Natural Resource Partners L.P. (NRP): A Bull Case Theory

Wed, Sep 17, 2025, 10:45 AM 3 min read

We came across a bullish thesis on Natural Resource Partners L.P. on Scalper's Lounge’s Substack by scalpavelli. In this article, we will summarize the bulls’ thesis on NRP. Natural Resource Partners L.P. 's share was trading at $102.73 as of September 11th. NRP’s trailing P/E was 9.63 according to Yahoo Finance.

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Natural Resources Partners LP (NRP) is a master limited partnership structured as a royalty business on mineral rights and infrastructure, with most income tied to coal production, split between thermal and coking coal depending on market dynamics. Around 35% of revenues come from infrastructure fees such as transportation, wheelage, and processing, which provide a stabilizing buffer against commodity price and volume swings.

The company also holds a non-controlling interest in the Sisecam soda ash operation, once a major contributor but currently depressed after market weakness, with income down from $73 million to $16 million. Despite this, soda ash remains a long-reserve asset with recovery potential. Current free cash flow of roughly $150 million is likely close to a cycle trough, and a sustainable baseline, compared with peak operating income plus equity investment returns of over $300 million.

Management has executed a disciplined deleveraging strategy, targeting zero debt within 12 months, after which capital returns via dividends and buybacks should accelerate. Investors anticipate a double-digit free cash flow yield, with dividends offering strong upside once debt repayment is complete. Even in a severe downside case like 2020, NRP still generated $100 million in operating cash flow, equating to a 7% yield at current valuations. While terminal value concerns remain, NRP benefits from nominal royalty pricing, which provides inflation protection, and potential upside from carbon capture revenues.

The investment opportunity exists largely because many investors avoid MLPs due to tax complexities, creating mispricing. With deleveraging nearly complete and a dividend hike expected soon, NRP offers a compelling setup with catalysts for rerating, limited downside, and strong cash return potential.

Previously we covered a bullish thesis on Natural Resource Partners L.P. (NRP) by InvestSpecial in April 2025, which highlighted the company’s disciplined deleveraging, resilient royalty model, and potential catalyst from dividend reinstatement. The company’s stock price has appreciated approximately by 2.4% since our coverage. The thesis still stands as NRP nears debt-free status with robust cash flow. scalpavelli shares an identical view but emphasizes infrastructure revenues and soda ash recovery.