NATURAL RESOURCE PARTNERS LP [NRP] Filings

10-Q 1 nrp20220930_10q.htm FORM 10-Q nrp20220930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022 or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		Commission file number:	001-31465

NATURAL RESOURCE PARTNERS LP
	(Exact name of registrant as specified in its charter)

Delaware

35-2164875

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1415 Louisiana Street, Suite 2400

Houston, Texas 77002

(Address of principal executive offices)

(Zip Code)

(713) 751-7507

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Units representing limited partner interests		NRP		New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of "accelerated filer", "large accelerated filer", "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-accelerated Filer	☐	Smaller Reporting Company	☒
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Table of Contents

NATURAL RESOURCE PARTNERS, L.P.

TABLE OF CONTENTS

		Page
Part I. Financial Information
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets	1
	Consolidated Statements of Comprehensive Income	2
	Consolidated Statements of Partners’ Capital	3
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
Part II. Other Information
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	28
	Signatures	29

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

NATURAL RESOURCE PARTNERS L.P.

CONSOLIDATED BALANCE SHEETS

	*September 30,*		*December 31,*
(In thousands, except unit data)	*2022*		*2021*
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	60,937	$	135,520
Accounts receivable, net		34,726		24,538
Other current assets, net		1,228		2,723
Total current assets	$	96,891	$	162,781
Land		24,008		24,008
Mineral rights, net		421,351		437,697
Intangible assets, net		15,168		16,130
Equity in unconsolidated investment		284,806		276,004
Long-term contract receivable, net		29,570		31,371
Other long-term assets, net		7,216		5,832
Total assets	$	879,010	$	953,823
LIABILITIES AND CAPITAL
Current liabilities
Accounts payable	$	2,179	$	1,956
Accrued liabilities		5,913		10,297
Accrued interest		4,227		1,213
Current portion of deferred revenue		8,886		11,817
Current portion of long-term debt, net		89,989		39,102
Total current liabilities	$	111,194	$	64,385
Deferred revenue		35,882		50,045
Long-term debt, net		148,734		394,443
Other non-current liabilities		5,231		5,018
Total liabilities	$	301,041	$	513,891
Commitments and contingencies (see Note 12)
Class A Convertible Preferred Units (250,000 and 269,321 units issued and outstanding at September 30, 2022 and December 31, 2021, respectively, at $1,000 par value per unit; liquidation preference of $1,850 per unit at September 30, 2022 and December 31, 2021)	$	164,587	$	183,908
Partners’ capital
Common unitholders’ interest (12,505,996 and 12,351,306 units issued and outstanding at September 30, 2022 and December 31, 2021, respectively)	$	358,332	$	203,062
General partner’s interest		5,054		1,787
Warrant holders’ interest		47,964		47,964
Accumulated other comprehensive income		2,032		3,211
Total partners’ capital	$	413,382	$	256,024
Total liabilities and partners' capital	$	879,010	$	953,823

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

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NATURAL RESOURCE PARTNERS L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	*For the Three Months Ended September 30,*						*For the Nine Months Ended September 30,*
(In thousands, except per unit data)	*2022*			*2021*			*2022*			*2021*
Revenues and other income
Royalty and other mineral rights	$	81,379		$	47,884		$	231,795		$	114,422
Transportation and processing services		5,969			2,171			15,377			6,545
Equity in earnings of Sisecam Wyoming		14,556			6,672			44,036			11,246
Gain on asset sales and disposals		354			68			699			243
Total revenues and other income	$	102,258		$	56,795		$	291,907		$	132,456

Operating expenses
Operating and maintenance expenses	$	7,898		$	8,354		$	25,989		$	19,076
Depreciation, depletion and amortization		6,850			5,182			16,565			15,145
General and administrative expenses		4,518			4,052			14,037			11,550
Asset impairments		812			57			874			4,116
Total operating expenses	$	20,078		$	17,645		$	57,465		$	49,887

Income from operations	$	82,180		$	39,150		$	234,442		$	82,569

Other expenses, net
Interest expense, net	$	(5,141	)	$	(9,652	)	$	(22,636	)	$	(29,308	)
Loss on extinguishment of debt		(2,484	)		—			(6,532	)		—
Total other expenses, net	$	(7,625	)	$	(9,652	)	$	(29,168	)	$	(29,308	)

