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OFFON

NATURAL RESOURCE PARTNERS L.P.

(NRP)
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NATURAL RESOURCE PARTNERS LP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

11/03/2021 | 12:04pm EST
The following review of operations for the three and nine month periods
ended September 30, 2021 and 2020 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, 2020.
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
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; 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 production
levels by our lessees; Ciner Wyoming LLC's ("Ciner 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,
2020 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, net income
attributable to non-controlling interest and gain on reserve swap; 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, 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 8. 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, 2020. 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.

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Distributable Cash Flow
Distributable cash flow ("DCF") represents net cash provided by (used in)
operating activities of continuing operations 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 receivables; less maintenance capital expenditures and
distributions to non-controlling interest. 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 asses 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 of continuing operations plus distributions from unconsolidated
investment in excess of cumulative earnings and return of long-term contract
receivables; less maintenance and expansion capital expenditures, 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.
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
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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 Ciner 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:
Coal Royalty and Other-consists primarily of coal royalty properties and
coal-related transportation and processing assets. Other assets include
industrial mineral royalty properties, aggregates royalty properties, oil and
gas royalty properties and timber. Our coal reserves are primarily located in
Appalachia, the Illinois Basin and the Northern Powder River Basin in the United
States. Our industrial minerals and aggregates properties are located in various
states across the United States, our oil and gas royalty assets are primarily
located in Louisiana and our timber assets are primarily located in West
Virginia.
Soda Ash-consists of our 49% non-controlling equity interest in Ciner Wyoming, a
trona ore mining and soda ash production business located in the Green River
Basin of Wyoming. Ciner Wyoming mines the trona and processes it into soda ash
that is sold both domestically and internationally into the glass and chemicals
industries.
In addition to actively managing our producing coal and hard mineral properties,
we continue to identify alternative revenue sources across our large portfolio
of land, mineral and timber assets. The types of opportunities include the
sequestration of carbon dioxide underground and in standing forests, and the
generation of electricity using geothermal, solar and wind energy. In the fourth
quarter of this year, we were able to execute on one such project through the
issuance and subsequent sale of 1.1 million forest carbon offset credits for
$13.8 million. The offset credits were issued to us by the California Air
Resources Board under its cap-and-trade program and represent 1.1 million tonnes
of carbon sequestered from approximately 39,000 acres of our forest assets in
West Virginia. This is an encouraging first step in our ability to create value
through alternative revenue sources. While the timing and likelihood of
additional cash flows being realized from further activities is uncertain, we
believe our large ownership footprint throughout the United States will provide
additional opportunities to create value in this regard with minimal capital
investment.
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, 2021
are as follows:
                                                               Operating Segments
                                                    Coal Royalty and                         Corporate and
(In thousands)                                           Other              Soda Ash           Financing             Total
Revenues and other income                           $     121,210          $ 11,246          $         -          $ 132,456
Net income (loss)                                   $      82,980          $ 11,115          $   (40,834)         $  53,261
Adjusted EBITDA (1)                                 $     102,265          $  3,789          $   (11,550)         $  94,504

Cash flow provided by (used in) continuing
operations
Operating activities                                $      91,958          $  3,817          $   (29,132)         $  66,643
Investing activities                                $       1,871          $      -          $         -          $   1,871
Financing activities                                $      (1,132)         $      -          $   (48,183)         $ (49,315)
Distributable cash flow (1)                         $      93,829          $  3,817          $   (29,132)         $  68,514
Free cash flow (1)                                  $      92,580          $  3,817          $   (29,132)         $  67,265



(1)See "-Results of Operations" below for reconciliations to the most comparable GAAP financial measures.

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Current Results/Market Commentary
Business Outlook and Quarterly Distributions

We generated $67.3 million of free cash flow during the nine months ended September 30, 2021, and ended the quarter with $219.0 million of liquidity consisting of $119.0 million of cash and cash equivalents and $100.0 million of borrowing capacity under our Opco Credit Facility.


