Natural Resource Partners L.P. (NYSE:NRP) today reported third quarter 2022 results as follows:

Highlights:

• Generated record free cash flow of $83 million in the third quarter of 2022, and $199 million in the first nine months of 2022
• Closed new five-year, $130 million revolving credit facility
• Announced full repayment of outstanding 9.125% Senior Notes due 2025
• Executed second subsurface carbon dioxide ("CO₂") sequestration lease
• Pro-forma leverage ratio of 0.6x following the repayment of 9.125% Senior Notes, down from 4.6x as of June 30, 2021

“NRP's record year continues with third quarter free cash flow generation of $83 million, bringing our year-to-date free cash flow to $199 million, primarily due to the strong results of our Mineral Rights segment," stated Craig Nunez, NRP’s president and chief operating officer. “It is fitting that the 20th anniversary of the Partnership's initial public offering coincides with the best operating performance in our history. Not only has this year been exceptional from a free cash flow perspective, but we continue to execute on our strategy to de-risk the capital structure and grow our carbon neutral portfolio. During the third quarter, we closed a new five-year revolving credit facility that increased our borrowing capacity from $100 million to $130 million. We also announced the redemption of our outstanding 9.125% Senior Notes due 2025 and fully repaid the Senior Notes in October. After giving effect to the redemption, NRP has permanently retired $249 million of debt this year. In the third quarter we also executed our second subsurface CO₂ sequestration lease for an estimated carbon storage capacity of at least 500 million metric tons of CO₂. NRP currently has approximately 140,000 acres of pore space under lease for carbon sequestration with estimated potential CO₂ storage capacity of at least 800 million metric tons. We continue to believe that de-risking the Partnership and leveraging our asset footprint in this regard, while continuing to provide unitholder distributions, is the right strategy to maximize unitholder value.”

NRP announced today that the Board of Directors of its general partner declared a cash distribution of $0.75 per common unit to be paid on November 22, 2022 to unitholders of record on November 15, 2022. In addition, the board declared a $7.5 million cash distribution on its outstanding preferred units. Future distributions on NRP's common and preferred units will be determined on a quarterly basis by the Board of Directors. The Board of Directors considers numerous factors each quarter in determining cash distributions, including profitability, cash flow, debt service obligations, market conditions and outlook, estimated unitholder income tax liability and the level of cash reserves that the board determines is necessary for future operating and capital needs.

NRP's liquidity was $190.9 million at September 30, 2022, consisting of $60.9 million of cash and $130.0 million of borrowing capacity available under its recently amended revolving credit facility.

Segment Performance

Mineral Rights

Mineral Rights net income for the third quarter of 2022 increased $35.6 million as compared to the prior year period. Free cash flow for the third quarter increased $42.0 million as compared to the prior year period. These increases were primarily due to stronger metallurgical coal demand and pricing in 2022. Approximately 65% of coal royalty revenues and approximately 40% of coal royalty sales volumes were derived from metallurgical coal in the third quarter of 2022.

Metallurgical and thermal coal prices remain supported by ongoing tightness in the supply-demand balance for coal. Many operators are limited in their ability to increase production due to ongoing labor shortages, global supply chain interruptions, and access to capital. Thermal coal prices are further supported by the European Union's ban on Russian coal due to the war in Ukraine, as well as increased natural gas prices and demand for electricity. While metallurgical markets are seeing weakened demand for steel, and thermal markets continue to face ongoing environmental and political pressures, supply constraints should provide continued support for metallurgical and thermal coal prices for the foreseeable future.

NRP continues to identify alternative revenue opportunities across its large portfolio of land and mineral assets. NRP owns the rights to sequester CO₂ on approximately 3.5 million acres of pore space in the southern United States. As announced previously, in the first quarter of 2022 NRP executed its first subsurface CO₂ sequestration lease on 75,000 acres of underground pore space NRP owns in southwest Alabama with the potential to store over 300 million metric tons of CO₂. In October of 2022, NRP announced its second subsurface CO₂ transaction with the execution of a lease for approximately 65,000 acres of pore space controlled by NRP near southeast Texas with estimated storage capacity of at least 500 million metric tons of CO₂. In total, NRP has approximately 140,000 acres of pore space under lease for carbon sequestration with estimated CO₂ storage capacity of 800 million metric tons. While the timing and likelihood of additional cash flows being realized from these activities is uncertain, NRP believes its large ownership footprint throughout the United States will provide additional opportunities to create value in this regard and position NRP as a key beneficiary of the transitional energy economy with minimal capital investment.

