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 nine month periods ended September 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.    18 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 nine months ended September 30, 2023 are as follows:       Operating Segments                   (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   Revenues and other income   $ 218,213     $ 58,633     $ —     $ 276,846   Net income (loss)   $ 182,400     $ 58,408     $ (27,353 )   $ 213,455   Adjusted EBITDA (1)   $ 194,987     $ 65,915     $ (17,157 )   $ 243,745                                     Cash flow provided by (used in) continuing operations                                 Operating activities   $ 189,836     $ 65,901     $ (22,545 )   $ 233,192   Investing activities   $ 2,791     $ —     $ (10 )   $ 2,781   Financing activities   $ (583 )   $ —     $ (256,070 )   $ (256,653 ) Distributable cash flow (1)   $ 192,627     $ 65,901     $ (22,555 )   $ 235,973   Free cash flow (1)   $ 191,666     $ 65,901     $ (22,555 )   $ 235,012             (1) See "—Results of Operations" below for reconciliations to the most comparable GAAP financial measures.   19 Table of Contents   Current Results/Market Commentary   Financial Results and Quarterly Distributions   We generated $233.2 million of operating cash flow and $235.0 million of free cash flow during the nine months ended September 30, 2023, and ended the quarter with $45.4 million of liquidity consisting of $18.4 million of cash and cash equivalents and $27.0 million of borrowing capacity under our Opco Credit Facility. As of September 30, 2023 our leverage ratio was 0.7 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. In August 2023, we declared and paid a cash distribution of $0.75 per common unit of NRP with respect to the second quarter of 2023 as well as a $3.7 million cash distribution on the preferred units with respect to the second 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. In August 2023, we executed a negotiated transaction with holders of the Class A Preferred Units pursuant to which we repurchased and retired an aggregate of 35,000 Class A Preferred Units for $35.0 million in cash. In September 2023, we executed a negotiated transaction with holders of the Class A Preferred Units pursuant to which we repurchased and retired an aggregate of 15,001 Class A Preferred Units for $15.0 million in cash. Of the originally issued 250,000 Class A Preferred Units, 71,666 Class A Preferred Units remain outstanding as of September 30, 2023. In connection with these repurchases and effective September 2023, Blackstone no longer holds any Class A Preferred Units and as such, all rights of Blackstone thereof have ceased with respect to the Class A Preferred Units and Blackstone's board designee resigned from the board of the Partnership's general partner.   In September 2023, we negotiated a transaction with holders of the warrants to purchase common units (the "warrants") pursuant to which we repurchased and retired an aggregate of 752,500 warrants with an exercise price of $22.81 and 60,000 warrants with an exercise price of $34.00 for approximately $33.6 million in cash. In October 2023, we executed two negotiated transactions with holders of the warrants pursuant to which we repurchased and retired an aggregate of 650,000 warrants with an exercise price of $34.00 for approximately $22.5 million in cash. Following these transactions, 1.54 million warrants with an exercise price of $34.00 remain outstanding.    Mineral Rights Business Segment   Revenues and other income in the first nine months of 2023 decreased $29.7  million, or 12% , as compared to the prior year period primarily due to decreased metallurgical coal sales prices and decreased revenues from oil and gas royalties and certain carbon neutral initiative transactions entered into in 2022.  Cash provided by operating activities and free cash flow decreased $4.6 million and $3.9 million, respectively, compared to the prior year period primarily due to the lower revenues during the first nine months of 2023 as compared to the prior year period.    Metallurgical coal prices improved, and thermal coal prices remained relatively flat during the third quarter of 2023. Both metallurgical and thermal coal prices were above historical norms but below the record highs seen in 2022. We expect continued price support for coal as limited access to capital, labor shortages and inflationary pressures limit operators' ability to increase production.   We continue to explore carbon neutral revenue opportunities across our large asset portfolio, 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 nine m onths of  2023increased   $14.6  million, or 33%, as 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.  Cash provided by operating activities and free cash flow in the first nine months of 2023increased   $32.0  million as compared to the prior year period  due to higher distributions received from Sisecam Wyoming in 2023 stemming from Sisecam Wyoming's strong operating performance in the first half of the year.   