Our liquidity has remained steady and our consolidated leverage ratio has
decreased to 3.8x at September 30, 2021. The indenture governing our 2025 parent
company notes restricts us from paying more than one-half of the quarterly
distribution on our preferred units in cash if our consolidated leverage ratio
exceeds 3.75x. Accordingly, the Board of Directors of our general partner has
declared a distribution on our preferred units to be paid one-half in kind
through the issuance of additional preferred units ("PIK units") for the past
five quarters. While our leverage ratio is currently above the 3.75x threshold,
as a result of the strong coal and soda ash pricing expected in the fourth
quarter and the forest carbon offset transaction described above, we expect our
leverage ratio to be below the 3.75x threshold by December 31, 2021. If this
occurs, we plan to redeem our outstanding paid-in-kind preferred units and
continue paying cash distributions to our common unitholders. If our
consolidated leverage ratio were to remain above 3.75x and we remain unable to
redeem our outstanding paid-in-kind preferred units, we would be required to
temporarily suspend distributions on our common units until the leverage ratio
drops below 3.75x and the outstanding paid-in-kind preferred units are redeemed.
Additionally, we expect our leverage ratio to continue its long-term decline as
we pay down debt.
Future distributions on our common and preferred units and decisions regarding
paid-in-kind preferred unit redemptions 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, covenants in our debt and partnership
agreements, 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.
Coal Royalty and Other Business Segment
Metallurgical coal markets have rebounded significantly from the lows seen in
2020 to record highs and the outlook remains strong as steel demand driven by
global economic recovery is more than offsetting challenges related to the
COVID-19 pandemic. Domestic and export thermal coal markets have also
significantly improved from the lows seen in 2020, however we do not have
meaningful sensitivity to thermal coal price movements this year since the
substantial majority of our thermal cash flows are fixed through 2021 pursuant
to a contract with Foresight Energy ("Foresight") that went into effect as they
emerged from bankruptcy in 2020. While there is potential for us to capture
upside from improved thermal coal demand and pricing in 2022, thermal coal
markets still face the long-term challenges of lower electricity demand,
competition from natural gas and the secular shift to renewable energy.

Our lessees sold 21.1 million tons of coal from our properties in the first nine
months of 2021 and we derived approximately 60% of our coal royalty revenues and
approximately 45% of our coal royalty sales volumes from metallurgical coal
during the same period.

Soda Ash Business Segment


Ciner Wyoming's business continues to recover to pre-COVID-19 levels. While we
believe Ciner Wyoming's facility is competitively positioned as one of the
lowest cost producers of soda ash in the world, we expect the market to remain
volatile as a result of ongoing uncertainties with the COVID-19 pandemic.

Revenues and other income in the first nine months of 2021 were higher by $6.0
million compared to the prior year period as demand for soda ash continues to
improve globally from the lows caused by the COVID-19 pandemic.
We received a special distribution of $3.9 million in the first nine months of
2021 as compared to $14.2 million of regular quarterly distributions received in
the first nine months of 2020. In order to have financial flexibility during the
COVID-19 pandemic, Ciner Wyoming suspended its regular quarterly distributions
in the third quarter of 2020. As a result of the continued improvement in global
soda ash demand and pricing, Ciner Wyoming reinstated its quarterly cash
distribution and NRP will receive $7.4 million in the fourth quarter of 2021.
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When considering the significant investment required by Ciner Wyoming's
previously announced expansion project and the infrastructure improvements
designed to increase overall efficiency, combined with the COVID-19 pandemic's
negative impact on Ciner Wyoming's financial results, Ciner Wyoming has
reprioritized the timing of the significant capital expenditure items in order
to increase financial and liquidity flexibility until it has more clarity and
visibility into the ongoing impact of the COVID-19 pandemic on its business.

