NATURAL RESOURCE PARTNERS LP 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   The following review of operations for the three and six month periods ended June 30, 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 six months ended June 30, 2023 are as follows:       Operating Segments                   (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   Revenues and other income   $ 144,247     $ 46,232     $ —     $ 190,479   Net income (loss)   $ 121,391     $ 46,060     $ (17,842 )   $ 149,609   Adjusted EBITDA (1)   $ 129,326     $ 42,958     $ (11,488 )   $ 160,796                                     Cash flow provided by (used in) continuing operations                                 Operating activities   $ 128,898     $ 42,943     $ (17,591 )   $ 154,250   Investing activities   $ 1,314     $ —     $ (10 )   $ 1,304   Financing activities   $ (583 )   $ —     $ (183,332 )   $ (183,915 ) Distributable cash flow (1)   $ 130,212     $ 42,943     $ (17,601 )   $ 155,554   Free cash flow (1)   $ 130,106     $ 42,943     $ (17,601 )   $ 155,448             (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 $154.3 million of operating cash flow and $155.4 million of free cash flow during the six months ended June 30, 2023, and ended the quarter with $62.7 million of liquidity consisting of $10.7 million of cash and cash equivalents and $52.0 million of borrowing capacity under our Opco Credit Facility. As of June 30, 2023 our leverage ratio was 0.6 x.   In May 2023, we declared and paid a cash distribution of $0.75 per common unit of NRP with respect to the first quarter of 2023 as well as a $6.1 million cash distribution on the preferred units with respect to the first quarter of 2023. 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 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. We chose to redeem the preferred units for $47.5 million in cash rather than issuing common units. In May 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 35,834 Class A Preferred Units. We chose to redeem the preferred units for $35.8 million in cash rather than issuing common units. In June 2023, we executed a negotiated transaction with holders of our Class A Preferred Units pursuant to which we repurchased and retired an aggregate of 45,000 Class A Preferred Units for $45.0 million in cash. Of the originally issued 250,000 Class A Preferred Units, 121,667 Class A Preferred Units remain outstanding.   18 Table of Contents   Mineral Rights Business Segment   Revenues and other income in the first six months of 2023 decreased $15.9  million, or 10% , as compared to the prior year period primarily due to decreased metallurgical coal sales prices.  Cash provided by operating activities and free cash flow increased $10.4 million and $11.0 million, respectively, compared to the prior year period primarily due to the timing of minimum and royalty payments and prior year recoupments, partially offset by lower revenues and other income in the second quarter of 2023 as compared to the prior year period primarily due to lower met coal sales prices.    While metallurgical and thermal coal prices have decreased from the beginning of the year and decreased significantly from the record highs seen in 2022, they both remain strong relative to historical norms. Transportation and logistics challenges, limited access to capital, and qualified labor shortages limit operators' ability to increase production and sales which should provide continued price support at current levels.    We continue to explore opportunities for carbon neutral revenue 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.   Soda Ash Business Segment   Revenues and other income in the first six m onths of  2023increased   $16.8  million, or 57%, as compared to the prior year period driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales volumes.  Cash provided by operating activities and free cash flow in the first six months of 2023increased   $19.3  million as compared to the prior year period  due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023.   After starting the year at historically high levels, global soda ash prices have fallen throughout the first half of the year. New supply from China entering the market in the second half of the year is expected to continue to put downward pressure on international soda ash pricing. However, we expect Sisecam Wyoming's domestic soda ash sales prices to remain strong in the second half of the year as a result of negotiated 2023 domestic sales contracts entered into at the end of 2022.   