Master limited partnership Natural Resource Partners L.P. (NRP) yesterday provided its production and earnings guidance for 2010.

The partnership projects coal production in 2010 to be essentially flat, ranging from 41 to 50 million tons. The partnership guided total revenue in 2010 to be in the $235-$285 million range, with coal royalty revenue of $175-$205 million. This represents a 10% increase in total revenue and a 2% rise in coal royalty revenue, over the respective projected revenues for 2009.

Management indicated that the partnership completed six acquisitions during 2009, which will contribute to a higher production in 2011 and 2012. It expects this increase to coincide with growing demand for both coal and aggregates as the economy recovers. Additionally, the partnership expects this increased production to generate escalating cash flows in 2011 and beyond.

For 2010, Natural Resource Partners expects earnings per unit to grow roughly 35% in the 75 cents to $1.25 range. Furthermore, the partnership expects 2010 distributable cash flow to increase 10% to the range of $150-$185 million.

Along with issuing its guidance for 2010, Natural Resource Partners’ general partner also declared a fourth quarter distribution of 54 cents per unit. The distribution is payable on February 12, 2010, to unitholders of record on February 5, 2010. The general partner expects to maintain this distribution rate throughout 2010.

Market Scenario

The partnership is noticing signs of recovery in the global economy. It expects strong prices in 2010 compared to 2009, provided the current trend of steel production continues. The partnership generates approximately one-fourth of its coal and 30-35% of its coal royalty revenue from metallurgical coal used to produce steel. Thus, the partnership’s income is affected by the pricing of this commodity.

Furthermore, the partnership does not expect the U.S. steam market to recover until the second half of 2010. The factors affecting the steam market include weather, industrial demand and fuel switching. However, it expects the stronger industrial demand due to a strengthening economy to have a positive impact on the steam coal market.

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