NICK CARTER – NATURAL RESOURCE PARTNERS LP (NRP)
CEO Interview - published 12/10/2007

NICK CARTER is the President and Chief Operating Officer of GP Natural Resource 
Partners LLC.  He has also served as President of the general partner of Western 
Pocahontas Properties Limited Partnership and New Gauley Coal Corporation since 
1990 and as President of the general partner of Great Northern Properties 
Limited Partnership from 1992 to 1998.  Western Pocahontas Properties Limited 
Partnership, Great Northern Properties Limited Partnership and New Gauley Coal 
Corporation are all affiliates of Natural Resource Partners LP. Prior to 1990, 
Mr. Carter held various positions with MAPCO Coal Corporation and was engaged in 
the private practice of law. He is Chairman of the National Council of Coal 
Lessors, a past Chair of the West Virginia Chamber of Commerce and a Board 
member of both the Kentucky Coal Association and the West Virginia Coal 
Association.

SECTOR – METALS & MINING


TWST: What is Natural Resource Partners?


Mr. Carter: Natural Resource Partners is a master limited partnership, one of 
three master limited partnerships engaged in the coal business. We have a rather 
unique role in that we do not mine coal, don't produce any coal, and don't sell 
any coal to any of the end users. We are an owner of coal reserves and lease 
those reserves to the mining companies. They in turn pay us a royalty based upon 
the gross selling price of the coal with a minimum fixed dollar amount for each 
ton that's produced. In addition to that, we also own coal infrastructure. We 
own a lot of surface property and are able to charge wheelage or throughput for 
that and also have a large sand and gravel operation in Washington State that we 
purchased 11 months ago. We are really in three separate businesses: coal 
reserves, coal infrastructure and aggregates.

TWST: Give us an idea of those specific geographies.


Mr. Carter: We have coal in the three major coal producing regions. Our 
principal region, based upon our history, is Appalachia. We are very unique in 
that respect in that we own coal in every state in the Appalachian coal chain, 
all the way from Alabama, north to Pennsylvania and every coal producing state 
in between. The Appalachian coal is used both within the region and is also 
exported, mainly to Europe, for use in both the steel making process as well as 
for generating electricity. Additionally, we have coal in Indiana and Illinois 
in the Illinois Basin. That's the coal basin that really is experiencing, and we 
think will continue to experience over the next few years, a fairly rapid growth 
because it's a high-sulfur coal. It contains thicker coal seams because it was 
not mined in its normal course during the 1980s and 1990s because of the 
requirements of the Clean Air Act that caused lower-sulfur coal to be mined. 
Now, because of scrubbers being installed on power plants, there is a growing 
demand for high-sulfur coal, because we now have the technological ability to 
remove the sulfur from the plants and can mine and sell that quality of coal to 
the utilities that can now burn it in compliance with the Clean Air Act. In the 
West, we have coal in Montana on a very large surface mine in Colstrip, Montana. 
Most of the coal that's mined there goes to a power plant that is on site. Our 
aggregates operation is on Puget Sound. It is operated by a large Japanese 
cement company. Our business plan there is the same as it is with regard to our 
coal: we own the reserves, lease them to a mining company and they pay us a 
royalty. Those aggregates can be shipped by barge around the Puget Sound to the 
Greater Seattle-Tacoma area.

TWST: Is there a growth element at this point? Are you actively acquiring? Are 
you bringing more land into production through these lease and other 
partnerships?


Mr. Carter: Yes, we have completed 29 acquisitions in the five years that we've 
been public. We just celebrated our fifth anniversary as a public company on 
October 11 and have completed acquisitions totaling in excess of $1.1 billion. 
We've doubled the size of the reserves that we owned at the time we went public 
and we've added the aggregates as a growth platform. We've purchased four coal 
preparation plants. Additionally we purchased some coal transportation 
facilities, rail loadouts and coal handling facilities. Our infrastructure 
business is rapidly growing. We hope to grow the aggregates business as well, 
and our coal royalty business and coal reserves are continuing to grow.

TWST: What's the financial balance sheet and P&L? 


