Breaking News

Tweet TWEET

Oxford Resource Partners, LP Reports Third Quarter 2012 Financial Results

  Oxford Resource Partners, LP Reports Third Quarter 2012 Financial Results

Focus is on Core Northern Appalachian Operations and Enhancing Liquidity in
Challenging Coal Environment

PR Newswire

COLUMBUS, Ohio, Nov. 6, 2012

COLUMBUS, Ohio, Nov. 6, 2012 /PRNewswire/ --Oxford Resource Partners, LP
(NYSE: OXF) (the "Partnership" or "Oxford") today announced third quarter 2012
financial results.

Adjusted EBITDA^1 was $14.2 million for the third quarter of 2012 as compared
to $17.8 million for the third quarter of 2011 and $14.6 million for the
second quarter of 2012. Distributable Cash Flow^1 was $3.1 million for the
third quarter of 2012, down $0.8 million from the third quarter of 2011 and
$0.1 million from the second quarter of 2012.

The Partnership maintained a cash margin per ton of $8.07 year-over-year for
the third quarter as a 5 percent improvement in cash coal sales revenue per
ton was offset by a 6 percent increase in cash cost of coal sales per ton,
predominantly attributable to higher purchased coal prices and increased
diesel fuel expense. Lower sales volumes, primarily from Oxford's Illinois
Basin operations, drove the year-over-year decline in Adjusted EBITDA.

Reported net loss for the third quarter of 2012 was $3.3 million, or $0.16 per
diluted limited partner unit, compared to breakeven results for the third
quarter of 2011, and a net loss of $1.5 million, or $0.07 per diluted limited
partner unit, for the second quarter of 2012.

"We remain highly focused on our core Northern Appalachian operations and
continue to adjust our Illinois Basin operations to better align our
production with expected sales volumes," said Oxford's President and Chief
Executive Officer Charles C. Ungurean. "Although current coal markets remain
weak, natural gas prices have been increasing, setting up for what we expect
will be an increase in thermal coal demand. Given our capacity to increase
production, Oxford is well-positioned to participate in a market rebound. In
the near term, we are diligently pursuing the sale of our excess Illinois
Basin equipment at acceptable values and further reducing capital expenditures
to enhance our liquidity."

Production and Sales Information Summary

                                                              % Change
                                                              Three    Nine
                                                              Months   Months
                           Three Months Ended  Nine Months    2012     2012
                                               Ended
                           September 30,       September 30,  vs.      vs.
                           2012     2011       2012    2011   2011     2011
                           (tons in thousands)
Produced tons              1,776    2,187      5,285   6,071  (18.8%)  (12.9%)
Purchased tons             146      88         366     365    65.9%    0.3%
Tons of coal sold          1,922    2,275      5,651   6,436  (15.5%)  (12.2%)
Tons sold under long-term  94.0%    93.2%      93.0%   93.5%  n/a      n/a
contracts*
Coal sales revenue per     $      $ 41.72   $      $     4.7%     7.3%
ton                        43.67               43.70   40.73
Below-market sales
contract amortization per  0.06     0.11       0.10    0.12   (45.5%)  (16.7%)
ton
Cash coal sales revenue    43.61    41.61      43.60   40.61  4.8%     7.4%
per ton
Cash cost of coal sales    35.54    33.54      36.28   33.36  6.0%     8.8%
per ton
Cash margin per ton        $     $  8.07  $     $    0.0%     1.0%
                           8.07                7.32    7.25
Transportation revenue     $     $  5.66  $     $    1.9%     7.0%
and cost per ton           5.77                5.81    5.43
Number of operating days   67       68         203     204    (1.5%)   (0.5%)
*Represents the percentage of the tons sold under long-term sales
contracts.



Business Update

Oxford's sales book is fully committed and priced for the remainder of 2012
and 97 percent committed and priced for 2013, illustrating the strength of
Oxford's long-term customer relationships.