Results of Operations   Second 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 June 30,     Increase     Percentage   Operating Segment (In thousands)   2023     2022     (Decrease)     Change   Mineral Rights   $ 64,282     $ 85,290     $ (21,008 )     (25 )% Soda Ash     26,978       14,643       12,335       84 % Total   $ 91,260     $ 99,933     $ (8,673 )     (9 )%   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 June 30,     Increase     Percentage   (In thousands, except per ton data)   2023     2022     (Decrease)     Change   Coal sales volumes (tons)                                 Appalachia                                 Northern     390       392       (2 )     (1 )% Central     3,352       3,484       (132 )     (4 )% Southern     693       312       381       122 % Total Appalachia     4,435       4,188       247       6 % Illinois Basin     1,631       3,403       (1,772 )     (52 )% Northern Powder River Basin     881       699       182       26 % Gulf Coast     139       67       72       107 % Total coal sales volumes     7,086       8,357       (1,271 )     (15 )%                                   Coal royalty revenue per ton                                 Appalachia                                 Northern   $ 6.87     $ 11.84     $ (4.97 )     (42 )% Central     8.49       12.19       (3.70 )     (30 )% Southern     10.85       17.67       (6.82 )     (39 )% Illinois Basin     3.15       2.07       1.08       52 % Northern Powder River Basin     4.62       4.74       (0.12 )     (3 )% Gulf Coast     0.71       0.57       0.14       25 % Combined average coal royalty revenue per ton     6.77       7.54       (0.77 )     (10 )%                                   Coal royalty revenues                                 Appalachia                                 Northern   $ 2,681     $ 4,640     $ (1,959 )     (42 )% Central     28,445       42,461       (14,016 )     (33 )% Southern     7,521       5,513       2,008       36 % Total Appalachia     38,647       52,614       (13,967 )     (27 )% Illinois Basin     5,141       7,061       (1,920 )     (27 )% Northern Powder River Basin     4,066       3,314       752       23 % Gulf Coast     98       38       60       158 % Unadjusted coal royalty revenues     47,952       63,027       (15,075 )     (24 )% Coal royalty adjustment for minimum leases     8       (82 )     90       110 % Total coal royalty revenues   $ 47,960     $ 62,945     $ (14,985 )     (24 )%                                   Other revenues                                 Production lease minimum revenues   $ 562     $ 65     $ 497       765 % Minimum lease straight-line revenues     4,447       4,674       (227 )     (5 )% Carbon neutral initiative revenues     115       —       115       100 % Wheelage revenues     3,284       4,379       (1,095 )     (25 )% Property tax revenues     1,470       1,695       (225 )     (13 )% Coal overriding royalty revenues     150       682       (532 )     (78 )% Lease amendment revenues     848       811       37       5 % Aggregates royalty revenues     686       1,037       (351 )     (34 )% Oil and gas royalty revenues     1,214       2,906       (1,692 )     (58 )% Other revenues     271       139       132       95 % Total other revenues   $ 13,047     $ 16,388     $ (3,341 )     (20 )% Royalty and other mineral rights   $ 61,007     $ 79,333     $ (18,326 )     (23 )% Transportation and processing services revenues     3,270       5,612       (2,342 )     (42 )% Gain on asset sales and disposals     5       345       (340 )     (99 )% Total Mineral Rights segment revenues and other income   $ 64,282     $ 85,290     $ (21,008 )     (25 )%   20 Table of Contents   Coal Royalty Revenues   Approximately 70% of coal royalty revenues and approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the three months ended June 30, 2023. Total coal royalty revenues decreased $15.0 million as compared to the prior year quarter. The discussion by region is as follows:   • Appalachia:  Coal royalty revenues decreased $14.0 mi llion primarily due to decreased metallurgical coal sales prices during the three months ended June 30, 2023, as compared to the prior year quarter.   • Illinois Basin:  Coal royalty revenues decreased $1.9 million primarily due to decreased sales volumes during the three months ended June 30, 2023, as compared to the prior year quarter. This decrease in sales volumes is primarily a result of a temporary relocation off of NRP's coal reserves. However, the decrease in sales volumes was partially offset by an increase in sales prices and increased wheelage revenues associated with the transportation of non-NRP coal across NRP property.   