Results of Operations
Third Quarter of 2021 and 2020 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)                       2021               2020            Increase               Change
Coal Royalty and Other                             $   50,123          $ 27,944          $ 22,179                        79  %
Soda Ash                                                6,672             1,986             4,686                       236  %
Total                                              $   56,795          $ 29,930          $ 26,865                        90  %


The changes in revenues and other income is discussed for each of the operating segments below:

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Coal Royalty and Other
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)                      2021               2020             (Decrease)               Change
Coal sales volumes (tons)
Appalachia
Northern                                                    422               102                  320                       314  %
Central                                                   3,199             2,247                  952                        42  %
Southern                                                    642               172                  470                       273  %
Total Appalachia                                          4,263             2,521                1,742                        69  %
Illinois Basin                                            2,689               758                1,931                       255  %
Northern Powder River Basin                               1,047               365                  682                       187  %
Gulf Coast                                                   13                 -                   13                       100  %
Total coal sales volumes                                  8,012             3,644                4,368                       120  %

Coal royalty revenue per ton
Appalachia
Northern                                             $     7.18          $   3.06          $      4.12                       135  %
Central                                                    5.74              3.83                 1.91                        50  %
Southern                                                  11.61              4.78                 6.83                       143  %

Illinois Basin                                             2.33              1.63                 0.70                        43  %
Northern Powder River Basin                                3.71              3.46                 0.25                         7  %
Gulf Coast                                                 0.54                 -                 0.54                       100  %
Combined average coal royalty revenue per ton              4.87              3.36                 1.51                        45  %

Coal royalty revenues
Appalachia
Northern                                             $    3,031          $    312          $     2,719                       871  %
Central                                                  18,357             8,602                9,755                       113  %
Southern                                                  7,452               823                6,629                       805  %
Total Appalachia                                         28,840             9,737               19,103                       196  %
Illinois Basin                                            6,261             1,234                5,027                       407  %
Northern Powder River Basin                               3,881             1,262                2,619                       208  %
Gulf Coast                                                    7                 -                    7                       100  %
Unadjusted coal royalty revenues                         38,989            12,233               26,756                       219  %
Coal royalty adjustment for minimum leases               (6,557)           (1,623)              (4,934)                     (304) %
Total coal royalty revenues                          $   32,432          $ 10,610          $    21,822                       206  %

Other revenues
Production lease minimum revenues                    $    3,235          $  4,267          $    (1,032)                      (24) %
Minimum lease straight-line revenues                      4,808             3,553                1,255                        35  %
Property tax revenues                                     1,466             1,896                 (430)                      (23) %
Wheelage revenues                                         1,964             1,680                  284                        17  %
Coal overriding royalty revenues                            757             1,314                 (557)                      (42) %
Lease amendment revenues                                  1,519               858                  661                        77  %

Aggregates royalty revenues                                 429               221                  208                        94  %
Oil and gas royalty revenues                              1,154             1,078                   76                         7  %
Other revenues                                              120               263                 (143)                      (54) %
Total other revenues                                 $   15,452          $ 15,130          $       322                         2  %
Coal royalty and other                               $   47,884          $ 25,740          $    22,144                        86  %
Transportation and processing services revenues           2,171             2,204                  (33)                       (1) %
Gain on asset sales and disposals                            68                 -                   68                       100  %
Total Coal Royalty and Other segment revenues and                                                                             79  %
other income                                         $   50,123          $ 27,944          $    22,179