International soda ash prices were significantly lower in the third quarter compared to the first half of the year primarily due to new supply from China. We believe lower international prices will persist throughout the remainder of the year and into next year as the market absorbs the additional supply. Sisecam Wyoming’s domestic soda ash sales prices are expected to remain above the spot market for the rest of this year as a result of negotiated 2023 domestic sales contracts entered into at the end of 2022. As domestic sales contracts for 2024 begin to be negotiated, we believe contracted sales prices will be set at lower levels as the market contends with recessionary headwinds and new supply entering the export markets.   Results of Operations   Third 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 September 30,           Percentage   Operating Segment (In thousands)   2023     2022     Decrease     Change   Mineral Rights   $ 73,966     $ 87,702     $ (13,736 )     (16 )% Soda Ash     12,401       14,556       (2,155 )     (15 )% Total   $ 86,367     $ 102,258     $ (15,891 )     (16 )%   The changes in revenues and other income are discussed for each of the operating segments below:   20 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 September 30,     Increase     Percentage   (In thousands, except per ton data)   2023     2022     (Decrease)     Change   Coal sales volumes (tons)                                 Appalachia                                 Northern     284       440       (156 )     (35 )% Central     3,429       3,503       (74 )     (2 )% Southern     741       498       243       49 % Total Appalachia     4,454       4,441       13       0 % Illinois Basin     2,541       3,490       (949 )     (27 )% Northern Powder River Basin     1,364       835       529       63 % Gulf Coast     479       188       291       155 % Total coal sales volumes     8,838       8,954       (116 )     (1 )%                                   Coal royalty revenue per ton                                 Appalachia                                 Northern   $ 5.54     $ 6.74     $ (1.20 )     (18 )% Central     8.20       9.04       (0.84 )     (9 )% Southern     11.88       9.78       2.10       21 % Illinois Basin     3.98       2.57       1.41       55 % Northern Powder River Basin     4.86       4.56       0.30       7 % Gulf Coast     0.69       0.59       0.10       17 % Combined average coal royalty revenue per ton     6.29       5.85       0.44       8 %                                   Coal royalty revenues                                 Appalachia                                 Northern   $ 1,573     $ 2,965     $ (1,392 )     (47 )% Central     28,111       31,680       (3,569 )     (11 )% Southern     8,806       4,872       3,934       81 % Total Appalachia     38,490       39,517       (1,027 )     (3 )% Illinois Basin     10,108       8,967       1,141       13 % Northern Powder River Basin     6,627       3,805       2,822       74 % Gulf Coast     330       111       219       197 % Unadjusted coal royalty revenues     55,555       52,400       3,155       6 % Coal royalty adjustment for minimum leases     (11 )     (19 )     8       42 % Total coal royalty revenues   $ 55,544     $ 52,381     $ 3,163       6 %                                   Other revenues                                 Production lease minimum revenues   $ 850     $ 1,885     $ (1,035 )     (55 )% Minimum lease straight-line revenues     4,464       4,778       (314 )     (7 )% Carbon neutral initiative revenues     681       8,600       (7,919 )     (92 )% Wheelage revenues     2,385       2,977       (592 )     (20 )% Property tax revenues     1,770       1,360       410       30 % Coal overriding royalty revenues     827       1,367       (540 )     (40 )% Lease amendment revenues     623       759       (136 )     (18 )% Aggregates royalty revenues     736       884       (148 )     (17 )% Oil and gas royalty revenues     324       6,170       (5,846 )     (95 )% Other revenues     329       218       111       51 % Total other revenues   $ 12,989     $ 28,998     $ (16,009 )     (55 )% Royalty and other mineral rights   $ 68,533     $ 81,379     $ (12,846 )     (16 )% Transportation and processing services revenues     4,579       5,969       (1,390 )     (23 )% Gain on asset sales and disposals     854       354       500       141 % Total Mineral Rights segment revenues and other income   $ 73,966     $ 87,702     $ (13,736 )     (16 )%   21 Table of Contents   Coal Royalty Revenues   Approximately 60% of coal royalty revenues and approximately 45% of coal royalty sales volumes were derived from metallurgical coal during the three months ended September 30, 2023. Total coal royalty revenues increased $3.2 million as compared to the prior year quarter. The discussion by region is as follows:   • Appalachia:  Coal royalty revenues decreased $1.0 mi llion primarily due to decreased metallurgical coal sales prices during the three months ended September 30, 2023, as compared to the prior year quarter.   • Illinois Basin:  Coal royalty revenues increased $1.1 million primarily due to increased sales prices during the three months ended September 30, 2023, as compared to the prior year quarter.   • Northern Powder River Basin:  Coal royalty revenues increased $2.8 million primarily due to increased sales volumes during the three months ended September 30, 2023, as compared to the prior year quarter as our lessee mined more on our property during the third quarter of 2023 as compared to the third quarter of 2022 in accordance with its mine plan.   Other Revenues   Total other revenues decreased $16.0 million during the three months ended September 30, 2023, as compared to the prior year quarter primarily due a $7.9 million decrease in carbon neutral initiative revenues and a $5.8 million decrease in oil and gas royalty revenues. Carbon neutral initiative revenues recognized during the three months ended September 30, 2023 primarily related to the sale of forest carbon offset credits and carbon neutral initiative revenues recognized during the three months ended September 30, 2022 primarily related to carbon neutral transactions that included subsurface CO 2  storage and geothermal energy production. Oil and gas royalty revenues decreased during the three months ended September 30, 2023 primarily as a result of decreased natural gas production and prices as compared to the prior year quarter.   Soda Ash   Revenues and other income related to our Soda Ash segment decreased $2.2 million as compared to the prior year quarter primarily due to lower international sales prices and an increased sales mix into the lower priced international market in the three months ended September 30, 2023 as compared to the prior year period.   Operating and Other Expenses   The following table presents the significant categories of our consolidated operating and other expenses:       For the Three Months Ended September 30,     Increase     Percentage   (In thousands)   2023     2022     (Decrease)     Change   Operating expenses                                 Operating and maintenance expenses   $ 8,358     $ 7,898     $ 460       6 % Depreciation, depletion and amortization     4,594       6,850       (2,256 )     (33 )% General and administrative expenses     5,669       4,518       1,151       25 % Asset impairments     63       812       (749 )     (92 )% Total operating expenses   $ 18,684     $ 20,078     $ (1,394 )     (7 )%                                   Other expenses, net                                 Interest expense, net   $ 3,837     $ 5,141     $ (1,304 )     (25 )% Loss on extinguishment of debt     —       2,484       (2,484 )     (100 )% Total other expenses, net   $ 3,837     $ 7,625     $ (3,788 )     (50 )%   Total operating expenses decreased $1.4 million as compared to the prior year quarter primarily due a decrease in depreciation, depletion and amortization driven by lower Illinois Basin coal sales volumes during the three months ended September 30, 2023 as compared to the prior year quarter.   Total other expenses, net decreased $3.8 million as a result of the loss on extinguishment of debt recognized in 2022 related to the partial retirement of the 2025 Senior Notes during the third quarter of 2022 in addition a decrease in interest expense, net primarily due to less debt outstanding as compared to the prior year quarter.   22 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   September 30, 2023                                 Net income (loss)   $ 61,009     $ 12,348     $ (9,511 )   $ 63,846   Less: equity earnings from unconsolidated investment     —       (12,401 )     —       (12,401 ) Add: total distributions from unconsolidated investment     —       23,010       —       23,010   Add: interest expense, net     —       —       3,837       3,837   Add: depreciation, depletion and amortization     4,589       —       5       4,594   Add: asset impairments     63       —       —       63   Adjusted EBITDA   $ 65,661     $ 22,957     $ (5,669 )   $ 82,949                                     September 30, 2022                                 Net income (loss)   $ 72,173     $ 14,525     $ (12,143 )   $ 74,555   Less: equity earnings from unconsolidated investment     —       (14,556 )     —       (14,556 ) Add: total distributions from unconsolidated investment     —       10,339       —       10,339   Add: interest expense, net     —       —       5,141       5,141   Add: loss on extinguishment of debt     —       —       2,484       2,484   Add: depreciation, depletion and amortization     6,850       —       —       6,850   Add: asset impairments     812       —       —       812   Adjusted EBITDA   $ 79,835     $ 10,308     $ (4,518 )   $ 85,625     Net income decreased $10.7 million as compared to the prior year quarter primarily due to the decrease in revenues and other income, partially offset by the decrease in operating and other expenses, net, both discussed above. Adjusted EBITDA decreased $2.7 million as compared to the prior year quarter primarily due to a $14.2 million decrease in Adjusted EBITDA within our Mineral Rights segment primarily as a result of lower revenues and other income as discussed above. This decrease was partially offset by a $12.6 million increase in Adjusted EBITDA within our Soda Ash segment due to a higher distribution received from Sisecam Wyoming driven by their strong operating performance in the first half of 2023.   