Other Revenues   Total other revenues decreased $3.3 million during the three months ended June 30, 2023, as compared to the prior year quarter primarily due a $1.7 million decrease in oil and gas royalty revenues and a $1.1 million decrease in wheelage revenues as compared to the prior year period. Oil and gas royalty revenues decreased primarily as a result of decreased natural gas prices as compared to the prior year quarter and wheelage revenues decreased primarily due to lower met coal sales prices resulting in a lower wheelage revenue received per ton of coal transported.    Transportation and Processing Services Revenues   Transportation and processing services revenues decreased $2.3 million during the three months ended June 30, 2023, as compared to the prior year quarter primarily due to a temporary relocation of certain production off of NRP's coal reserves. The fee per ton associated with the transportation and processing of the non-NRP coal is less than the fee per ton associated with the transportation and processing of NRP coal.    Soda Ash   Revenues and other income related to our Soda Ash segment increased $12.3 million compared to the prior year quarter primarily due to higher sales prices driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales volumes.   Operating and Other Expenses   The following table presents the significant categories of our consolidated operating and other expenses:       For the Three Months Ended June 30,     Increase     Percentage   (In thousands)   2023     2022     (Decrease)     Change   Operating expenses                                 Operating and maintenance expenses   $ 7,930     $ 10,015     $ (2,085 )     (21 )% Depreciation, depletion and amortization     3,792       5,847       (2,055 )     (35 )% General and administrative expenses     5,643       5,052       591       12 % Asset impairments     69       43       26       60 % Total operating expenses   $ 17,434     $ 20,957     $ (3,523 )     (17 )%                                   Other expenses, net                                 Interest expense, net   $ 3,492     $ 8,108     $ (4,616 )     (57 )% Loss on extinguishment of debt     —       4,048       (4,048 )     (100 )% Total other expenses, net   $ 3,492     $ 12,156     $ (8,664 )     (71 )%   Total operating expenses decreased $3.5 million as compared to the prior year quarter primarily due to a $2.1 million decrease in operating and maintenance expenses and a $2.1 million decrease in depreciation, depletion and amortization. The decrease in operating and maintenance expenses was primarily driven by lower overriding royalty expense from an agreement with WPPLP in the second quarter of 2023 as compared to second quarter of 2022. This overriding royalty expense is fully offset by coal royalty revenue we receive from this property. The decrease in depreciation, depletion and amortization was primarily driven by lower Illinois Basin coal sales volumes during the second quarter of 2023 as compared to the second quarter of 2022 as explained in the coal royalty revenues section above.   Other expenses, net decreased $8.7 million as a result of less debt outstanding as compared to the prior year quarter, in addition to the loss on extinguishment of debt recognized in 2022 related to the partial retirement of the 2025 Senior Notes during the second quarter of 2022.   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   June 30, 2023                                 Net income (loss)   $ 52,510     $ 26,964     $ (9,140 )   $ 70,334   Less: equity earnings from unconsolidated investment     —       (26,978 )     —       (26,978 ) Add: total distributions from unconsolidated investment     —       32,350       —       32,350   Add: interest expense, net     —       —       3,492       3,492   Add: depreciation, depletion and amortization     3,787       —       5       3,792   Add: asset impairments     69       —       —       69   Adjusted EBITDA   $ 56,366     $ 32,336     $ (5,643 )   $ 83,059                                     June 30, 2022                                 Net income (loss)   $ 69,408     $ 14,620     $ (17,208 )   $ 66,820   Less: equity earnings from unconsolidated investment     —       (14,643 )     —       (14,643 ) Add: total distributions from unconsolidated investment     —       10,486       —       10,486   Add: interest expense, net     —       —       8,108       8,108   Add: loss on extinguishment of debt     —       —       4,048       4,048   Add: depreciation, depletion and amortization     5,847       —       —       5,847   Add: asset impairments     43       —       —       43   Adjusted EBITDA   $ 75,298     $ 10,463     $ (5,052 )   $ 80,709     Net income increased $3.5 million primarily due to the decrease in operating and other expenses, partially offset by the decrease in revenues and other income, all