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Coal Royalty Revenues
Approximately 65% of coal royalty revenues and approximately 45% of coal royalty
sales volumes were derived from metallurgical coal during the three months ended
September 30, 2021. Total coal royalty revenues increased $21.8 million as
compared to the prior year quarter as a result of increased demand and pricing
for both metallurgical and thermal coals. The discussion by region is as
follows:
•Appalachia: Coal royalty revenues increased $19.1 million primarily due to a
69% increase in sales volumes in addition to higher sales prices as compared to
the prior year quarter.
•Illinois Basin: Coal royalty revenues increased $5.0 million primarily due to a
255% increase in sales volumes and a 43% increase in sales prices for the three
months ended September 30, 2021 as compared to the prior year quarter. In the
second quarter of 2020, we entered into lease amendments with Foresight pursuant
to which Foresight agreed to pay us fixed cash payments to satisfy all
obligations arising out of the existing various coal mining leases and
transportation infrastructure fee agreements between us and Foresight for
calendar years 2020 and 2021. As a result of these amendments, actual revenues
recognized from Foresight were flat period-over-period.
•Northern Powder River Basin: Coal royalty revenues increased $2.6 million
primarily due to a 187% increase in sales volumes as our lessee mined on our
property more during the third quarter of 2021 as compared to the prior year
quarter in accordance with its mine plan in addition to a 7% increase in sales
prices as compared to the prior year quarter.
Soda Ash
Revenues and other income related to our Soda Ash segment increased $4.7 million
compared to the prior year quarter as demand for soda ash continues to improve
globally from the lows caused by the COVID-19 pandemic.
Operating Expenses
The following table presents the significant categories of our consolidated
operating expenses:
                                                       For the Three Months Ended
                                                              September 30,                   Increase              Percentage
(In thousands)                                           2021               2020             (Decrease)               Change
Operating expenses
Operating and maintenance expenses                   $    8,354          $  5,781          $     2,573                        45  %
Depreciation, depletion and amortization                  5,182             2,111                3,071                       145  %
General and administrative expenses                       4,052             3,634                  418                        12  %
Asset impairments                                            57               934                 (877)                      (94) %
Total operating expenses                             $   17,645          $ 12,460          $     5,185                        42  %


Total operating expenses increased $5.2 million primarily due to a $3.1 million
increase in depreciation, depletion and amortization expense as a result of
increased production at certain Illinois Basin coal properties. Additionally,
operating and maintenance expenses increased $2.6 million primarily due to an
increase in bad debt expense as compared to the prior year quarter.
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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

                                                     Coal Royalty                           Corporate and
For the Three Months Ended (In thousands)             and Other            Soda Ash           Financing             Total
September 30, 2021
Net income (loss)                                   $    36,606          $   6,596          $   (13,704)         $ 29,498
Less: equity earnings from unconsolidated
investment                                                    -             (6,672)                   -            (6,672)

Add: interest expense, net                                    -                  -                9,652             9,652

Add: depreciation, depletion and amortization             5,182                  -                    -             5,182
Add: asset impairments                                       57                  -                    -                57
Adjusted EBITDA                                     $    41,845          $     (76)         $    (4,052)         $ 37,717

September 30, 2020
Net loss                                            $    19,173          $   1,890          $   (13,847)         $  7,216
Less: equity earnings from unconsolidated
investment                                                    -             (1,986)                   -            (1,986)

Add: interest expense, net                                   41                  -               10,213            10,254

Add: depreciation, depletion and amortization             2,111                  -                    -             2,111
Add: asset impairments                                      934                  -                    -               934
Adjusted EBITDA                                     $    22,259          $     (96)         $    (3,634)         $ 18,529



Adjusted EBITDA increased $19.2 million primarily due to a $19.6 million
increase in Adjusted EBITDA within our Coal Royalty and Other segment as a
result of higher revenues and other income, partially offset by higher operating
and maintenance expenses, both discussed above.
Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial
Measures)
The following table presents the three major categories of the statement of cash
flows by business segment:
                                                             Operating 

Segments

                                                   Coal Royalty                           Corporate and
For the Three Months Ended (In thousands)            and Other           Soda Ash           Financing            Total
September 30, 2021
Cash flow provided by (used in) continuing
operations
Operating activities                               $   33,968          $     (36)         $   (3,873)         $ 30,059
Investing activities                                      614                  -                   -               614
Financing activities                                        -                  -              (9,592)           (9,592)