Net income	$	74,555		$	29,498		$	205,274		$	53,261
Less: income attributable to preferred unitholders		(7,500	)		(7,961	)		(22,500	)		(23,530	)
Net income attributable to common unitholders and the general partner	$	67,055		$	21,537		$	182,774		$	29,731

Net income attributable to common unitholders	$	65,714		$	21,106		$	179,119		$	29,136
Net income attributable to the general partner		1,341			431			3,655			595

Net income per common unit (see Note 4)
Basic	$	5.25		$	1.71		$	14.36		$	2.36
Diluted		3.71			1.10			10.24			1.98

Net income	$	74,555		$	29,498		$	205,274		$	53,261
Comprehensive income (loss) from unconsolidated investment and other		289			4,204			(1,179	)		7,469
Comprehensive income	$	74,844		$	33,702		$	204,095		$	60,730

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

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NATURAL RESOURCE PARTNERS L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(Unaudited)

											*Accumulated*
											*Other*			*Total*
	*Common Unitholders*					*General*			*Warrant*		*Comprehensive*			*Partners'*
(In thousands)	*Units*		*Amounts*			*Partner*			*Holders*		*Income*			*Capital*
Balance at December 31, 2021		12,351	$	203,062		$	1,787		$	47,964	$	3,211		$	256,024
Net income ⁽¹⁾		—		62,621			1,278			—		—			63,899
Distributions to common unitholders and the general partner		—		(5,559	)		(113	)		—		—			(5,672	)
Distributions to preferred unitholders		—		(7,603	)		(155	)		—		—			(7,758	)
Issuance of unit-based awards		155		—			—			—		—			—
Unit-based awards amortization and vesting, net		—		(1,754	)		—			—		—			(1,754	)
Capital contribution		—		—			112			—		—			112
Comprehensive income from unconsolidated investment and other		—		—			—			—		2,545			2,545
Balance at March 31, 2022		12,506	$	250,767		$	2,909		$	47,964	$	5,756		$	307,396
Net income ⁽¹⁾		—		65,484			1,336			—		—			66,820
Distributions to common unitholders and the general partner		—		(9,379	)		(191	)		—		—			(9,570	)
Distributions to preferred unitholders		—		(7,350	)		(150	)		—		—			(7,500	)
Unit-based awards amortization and vesting		—		1,231			—			—		—			1,231
Comprehensive loss from unconsolidated investment and other		—		—			—			—		(4,013	)		(4,013	)
Balance at June 30, 2022		12,506	$	300,753		$	3,904		$	47,964	$	1,743		$	354,364
Net income ⁽¹⁾		—		73,064			1,491			—		—			74,555
Distributions to common unitholders and the general partner		—		(9,380	)		(191	)		—		—			(9,571	)
Distributions to preferred unitholders		—		(7,350	)		(150	)		—		—			(7,500	)
Unit-based awards amortization and vesting		—		1,245			—			—		—			1,245
Comprehensive income from unconsolidated investment and other		—		—			—			—		289			289
Balance at September 30, 2022		12,506	$	358,332		$	5,054		$	47,964	$	2,032		$	413,382

⁽¹⁾	Net income includes $7.5 million of income attributable to preferred unitholders that accumulated during the period, of which $7.4 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.

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

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NATURAL RESOURCE PARTNERS L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(Unaudited)

