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Natural Resource Partners L.P. Reports Second Quarter 2003 Results

08/07/2003

HOUSTON, Aug 7, 2003 /PRNewswire-FirstCall via COMTEX/ -- Natural Resource Partners L.P. (NYSE: NRP) today reported net income of $10.2 million or $0.44 per unit for the second quarter ended June 30, 2003. Earnings before interest, taxes, depletion and amortization (EBITDA) were $17.6 million. For the six months ended June 30, 2003, NRP reported net income of $18.2 million or $0.78 per unit. For the same six month period, EBITDA was $31.8 million.

Second Quarter 2003

During the second quarter of 2003, NRP's lessees sold 11.4 million tons of coal generating $19.2 million of coal royalty revenues for an average royalty revenue per ton of $1.69. This is compared to 7.0 million tons of coal, coal royalty revenues of $11.7 million and an average royalty revenue per ton of $1.68 for the second quarter of 2002. The approximately 64% increase in both revenues and production is predominantly due to increased production from acquisitions in Appalachia and the resumption of production from several previously idle mines.

Corbin J. Robertson, Jr., Chairman and Chief Executive Officer said, "NRP had an excellent second quarter that included for the first time the benefit of the Alpha Natural Resources reserves, our second major acquisition. The increased production, in addition to slightly higher coal prices, combined to generate better than anticipated results. In addition, on June 30, we entered into an agreement to acquire the PinnOak reserves. That acquisition closed on July 11 and will be included for the first time in our third quarter results. We are very pleased with our growth to date and will continue to focus on integrating these assets as well as seeking further acquisitions."

"We also arranged long-term financing at very attractive rates for all our acquisitions to date, including $50 million of the PinnOak acquisition that will be drawn in September," said Robertson. In anticipation of the issuance of $125 million of senior notes, which closed on June 19, 2003, NRP entered into a treasury rate hedge with respect to $50 million of the senior notes. In conjunction with the closing of that transaction, NRP paid $1.4 million to settle this treasury rate hedge. Of the $1.4 million paid for the settlement, $0.9 million will be amortized into expense over 20 years and the balance of $0.5 million has been expensed in the second quarter.

Year to Date

For the six months ended June 30, 2003, NRP's lessees sold 21.2 million tons of coal generating $34.6 million of coal royalty revenues for an average royalty revenue per ton of $1.63. This is compared to 13.7 million tons of coal, coal royalty revenues of $22.5 million and an average royalty revenue per ton of $1.64 for the comparable period in 2002. The approximately 54% increase in both revenues and production is predominantly due to increased production from acquisitions in Appalachia, the resumption of mining at several previously idle mines and a new mine started in 2002 reaching full production this year.

2003 Outlook

Natural Resource Partners expects its lessees to produce between 43 million tons and 46 million tons of coal in 2003. Production in Appalachia is expected to account for approximately 84% to 87% of the coal produced, with 4% to 6% in the Illinois Basin and 9% to 10% from the Northern Powder River Basin. This production should generate coal royalty revenues of approximately $72 million to $77 million with total revenues of between $82 million to $86 million based upon average selling prices provided by its lessees. General and administrative costs are forecasted to range between $7.1 million and $7.4 million with depletion and amortization of approximately $24 million to $26 million. Interest expense should range between $6.6 million and $6.8 million. NRP expects net income to be between $37 million and $40 million.

Distributions

On August 14, 2003, Natural Resource Partners will make a distribution of $12.1 million or $0.5225 per unit on all 22.7 million limited partner units outstanding as well as the 2% distribution with respect to the general partner interest. This distribution equates to an annualized distribution of $2.09 per unit.

Disclosure of Non-GAAP Financial Measures

NRP calculates EBITDA by adding depletion, amortization and interest expense to net income. EBITDA is not defined under generally accepted accounting principles (GAAP) and is not intended to be used in lieu of GAAP presentations of results of operations or cash provided by operating activities. EBITDA is presented because management believes it provides additional information with respect to both the performance of our fundamental business activities as well as our ability to meet our future debt service, working capital requirements and minimum distributions. Management also believes that debt holders and investment analysts commonly use EBITDA to analyze company performance. A reconciliation of EBITDA to net income is included in the tables attached to this release.

Natural Resource Partners L.P. is headquartered in Houston, TX, with its operations headquarters in Huntington, WV. NRP is a master limited partnership that is principally engaged in the business of owning and managing coal properties in the three major coal producing regions of the United States: Appalachia, the Illinois Basin and the Powder River Basin.

For additional information, please contact Kathy Hager at 713-751-7555 or khager@nrplp.com. Further information about NRP is available on the partnership's website at http://www.nrplp.com .

This press release may include "forward-looking statements" as defined by the Securities and Exchange Commission. Such statements include the anticipated net income, coal royalty revenue, coal production, depletion, general and administrative costs and all income or expense items associated with the 2003 outlook. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the partnership based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the partnership. These risks include, but are not limited to, decreases in demand for coal; changes in operating conditions and costs; production cuts by our lessees; commodity prices; unanticipated geologic problems; changes in the legislative or regulatory environment and other factors detailed in Natural Resource Partners' Securities and Exchange Commission filings.