September 30, 2020
Cash flow provided by (used in) continuing
operations
Operating activities                               $   28,573          $     (75)         $   (4,175)         $ 24,323
Investing activities                                      332                  -                   -               332
Financing activities                                        -                  -             (19,910)          (19,910)


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The following table reconciles net cash provided by (used in) operating activities of continuing operations (the most comparable GAAP financial measure) by business segment to DCF and FCF:

                                                              Operating 

Segments

                                                    Coal Royalty                           Corporate and
For the Three Months Ended (In thousands)             and Other           Soda Ash           Financing            Total
September 30, 2021
Net cash provided by (used in) operating
activities of continuing operations                 $   33,968          $   

(36) $ (3,873) $ 30,059


Add: proceeds from asset sales and disposals                74                  -                   -                74

Add: return of long-term contract receivable               540                  -                   -               540

Distributable cash flow                             $   34,582          $     (36)         $   (3,873)         $ 30,673
Less: proceeds from asset sales and disposals              (74)                 -                   -               (74)

Free cash flow                                      $   34,508          $     (36)         $   (3,873)         $ 30,599

September 30, 2020
Net cash provided by (used in) operating
activities of continuing operations                 $   28,573          $   

(75) $ (4,175) $ 24,323


Add: return of long-term contract receivable               332                  -                   -               332

Distributable cash flow and free cash flow $ 28,905 $

(75) $ (4,175) $ 24,655




DCF and FCF increased $6.0 million and $5.9 million, respectively, primarily due
to increased coal royalty cash flow as a result of stronger metallurgical coal
demand and pricing in the third quarter of 2021.

Results of Operations
First Nine Months of 2021 and 2020 Compared
Revenues and Other Income
The following table includes our revenues and other income by operating segment:
                                                       For the Nine Months Ended
                                                             September 30,                                       Percentage
Operating Segment (In thousands)                        2021                2020            Increase               Change
Coal Royalty and Other                             $   121,210          $  95,955          $ 25,255                        26  %
Soda Ash                                                11,246              5,200             6,046                       116  %
Total                                              $   132,456          $ 101,155          $ 31,301                        31  %


The changes in revenues and other income is discussed for each of the operating segments below:

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Coal Royalty and Other
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)                       2021               2020             (Decrease)               Change
Coal sales volumes (tons)
Appalachia
Northern                                                     947               516                  431                        84  %
Central                                                    8,824             7,643                1,181                        15  %
Southern                                                   1,058               820                  238                        29  %
Total Appalachia                                          10,829             8,979                1,850                        21  %
Illinois Basin                                             7,987             1,841                6,146                       334  %
Northern Powder River Basin                                2,291             1,232                1,059                        86  %
Gulf Coast                                                    13                 -                   13                       100  %
Total coal sales volumes                                  21,120            12,052                9,068                        75  %

Coal royalty revenue per ton
Appalachia
Northern                                             $      5.57          $   2.22          $      3.35                       151  %
Central                                                     4.91              4.28                 0.63                        15  %
Southern                                                    9.82              4.70                 5.12                       109  %

Illinois Basin                                              2.13              2.48                (0.35)                      (14) %
Northern Powder River Basin                                 3.59              3.66                (0.07)                       (2) %
Gulf Coast                                                  0.54                 -                 0.54                       100  %
Combined average coal royalty revenue per ton               3.99              3.88                 0.11                         3  %

Coal royalty revenues
Appalachia
Northern                                             $     5,272          $  1,143          $     4,129                       361  %
Central                                                   43,308            32,726               10,582                        32  %
Southern                                                  10,390             3,857                6,533                       169  %
Total Appalachia                                          58,970            37,726               21,244                        56  %
Illinois Basin                                            17,044             4,570               12,474                       273  %
Northern Powder River Basin                                8,222             4,510                3,712                        82  %
Gulf Coast                                                     7                 -                    7                       100  %
Unadjusted coal royalty revenues                          84,243            46,806               37,437                        80  %
Coal royalty adjustment for minimum leases               (18,148)           (6,247)             (11,901)                     (191) %
Total coal royalty revenues                          $    66,095          $ 40,559          $    25,536                        63  %