discussed above. Adjusted EBITDA increased $2.4 million as compared to the prior year quarter primarily due to a $21.9 million increase in Adjusted EBITDA within our Soda Ash segment due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023. This increase in Adjusted EBITDA was partially offset by an $18.9 million decrease in Adjusted EBITDA within our Mineral Rights segment primarily as a result of lower revenues and other income 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   June 30, 2023                                 Cash flow provided by (used in)                                 Operating activities   $ 55,040     $ 32,326     $ (6,016 )   $ 81,350   Investing activities     615       —       (8 )     607   Financing activities     —       —       (88,882 )     (88,882 )                                   June 30, 2022                                 Cash flow provided by (used in)                                 Operating activities   $ 70,351     $ 10,430     $ (17,658 )   $ 63,123   Investing activities     909       —       —       909   Financing activities     —       —       (140,266 )     (140,266 )   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   June 30, 2023                                 Net cash provided by (used in) operating activities   $ 55,040     $ 32,326     $ (6,016 )   $ 81,350   Add: proceeds from asset sales and disposals     5       —       —       5   Add: return of long-term contract receivable     610       —       —       610   Less: maintenance capital expenditures     —       —       (8 )     (8 ) Distributable cash flow   $ 55,655     $ 32,326     $ (6,024 )   $ 81,957   Less: proceeds from asset sales and disposals     (5 )     —       —       (5 ) Free cash flow   $ 55,650     $ 32,326     $ (6,024 )   $ 81,952                                     June 30, 2022                                 Net cash provided by (used in) operating activities   $ 70,351     $ 10,430     $ (17,658 )   $ 63,123   Add: proceeds from asset sales and disposals     346       —       —       346   Add: return of long-term contract receivable     563       —       —       563   Distributable cash flow   $ 71,260     $ 10,430     $ (17,658 )   $ 64,032   Less: proceeds from asset sales and disposals     (346 )     —       —       (346 ) Free cash flow   $ 70,914     $ 10,430     $ (17,658 )   $ 63,686     Operating cash flow, DCF and FCF increased $18.2 million, $17.9 million and $18.3 million, respectively, primarily due to an increase in cash flow within our Soda Ash and Corporate and Financing segments, partially offset by a decrease in cash flow within our Mineral Rights segment. The discussion by segment is as follows:   • Mineral Rights Segment   ◦ Operating cash flow, DCF and FCF decreased $15.3 million, $15.6 million and $15.3 million, respectively, primarily due to lower revenues and other income as discussed above primarily driven by lower met coal sales prices.    • Soda Ash Segment   ◦ Operating cash flow, DCF and FCF increased $21.9 million due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023.   • Corporate and Financing Segment    ◦ Operating cash flow, DCF and FCF increased $11.6 million primarily due to lower cash paid for interest as a result of the retirement of the 2025 Senior Notes in 2022.       First Six Months of 2023 and 2022 Compared   Revenues and Other Income   The following table includes our revenues and other income by operating segment:         For the Six Months Ended June 30,     Increase     Percentage   Operating Segment (In thousands)   2023     2022     (Decrease)     Change   Mineral Rights   $ 144,247     $ 160,169     $ (15,922 )     (10 )% Soda Ash     46,232       29,480       16,752       57 % Total   $ 190,479     $ 189,649     $ 830       0 %   The changes in revenues and other income are discussed for each of the operating segments below:   23 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 Six Months Ended June 30,     Increase     Percentage   (In thousands, except per ton data)   2023     2022     (Decrease)     Change   Coal sales volumes (tons)                                 Appalachia                                 Northern     769       820       (51 )     (6 )% Central     6,961       6,735       226       3 % Southern     1,275       673       602       89 % Total Appalachia     9,005       8,228       777       9 % Illinois Basin     2,941       4,905       (1,964 )     (40 )% Northern Powder River Basin     1,966       1,937       29       1 % Gulf Coast     197       136       61       45 % Total coal sales volumes     14,109       15,206       (1,097 )     (7 )%                                   Coal royalty revenue per ton                                 