Wed, Oct 22, 2014, 8:13 AM EDT - U.S. Markets open in 1 hr 17 mins


% | $
Quotes you view appear here for quick access.

Natural Resource Partners LP Message Board

  • jrad52 jrad52 Oct 4, 2013 1:19 PM Flag

    OCIR comparison

    OCIR went public on Sept 13, and since then it's up just about 6%. NRP. which owns the other half of OCI, is basically flat since that day. If you like the OCI operation, OCIR would seem to be the way to invest in it. For NRP, the OCI operation is simply too small to offset all the other problems. Even tho NRP's management wants us to believe that its DCF from OCI will be close to $ 100 million this year, it's too small a piece of NRP to invest that way.


    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • OCIR gave away all of its incentive distribution rights. I'm not positive, but I believe NRP retained its rights. More upside on the JV to NRP.

      • 1 Reply to joelm_shapiro
      • You are right; the sponsor of OCIR created the IDRs for its half of the OCI investment. NRP simply owns 49% of the underlying OCI, so it isn't sharing its 49% with any one. Investing in OCI the way NRP did was a great investment. Not enough to offset the coal exposure, but a nice start.

        For the time being, the IDR issue won't affect OCIR. It isn't near the IDR hurdle. Mostly, that's because OCIR hasn't yet shown enough cash flow to cover its starting $ 2/year distribution (but the sponsor has subordinated its units, so probably the $ 2 will be paid in any event). The first jump in the IDRs (to 15%) starts when the distribution tops $ 2.30/year, so I figure it's a few years to hit that mark.

        I figure that OCIR will be lucky to earn enough to cover a total distribution of about $ 35 MM in calendar 2014, with NRP getting slightly less than that amount. That's a pure guess based on production; the price of soda ash might go anywhere, I guess. But that would mean NRP's share of distributions from OCI in 2014 will be slightly less than $ 35 million, compared to the total $ 90 million or $ 100 million it will get this year, including the refinancing.

        And BTW, in case the whole OCI/OCIR isn't confusing enough, on Friday OCIP (OCI Partners, another new MLP) went public. Totally different operation; just a coincidence about the name. I bought some of that 1, too, for a short-term bet.

    • Jrad:
      Glad you are still posting. Do you have revenue, income and guidance estimates for NRP's
      third quarter? Thank you!

      • 2 Replies to ayscuew
      • NRP doesn't give much specifics in its guidance, so no, I don't have specific expectations for Q3. In the past 3 years, Q3 production by the lessees has been 5% - 10% higher than Q2, so I'm expecting higher production. Royalty rates have been in the cellar all year, but Q2 was flat with Q1, so maybe a bottom has been reached with the rate. With those 2 expectations, Q3 income and operating cash flow should be better than Q2, but probably not by much. NRP will show DCF through the roof, because it's treating the $ 40 million 1-time restructuring distribution from OCI as cash flow. But ignoring that nonsense, I would expect things to be slightly better than Q2.

        The debt refinancing should be a non-event on the income statement. There will be some very small write off of the deferred financing costs associated with the debt that was repaid, and there will be 1 month higher interest expense, but neither of these should be material in Q3.

        If I were a real unit holder, the thing I would watch is lessee production. Lower production, if it happens, might signal more mine closings, considering the new properties that have opened in the past year or so. I don't expect that, though.

        But the company doesn't say very much, so my expectations aren't worth much.

      • Forgot to ask, will NRP take any charges for the cost of selling the $300 million in senior notes??

12.40-0.12(-0.96%)Oct 21 4:02 PMEDT

Trending Tickers

Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.