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   September 30, 2023                                 Cash flow provided by (used in)                                 Operating activities   $ 60,938     $ 22,958     $ (4,954 )   $ 78,942   Investing activities     1,477       —       —       1,477   Financing activities     —       —       (72,738 )     (72,738 )                                   September 30, 2022                                 Cash flow provided by (used in)                                 Operating activities   $ 75,948     $ 10,309     $ (3,761 )   $ 82,496   Investing activities     928       —       (59 )     869   Financing activities     —       —       (81,784 )     (81,784 )   23 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   September 30, 2023                                 Net cash provided by (used in) operating activities   $ 60,938     $ 22,958     $ (4,954 )   $ 78,942   Add: proceeds from asset sales and disposals     855       —       —       855   Add: return of long-term contract receivable     622       —       —       622   Less: maintenance capital expenditures     —       —       —       —   Distributable cash flow   $ 62,415     $ 22,958     $ (4,954 )   $ 80,419   Less: proceeds from asset sales and disposals     (855 )     —       —       (855 ) Free cash flow   $ 61,560     $ 22,958     $ (4,954 )   $ 79,564                                     September 30, 2022                                 Net cash provided by (used in) operating activities   $ 75,948     $ 10,309     $ (3,761 )   $ 82,496   Add: proceeds from asset sales and disposals     353       —       —       353   Add: return of long-term contract receivable     575       —       —       575   Less: maintenance capital expenditures     —       —       (59 )     (59 ) Distributable cash flow   $ 76,876     $ 10,309     $ (3,820 )   $ 83,365   Less: proceeds from asset sales and disposals     (353 )     —       —       (353 ) Free cash flow   $ 76,523     $ 10,309     $ (3,820 )   $ 83,012     Operating cash flow, DCF and FCF decreased $3.6 million, $2.9 million and $3.4 million, respectively, as compared to the prior year quarter primarily due to a decrease in cash flow within our Mineral Rights segment, partially offset by an increase in cash flow within our Soda Ash segment. The discussion by segment is as follows:   • Mineral Rights Segment   ◦ Operating cash flow, DCF and FCF decreased $15.0 million, $14.5 million and $15.0 million, respectively, primarily driven by cash received from certain carbon neutral initiatives entered into in the third quarter of 2022 and lower natural gas production and prices in the third quarter of 2023 as compared to the prior year quarter.    • Soda Ash Segment   ◦ Operating cash flow, DCF and FCF increased $12.6 million as compared to the prior year quarter primarily due to a higher distribution received from Sisecam Wyoming driven by Sisecam Wyoming's strong operating performance in the first half of 2023.       First Nine Months of 2023 and 2022 Compared   Revenues and Other Income   The following table includes our revenues and other income by operating segment:         For the Nine Months Ended September 30,     Increase     Percentage   Operating Segment (In thousands)   2023     2022     (Decrease)     Change   Mineral Rights   $ 218,213     $ 247,871     $ (29,658 )     (12 )% Soda Ash     58,633       44,036       14,597       33 % Total   $ 276,846     $ 291,907     $ (15,061 )     (5 )%   The changes in revenues and other income are discussed for each of the operating segments below:   24 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 Nine Months Ended September 30,     Increase     Percentage   (In thousands, except per ton data)   2023     2022     (Decrease)     Change   Coal sales volumes (tons)                                 Appalachia                                 Northern     1,053       1,260       (207 )     (16 )% Central     10,390       10,238       152       1 % Southern     2,016       1,171       845       72 % Total Appalachia     13,459       12,669       790       6 % Illinois Basin     5,482       8,395       (2,913 )     (35 )% Northern Powder River Basin     3,330       2,772       558       20 % Gulf Coast     676       324       352       109 % Total coal sales volumes     22,947       24,160       (1,213 )     (5 )%                                   Coal royalty revenue per ton                                 Appalachia                                 Northern   $ 7.59     $ 9.48     $ (1.89 )     (20 )% Central     8.89       10.85       (1.96 )     (18 )% Southern     12.41       14.28       (1.87 )     (13 )% Illinois Basin     3.63       2.30       1.33       58 % Northern Powder River Basin     4.74       4.24       0.50       12 % Gulf Coast     0.68       0.58       0.10       17 % Combined average coal royalty revenue per ton     7.04       7.08       (0.04 )     (1 )%                                   Coal royalty revenues                                 Appalachia                                 Northern   $ 7,991     $ 11,946     $ (3,955 )     (33 )% Central     92,362       111,121       (18,759 )     (17 )% Southern     25,024       16,725       8,299       50 % Total Appalachia     125,377       139,792       (14,415 )     (10 )% Illinois Basin     19,924       19,331       593       3 % Northern Powder River Basin     15,768       11,751       4,017       34 % Gulf Coast     461       187       274       147 % Unadjusted coal royalty revenues     161,530       171,061       (9,531 )     (6 )% Coal royalty adjustment for minimum leases     (3 )     (286 )     283       99 % Total coal royalty revenues   $ 161,527     $ 170,775     $ (9,248 )     (5 )%                                   Other revenues                                 Production lease minimum revenues   $ 2,025     $ 3,542     $ (1,517 )     (43 )% Minimum lease straight-line revenues     13,414       14,235       (821 )     (6 )% Carbon neutral initiative revenues     2,914       8,600       (5,686 )     (66 )% Wheelage revenues     9,538       11,073       (1,535 )     (14 )% Property tax revenues     4,710       4,527       183       4 % Coal overriding royalty revenues     1,165       2,307       (1,142 )     (50 )% Lease amendment revenues     2,322       2,450       (128 )     (5 )% Aggregates royalty revenues     2,175       2,691       (516 )     (19 )% Oil and gas royalty revenues     5,126       10,890       (5,764 )     (53 )% Other revenues     895       705       190       27 % Total other revenues   $ 44,284     $ 61,020     $ (16,736 )     (27 )% Royalty and other mineral rights   $ 205,811     $ 231,795     $ (25,984 )     (11 )% Transportation and processing services revenues     11,447       15,377       (3,930 )     (26 )% Gain on asset sales and disposals     955       699       256       37 % Total Mineral Rights segment revenues and other income   $ 218,213     $ 247,871     $ (29,658 )     (12 )%   25 Table of Contents   Coal Royalty Revenues   Approximately 70% of coal royalty revenues and approximately 50% of coal royalty sales volumes were derived from metallurgical coal during the nine months ended September 30, 2023. Total coal royalty revenues decreased $9.2 million as compared to the prior year period. The discussion by region is as follows:   • Appalachia:  Coal royalty revenues decreased $14.4 mi llion p rimarily due to decreased metallurgical coal sales prices during the nine months ended September 30, 2023, as compared to the prior year period.   • Illinois Basin:  Coal royalty revenues increased $0.6 million during the nine months ended September 30, 2023, as compared to the prior year period primarily due to higher coal sales prices, partially offset by lower coal sales volumes as compared to the prior year period.   • Northern Powder River Basin:  Coal royalty revenues increased $4.0 million primarily due to increased sales volumes during the nine months ended September 30, 2023, as compared to the prior year period as our lessee mined more on our property during the first nine months of 2023 as compared to the first nine months of 2022 in accordance with its mine plan.   Other Revenues   Total other revenues decreased $16.7 million during the nine months ended September 30, 2023, as compared to the prior year period primarily due a $5.8 million decrease in oil and gas royalty revenues and a $5.7 million decrease in carbon neutral initiative revenues. Oil and gas royalty revenues decreased during the nine months ended September 30, 2023 primarily as a result of decreased natural gas production and prices as compared to the prior year period. Carbon neutral initiative revenues recognized during the nine months ended September 30, 2023 primarily related to subsurface CO 2  storage and forest carbon offset credits. Carbon neutral initiative revenues recognized during the nine months ended September 30, 2022 primarily related to subsurface CO 2  storage and geothermal energy transactions.   Transportation and Processing Services Revenues   Transportation and processing services revenues decreased $3.9 million during the nine months ended September 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 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 $14.6 million during the nine months ended September 30, 2023 as 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 and Other Expenses   The following table presents the significant categories of our consolidated operating and other expenses:       For the Nine Months Ended September 30,     Increase     Percentage   (In thousands)   2023     2022     (Decrease)     Change   Operating expenses                                 Operating and maintenance expenses   $ 23,451     $ 25,989     $ (2,538 )     (10 )% Depreciation, depletion and amortization     12,469       16,565       (4,096 )     (25 )% General and administrative expenses     17,157       14,037       3,120       22 % Asset impairments     132       874       (742 )     (85 )% Total operating expenses   $ 53,209     $ 57,465     $ (4,256 )     (7 )%                                   Other expenses, net                                 Interest expense, net   $ 10,182     $ 22,636     $ (12,454 )     (55 )% Loss on extinguishment of debt     —       6,532       (6,532 )     (100 )% Total other expenses, net   $ 10,182     $ 29,168     $ (18,986 )     (65 )%   Total operating expenses decreased $4.3 million primarily due to a $4.1 million decrease in depreciation, depletion and amortization and a $2.5 million decrease in operating and maintenance expenses, partially offset by a $3.1 million increase in general and administrative expenses. The decrease in depreciation, depletion and amortization was primarily driven by lower Illinois Basin coal sales volumes as compared to the prior year period. The decrease in operating and maintenance expenses was primarily driven by lower overriding royalty expense from an agreement with WPPLP in the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. This overriding royalty expense is fully offset by coal royalty revenue we receive from this property. The increase in general and administrative expenses was primarily due to increased incentive compensation expense as compared to theprior year period.    Total other expenses, net decreased $19.0 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 and third quarters of 2022.   26 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 Nine Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   September 30, 2023                                 Net income (loss)   $ 182,400     $ 58,408     $ (27,353 )   $ 213,455   Less: equity earnings from unconsolidated investment     —       (58,633 )     —       (58,633 ) Add: total distributions from unconsolidated investment     —       66,140       —       66,140   Add: interest expense, net     —       —       10,182       10,182   Add: depreciation, depletion and amortization     12,455       —       14       12,469   Add: asset impairments     132       —       —       132   Adjusted EBITDA   $ 194,987     $ 65,915     $ (17,157 )   $ 243,745                                     September 30, 2022                                 Net income (loss)   $ 204,548     $ 43,931     $ (43,205 )   $ 205,274   Less: equity earnings from unconsolidated investment     —       (44,036 )     —       (44,036 ) Add: total distributions from unconsolidated investment     —       34,055       —       34,055   Add: interest expense, net     —       —       22,636       22,636   Add: loss on extinguishment of debt     —       —       6,532       6,532   Add: depreciation, depletion and amortization     16,565       —       —       16,565   Add: asset impairments     874       —       —       874   Adjusted EBITDA   $ 221,987     $ 33,950     $ (14,037 )   $ 241,900     Net income increased $8.2 million during the first nine months of 2023 as compared to the prior year period primarily due to the decrease in operating and other expenses, net, partially offset by the decrease in revenues and other income, both discussed above. Adjusted EBITDA decreased $1.8 million as compared to the prior year period primarily due to a $27.0 million decrease in Adjusted EBITDA within our Mineral Rights segment as a result of lower revenues and other income as discussed above and a $3.1 million decrease in Adjusted EBITDA within our Corporate and Financing segment as a result of the increase in general and administrative expenses as discussed above. These decreases in Adjusted EBITDA were partially offset by a $32.0 million increase in Adjusted EBITDA within our Soda Ash segment due to higher distributions received from Sisecam Wyoming driven by Sisecam Wyoming's strong operating performance in the first nine months of 2023.   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 Nine Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   September 30, 2023                                 Cash flow provided by (used in)                                 Operating activities   $ 189,836     $ 65,901     $ (22,545 )   $ 233,192   Investing activities     2,791       —       (10 )     2,781   Financing activities     (583 )     —       (256,070 )     (256,653 )                                   September 30, 2022                                 Cash flow provided by (used in)                                 Operating activities   $ 194,475     $ 33,934     $ (30,459 )   $ 197,950   Investing activities     1,837       —       (59 )     1,778   Financing activities     (614 )     —       (273,697 )     (274,311 )   27 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 Nine Months Ended (In thousands)   Mineral Rights     Soda Ash     Corporate and Financing     Total   September 30, 2023                                 Net cash provided by (used in) operating activities   $ 189,836     $ 65,901     $ (22,545 )   $ 233,192   Add: proceeds from asset sales and disposals     961       —       —       961   Add: return of long-term contract receivable     1,830       —       —       1,830   Less: maintenance capital expenditures     —       —       (10 )     (10 ) Distributable cash flow   $ 192,627     $ 65,901     $ (22,555 )   $ 235,973   Less: proceeds from asset sales and disposals     (961 )     —       —       (961 ) Free cash flow   $ 191,666     $ 65,901     $ (22,555 )   $ 235,012                                     September 30, 2022                                 Net cash provided