Appalachia                                 Northern   $ 8.35     $ 10.95     $ (2.60 )     (24 )% Central     9.23       11.80       (2.57 )     (22 )% Southern     12.72       17.61       (4.89 )     (28 )% Illinois Basin     3.34       2.11       1.23       58 % Northern Powder River Basin     4.65       4.10       0.55       13 % Gulf Coast     0.66       0.56       0.10       18 % Combined average coal royalty revenue per ton     7.51       7.80       (0.29 )     (4 )%                                   Coal royalty revenues                                 Appalachia                                 Northern   $ 6,418     $ 8,981     $ (2,563 )     (29 )% Central     64,251       79,441       (15,190 )     (19 )% Southern     16,218       11,853       4,365       37 % Total Appalachia     86,887       100,275       (13,388 )     (13 )% Illinois Basin     9,816       10,364       (548 )     (5 )% Northern Powder River Basin     9,141       7,946       1,195       15 % Gulf Coast     131       76       55       72 % Unadjusted coal royalty revenues     105,975       118,661       (12,686 )     (11 )% Coal royalty adjustment for minimum leases     8       (267 )     275       103 % Total coal royalty revenues   $ 105,983     $ 118,394     $ (12,411 )     (10 )%                                   Other revenues                                 Production lease minimum revenues   $ 1,175     $ 1,657     $ (482 )     (29 )% Minimum lease straight-line revenues     8,950       9,457       (507 )     (5 )% Carbon neutral initiative revenues     2,233       —       2,233       100 % Wheelage revenues     7,153       8,096       (943 )     (12 )% Property tax revenues     2,940       3,167       (227 )     (7 )% Coal overriding royalty revenues     338       940       (602 )     (64 )% Lease amendment revenues     1,699       1,691       8       0 % Aggregates royalty revenues     1,439       1,807       (368 )     (20 )% Oil and gas royalty revenues     4,802       4,720       82       2 % Other revenues     566       487       79       16 % Total other revenues   $ 31,295     $ 32,022     $ (727 )     (2 )% Royalty and other mineral rights   $ 137,278     $ 150,416     $ (13,138 )     (9 )% Transportation and processing services revenues     6,868       9,408       (2,540 )     (27 )% Gain on asset sales and disposals     101       345       (244 )     (71 )% Total Mineral Rights segment revenues and other income   $ 144,247     $ 160,169     $ (15,922 )     (10 )%   24 Table of Contents   Coal Royalty Revenues   Approximately 70% of coal royalty revenues and approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the six months ended June 30, 2023. Total coal royalty revenues decreased $12.4 million as compared to the prior year period. The discussion by region is as follows:   • Appalachia:  Coal royalty revenues decreased $13.4 mi llion p rimarily due to decreased metallurgical coal sales prices during the six months ended June 30, 2023, as compared to the prior year quarter.   • Illinois Basin:  Coal royalty revenues decreased $0.5 million primarily due to decreased sales volumes during the six months ended June 30, 2023, as compared to the prior year period. This decrease in sales volumes is primarily a result of a temporary relocation of certain production off of NRP's coal reserves. However, the decrease in sales volumes was partially offset by an increase in sales prices and increased wheelage revenues associated with the transportation of non-NRP coal across NRP property.   Transportation and Processing Services Revenues   Transportation and processing services revenues decreased $2.5 million during the six months ended June 30, 2023, as compared to the prior year period primarily due to a temporary relocation of certain production off of NRP's coal reserves. The fee per ton on associated with the transportation and processing of the non-NRP coal is less than the fee per ton associated with the transportation and processing of NRP coal.    Soda Ash   Revenues and other income related to our Soda Ash segment increased $16.8 million compared to the prior year period primarily due to higher sales prices driven by strong demand in domestic and international markets, partially offset by lower soda ash production and sales volumes.   