Natural Resource Partners (NYSE:NRP) increased its third-quarter distribution to $2.34 per common unit, up from $0.75 for the preceding quarter, as debt repayments give the partnership more room to return cash to investors.
The partnership generated $45 million in free cash flow during the third quarter of 2026 and used $13 million to pay down debt, leaving $32 million, or $2.34 per unit, available for distribution, President and Chief Operating Officer Craig Nunez said on the earnings call.
Nunez said the increase followed a decade of work to reduce debt and risk. The partnership had $14 million of debt left to repay the following month, he said.
Distributions to be decided quarterly
Nunez cautioned that free cash flow can vary substantially from quarter to quarter and year to year. The board will decide distributions each quarter after considering results, liquidity needs and other potential uses of cash, including unit repurchases or acquisitions.
If the board retains cash, Nunez said, management will hold itself to a test of creating more than a dollar of intrinsic value per unit for every dollar retained.
Asked by independent investor Robert Liu about the partnership’s view of its intrinsic value and potential buybacks, Nunez declined to provide an estimate. He did not announce a repurchase during the call.
Chief Financial Officer Chris Zolas said the partnership fully repaid the remaining $13 million balance on its operating company credit facility during the third quarter. Lower debt reduced interest costs and helped corporate and financing net income, operating cash flow and free cash flow each improve by $1 million from the year-earlier quarter, he said.
Mineral rights remain the main cash generator
Natural Resource Partners reported third-quarter net income of $27 million and operating cash flow of $44 million. Its Mineral Rights segment generated $37 million in net income, $46 million in operating cash flow and $47 million in free cash flow.
Segment net income fell $4 million from a year earlier, primarily because of higher depreciation, depletion and amortization expense, Zolas said. Operating cash flow and free cash flow each rose $2 million, helped by higher metallurgical coal pricing and volumes at certain properties and the timing of payments. Lease amendment fees received in the prior-year quarter partly offset those gains.
Metallurgical coal accounted for approximately 70% of coal royalty revenue and 45% of coal royalty sales volumes in the third quarter, Zolas said.
Nunez said weak global steel demand continues to restrain metallurgical coal prices. For thermal coal, he pointed to inexpensive natural gas and ample coal inventories at power plants. He said management saw nothing indicating a material change in coal pricing for 2027, although geopolitical conflicts could move prices in either direction.
Soda ash market remains oversupplied
Natural Resource Partners does not expect distributions from its Sisecam Wyoming soda ash investment to resume until demand rebounds or there is a significant supply response, Zolas said. The partnership received no distribution from the investment in the third quarter of either 2025 or 2026.
Soda ash segment net income declined $2 million from a year earlier, driven by lower sales prices amid international oversupply and weaker demand for flat glass, Zolas said.
Nunez said international soda ash prices have stopped falling but remain below the production costs of most producers. Domestic prices are expected to decline as contracts reset and the premium over international prices narrows, making 2027 harder than 2026, he said.
Although some capacity closures have begun, Nunez said the market’s rebalancing will likely take “years, not quarters.” He said Sisecam Wyoming operates one of the world’s lowest-cost soda ash facilities and that its managing partner is pursuing cost savings while maintaining safe and reliable operations.
Property development efforts continue
In response to a question from Yellow Gate Capital analyst Steven Balsam, Nunez said the partnership’s approach to carbon dioxide sequestration, solar, geothermal and other renewable-related activities has not changed as its capital structure and cash allocation strategy have evolved.
Natural Resource Partners continues to seek lessees willing to develop projects on its acreage, he said.
About Natural Resource Partners (NYSE:NRP)
Natural Resource Partners L.P. is a Houston-based master limited partnership that owns and manages a diversified portfolio of natural resource properties. The company generally does not operate mines or other extraction facilities; instead, it leases its mineral interests to operating companies and receives royalty payments and other mineral-related revenues.
NRP’s mineral rights include coal reserves and properties associated with oil and natural gas, aggregates, and other industrial minerals.