by (used in) operating activities   $ 194,475     $ 33,934     $ (30,459 )   $ 197,950   Add: proceeds from asset sales and disposals     699       —       —       699   Add: return of long-term contract receivable     1,138       —       —       1,138   Less: maintenance capital expenditures     —       —       (59 )     (59 ) Distributable cash flow   $ 196,312     $ 33,934     $ (30,518 )   $ 199,728   Less: proceeds from asset sales and disposals     (699 )     —       —       (699 ) Free cash flow   $ 195,613     $ 33,934     $ (30,518 )   $ 199,029     Operating cash flow, DCF and FCF increased $35.2 million, $36.2 million and $36.0 million, respectively, as compared to the prior year period due to increased cash flow within our Soda Ash and Corporate and Financing segments, partially offset by decreased cash flow within our Mineral Rights segment. The discussion by segment is as follows:   • Mineral Rights Segment   ◦ Operating cash flow, DCF and FCF decreased $4.6 million, $3.7 million and $3.9 million, respectively, primarily due to lower revenues and other income in the nine months ended September 30, 2023 as compared to the prior year period primarily due to decreased metallurgical coal sales prices and decreased revenues from oil and gas royalties and certain carbon neutral initiative transactions entered into in 2022.   • Soda Ash Segment   ◦ Operating cash flow, DCF and FCF increased $32.0 million as compared to the prior year period primarily due to higher distributions received from Sisecam Wyoming driven by Sisecam Wyoming's strong operating performance in the first half of 2023.   • Corporate and Financing Segment    ◦ Operating cash flow, DCF and FCF increased $7.9 million, $8.0 million and $8.0 million, respectively, 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 September 30, 2023, we had total liquidity of $45.4 million, consisting of $18.4 million of cash and cash equivalents and $27.0 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 September 30, 2023:        For the Three Months Ended           (In thousands)   December 31, 2022     March 31, 2023     June 30, 2023     September 30, 2023     Last 12 Months   Net income   $ 63,218     $ 79,275     $ 70,334     $ 63,846     $ 276,673   Less: equity earnings from unconsolidated investment     (15,759 )     (19,254 )     (26,978 )     (12,401 )     (74,392 ) Add: total distributions from unconsolidated investment     10,780       10,780       32,350       23,010       76,920   Add: interest expense, net     3,638       2,853       3,492       3,837       13,820   Add: loss on extinguishment of debt     3,933       —       —       —       3,933   Add: depreciation, depletion and amortization     5,954       4,083       3,792       4,594       18,423   Add: asset impairments     3,583       —       69       63       3,715   Adjusted EBITDA   $ 75,347     $ 77,737     $ 83,059     $ 82,949     $ 319,092                                             Debt—at September 30, 2023                                   $ 208,059                                             Leverage Ratio                                   0.7 x     28 Table of Contents   Cash Flows   Cash flows provided by operating activities increased $35.2  million, from $198.0  million in the  nine months ended September 30, 2022 to $233.2  million in the nine months ended September 30, 2023 , due to increased cash flow within our Soda Ash and Corporate and Financing segments, partially offset by decreased cash flow within our Mineral Rights segment, all discussed above.   Cash used in financing activities decreased $17.7 million, from $274.3 million used in the nine months ended September 30, 2022 to $256.7 million used in the nine months ended September 30, 2023, primarily due to the following:   • $215.0 million of borrowings on the Opco Credit Facility in 2023;   • $178.6 million of cash used to retire a portion of the 2025 Senior Notes in 2022;   • $19.3 million of cash used to redeem the preferred units paid-in-kind during the first quarter of 2022;    • $6.2 million of decreased cash used for other items, net primarily due to the premiums paid related to the repayment of the 2025 Senior Notes during the nine months ended September 30, 2022; and   • $2.8 million of decreased cash used for preferred unit distributions as a result of the redemption of preferred units in 2023.   These decreases in cash flow used were partially offset by the following:   • $178.3 million of cash used to redeem the preferred units in 2023;    • $157.0 million of cash used to repay a portion of the Opco Credit Facility in 2023;   • $35.4 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; and   • $33.6 million of cash used to settle the warrants in the third quarter of 2023.    Capital Resources and Obligations   Debt, Net   We had the following debt outstanding as of September 30, 2023 and December 31, 2022:       September 30,     December 31,   (In thousands)   2023     2022   Current portion of long-term debt, net   $ 36,780     $ 39,076   Long-term debt, net     170,735       129,205   Total debt, net   $ 207,515     $ 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.   29 Table of Contents