Operating Expenses   The following table presents the significant categories of our consolidated operating and other expenses:       For the Six Months Ended June 30,     Increase     Percentage   (In thousands)   2023     2022     (Decrease)     Change   Operating expenses                                 Operating and maintenance expenses   $ 15,093     $ 18,091     $ (2,998 )     (17 )% Depreciation, depletion and amortization     7,875       9,715       (1,840 )     (19 )% General and administrative expenses     11,488       9,519       1,969       21 % Asset impairments     69       62       7       11 % Total operating expenses   $ 34,525     $ 37,387     $ (2,862 )     (8 )%                                   Other expenses, net                                 Interest expense, net   $ 6,345     $ 17,495     $ (11,150 )     (64 )% Loss on extinguishment of debt     —       4,048       (4,048 )     (100 )% Total other expenses, net   $ 6,345     $ 21,543     $ (15,198 )     (71 )%   Total operating expenses decreased $2.9 million primarily due to a $3.0 million decrease in operating and maintenance expenses, primarily driven by lower overriding royalty expense from an agreement with WPPLP as discussed above.   Total other expenses, net decreased $15.2 million as a result of less debt outstanding as compared to the prior year period, in addition to the loss on extinguishment of debt recognized in 2022 related to the partial retirement of the 2025 Senior Notes during the second quarter of 2022.   25 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 Six Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   June 30, 2023                                 Net income (loss)   $ 121,391     $ 46,060     $ (17,842 )   $ 149,609   Less: equity earnings from unconsolidated investment     —       (46,232 )     —       (46,232 ) Add: total distributions from unconsolidated investment     —       43,130       —       43,130   Add: interest expense, net     —       —       6,345       6,345   Add: depreciation, depletion and amortization     7,866       —       9       7,875   Add: asset impairments     69       —       —       69   Adjusted EBITDA   $ 129,326     $ 42,958     $ (11,488 )   $ 160,796                                     June 30, 2022                                 Net income (loss)   $ 132,375     $ 29,406     $ (31,062 )   $ 130,719   Less: equity earnings from unconsolidated investment     —       (29,480 )     —       (29,480 ) Add: total distributions from unconsolidated investment     —       23,716       —       23,716   Add: interest expense, net     —       —       17,495       17,495   Add: loss on extinguishment of debt     —       —       4,048       4,048   Add: depreciation, depletion and amortization     9,715       —       —       9,715   Add: asset impairments     62       —       —       62   Adjusted EBITDA   $ 142,152     $ 23,642     $ (9,519 )   $ 156,275     Net income increased $18.9 million primarily due to the decrease in operating and other expenses as discussed above. Adjusted EBITDA increased $4.5 million as compared to the prior year period primarily due to a $19.3 million increase in Adjusted EBITDA within our Soda Ash segment due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023. This increase in Adjusted EBITDA was partially offset by a $12.8 million decrease in Adjusted EBITDA within our Mineral Rights segment as a result of lower revenues and other income 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 Six Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   June 30, 2023                                 Cash flow provided by (used in)                                 Operating activities   $ 128,898     $ 42,943     $ (17,591 )   $ 154,250   Investing activities     1,314       —       (10 )     1,304   Financing activities     (583 )     —       (183,332 )     (183,915 )                                   June 30, 2022                                 Cash flow provided by (used in)                                 Operating activities   $ 118,527     $ 23,625     $ (26,698 )   $ 115,454   Investing activities     909       —       —       909   Financing activities     (614 )     —       (191,913 )     (192,527 )   26 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 Six Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   June 30, 2023                                 Net cash provided by (used in) operating activities   $ 128,898     $ 42,943     $ (17,591 )   $ 154,250   Add: proceeds from asset sales and disposals     106       —       —       106   Add: return of long-term contract receivable     1,208       —       —       1,208   Less: maintenance capital expenditures     —       —       (10 )     (10 ) Distributable cash flow   $ 130,212     $ 42,943     $ (17,601 )   $ 155,554   Less: proceeds from asset sales and disposals     (106 )     —       —       (106 ) Free cash flow   $ 130,106     $ 42,943     $ (17,601 )   $ 155,448                                     June 30, 2022                                 Net cash provided by (used in) operating activities   $ 118,527     $ 23,625     $ (26,698 )   $ 