											*Accumulated*
											*Other*		*Total*
	*Common Unitholders*					*General*			*Warrant*		*Comprehensive*		*Partners'*
(In thousands)	*Units*		*Amounts*			*Partner*			*Holders*		*Income*		*Capital*
Balance at December 31, 2020		12,261	$	136,927		$	459		$	66,816	$	322	$	204,524
Net income ⁽¹⁾		—		8,213			168			—		—		8,381
Distributions to common unitholders and the general partner		—		(5,517	)		(113	)		—		—		(5,630	)
Distributions to preferred unitholders		—		(7,461	)		(152	)		—		—		(7,613	)
Issuance of unit-based awards		90		—			—			—		—		—
Unit-based awards amortization and vesting, net		—		215			—			—		—		215
Capital contribution		—		—			32			—		—		32
Comprehensive income from unconsolidated investment and other		—		—			—			—		732		732
Balance at March 31, 2021		12,351	$	132,377		$	394		$	66,816	$	1,054	$	200,641
Net income ⁽²⁾		—		15,074			308			—		—		15,382
Distributions to common unitholders and the general partner		—		(5,559	)		(113	)		—		—		(5,672	)
Distributions to preferred unitholders		—		(7,571	)		(155	)		—		—		(7,726	)
Unit-based awards amortization and vesting		—		515			—			—		—		515
Comprehensive income from unconsolidated investment and other		—		—			—			—		2,533		2,533
Balance at June 30, 2021		12,351	$	134,836		$	434		$	66,816	$	3,587	$	205,673
Net income ⁽³⁾		—		28,909			589			—		—		29,498
Distributions to common unitholders and the general partner		—		(5,558	)		(113	)		—		—		(5,671	)
Distributions to preferred unitholders		—		(7,687	)		(156	)		—		—		(7,843	)
Unit-based awards amortization and vesting		—		959			—			—		—		959
Comprehensive income from unconsolidated investment and other		—		—			—			—		4,204		4,204
Balance at September 30, 2021		12,351	$	151,459		$	754		$	66,816	$	7,791	$	226,820

⁽¹⁾	Net income includes $7.7 million of income attributable to preferred unitholders that accumulated during the period, of which $7.6 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.
⁽²⁾	Net income includes $7.8 million of income attributable to preferred unitholders that accumulated during the period, of which $7.7 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.
⁽³⁾	Net income includes $8.0 million of income attributable to preferred unitholders that accumulated during the period, of which $7.8 million is allocated to the common unitholders and $0.2 million is allocated to the general partner.

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

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NATURAL RESOURCE PARTNERS L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	*For the Nine Months Ended September 30,*
(In thousands)	*2022*			*2021*
Cash flows from operating activities
Net income	$	205,274		$	53,261
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Depreciation, depletion and amortization		16,565			15,145
Distributions from unconsolidated investment		34,055			3,920
Equity earnings from unconsolidated investment		(44,036	)		(11,246	)
Gain on asset sales and disposals		(699	)		(243	)
Loss on extinguishment of debt		6,532			—
Asset impairments		874			4,116
Bad debt expense		641			1,715
Unit-based compensation expense		4,216			2,837
Amortization of debt issuance costs and other		1,887			1,899
Change in operating assets and liabilities:
Accounts receivable		(10,118	)		(12,332	)
Accounts payable		223			89
Accrued liabilities		(4,831	)		(839	)
Accrued interest		3,014			6,971
Deferred revenue		(17,094	)		(2,121	)
Other items, net		1,447			3,471
Net cash provided by operating activities	$	197,950		$	66,643

Cash flows from investing activities
Proceeds from asset sales and disposals	$	699		$	249
Return of long-term contract receivable		1,138			1,622
Capital expenditures		(59	)		—
Net cash provided by investing activities	$	1,778		$	1,871

Cash flows from financing activities
Debt repayments	$	(197,665	)	$	(19,061	)
Distributions to common unitholders and the general partner		(24,813	)		(16,973	)
Distributions to preferred unitholders		(22,500	)		(11,591	)
Acquisition of non-controlling interest in BRP		—			(1,000	)
Redemption of preferred units paid-in-kind		(19,579	)		—
Other items, net		(9,754	)		(690	)
Net cash used in financing activities	$	(274,311	)	$	(49,315	)

Net increase (decrease) in cash and cash equivalents	$	(74,583	)	$	19,199
Cash and cash equivalents at beginning of period		135,520			99,790
Cash and cash equivalents at end of period	$	60,937		$	118,989

Supplemental cash flow information:
Cash paid for interest	$	18,501		$	20,829
Non-cash investing and financing activities:
Preferred unit distributions paid-in-kind		—			11,591

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

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Nature of Business

Natural Resource Partners L.P. (the "Partnership") engages principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and owns a non-controlling 49% interest in Sisecam Wyoming LLC ("Sisecam Wyoming"), a trona ore mining and soda ash production business. The Partnership is organized into two operating segments further described in Note 5. Segment Information. As used in these Notes to Consolidated Financial Statements, the terms "NRP," "we," "us" and "our" refer to Natural Resource Partners L.P. and its subsidiaries, unless otherwise stated or indicated by context.

