Global Hunter Securities Starts Natural Resource Partners LP (NRP) at Accumulate

Global Hunter Securities initiates coverage on Natural Resource Partners LP (NYSE: NRP) with a Accumulate. PT $24.00.

The firm comments: "Natural Resources Partners L.P. (NRP) is a master limited partnership engaged in the business of owning and managing mineral reserve properties. It does not operate any mines, but rather purchases properties containing coal, aggregates or oil and gas reserves and leases them to companies that develop the natural resources. NRP is paid a royalty based on a percentage of sales or a fixed fee per ton by the operators of its properties. Thus, its royalty payments are mostly based on whether or not coal, aggregates or oil and gas are produced, not their profitability. Given this, its profitability and income stream are less vulnerable to swings in pricing and demand for coal. The companies that lease its coal properties shipped 34% of the produced coal into the metallurgical coal market in 2011, which we believe will be stronger than the thermal coal market over the next three to five years. Coal royalties represent 74% of its total revenue. The company also owns and leases infrastructure assets, including transportation, handling and processing facilities, and receives throughput fees. At year-end 2011, the company owned 2.3 billion tons of proven and probable coal reserves and 380 million tons of geographically diverse aggregate reserves, making it the fifth-largest owner of coal reserves in the US. Its operations are 100% US based; the company was formed in April 2002 and went public via an IPO in October 2002. NRP grows by raising capital in the debt or equity markets and buying more natural resource properties and then leasing these to mining or oil and gas E&P companies. We believe NRP will be able to continue to grow its asset base and royalty payments over the next three to five years. However, we believe its growth will be slower than in the past due to headwinds in the US coal market. NRP has a 10-year record of raising or maintaining its dividend. However, the company’s dividend has risen only modestly over the last three years, but despite the weak coal market, we expect it to rise modestly (1%-2% annually) over the next three to five years due to the acquisitions it has made outside of coal."

For an analyst ratings summary and ratings history on Natural Resource Partners LP click here. For more ratings news on Natural Resource Partners LP click here.

Shares of Natural Resource Partners LP closed at $20.77 yesterday.

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