115,454   Add: proceeds from asset sales and disposals     346       —       —       346   Add: return of long-term contract receivable     563       —       —       563   Distributable cash flow   $ 119,436     $ 23,625     $ (26,698 )   $ 116,363   Less: proceeds from asset sales and disposals     (346 )     —       —       (346 ) Free cash flow   $ 119,090     $ 23,625     $ (26,698 )   $ 116,017     Operating cash flow, DCF and FCF increased $38.8 million, $39.2 million and $39.4 million, respectively, as compared to the prior year period due to increased cash flow within our Soda Ash, Corporate and Financing and Mineral Rights segments. The discussion by segment is as follows:   • Mineral Rights Segment   ◦ Operating cash flow, DCF and FCF increased $10.4 million, $10.8 million and $11.0 million, respectively, primarily due to the timing of minimum and royalty payments and prior year recoupments, partially offset by lower revenues and other income in the second quarter of 2023 as compared to the prior year period primarily driven by lower met coal sales prices.    • Soda Ash Segment   ◦ Operating cash flow, DCF and FCF increased  $19.3 million due to the early timing of distributions received from Sisecam Wyoming and a higher distribution amount driven by Sisecam Wyoming's strong operating performance in the second quarter of 2023.   • Corporate and Financing Segment    ◦ Operating cash flow, DCF and FCF increased $9.1 million primarily due to lower cash paid for interest as a result of the retirement of the 2025 Senior Notes in 2022.    Liquidity and Capital Resources   Current Liquidity   As of June 30, 2023, we had total liquidity of $62.7 million, consisting of $10.7 million of cash and cash equivalents and $52.0 million of borrowing capacity under our Opco Credit Facility. We have debt service obligations, including approximately $20 million of principal repayments on Opco’s senior notes, throughout the remainder of 2023. The following table calculates our leverage ratio as of June 30, 2023:        For the Three Months Ended           (In thousands)   September 30, 2022     December 31, 2022     March 31, 2023     June 30, 2023     Last 12 Months   Net income   $ 74,555     $ 63,218     $ 79,275     $ 70,334     $ 287,382   Less: equity earnings from unconsolidated investment     (14,556 )     (15,759 )     (19,254 )     (26,978 )     (76,547 ) Add: total distributions from unconsolidated investment     10,339       10,780       10,780       32,350       64,249   Add: interest expense, net     5,141       3,638       2,853       3,492       15,124   Add: loss on extinguishment of debt     2,484       3,933       —       —       6,417   Add: depreciation, depletion and amortization     6,850       5,954       4,083       3,792       20,679   Add: asset impairments     812       3,583       —       69       4,464   Adjusted EBITDA   $ 85,625     $ 75,347     $ 77,737     $ 83,059     $ 321,768                                             Debt—at June 30, 2023                                   $ 183,059                                             Leverage Ratio                                   0.6 x     27 Table of Contents   Cash Flows   Cash flows provided by operating activities increased $38.8  million, from $115.5  million in the  six months ended June 30, 2022 to $154.3  million in the six months ended June 30, 2023 , due to an increased cash flow within our Soda Ash, Corporate and Financing and Mineral Rights segments, all discussed above.   Cash used in financing activities decreased $8.6 million, from $192.5 million used in the six months ended June 30, 2022 to $183.9 million used in the six months ended June 30, 2023, primarily due to the following:   • $165.0 million of borrowings on the Opco Credit Facility in 2023;   • $118.1 million of cash used to retire a portion of the 2025 Senior Notes in the second quarter of 2022; and   • $19.3 million of cash used to redeem the preferred units paid-in-kind during the first quarter of 2022.   These decreases in cash flow used were partially offset by the following:   • $132.0 million of cash used to repay a portion of the Opco Credit Facility in 2023;   • $128.3 million of cash used to redeem the preferred units in 2023; and   • $35.3 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. Capital Resources and Obligations   Debt, Net   We had the following debt outstanding as of June 30, 2023 and December 31, 2022:       June 30,     December 31,   (In thousands)   2023     2022   Current portion of long-term debt, net   $ 36,743     $ 39,076   Long-term debt, net     145,693       129,205   Total debt, net   $ 182,436     $ 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.   28 Table of Contents