Mr. Carter: Our capital structure is very sound.  We have always felt that our 
target was to get to a 50-50 debt-to-equity ratio. We've reached that only 
momentarily from time to time as we've done acquisitions, but right now we're at 
about a 39% debt-to-equity, so we have substantial room to grow. We have been 
able to quickly and efficiently access the debt markets through private 
placements, primarily to the insurance industry, and our senior notes have fixed 
interest rates less than 6%. We are a little different from most MLPs in that we 
are amortizing all of that debt and paying it off as we mine the reserves. We 
have a very strong balance sheet, a $300 million credit facility and the ability 
to increase the size of that to $450 million based on pre-approved credit 
availabilities from the banks that currently participate in that facility. We've 
increased distributions 17 straight quarters and have significantly grown our 
income while maintaining a strong balance sheet. We reported third quarter 
earnings with record revenue in excess of $56 million, which was up 36% from a 
year ago.

TWST: What do you consider to be competition? How do you measure yourself?


Mr. Carter: We are the largest company in our space that buys and owns coal 
properties and leases them to the mining companies. We have a relationship with 
70 different mining companies through 189 leases. We're a very large company. 
There is one other company that's in our space that is public. There are a 
number of private companies that have historically, over a period of 100 years 
or more, owned coal properties. We know all of those companies. We work with 
them because they own properties adjacent to ours. We've been able to purchase 
some of those companies and believe that in the future we will continue to be 
able to purchase additional private companies and further consolidate our space 
within the coal sector. We have a great management team that is on the ground 
every day managing our relationship with our lessees and they are able to bring 
deals to us. The industry is consolidating from a production standpoint and we 
have been able to play a role in that consolidation also.

TWST: Introduce us to the top-level management team, yourself and two or three 
of your key individuals, please.


Mr. Carter: We run operations from Huntington, West Virginia. My title is Chief 
Operating Officer and I've been here at this company for 12 years prior to when 
the company went public, so for a total now of 17 years. I am a lawyer who went 
to work in the mining business 25 years ago. I spent eight years with the 
company that is now Alliance Resources, a coal master limited partnership, but 
then came over here to the private company that preceded NRP in 1990, and have 
been here ever since. I've worked within the industry and serve on the Board of 
the Kentucky Coal Association, West Virginia's Coal Association and am now in my 
fourth year as Chairman of the National Council of Coal Lessors. 
My right arm here is Kevin Wall, who is our Vice President and Chief Engineer. 
He is a Virginia Tech grad and has been involved with this company for longer 
than I've been here, I think, about 27 years. He is very knowledgeable of all of 
our properties, and manages all of the people who really are the core of our 
management team: the guys who we call regional managers who are in the field, 
managing our relationship with the lessees, doing mine inspections, making sure 
that the terms of the lease are being complied with, negotiating amendments to 
the lease, and in many instances working on due diligence for acquisitions. We 
also have three regional managers who run shops in London and Hazard, Kentucky 
and in Logan, West Virginia where we manage some of our properties because of 
the remote nature of those properties. In addition, we have Kevin Craig here, 
who is our Vice President of Business Development. He is in charge of our 
acquisition program. He and an analyst who works for him are really the only two 
people who work full time on acquisitions. The rest of our due diligence team is 
made up of the operations people, those regional managers who I talked about. In 
Houston is Corby Robertson Jr., our Chairman and CEO, Kathy Hager, our Vice 
President of Investor Relations, Dwight Dunlap, our Chief Financial Officer, and 
Wyatt Hogan, our General Counsel. They all work in our Houston headquarters.

TWST: What historically has been the shareholder base with the company? Has that 
base undergone any recent changes?


Mr. Carter: It has changed a lot over the last two years. When we first went 
public, most of our owners were retail or individual owners who bought, and, in 
large part, held our units. We've noticed a transition over the last couple of 
years. Really, in 2006, we began to notice a larger and larger percentage of our 
units were being held by institutions. Now, approximately 20% of our units are 
held by institutions, up from approximately 5% when we went public. There were 
some changes in the tax laws that allow them to now invest in MLPs. In addition, 
approximately 34% is held by retail investors and approximately 46% is held by 
insiders.  

TWST: In your discussions with the investment community, are there any recurring 
questions or misperceptions? Is the Natural Resource Partners story understood?


