Coal news and updates

Will Natural Resource Partners Survive the Coal Depression?

An updated research report on Natural Resource Partners LP NRP which has stated that increasing usage of natural gas along with proposals for curbing carbon emissions is affecting the demand for coal in the power sector. However, the partnership's diversification into non-coal assets is to some extent helping to offset the coal weakness.

Houston, TX-based Natural Resource Partners' first-quarter 2015 earnings and revenues missed the Zacks Consensus Estimate. While earnings declined year over year, revenues showed an improvement. The upside came from increased aggregates and oil and gas related revenues as a result of certain acquisitions completed last year.

The partnership's attempts to expand its unconventional asset base through systematic acquisitions are praiseworthy. This has enabled the partnership to diversify its revenue stream away from coal.

The oil and gas properties acquired last year have scaled down the partnership's coal operations substantially and are yielding positive results as well. In the first quarter of 2015, Natural Resource's revenues from oil and gas properties increased 51.4% year over year to $15.2 million.

However, the U.S. Environmental Protection Agency's ("EPA") Clean Power Plan to lower carbon emission from power plants, if implemented without any downward revision, will certainly discourage the production of power from coal and thereby lower demand for this fossil fuel.

Moreover, coal is being increasingly replaced by natural gas for power production due to the latter's clean burning nature and declining prices. Adding to the severity, some of the major lessees of the partnership are idling production at the mines, leading to a loss of coal royalty revenues.

The overall softness in coal demand has not only affected Natural Resource Partners but other coal players as well. Both Peabody Energy Corp.
and Arch Coal Inc. reported a wider-than-expected loss in the first quarter of 2015.

Natural Resource Partners currently has a Zacks Rank #4 (Sell). A better-ranked stock in the coal industry is Rhino Resource Partners LP
, carrying a Zacks Rank #2

source: http://www.nasdaq.com