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Natural Resource Partners L.P. Davenport & Company LLC Richmond, Virginia May 11, 2006. Forward-Looking Statements.

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Natural Resource Partners L.P.

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Natural resource partners l p

Natural Resource Partners L.P.

Davenport & Company LLC

Richmond, Virginia

May 11, 2006


Forward looking statements

Forward-Looking Statements

The statements made by representatives of Natural Resource Partners L.P. (“NRP”) during the course of this presentation that are not historical facts are forward-looking statements. Although NRP believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect NRP’s business prospects and performance, causing actual results to differ from those discussed during the presentation.

Such risks and uncertainties include, by way of example and not of limitation: general business and economic conditions; decreases in demand for coal; changes in our lessees’ operating conditions and costs; changes in the level of costs related to environmental protection and operational safety; unanticipated geologic problems; problems related to force majeure; potential labor relations problems; changes in the legislative or regulatory environment; and lessee production cuts.

These and other applicable risks and uncertainties have been described more fully in NRP’s 2005 Annual Report on Form 10-K. NRP undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.


Overview of natural resource partners

Overview of Natural Resource Partners

  • Own and manage coal properties in the three major coal producing regions of the United States:

    • Appalachia, Illinois Basin and Western US

    • Eleven States

  • Lease reserves to experienced mine operators under long-term leases in exchange for royalty payments

  • Royalty payments based on percentage of sales price or fixed price, with periodic minimum payments

  • Lessees provide coal to diverse group of utilities, steel companies and industrial users


Evolution since natural resource partners ipo

Evolution Since Natural Resource Partners’ IPO

IPO (10/11/2002)

Current

  • _______________________

  • As of 12/31/2005

  • For 2002 and 2005, respectively

  • As of 3/31/2006

  • As of 05/02/2006

  • As of 03/31/06 NRP had $165 million of $175 million capacity available under its credit facility. NRP also retains the right to increase the size of the credit facility to $300 million without obtaining lender consents.


Natural resource partners l p

Diverse Portfolio of Properties

  • 2.0 billion tons at 12/31/05

  • 23% Met / 77% Steam

  • 58% Low Sulfur / 35% Compliance

Northern Powder River Basin

Reserves – 132 mm tons (7%)

Low Sulfur

Illinois Basin (1)

Reserves – 62 mm tons (3%)

Medium and High Sulfur

Appalachia

Reserves – 1,835 mm tons (90%)

Low, Medium, High Sulfur

Coal Producing Basins in U.S.

States in which NRP has Coal Reserves

Note: Reserve information as of December 31, 2005

(1) Does not include reserves associated with the 2nd and 3rd closings of Williamson Development acquisition in 2006.


Stable and predictable historical performance

Stable and Predictable Historical Performance

Coal Production

  • Royalty structure supports stable revenues

  • Diversified sources of royalty revenues

  • Downside price protection without limiting upside; minimum royalty payments of $29.6mm at 12/31/05

  • Transportation / customer diversity

21% CAGR

Coal Royalty Revenues

42% CAGR


Natural resource partners l p

No Direct Operating Costs or Risks

Operating Risks

Operating Cost

  • Capital Expenditures

  • Labor

  • Employee Benefits

  • Property Taxes

  • Transportation / Processing

  • Reclamation Exposure

  • Regulatory / Permitting

  • Competition

  • Weather

  • Economy


Natural resource partners l p

Active Acquisition History – Major Acquisitions

Acquisition

Reserves

(mm tons)

Date

  • (1) Does not include 14 million tons of override reserves.

  • Closed on the first two phases of this acquisition. Expect to complete the final acquisition of the remaining reserves in the middle of 2006. Reflects owned reserves of 88 million tons in total, of which NRP has closed on approximately 2/3rds. Does not include 56 million tons of override reserves.


First quarter 2006 highlights

First Quarter 2006 Highlights

  • Increased distributions for the eleventh consecutive quarter to $0.79 per unit (annualized rate of $3.16)

  • Reported record financial results

    • Net income increased 40% over 1Q 2005 to $1.01 per unit

    • Coal royalty revenues increased 20%

    • Distributable cash flow increased 45%

    • Distribution increased 15%

  • Sold timber assets for a net gain of $2.2 mm or $0.08 per unit

  • Completed the second phase of the Williamson Development acquisition for $35 million

  • Financed the above acquisition with $50 mm in long term debt at 5.05% including a pay down of $15 mm on our credit facility


Strong cash flow and distribution strength

Strong Cash Flow and Distribution Strength

  • Increased distributions 12 out of 13 quarters since IPO, 54% overall

  • Two full quarters of distributions reserved in cash balance

    • $22.3 mm per quarter based on $0.79 per unit ($3.16 annualized) including GP and IDRs

    • Cash balance at 3/31/06 - $67.4 mm

  • Midpoint of guidance for distributable cash flow for 2006 - $106 mm

  • Current coverage ratio based on $3.16 per unit and 2006 guidance – 1.19x

  • Room for distribution growth in 2006

  • Cash available for acquisitions to fuel future growth


Strong balance sheet 3 31 06

Strong Balance Sheet – 3/31/06


Attractive tax structure due to coal

Attractive Tax Structure Due to Coal

  • Distributions are treated as return of capital

  • Unitholders are taxed on the income generated by the partnership

  • Coal royalty revenues are taxed as long term capital gains

  • Approximately 60% of the revenue generated is sheltered by depletion deductions

  • Depletion does not have to be recaptured upon sale of the units

  • If units are held for more than one year, receive capital gains treatment on the sale


Favorable current coal fundamentals

Favorable Current Coal Fundamentals

  • Electricity generated from coal is currently 50%, EIA projects to increase to 57% by 2030

  • High natural gas prices

  • Coal-fired equipment has become cleaner

  • Increase in plans to build new coal-fired plants

  • Scrubbers being added to existing coal-fired plants

  • Increased U.S. export market

  • Favorable exchange rate with European Union

  • Continued demand due to growth of Chinese economy

Domestic Demand

Global Demand


Nrp a proxy for the coal industry

NRP – A Proxy for the Coal Industry

  • Over 2 billion tons of low, medium and high sulfur coal reserves

  • 68 lessees produce approximately 5% of the US production from our 176 leases

  • Three major coal producing regions in eleven states

    • Appalachia

      • Northern

      • Central

      • Southern

    • Illinois Basin

    • Northern Powder River Basin

  • 2005 production: metallurgical – 27% steam – 73%

  • 2006 estimated production: metallurgical – 20% steam – 80%

  • Only coal company to have reserves that stretch the entire Appalachian coal chain


Investment highlights

Investment Highlights

  • Attractive portfolio of long-life, diverse properties

  • Lease to operators with diverse customer base

  • Distribution supported by stable, royalty-based cash flows

  • No direct exposure to mining operating costs or risks

  • Well-positioned for growth via coal and mineral acquisitions

  • Demonstrated ability to grow asset base and distributions

  • Coal royalty revenues are taxed at capital gains rates


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