investment     (14,643 )     (14,556 )     (15,759 )     (19,254 )     (64,212 ) Add: total distributions from unconsolidated investment     10,486       10,339       10,780       10,780       42,385   Add: interest expense, net     8,108       5,141       3,638       2,853       19,740   Add: loss on extinguishment of debt     4,048       2,484       3,933       —       10,465   Add: depreciation, depletion and amortization     5,847       6,850       5,954       4,083       22,734   Add: asset impairments     43       812       3,583       —       4,438   Adjusted EBITDA   $ 80,709     $ 85,625     $ 75,347     $ 77,737     $ 319,418                                             Debt—at March 31, 2023                                   $ 173,591                                             Leverage Ratio                                   0.5 x       23 Table of Contents   Cash Flows   Cash flows provided by operating activities increased $20.6 million, from $52.3 million in the three months ended March 31, 2022 to $72.9 million in the three months ended March 31, 2023, primarily due to increased cash provided by operating activities within our Mineral Rights segment, partially offset by decreased cash provided by operating activities within our Soda Ash and Corporate and Financing segments, all discussed above.    Cash flows used in financing activities increased $42.8 million, from $52.3 million used in the three months ended March 31, 2022 to $95.0 million used in the three months ended March 31, 2023, primarily due to the following:   • $73.0 million of cash used to repay a portion of the Opco Credit Facility in the first quarter of 2023;   • $48.1 million of cash used to redeem the preferred units the first quarter of 2023; and   • $35.2 million of increased cash distributions to common unitholders and the general partner as a result of increasing our quarterly cash distribution to $0.75/unit beginning in the second quarter of 2022 in addition to the special distribution paid in the first quarter of 2023.   These increases in cash flow used were partially offset by $94.2 million of borrowings on our Opco Credit Facility in the first quarter of 2023 and $19.6 million of cash used to redeem the preferred units paid-in-kind during the first quarter of 2022.  Capital Resources and Obligations   Debt, Net   We had the following debt outstanding as of March 31, 2023 and December 31, 2022:       March 31,     December 31,   (In thousands)   2023     2022   Current portion of long-term debt, net   $ 39,055     $ 39,076   Long-term debt, net     133,821       129,205   Total debt, net   $ 172,876     $ 168,281     We have been and continue to be in compliance with the terms of the financial covenants contained in our debt agreements. For additional information regarding our debt and the agreements governing our debt, including the covenants contained therein, see  Note 9. Debt, Net to the Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.   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.   Related Party Transactions   The information required set forth under Note 11. Related Party Transactions to the Consolidated Financial Statements is incorporated herein by reference.   Summary of Critical Accounting Estimates   The preparation of Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. There have been no significant changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.   Recent Accounting Standards   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.     24 Table of Contents   ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   We are exposed to market risk, which includes adverse changes in commodity prices and interest rates as discussed below:   Commodity Price Risk   Our revenues, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on prevailing commodity prices. Historically, coal prices have been volatile, with prices fluctuating widely, and are likely to continue to be volatile. Depressed prices in the future would have a negative impact on our future financial results. In particular, substantially lower prices would significantly reduce revenues and could potentially trigger an impairment of our coal properties or a violation of certain financial debt covenants. Because substantially all our reserves are coal, changes in coal prices have a more significant impact on our financial results.    We are dependent upon the effective marketing of the coal mined by our lessees. Our lessees sell the coal under various long-term and short-term contracts as well as on the spot market. Current conditions in the coal industry may make it difficult for our lessees to extend existing contracts or enter into supply contracts with terms of one year or more. Our lessees' failure to negotiate long-term contracts could adversely affect the stability and profitability of our lessees' operations and adversely affect our future financial results. If more coal is sold on the spot market, coal royalty revenues may become more volatile due to fluctuations in spot coal prices.    The market price of soda ash and energy costs directly affects the profitability of Sisecam Wyoming's operations. If the market price for soda ash declines, Sisecam Wyoming's sales revenues will decrease. Historically, the global market and, to a lesser extent, the domestic market for soda ash have been volatile and are likely to remain volatile in the future.    Interest Rate Risk   Our exposure to changes in interest rates results from our borrowings under the Opco Credit Facility, which is subject to variably interest rates based upon SOFR. At March 31, 2023, we had $91.2 million in borrowings outstanding under the Opco Credit Facility. If interest rates were to increase by 1%, annual interest expense would increase approximately $0.9 million, assuming the same principal amount remained outstanding during the year.   ITEM 4. CONTROLS AND PROCEDURES   Evaluation of Disclosure Controls and Procedures   NRP carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of NRP management, including the Chief Executive Officer and Chief Financial Officer of the general partner of the general partner of NRP. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective in providing reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (b) such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.   Changes in the Partnership ’ s Internal Control Over Financial Reporting   There were no material changes in the Partnership’s internal control over financial reporting during the first three months of 2023 that materially affected, or were reasonably likely to materially affect, the Partnership’s internal control over financial reporting.     25 Table of Contents   PART II ITEM 1. LEGAL PROCEEDINGS   From time to time, we are involved in various legal proceedings arising in the ordinary course of business. While the ultimate results of these proceedings cannot be predicted with certainty, we believe these ordinary course matters will not have a material effect on our financial position, liquidity or operations.   ITEM 1A. RISK FACTORS   During the period covered by this report, there were no material changes from the risk factors previously disclosed in Natural Resource Partners L.P.’s Annual Report on Form 10-K for the year ended December 31, 2022.   ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   None.   ITEM 3. DEFAULTS UPON SENIOR SECURITIES   None.    ITEM 4. MINE SAFETY DISCLOSURES   None.   ITEM 5. OTHER INFORMATION   None.   ITEM 6. EXHIBITS   Exhibit Number   Description 3.1   Fifth Amended and Restated Agreement of Limited Partnership of Natural Resource Partners L.P., dated as of March 2, 2017 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on March 6, 2017). 3.2   Fifth Amended and Restated Agreement of Limited Partnership of NRP (GP) LP, dated as of December 16, 2011 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on December 16, 2011). 3.3   Fifth Amended and Restated Limited Liability Company Agreement of GP Natural Resource Partners LLC, dated as of October 31, 2013 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on October 31, 2013). 3.4   Certificate of Limited Partnership of Natural Resource Partners L.P. (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed April 19, 2002, File No. 333-86582). 31.1*   Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley. 31.2*   Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley. 32.1**   Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350. 32.2**   Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350. 101.INS*   Inline XBRL Instance Document 101.SCH*   Inline XBRL Taxonomy Extension Schema Document 101.CAL*   Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF*   Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB*   Inline XBRL Taxonomy Extension Labels Linkbase Document 101.PRE*   Inline XBRL Taxonomy Extension Presentation Linkbase Document 104*   Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)       *   Filed herewith **   Furnished herewith     26 Table of Contents   SIGNATURES   Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned and thereunto duly authorized.     NATURAL RESOURCE PARTNERS L.P.   By: NRP (GP) LP, its general partner   By: GP NATURAL RESOURCE     PARTNERS LLC, its general partner       Date: May 4, 2023 By: /s/ Corbin J. Robertson, Jr.     Corbin J. Robertson, Jr.     Chairman of the Board and     Chief Executive Officer     (Principal Executive Officer)         Date: May 4, 2023 By: /s/ Christopher J. Zolas     Christopher J. Zolas     Chief Financial Officer and Treasurer     (Principal Financial and Accounting Officer)         27