Mr. Carter: I think it's pretty well understood now. We have certainly made an 
effort over the last five years to spend a lot of time with the investors, 
especially the larger investors. I think there is a concern among a lot of our 
investors with regard to some of the macro political issues relating to global 
warming and some of those issues that impact the end users of our coal, the 
electric utility industry, and what's going to happen on that aspect of it. As 
far as the industry is concerned, I think most people in the larger cities, 
where a lot of these institutions are headquartered, if they don't know a lot 
about the coal industry, they are always surprised that 50% of the electricity 
in the country is generated by coal-fired power plants. They are surprised at 
the volume of tonnage that is mined in this country, which is over 1.1 billion 
tons of coal mined every year. They are really surprised at what a global 
commodity it is, with a lot of production in China, Colombia, South Africa and 
Australia. The worldwide movement of those coal products is a surprise to a lot 
of people. I think people are becoming more aware of all of the impact that the 
coal industry has on their lives.

TWST: As investors track and access your performance, what are the key metrics 
and events they should focus on? What should matter to the investor? What 
matters to you?


Mr. Carter: To us, cash is king and we measure cash as distributable cash flow, 
which is the metric that, we believe, should be most important to anyone who is 
investing in a master limited partnership. That's a metric that determines 
whether or not we have the ability to continue to increase distributions as we 
have done historically. That's the first number I'll look at when I am looking 
at our financial statements and trying to determine whether or not we're doing a 
good job. One of the things that investors should focus on with regard to NRP 
when looking at a potential investment is the tax attributes that they are going 
to receive from having an investment in us. A partnership doesn't pay income 
tax, but it passes through all of the tax liability and the tax attributes to 
the unitholders. We are able to currently defer a substantial amount of our 
taxable income through depletion. Additionally, coal royalty revenue, which 
constitutes the major portion of our entire revenue stream, is taxed under the 
federal tax code at the capital gains rate. That means that most of what revenue 
is taxable to the unitholders is taxed at the lower, long-term capital gains 
rate. When they look at how many dollars they get to keep in their pocket from 
this investment at the end of the year, I think they'll determine that NRP is 
very attractive.  We believe distributable cash flow is the primary number that 
investors should to be looking at and in our most recent earnings report, that 
number was up 10% over the third quarter of 2006. We reached $34 million in 
distributable cash flow for this last quarter.

TWST: What's the agenda or the priorities for the next 12 to 18 months? What 
would make that time frame a success?


Mr. Carter: We need to keep doing what we've been doing! We need to always keep 
our eye on the ball and actively manage the properties that we already have. We 
need to generate a strong revenue stream from those properties first and 
foremost. We will be in the field actively managing those, making sure that the 
mine plans, which we have the right to approve, maximize the use of our 
resource. Additionally, we also have the right to audit our lessees. We audit 
the royalty payments to insure that we are paid the correct amount of royalty. 
While doing that, we are also building a relationship with our lessees because 
we found that most of our acquisition leads come from our current lessees. 
Either they want to expand their business or they know somebody that is, and may 
refer them to us. We are always in a relationship building mode with our 
lessees. The second thing that we need to do as a growing company is to continue 
to focus on acquisitions and we work everyday on acquisitions. We've had a very 
strong deal flow and continue to have a strong deal flow and anticipate that the 
coal industry consolidation that we think will occur will afford us the 
opportunity to do a substantial number of deals over the next few years. We need 
to be geared up and prepared to do that, for every aspect of our business.

TWST: What today compels investors to include NRP as part of their current 
portfolios and longer-term investment strategies?


Mr. Carter: We have a five-year history with 18 increases in distributions and 
17 straight increases in distributions. When we talk to investors and they want 
to know what to expect from us in the future, we tell them to look at the past 
and that's probably the best indication of what they can expect from us in the 
future. What they'll see when they do that is that we are a company that's made 
smart acquisitions and then been able to integrate those acquisitions in part 
because of the way we do due diligence. When performing due diligence we have 
the people who will be in charge of managing the property actively working on 
the acquisition team. We've used our revenue streams from those acquisitions to 
increase distributions. We have a very strong balance sheet to back up the 
company and the distributions. Additionally, as I just mentioned, I think they 
need to look at the after-tax returns that they are going to achieve. Those are 
the key points that we try to stress when we are out meeting with investors.

TWST: Thank you. (DWA)


NICK CARTER
President & COO
Natural Resource Partners LP
601 Jefferson Street 
Suite 3600
Houston, TX 77002
(713) 751-7507
www.nrplp.com
e-mail: info@nrplp.com

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