For the period ended June 30, NRP reported revenues of $US90.7 million, down 6% from the 2011,
Net income to the company’s limited partners totaled $48.9 million, a decrease of $6.1 million from 2011’s second quarter. Officials cited lower coal royalty revenues for the slide.
Despite flatness in quarterly coal production compared to the same period last year, the MLP’s coal royalty revenues fell 12% to $62.9 million.
The company said the decline was due in part to a greater percentage of production in Illinois that sold at lower average prices, as well as some production at properties on old leases tied to low royalty rates. A decline in overall prices was also cited.
Non-coal royalty revenue from items such as infrastructure fee increases and a jump in gains from asset sales, which rose 10% to $2.5 million, helped to offset the decline.
“Our emphasis on metallurgical coal and our expansion into the Illinois Basin helped through the first half of this year when the thermal market has been under pressure from low natural gas prices, mild winter weather, and regulatory pressures," president and chief operating officer Nick Carter said.
The executive acknowledged a continued weak thermal market, to which the industry responded in kind; however, the strength needed is not yet there.
“While natural gas prices have risen in recent months, they are still not to the level to cause significant switching back to coal-fired power plants,” he said.
“The unusually warm weather experienced over the last month across much of the Mid Atlantic and northeast has caused some previously idled coal plants to be brought back on line. As the market slowly recovers, our focus on Illinois Basin thermal coal should benefit us because we believe that the Illinois Basin will recover ahead of Central Appalachia.”
On the metallurgical side, which is significantly stronger than thermal at this time, some softening has been realized from a slowdown in steel production from a drop in Asian economies.
“We are … waiting to see the response of the governments in Asia regarding any type of stimulus to spur growth,” Carter said.
NRP, on a more positive note, did record “unprecedented” exports of both thermal and metallurgical coal in the year to date, putting it on track for another record whole-year.
Looking ahead to the balance of the year, NRP said it was adjusting its guidance slightly.
“While coal royalty revenues are forecasted to be lower than originally forecast, revenues other than coal royalty are forecasted to offset much of this decline,” the company said.
NRP has lowered its midpoint total revenues range by about $5 million and is now projecting between $340 million and $365 million instead of $335 million to $380 million.
Its coal royalty revenue for the year is forecast to be $245 million to $260 million, down from the previous range of $265 million to $295 million.
NRP said the change was due to the impact of declining coal receipts.