Principles of Consolidation and Reporting

The accompanying unaudited Consolidated Financial Statements of the Partnership have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2021 and notes thereto included in the Partnership's Annual Report on Form 10-K, which was filed with the SEC on March 15, 2022.

2. Revenues from Contracts with Customers

The following table presents the Partnership's Mineral Rights segment revenues by major source:

	*For the Three Months Ended September 30,*				*For the Nine Months Ended September 30,*
(In thousands)	*2022*		*2021*		*2022*		*2021*
Coal royalty revenues	$	52,381	$	32,432	$	170,775	$	66,095
Production lease minimum revenues		1,885		3,235		3,542		10,241
Minimum lease straight-line revenues		4,778		4,808		14,235		15,773
Carbon neutral initiative revenues ⁽¹⁾		8,600		—		8,600		—
Property tax revenues		1,360		1,466		4,527		4,522
Wheelage revenues		2,977		1,964		11,073		5,589
Coal overriding royalty revenues		1,367		757		2,307		3,592
Lease amendment revenues		759		1,519		2,450		3,159
Aggregates royalty revenues		884		429		2,691		1,339
Oil and gas royalty revenues		6,170		1,154		10,890		3,420
Other revenues		218		120		705		692
Royalty and other mineral rights revenues	$	81,379	$	47,884	$	231,795	$	114,422
Transportation and processing services revenues ⁽²⁾		5,969		2,171		15,377		6,545
Total Mineral Rights segment revenues	$	87,348	$	50,055	$	247,172	$	120,967

⁽¹⁾

Included within carbon neutral initiative revenues are payments that are recognized at a point in time upon satisfaction of NRP's performance obligation.

⁽²⁾

Transportation and processing services revenues from contracts with customers as defined under ASC 606 was $4.9 million and $1.2 million for the three months ended September 30, 2022 and 2021, respectively, and $12.9 million and $3.7 million for the nine months ended September 30, 2022 and 2021, respectively. The remaining transportation and processing services revenues of $1.1 million and $0.9 million for the three months ended September 30, 2022 and 2021, respectively, and $2.5 million and $2.8 million for the nine months ended September 30, 2022 and 2021, respectively, related to other NRP-owned infrastructure leased to and operated by third-party operators accounted for under other guidance. See Note 14. Financing Transaction for more information.

The following table details the Partnership's Mineral Rights segment receivables and liabilities resulting from contracts with customers:

	*September 30,*		*December 31,*
(In thousands)	*2022*		*2021*
Receivables
Accounts receivable, net	$	30,991	$	22,277
Other current assets, net ⁽¹⁾		874		769
Other long-term assets, net ⁽²⁾		75		250

Contract liabilities
Current portion of deferred revenue	$	8,886	$	11,817
Deferred revenue		35,882		50,045

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

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

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

The following table shows the activity related to the Partnership's Mineral Rights segment deferred revenue:

	*For the Nine Months Ended*
	*September 30,*
(In thousands)	*2022*			*2021*
Balance at beginning of period (current and non-current)	$	61,862		$	61,554
Increase due to minimums and lease amendment fees		11,309			6,411
Recognition of previously deferred revenue		(28,403	)		(8,532	)
Balance at end of period (current and non-current)	$	44,768		$	59,433

The Partnership's non-cancelable annual minimum payments due under the lease terms of its coal and aggregates royalty leases are as follows as of September 30, 2022 (in thousands):

Lease Term ⁽¹⁾	*Weighted Average Remaining Years*	*Annual Minimum Payments*
0 - 5 years	2.4	$	22,229
5 - 10 years	3.8		7,517
10+ years	12.8		27,221
Total	7.5	$	56,967

⁽¹⁾	Lease term does not include renewal periods.

