Upload
shanon-walker
View
218
Download
1
Embed Size (px)
Citation preview
Natural Resource Partners L.P.
FBR Capital Markets
Investor Conference
New York
November 27-28, 2007
2
Forward-Looking Statements
The statements made by representatives of Natural Resource Partners L.P. (“NRP”) during the course of this presentation that are not historical facts are forward-looking statements. Although NRP believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect NRP’s business prospects and performance, causing actual results to differ from those discussed during the presentation.
Such risks and uncertainties include, by way of example and not of limitation: general business and economic conditions; decreases in demand for coal; changes in our lessees’ operating conditions and costs; changes in the level of costs related to environmental protection and operational safety; unanticipated geologic problems; problems related to force majeure; potential labor relations problems; changes in the legislative or regulatory environment; and lessee production cuts.
These and other applicable risks and uncertainties have been described more fully in NRP’s 2006 Annual Report on Form 10-K. NRP undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.
3
NRP – A Lower Risk Proxy for the Coal Industry
• Landholding company
– Lease reserves to coal mining companies
– Receive royalty on production
• 2.1 billion tons of coal reserves
• 69 lessees produce approximately 5% of the US production from our 189 leases
• Three major coal producing regions in eleven states
• 2007 estimated production: 54 million tons to 61 million tons (metallurgical – 22% steam – 78%)
• 2007 estimated total revenues - $205 million to $224 million
4
Diverse Portfolio of PropertiesCoal Reserves
• 2.1 billion tons at 12/31/06• 24% Met / 76% Steam• 60% Low Sulfur / 36% Compliance
States in which NRP has Aggregates
Coal Producing Basins in U.S.
States in which NRP has Coal Reserves
Aggregate Reserves
• 70 million tons
States in which NRP has both Coal Reserves and Coal Handling Facilities
5
Performance
• Royalty supports stable revenues
• Diversified royalty revenues
– Coal
– Coal Infrastructure
– Aggregates
– Gas and Timber
• Increased distributions 17
consecutive quarters
• Grown market cap from $454mm
to $2.1b
Total Revenues
Distributable Cash Flow
30% CAGR30% CAGR
24% CAGR
24% CAGR
6
Active Acquisition History
Over the last five years
• Completed 29 acquisitions totaling ~$1.1 billion
• Diversified our portfolio of properties and lessees
• Established two new growth platforms
7
Three Platforms for Growth
% Revenues
2006 2007E
1% ~6%
% Revenues
2006 2007E
87% ~79%
% Revenues
2006 2007E
-- ~3%
Coal Royalties
Coal Infrastructure
fees
Aggregates
8
Coal Facts Coal Facts
and the and the
Global Coal MarketsGlobal Coal Markets
9
Coal – America’s Most Abundant Energy Source
• U.S. Fossil Energy Reserves on a BTU Basis
– Coal 94%
– Oil 3%
– Natural Gas 3%
• U. S. estimated recoverable reserves are approximately 270 billion tons
• U.S. production in 2006 was 1.2 billion tons
– 96% consumed in U.S.
– 4% exported
• Based on current consumption, the U.S. has over a 225 year reserve life
• U.S. consumption of coal
– 92% for electricity generation
– 7% for making steel and industrial use
– 1% residential
Source: EIA
10
Electricity Generation in the U.S.
• Fuel sources for electricity generation
– Coal 49%
– Nuclear 20%
– Natural Gas 19%
– Hydro 7%
– Other 5%
• Net Generation is 1.4 % higher YTD through July than in the
same period last year
– Coal up 1.5%
– Nuclear up 1.6 percent
– Natural Gas up 6.1 percent
– Hydro down 13.8 percent
Source: EIA
11
Relative Electricity Costs in the U.S.
0%10%20%30%40%50%60%70%80%90%
100%
$0.05 $0.07 $0.09 $0.11 $0.13 $0.15 $0.17 $0.19
Cost per KWH
% o
f E
lect
rici
ty f
rom
Co
al
Alabama Alaska Arizona Arkansas California Colorado
Connecticut Delaw are Florida Georgia Haw aii Idaho
Illinois Indiana Iow a Kansas Kentucky Louisiana
Maine Maryland Massachusetts Michigan Minnesota Mississippi
Missouri Montana Nebraska Nevada New Hampshire New Jersey
New Mexico New York North Carolina North Dakota Ohio Oklahoma
Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee
Texas Utah Vermont Virginia Washington West Virginia
Wisconsin Wyoming
Source: EIA
12
Global Coal Consumption – Growth last five years
0
200
400
600
800
1000
1200
1400
1600
1800
North
America
S. & Cent.
America
Europe &
Euroasia
Middle
East
Africa Asia
Pacifi c
2001
2006
Global Coal Consumption
has increased
•30% over the last five
years
•China ~ 75%
•India ~ 38%
•4.5% over the last year
•China grew 8.7%
•India grew 7.1%
Source: BP Statistical Review of World Energy June 2007
MM tonnes
13
World Dynamics and the Domestic Coal Markets
• China, India, and Europe importing coal
– High freight rates give U.S. coal into Europe an advantage
– Weakness in the U.S. dollar
• U.S. exports increasing
– metallurgical coal
– steam coal
• Coal use is exceeding production
• Increasing exports boosting U.S. domestic coal prices
14
New Electrical Generation
• Coal
– 21 domestic coal plants are currently under construction
– Completions scheduled between 2008 and 2010
– Over 12,000 Megawatts of capacity
– New baseload projects
• Nuclear
– 1 new nuclear plant has been announced
• Hydro
– None – in fact drought conditions have caused decreases in generation
• Wind
– Not large enough to make a significant difference
Source: Platts, Company announcements
15
Long Term Outlook for the Coal Markets
• New coal demand will be generated by:
– New coal-fired power plants being planned
– New coal uses
• coal gasification
• coal to liquids
• EIA expects total electricity sales to increase by 50% by 2030
• EIA expects coal fueled electricity to gain additional market
share over the next 25 years growing to approximately 57% by
2030 from 49% today
• New demand for higher sulfur coal due to the large number of
scrubbers being added to exiting power plants
Source: EIA – Energy Information Agency
Natural Resource Partners L.P.
FBR Capital Markets
Investor Conference
New York
November 27-28, 2007