Abraxas Petroleum Corp. (AXAS), Natural Resource Partners LP (NRP): Major Coal MLP Continues to Diversify Its Assets

Final thoughts

While we all like to see stock prices increase, MLPs tend to pay a healthy dividend making a more stable stock price with limited downside in difficult markets an important component. All three of these MLPs are working to diversify their assets in order to preserve the dividend and make the stock less volatile.

Already the holder of geographically diverse coal properties with reserves located in Appalachia, the Illinois Basin and the Power River Basin, Natural Resource Partners LP (NYSE:NRP)’ recent efforts to diversify its assets into other commodities should serve to support the stock in weak coal pricing environments. Revenue from sources other than coal royalties is expected to be approximately 37% in 2013. This is up from 31% in 2012 and only 11% in 2005. While shares are down 40% from their two-year closing high, the stock has shown much more stability year-to-date.

Strong demand for natural gas should continue to power earnings at PVR Partners LP (NYSE:PVR). EBITDA from the MLPs natural gas midstream operations exceeded 50% for the first time in 2012 and is expected to be approximately 78% in 2013. This has helped the stock of Penn Virginia remain stable while many coal related stocks were being crushed. Rhino Resource Partners, L.P. (NYSE:RNO) is still the most dependent on coal of the three and it shows in the stock price. Shares of Rhino are down over 50% from their two-year closing high and the shares are still very tied to coal.

Alex Gray has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Major Coal MLP Continues to Diversify Its Assets originally appeared on Fool.com.

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