                             -Financials follow-


                        NATURAL RESOURCE PARTNERS L.P.
                             Operating Statistics
                     (In thousands, except per ton data)
                                 (unaudited)

                                      Three Months Ended   Six Months Ended
                                           June 30,            June 30,
                                        2003      2002      2003      2002
    Coal royalty revenues:
      Appalachia                      $16,886    $9,703   $29,599   $18,526
      Illinois Basin                      970       706     1,835     1,284
      Northern Powder River Basin       1,332     1,294     3,163     2,659

    Total                             $19,188   $11,703   $34,597   $22,469

    Sales volumes (tons):
      Appalachia                        9,464     5,317    16,960    10,335
      Illinois Basin                      829       554     1,550     1,018
      Northern Powder River Basin       1,083     1,114     2,684     2,382

    Total                              11,376     6,985    21,194    13,735

    Average royalty revenue per ton:
      Appalachia                        $1.78     $1.82     $1.75     $1.79
      Illinois Basin                     1.17      1.27      1.18      1.26
      Northern Powder River Basin        1.23      1.16      1.18      1.12

    Total                               $1.69     $1.68     $1.63     $1.64


                        NATURAL RESOURCE PARTNERS L.P.
                             Statement of Income
                   (In thousands, except per unit amounts)
                                 (unaudited)

                                              Three Months    Six Months
                                                 Ended          Ended
                                             June 30, 2003  June 30, 2003
    Revenues:
      Coal royalties                            $19,188        $34,597
      Property taxes                              1,301          2,189
      Minimums recognized as revenue                455          1,259
      Override royalties                            200            661
      Other                                         695          1,203
        Total revenues                           21,839         39,909

    Operating costs and expenses:
      Depletion and amortization                  6,369         12,173
      General administrative and other            2,131          4,307
      Taxes other than income                     1,421          2,581
      Override payments                             ---            388
      Coal royalty payments                         161            311
        Total operating costs and expenses       10,082         19,760
    Income from operations                       11,757         20,149
    Other income (expense)

      Interest expense                           (1,131)        (1,597)
      Interest income                                56            103

      Loss from interest rate hedge                (499)          (499)
    Net income                                  $10,183        $18,156

      General partner's net income                 $204           $363
      Limited partner's net income               $9,979        $17,793
    Basic and diluted net income per
     limited partner unit
      Common                                      $0.44          $0.78
      Subordinated                                $0.44          $0.78
    Weighted average number of units outstanding:
      Common                                     11,354         11,354
      Subordinated                               11,354         11,354


                        NATURAL RESOURCE PARTNERS L.P.
                           Statement of Cash Flows
                                (In thousands)
                                 (unaudited)

                                        Three Months Ended   Six Months Ended
                                           June 30, 2003      June 30, 2003
    Cash flows from operating activities:
      Net income                              $10,183            $18,156
      Adjustments to reconcile net income
       to net cash provided by operating
       activities:
        Depletion and amortization              6,369             12,173
    Change in operating assets and
     liabilities:
        Accounts receivable                    (2,650)              (557)
        Other assets                           (2,343)            (2,180)
        Accounts payable and accrued
         liabilities                              219               (642)
        Deferred revenue                         (638)              (217)
        Accrued incentive plan expenses           702                798
        Property and franchise taxes payable      229                (91)
          Net cash provided by operating
           activities                          12,071             27,440
    Cash flows from investing activities:
      Acquisition of property                 (53,812)           (65,664)
      Cash held in escrow                     (58,000)           (58,000)
          Net cash used in investing
           activities                        (111,812)          (123,664)
    Cash flows from financing activities:
        Proceeds from loans                   236,600            248,100
        Repayment of loans                   (122,600)          (122,600)
        Distributions to partners             (12,106)           (21,917)
        Settlement of hedge included in
         other comprehensive loss                (931)              (931)
          Net cash provided by financing
           activities                         100,963            102,652
    Net increase in cash                        1,222              6,428
    Cash at beginning of period                12,959              7,753
    Cash at end of period                     $14,181            $14,181

    Supplemental cash flow information:
        Cash paid for interest                 $1,025             $1,416


                        NATURAL RESOURCE PARTNERS L.P.
                           Condensed Balance Sheet
                                (In thousands)

                                             June 30,          December 31,
                                               2003                2002
                                            (unaudited)

    Current assets                            $23,967            $17,307

    Property and equipment, net               428,003            374,187

    Other assets (A)                           61,405              1,225

        Total assets                         $513,375           $392,719

    Current liabilities                       $11,950             $3,333

    Deferred revenue                           13,035             13,252

    Accrued incentive plan expenses               798                ---

    Long-term debt                            173,650             57,500

    Partner's capital                         313,942            318,634

        Total liabilities and partners'
         capital                             $513,375           $392,719

    Supplemental information:
    Long term debt                           $173,650            $57,500
    Partner's capital                         313,942            318,634
    Total capitalization                     $487,592           $376,134
    Long term debt/Total capitalization            36%                15%

    (A)  Other assets at June 30, 2003 include $58 million of cash that was
         placed in escrow on June 30, 2003 for the PinnOak acquisition that
         closed on July 11.  The acquisition was effective July 1, 2003.


                        NATURAL RESOURCE PARTNERS L.P.
             Reconciliation of Unaudited GAAP Financial Measures
                        to Non-GAAP Financial Measures
                                (In thousands)

                                            Three Months        Six Months
                                               Ended              Ended
                                           June 30, 2003      June 30, 2003

    Net income                                $10,183            $18,156
    Adjustments to reconcile to EBITDA

      Interest income                             (56)              (103)
      Interest expense                          1,131              1,597
      Depletion and amortization                6,369             12,173
        EBITDA                                $17,627            $31,823

SOURCE Natural Resource Partners L.P.

Kathy Hager of Natural Resource Partners L.P., +1-713-751-7555, or khager@nrplp.com

http://www.nrplp.com

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