jrad: Who owned the IDRs? Believe they got 24% of the distribution and 48% of increased distribution. Now we as share holders will get the IDRs because there were 32 million new shares issued to buy out the IDRs. Assume this will be positive to shareholders after Deer River is started. Do you think that the $2.16 annual distribution is safe? If so a 6% return isn't bad to sit on till 2012 when Deer River opens. Appreciate your comments. You seem to know a lot about NRP.
Do like the fact that BB&T has a "buy" on NRP. BB&T also owns more than 1.5 million shares of NRP. Scott & Stringfellow has 950,000 shares. Scott and Stringfellow is owned by BB&T. BB&T Asset management own 656,000 shares. BB&T is a very conservative bank.
jrad: One other question! NRP said that distributable cash flo in 2011 will be between $215 and $255 million. Assume that means that shareholders will get between $2.02 and $2.40 per share (106 million shares). Are my numbers correct? Last I heard mines are still underwater in Australia. Would think that NRP first quarter results will be good.
I don't see NRP changing its distribution for a while. It has lots of discretion in determining what amounts to hold back for new projects, etc. So I'm expecting the $ 2.16 to continue for 2011, no matter what the cash flow turns out to be.
The announcement by NRP was strange. The first paragraph (floods in Australia, severe winter weather, etc) would make you think the price of coal was going thru the roof, at least for a while. Then, they cut expectations. I assume they have not built the possible continuing impact of higher coal prices into their projections, so I guess we could see some upside. Maybe under NRP's contracts with the miners, the impact of higher prices doesn't completely flow thru to NRP until the end of the lease. I know that's the case with PVR's coal royalty operation.
So I'll take the $ 2.16 and wait. I also have the luxury of a much lower cost for my shares; I've been in NRP for a while.
I know accounting, I don't know coal. I just assume that, even with all the negatives about coal, we're going to keep using it.
I'm not sure if the new project eliminates all of the dilution in 2012, but it certainly will shrink it.
The IDRs were owned by the GP and several entities realted to the GP. A few new (at least new to me) names popped up in the 8-K that announced the IDR deal, but I assume they are all related to the GP.
The deal with the IDR's is this - the IDRs were a leveraged bet on NRP's ability to increase cash flow from the coal operations. So the IDR holders benefitted disprortionately when coal prices rose, production increased, or when NRP issued new units. This leveraged bet has been shifted to NRP now. So long as you think coal prices and production will rise over time, then the IDR deal was probably good.