Other revenues
Production lease minimum revenues                    $    10,241          $ 13,554          $    (3,313)                      (24) %
Minimum lease straight-line revenues                      15,773            12,349                3,424                        28  %
Property tax revenues                                      4,522             4,256                  266                         6  %
Wheelage revenues                                          5,589             5,468                  121                         2  %
Coal overriding royalty revenues                           3,592             3,319                  273                         8  %
Lease amendment revenues                                   3,159             2,591                  568                        22  %

Aggregates royalty revenues                                1,339             1,068                  271                        25  %
Oil and gas royalty revenues                               3,420             4,923               (1,503)                      (31) %
Other revenues                                               692               752                  (60)                       (8) %
Total other revenues                                 $    48,327          $ 48,280          $        47                         -  %
Coal royalty and other                               $   114,422          $ 88,839          $    25,583                        29  %
Transportation and processing services revenues            6,545             6,651                 (106)                       (2) %
Gain on asset sales and disposals                            243               465                 (222)                      (48) %
Total Coal Royalty and Other segment revenues and
other income                                         $   121,210          $ 95,955          $    25,255                        26  %


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Coal Royalty Revenues
Approximately 60% of coal royalty revenues and approximately 45% of coal royalty
sales volumes were derived from metallurgical coal during the nine months ended
September 30, 2021. Total coal royalty revenues increased $25.5 million during
the nine months ended September 30, 2021 as compared to the prior year period
primarily as a result of increased demand for both metallurgical and thermal
coals from their lows in 2020 caused by the global COVID-19 pandemic. The
discussion by region is as follows:
•Appalachia: Coal royalty revenues increased $21.2 million primarily due to a
21% increase in sales volumes in addition to higher sales prices as compared to
the prior year period.
•Illinois Basin: Coal royalty revenues increased $12.5 million primarily due to
a 334% increase in sales volumes, partially offset by a 14% decrease in sales
prices as compared to the prior year period. As previously mentioned, in 2020 we
entered into lease amendments with Foresight pursuant to which Foresight agreed
to pay us fixed cash payments to satisfy all obligations arising out of the
existing various coal mining leases and transportation infrastructure fee
agreements between the us and Foresight for calendar years 2020 and 2021 and as
a result actual revenues from Foresight were flat period-over-period.
•Northern Powder River Basin: Coal royalty revenues increased $3.7 million
primarily due to an 86% increase in sales volumes as our lessee mined on our
property more during 2021 as compared to the prior year period in accordance
with its mine plan, partially offset by a 2% decrease in sales prices as
compared to the prior year period.
Soda Ash

Revenues and other income related to our Soda Ash segment increased $6.0 million
compared to the prior year compared to the prior year period as demand for soda
ash continues to improve globally from the lows caused by the COVID-19 pandemic.

Operating Expenses
The following table presents the significant categories of our consolidated
operating expenses:
                                                        For the Nine Months Ended
                                                              September 30,                    Increase              Percentage
(In thousands)                                           2021                2020             (Decrease)               Change
Operating expenses
Operating and maintenance expenses                   $   19,076          $  19,200          $      (124)                       (1) %
Depreciation, depletion and amortization                 15,145              6,185                8,960                       145  %
General and administrative expenses                      11,550             11,168                  382                         3  %
Asset impairments                                         4,116            133,217             (129,101)                      (97) %
Total operating expenses                             $   49,887          $ 169,770          $  (119,883)                      (71) %



Total operating expenses decreased $119.9 million primarily due to a $129.1
million decrease in asset impairments. Asset impairments in the first nine
months of 2021 primarily related to a lease termination while asset impairments
in the first nine months of 2020 were due to weakened coal markets that resulted
in termination of certain coal leases, changes to lessee mine plans resulting in
permanent moves off certain of our coal properties and decreased oil and gas
drilling activity which negatively impacted the outlook for NRP's frac sand
properties. This decrease was partially offset by a $9.0 million increase in
depreciation, depletion and amortization expense primarily as a result of
increased production at certain Illinois Basin coal properties.