3. Common and Preferred Unit Distributions

The Partnership makes cash distributions to common and preferred unitholders on a quarterly basis, subject to approval by the Board of Directors of GP Natural Resource Partners LLC (the "Board of Directors"). NRP recognizes both common unit and preferred unit distributions on the date the distribution is declared.

Distributions made on the common units and the general partner's general partner ("GP") interest are made on a pro-rata basis in accordance with their relative percentage interests in the Partnership. The general partner is entitled to receive 2% of such distributions.

Income available to common unitholders and the general partner is reduced by preferred unit distributions that accumulated during the period. NRP reduced net income available to common unitholders and the general partner by $7.5 million and $8.0 million during the three months ended September 30, 2022 and 2021, respectively, and $22.5 million and $23.5 million during the nine months ended September 30, 2022 and 2021, respectively, as a result of accumulated preferred unit distributions earned during the period.

The following table shows the cash distributions declared and paid to common and preferred unitholders during the nine months ended September 30, 2022 and 2021, respectively:

		*Cash Distributions*								*Paid-in-kind Distributions*
		*Common Units*				*Preferred Units*
				*Total Distribution (1)*				*Total Distribution*		*Total Distribution*
Month Paid	*Period Covered by Distribution*	*Distribution per Unit*		*(In thousands)*		*Distribution per Unit*		*(In thousands)*		*(In units)*
2022
February 2022	October 1 - December 31, 2021	$	0.45	$	5,672	$	30.00	$	7,500	—
May 2022	January 1 - March 31, 2022		0.75		9,570		30.00		7,500	—
August 2022	April 1 - June 30, 2022		0.75		9,571		30.00		7,500	—

2021
February 2021	October 1 - December 31, 2020	$	0.45	$	5,630	$	15.00	$	3,806	3,806
May 2021	January 1 - March 31, 2021		0.45		5,672		15.00		3,864	3,864
August 2021	April 1 - June 30, 2021		0.45		5,671		15.00		3,921	3,921

⁽¹⁾	Totals include the amount paid to NRP's general partner in accordance with the general partner's 2% general partner interest.

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

4. Net Income Per Common Unit

Basic net income per common unit is computed by dividing net income, after considering income attributable to preferred unitholders and the general partner’s general partner interest, by the weighted average number of common units outstanding. Diluted net income per common unit includes the effect of NRP's preferred units, warrants, and unvested unit-based awards if the inclusion of these items is dilutive.

The dilutive effect of the preferred units is calculated using the if-converted method. Under the if-converted method, the preferred units are assumed to be converted at the beginning of the period, and the resulting common units are included in the denominator of the diluted net income per unit calculation for the period being presented. Distributions declared in the period and undeclared distributions on the preferred units that accumulated during the period are added back to the numerator for purposes of the if-converted calculation. The calculation of diluted net income per common unit for the three and nine months ended September 30, 2022 and 2021 includes the assumed conversion of the preferred units.

The dilutive effect of the warrants is calculated using the treasury stock method, which assumes that the proceeds from the exercise of these instruments are used to purchase common units at the average market price for the period. The calculation of diluted net income per common unit for the three and nine months ended September 30, 2022 includes the net settlement of warrants to purchase 0.75 million common units at a strike price of $22.81 and the net settlement of warrants to purchase 2.25 million common units with a strike price of $34.00 whereas the calculation of diluted net income per common unit for the three and nine months ended September 30, 2021 does not include the net settlement of warrants to purchase 1.75 million common units at a strike price of $22.81 or the net settlement of warrants to purchase 2.25 million common units with a strike price of $34.00 because the impact would have been anti-dilutive.

The following tables reconcile the numerator and denominator of the basic and diluted net income per common unit computations and calculates basic and diluted net income per common unit:

	*For the Three Months Ended September 30,*						*For the Nine Months Ended September 30,*
(In thousands, except per unit data)	*2022*			*2021*			*2022*			*2021*
Allocation of net income
Net income	$	74,555		$	29,498		$	205,274		$	53,261
Less: income attributable to preferred unitholders		(7,500	)		(7,961	)		(22,500	)		(23,530	)
Net income attributable to common unitholders and the general partner	$	67,055		$	21,537		$	182,774		$	29,731
Less: net income attributable to the general partner		(1,341	)		(431	)		(3,655	)		(595	)
Net income attributable to common unitholders	$	65,714		$	21,106		$	179,119		$	29,136