Soda Ash

Soda Ash net income in the third quarter of 2022 increased $7.9 million as compared to the prior year period primarily as a result of increased international sales prices. Free cash flow in the third quarter of 2022 increased $10.3 million as compared to the prior year period due to Sisecam Wyoming reinstating its regular quarterly cash distributions beginning in the fourth quarter of 2021.

Supply interruptions in China and input cost inflation which significantly increased the global marginal cost of soda ash production led to historically high soda ash prices in the third quarter of 2022. Though soda ash demand weakened in many parts of the world during the third quarter due to slowing global economic growth and lower construction activity in China, Sisecam Wyoming remained sold-out as it took advantage of its low-cost position to profitably export soda ash. Consequently, Sisecam Wyoming delivered strong financial results in the third quarter of 2022.

Corporate and Financing

Corporate and Financing costs in the third quarter of 2022 decreased $1.6 million as compared to the prior year period primarily due to lower interest expense resulting from less debt outstanding, partially offset by the loss on early extinguishment of debt. Free cash flow in the third quarter of 2022 was relatively flat as compared to the prior year period.

During the third quarter of 2022, NRP repaid $60.5 million of debt and refinanced, upsized, and extended its credit facility to $130 million due 2027. In October of 2022, NRP fully retired its outstanding $121.4 million of 9.125% Senior Notes due 2025 at its redemption price of 102.281%, utilizing cash on hand and $70 million of borrowings under its new credit facility. After giving effect to this redemption, NRP's remaining total debt outstanding is $189.4 million.

Additionally, in August of 2022, NRP paid a second quarter 2022 cash distribution of $0.75 per common unit of NRP and a $7.5 million cash distribution on the preferred units.

Conference Call

A conference call will be held today at 9:00 a.m. ET. To register for the conference call, please use this link: https://conferencingportals.com/event/kfJdSHYP. After registering a confirmation will be sent via email, including dial in details and unique conference call codes for entry. Registration is open through the live call, however, to ensure you are connected for the full call we suggest registering at least 10 minutes prior to the start of the call. Investors may also listen to the call via the Investor Relations section of the NRP website at www.nrplp.com. To access the replay, please visit the Investor Relations section of NRP’s website.

Withholding Information for Foreign Investors

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of NRP's distributions to foreign investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, NRP's distributions to foreign investors are subject to federal income tax withholding at the highest applicable rate.

Company Profile

Natural Resource Partners L.P., a master limited partnership headquartered in Houston, TX, is a diversified natural resource company that owns, manages and leases a diversified portfolio of properties in the United States including coal, industrial minerals and other natural resources, as well as rights to conduct carbon sequestration and renewable energy activities. NRP also owns an equity investment in Sisecam Wyoming LLC, one of the world’s lowest-cost producers of soda ash.

For additional information, please contact Tiffany Sammis at 713-751-7515 or tsammis@nrplp.com. Further information about NRP is available on the Partnership’s website at http://www.nrplp.com.

Forward-Looking Statements

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. 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, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on the Partnership’s common and preferred units; the Partnership's business strategy; its liquidity and access to capital and financing sources; its financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected future performance by the Partnership's lessees; Sisecam Wyoming LLC’s trona mining and soda ash refinery operations; distributions from the soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving the Partnership, and of scheduled or potential regulatory or legal changes; global and U.S. economic conditions; and other factors detailed in Natural Resource Partners’ Securities and Exchange Commission filings. Natural Resource Partners L.P. has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

"Adjusted EBITDA" is a non-GAAP financial measure that we define as net income (loss) less equity earnings from unconsolidated investment; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income or loss, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.

“Distributable cash flow” or "DCF" is a non-GAAP financial measure that we define as 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 receivable; less maintenance capital expenditures. DCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. DCF may not be calculated the same for us as for other companies. In addition, distributable cash flow 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. Distributable cash flow is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.

“Free cash flow” or "FCF" is a non-GAAP financial measure that we define as 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 receivable; less maintenance and expansion capital expenditures and cash flow used in acquisition costs classified as investing or financing activities. FCF is calculated before mandatory debt repayments. Free cash flow 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. Free cash flow may not be calculated the same for us as for other companies. Free cash flow 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.

"Cash flow cushion" is a non-GAAP financial measure that we define as free cash flow less one-time beneficial items, mandatory Opco debt repayments, preferred unit distributions and redemption of PIK units, common unit distributions and warrant cash settlements. Cash flow cushion 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. Cash flow cushion is a supplemental liquidity measure used by our management to assess the Partnership's ability to make or raise cash distributions to our common and preferred unitholders and our general partner and repay debt or redeem preferred units.

-Financial Tables and Reconciliation of Non-GAAP Measures Follow-