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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

                                                    Coal Royalty and                         Corporate and
For the Nine Months Ended (In thousands)                 Other              Soda Ash           Financing             Total
September 30, 2021
Net income (loss)                                   $      82,980          $ 11,115          $   (40,834)         $  53,261
Less: equity earnings from unconsolidated
investment                                                      -           (11,246)                   -            (11,246)

Add: total distributions from unconsolidated
investment                                                      -             3,920                    -              3,920
Add: interest expense, net                                     24                 -               29,284             29,308

Add: depreciation, depletion and amortization              15,145                 -                    -             15,145
Add: asset impairments                                      4,116                 -                    -              4,116
Adjusted EBITDA                                     $     102,265          $  3,789          $   (11,550)         $  94,504

September 30, 2020
Net income (loss)                                   $     (62,562)         $  5,059          $   (42,003)         $ (99,506)
Less: equity earnings from unconsolidated
investment                                                      -            (5,200)                   -             (5,200)

Add: total distributions from unconsolidated
investment                                                      -            14,210                    -             14,210
Add: interest expense, net                                     56                 -               30,835             30,891

Add: depreciation, depletion and amortization               6,185                 -                    -              6,185
Add: asset impairments                                    133,217                 -                    -            133,217
Adjusted EBITDA                                     $      76,896          $ 14,069          $   (11,168)         $  79,797



Adjusted EBITDA increased $14.7 million primarily due to a $25.4 million
increase in Adjusted EBITDA within our Coal Royalty and Other segment as a
result of higher revenues and other income as discussed above, partially offset
by a $10.3 million decrease in Adjusted EBITDA within our Soda Ash segment as a
result of lower cash distributions received from Ciner Wyoming in the first nine
months of 2021 as compared to the prior year period.
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
                                                    Coal Royalty                           Corporate and
For the Nine Months Ended (In thousands)              and Other           Soda Ash           Financing             Total
September 30, 2021
Cash flow provided by (used in) continuing
operations
Operating activities                               $     91,958          $  3,817          $   (29,132)         $ 66,643
Investing activities                                      1,871                 -                    -             1,871
Financing activities                                     (1,132)                -              (48,183)          (49,315)

September 30, 2020
Cash flow provided by (used in) continuing
operations
Operating activities                               $     91,082          $ 14,091          $   (30,760)         $ 74,413
Investing activities                                        969                 -                    -               969
Financing activities                                          -                 -              (58,074)          (58,074)


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The following table reconciles net cash provided by (used in) operating activities of continuing operations (the most comparable GAAP financial measure) by business segment to DCF and FCF:

                                                           Operating 

Segments

                                                     Coal Royalty                           Corporate and
For the Nine Months Ended (In thousands)               and Other           Soda Ash           Financing             Total
September 30, 2021
Net cash provided by (used in) operating
activities of continuing operations                 $     91,958          $ 

3,817 $ (29,132) $ 66,643


Add: proceeds from asset sales and disposals                 249                 -                    -               249

Add: return of long-term contract receivable               1,622                 -                    -             1,622

Distributable cash flow                             $     93,829          $  3,817          $   (29,132)         $ 68,514
Less: proceeds from asset sales and disposals               (249)                -                    -              (249)

Less: acquisition costs                                   (1,000)                -                    -            (1,000)

Free cash flow                                      $     92,580          $  3,817          $   (29,132)         $ 67,265