Basic net income per common unit
Weighted average common units—basic		12,506			12,351			12,476			12,332
Basic net income per common unit	$	5.25		$	1.71		$	14.36		$	2.36

Diluted net income per common unit
Weighted average common units—basic		12,506			12,351			12,476			12,332
Plus: dilutive effect of preferred units		6,210			13,835			6,210			13,835
Plus: dilutive effect of warrants		807			—			759			—
Plus: dilutive effect of unvested unit-based awards		195			188			204			144
Weighted average common units—diluted		19,718			26,374			19,649			26,311

Net income	$	74,555		$	29,498		$	205,274		$	53,261
Less: income attributable to preferred unitholders		—			—			—			—
Diluted net income attributable to common unitholders and the general partner	$	74,555		$	29,498		$	205,274		$	53,261
Less: diluted net income attributable to the general partner		(1,491	)		(589	)		(4,105	)		(1,065	)
Diluted net income attributable to common unitholders	$	73,064		$	28,909		$	201,169		$	52,196

Diluted net income per common unit	$	3.71		$	1.10		$	10.24		$	1.98

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

5. Segment Information

The Partnership's segments are strategic business units that offer distinct products and services to different customers in different geographies within the U.S. and that are managed accordingly. NRP has the following two operating segments:

Mineral Rights—consists of mineral interests and other subsurface rights across the United States. NRP's ownership provides critical inputs for the manufacturing of steel, electricity and basic building materials, as well as opportunities for carbon sequestration and renewable energy. The Partnership is working to strategically redefine its business as a key player in the transitional energy economy in the years to come.

Soda Ash—consists of the Partnership's 49% non-controlling equity interest in Sisecam Wyoming, a trona ore mining operation and soda ash refinery in the Green River Basin of Wyoming. Sisecam Wyoming mines trona and processes it into soda ash that is sold both domestically and internationally to the glass and chemicals industries.

Direct segment costs and certain other costs incurred at the corporate level that are identifiable and that benefit the Partnership's segments are allocated to the operating segments accordingly. These allocated costs generally include salaries and benefits, insurance, property taxes, legal, royalty, information technology and shared facilities services and are included in operating and maintenance expenses on the Partnership's Consolidated Statements of Comprehensive Income.

Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment and are included in general and administrative expenses on the Partnership's Consolidated Statements of Comprehensive Income.

The following table summarizes certain financial information for each of the Partnership's business segments:

	*Operating Segments*
(In thousands)	*Mineral Rights*		*Soda Ash*		*Corporate and Financing*			*Total*
For the Three Months Ended September 30, 2022
Revenues	$	87,348	$	14,556	$	—		$	101,904
Gain on asset sales and disposals		354		—		—			354
Operating and maintenance expenses		7,867		31		—			7,898
Depreciation, depletion and amortization		6,850		—		—			6,850
General and administrative expenses		—		—		4,518			4,518
Asset impairments		812		—		—			812
Other expenses, net		—		—		7,625			7,625
Net income (loss)		72,173		14,525		(12,143	)		74,555

For the Three Months Ended September 30, 2021
Revenues	$	50,055	$	6,672	$	—		$	56,727
Gain on asset sales and disposals		68		—		—			68
Operating and maintenance expenses		8,278		76		—			8,354
Depreciation, depletion and amortization		5,182		—		—			5,182
General and administrative expenses		—		—		4,052			4,052
Asset impairments		57		—		—			57
Other expenses, net		—		—		9,652			9,652
Net income (loss)		36,606		6,596		(13,704	)		29,498

For the Nine Months Ended September 30, 2022
Revenues	$	247,172	$	44,036	$	—		$	291,208
Gain on asset sales and disposals		699		—		—			699
Operating and maintenance expenses		25,884		105		—			25,989
Depreciation, depletion and amortization		16,565		—		—			16,565
General and administrative expenses		—		—		14,037			14,037
Asset impairments		874		—		—			874
Other expenses, net		—		—		29,168			29,168
Net income (loss)		204,548		43,931		(43,205	)		205,274

