NRP expects flat or lower 2015 coal production

OREANDA-NEWS. February 13, 2015. Coal production from Natural Resource Partners' (NRP) leased properties will be flat to down this year from 2014 but average royalty revenues will dip because of weak market conditions.

Royalty production will be 44mn-51mn short tons (39.9mn-46.3mn metric tonnes), compared with 50.5mn st in 2014, the mineral property owner said today. But coal-related revenues will drop to \\$207mn-221mn from \\$226.7mn last year.

"The markets for coal and oil and gas remain difficult, and we will continue to manage our business with a long-term perspective through this cycle," NRP president Wyatt Hogan said. The company expects oil and gas revenues of \\$56mn-66mn, compared with \\$59.6mn last year, because increased production, including from assets it bought late last year, will partly offset "significantly lower prices."

NRP did not make price per ton estimates for its expected coal royalties. The business was challenged by lower metallurgical and thermal coal prices as well as a drop in production in 2014 and will be "down slightly from 2014 results."

Output on NRP-owned properties was 5pc lower in 2014 than in 2013 and the average royalty revenue dropped to \\$3.65/st from \\$3.99/st. Thermal coal represented 68pc of 2014 production and 60pc of revenue. The remainder was coking coal.

Fourth quarter coal production on NRP properties increased to just under 13mn st from 11.1mn st in the same period of 2013, but average royalty revenue dropped by 21pc to \\$3.39/st. Production and revenue were down from the third quarter 2014.

NRP's coal reserves are primarily in the Appalachias and the Illinois basin. But it also owns properties in Alabama, Louisiana and the northern Powder River basin. It also holds oil, gas, aggregates and industrial minerals reserves.