September 30, 2020
Net cash provided by (used in) operating
activities of continuing operations                 $     91,082          $ 14,091          $   (30,760)         $ 74,413
Add: proceeds from asset sales and disposals                 507                 -                    -               507
Add: proceeds from sale of discontinued
operations                                                     -                 -                    -               (66)
Add: return of long-term contract receivable               1,462                 -                    -             1,462
Distributable cash flow                             $     93,051          $ 14,091          $   (30,760)         $ 76,316
Less: proceeds from asset sales and disposals               (507)                -                    -              (507)
Less: proceeds from sale of discontinued
operations                                                     -                 -                    -                66
Less: acquisition costs                                   (1,000)                -                    -            (1,000)
Free cash flow                                      $     91,544          $ 14,091          $   (30,760)         $ 74,875



DCF and FCF decreased $7.8 million and $7.6 million, respectively, primarily due
to the following:
•Soda Ash Segment
•DCF and FCF decreased $10.3 million as a result of lower cash distributions
received from Ciner Wyoming in the first nine months of 2021 as compared to the
prior year period.
This decrease was partially offset by:
•Corporate and Financing Segment
•DCF and FCF increased $1.6 million primarily due to lower cash paid for
interest as our debt balance continues to decline.
•Coal Royalty and Other Segment
•DCF and FCF increased $0.8 million and $1.0 million, respectively, primarily
due to increased cash flow in 2021 as a result of the rebounding of coal demand
from its low in 2020 caused by the global COVID-19 pandemic, partially offset by
one-time lease amendment fee and past due payments received in the nine months
ended September 30, 2020.
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Liquidity and Capital Resources
Current Liquidity
As of September 30, 2021, we had total liquidity of $219.0 million, consisting
of $119.0 million of cash and cash equivalents and $100.0 million of borrowing
capacity under our Opco Credit Facility. We have significant debt service
obligations, including approximately $20 million of principal repayments on
Opco's senior notes throughout the remainder of 2021. We believe our liquidity
position provides us with the flexibility to continue paying down debt and
manage our business through the current market environment.
Cash Flows
Cash flows provided by operating activities decreased $9.5 million, from $76.1
million in the nine months ended September 30, 2020 to $66.6 million in the nine
months ended September 30, 2021, primarily related to $10.3 million of lower
cash distributions received from Ciner Wyoming in the first nine months of 2021
as compared to the prior year period and certain one-time lease amendment fee
and past due payments received in the nine months ended September 30, 2020.
These decreases were partially offset by increased coal royalty cash flow in
2021 primarily as a result of the rebounding of coal demand from its low in 2020
caused by the global COVID-19 pandemic in addition to $1.9 million of lower cash
paid for interest as our debt balance continues to decline.
Cash flows used in financing activities decreased $10.4 million from $59.7
million used in the nine months ended September 30, 2020 to $49.3 million used
in the nine months ended September 30, 2021, primarily due to an $11.0 million
decrease in cash distributions to preferred unitholders as we paid one-half of
our preferred unit distributions in kind through the issuance of 11.6 million
preferred units in the nine months ended September 30, 2021. Additionally, debt
repayments decreased $6.8 million in the nine months ended September 30, 2021 as
one of our Opco Senior Notes was fully repaid during the nine months ended
September 30, 2020. These decreases in cash flow used were partially offset by a
$5.7 million increase in distributions to common unitholders and the general
partner as the common unit distribution was suspended in the second quarter of
2020.
Capital Resources and Obligations
Debt, Net
We had the following debt outstanding as of September 30, 2021 and December 31,
2020:
                                                  September 30,       December 31,
       (In thousands)                                  2021               2020
       Current portion of long-term debt, net    $       39,082      $      39,055
       Long-term debt, net                              414,437            432,444
       Total debt, net                           $      453,519      $     471,499


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 8. 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 10. Related Party Transactions
to the Consolidated Financial Statements is incorporated herein by reference.

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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, 2020.
Recent Accounting Standards
The information set forth under   Note 1. Basis of Presentation   to the
Consolidated Financial Statements is incorporated herein by reference.


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