For the Nine Months Ended September 30, 2021
Revenues	$	120,967	$	11,246	$	—		$	132,213
Gain on asset sales and disposals		243		—		—			243
Operating and maintenance expenses		18,945		131		—			19,076
Depreciation, depletion and amortization		15,145		—		—			15,145
General and administrative expenses		—		—		11,550			11,550
Asset impairments		4,116		—		—			4,116
Other expenses, net		24		—		29,284			29,308
Net income (loss)		82,980		11,115		(40,834	)		53,261

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

6. Equity Investment

The Partnership accounts for its 49% investment in Sisecam Wyoming using the equity method of accounting. Activity related to this investment is as follows:

	*For the Three Months Ended September 30,*						*For the Nine Months Ended September 30,*
(In thousands)	*2022*			*2021*			*2022*			*2021*
Balance at beginning of period	$	280,300		$	266,433		$	276,004		$	262,514
Income allocation to NRP’s equity interests		15,732			7,989			47,601			15,060
Amortization of basis difference		(1,176	)		(1,317	)		(3,565	)		(3,814	)
Other comprehensive income (loss)		289			4,204			(1,179	)		7,469
Distribution		(10,339	)		—			(34,055	)		(3,920	)
Balance at end of period	$	284,806		$	277,309		$	284,806		$	277,309

The following table represents summarized financial information for Sisecam Wyoming as derived from their respective unaudited financial statements for the three and nine months ended September 30, 2022 and 2021:

	*For the Three Months Ended September 30,*				*For the Nine Months Ended September 30,*
(In thousands)	*2022*		*2021*		*2022*		*2021*
Net sales	$	190,450	$	135,648	$	542,955	$	384,129
Gross profit	$	39,679		23,530		119,723		50,317
Net income	$	32,105		16,304		97,144		30,734

7. Mineral Rights, Net

The Partnership’s mineral rights consist of the following:

	*September 30, 2022*							*December 31, 2021*
(In thousands)	*Carrying Value*		*Accumulated Depletion*			*Net Book Value*		*Carrying Value*		*Accumulated Depletion*			*Net Book Value*
Coal properties	$	666,604	$	(265,031	)	$	401,573	$	670,650	$	(253,503	)	$	417,147
Aggregates properties		8,674		(3,310	)		5,364		8,747		(2,975	)		5,772
Oil and gas royalty properties		12,354		(9,479	)		2,875		12,354		(9,115	)		3,239
Other		13,151		(1,612	)		11,539		13,151		(1,612	)		11,539
Total mineral rights, net	$	700,783	$	(279,432	)	$	421,351	$	704,902	$	(267,205	)	$	437,697

Depletion expense related to the Partnership’s mineral rights is included in depreciation, depletion and amortization on its Consolidated Statements of Comprehensive Income and totaled $6.4 million and $4.6 million for the three months ended September 30, 2022 and 2021, respectively, and $15.5 million and $13.8 million for the nine months ended September 30, 2022 and 2021, respectively.

During the three and nine months ended September 30, 2022 the Partnership recorded $0.8 million and $0.9 million of asset impairments, respectively. During the three months ended September 30, 2021, the Partnership did not have any material asset impairments and during the nine months ended September 30, 2021, the Partnership recorded $4.1 million of expense primarily due to a lease termination that resulted in the full impairment of a coal property. The Partnership has developed procedures to evaluate its long-lived assets for possible impairment periodically or whenever events or changes in circumstances indicate an asset's net book value may not be recoverable. Potential events or circumstances include, but are not limited to, specific events such as a reduction in economically recoverable reserves or production ceasing on a property for an extended period. This analysis is based on historic, current and future performance and considers both quantitative and qualitative information. While the Partnership's impairment evaluation as of September 30, 2022 incorporated an estimated impact of the global COVID-19 pandemic, there is significant uncertainty as to the severity and duration of this disruption. If the impact is worse than current estimates, an additional impairment charge may be recognized in future periods.

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NATURAL RESOURCE PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

(Unaudited)

8. Debt, Net

The Partnership's debt consists of the following:

		*September 30,*				*December 31,*
(In thousands)		*2022*				*2021*