Management is also executing the following plan in this challenging
environment:

  oMaintaining focus on the core Northern Appalachian operations;
  oCompleting the restructuring of the Illinois Basin operations;
  oPursuing sales of excess Illinois Basin equipment at acceptable values;
  oReducing capital expenditures;
  oStarting work on refinancing the credit facility; and
  oEvaluating additional areas for cost cutting initiatives, including
    selling, general and administrative expenses.

Oxford is the largest producer of surface mined coal in Ohio and is a leading
low-cost producer of thermal coal in the Northern Appalachian region. Oxford
completed the transfer of certain excess equipment from its Illinois Basin
mines to its Northern Appalachian mines during the third quarter.
Productivity in the Northern Appalachian operations continues to improve from
these recent equipment moves, as well as increased production from highwall
mining, Oxford's lowest cost mining method. Oxford continues to optimize its
Illinois Basin mine plan in order to minimize production costs.

Distributions

On October 25, 2012, the Partnership declared a cash distribution of $0.20 per
common unit for its third quarter ended September 30, 2012. The common units
distribution will be paid on November 14, 2012, to all common unitholders of
record as of the close of business on November 8, 2012. The Partnership will
pay no cash distribution on its subordinated units for its third quarter ended
September 30, 2012. The Board will continue to review the appropriate level
of distributions on a quarter-by-quarter basis. Given the challenging market
environment, the Partnership is not providing forward guidance on its
distribution policy at this time.

Liquidity

The Partnership had liquidity of $9.2 million as of September 30, 2012, and
continues to pursue opportunities to enhance its liquidity, including the sale
of certain excess Illinois Basin equipment. As asset sales are unlikely to
occur by the end of 2012, the Partnership elected to reduce the common units
distribution and suspend the subordinated units distribution to preserve
liquidity. Additionally, the Partnership has scaled back its 2012 capital
expenditure plan and expects to further reduce capital expenditures in 2013.
The Partnership is also preparing for discussions with its lender group
regarding the refinancing of its credit facility, with one option being an
extension of the facility's term.

Conference Call

The Partnership will host a conference call at 10:00 a.m. Eastern Time today
(November 6, 2012) to review its financial results for the third quarter of
2012. To participate in the call, dial (866) 783-2143 or (857) 350-1602 for
international callers and use passcode 70677946. The call will also be webcast
live on the Internet in the Investor Relations section of Oxford's website at
www.OxfordResources.com.

An audio replay of the conference call will be available for seven days
beginning at 12:00 p.m. Eastern Time on November 6, 2012, and may be accessed
at (888) 286-8010 or (617) 801-6888 for international callers. The replay
passcode is 69108537.The webcast will also be archived on Oxford's website at
www.OxfordResources.comfor 30 days following the call.

About Oxford Resource Partners, LP

Oxford Resource Partners, LP is a low-cost producer of high value steam coal
in Northern Appalachia and the Illinois Basin. Oxford markets its coal
primarily to large electric utilities with coal-fired, base-load scrubbed
power plants under long-term coal sales contracts. The Partnership is
headquartered in Columbus, Ohio.

For more information about Oxford Resource Partners, LP (NYSE: OXF), please
visit www.OxfordResources.com. Financial and other information about the
Partnership is routinely posted on and accessible at www.OxfordResources.com.

This announcement is intended to be a qualified notice under Treasury
Regulation Section1.1446-4(b), with 100% of the Partnership's distributions
to foreign investors attributable to income that is effectively connected with
a United States trade or business. Accordingly, the Partnership's
distributions to foreign investors are subject to federal income tax
withholding at the highest applicable tax rate.

FORWARD-LOOKING STATEMENTS: Except for historical information, statements made
in this press release are "forward-looking statements." All statements, other
than statements of historical facts, included in this press release that
address activities, events or developments that the Partnership expects,
believes or anticipates will or may occur in the future are forward-looking
statements, including the statements and information set forth under the
headings "Business Update," "Distributions" and "Liquidity."

These statements are based on certain assumptions made by the Partnership
based on its management's experience and perception of historical trends,
current conditions, expected future developments and other factors the
Partnership's management believes are appropriate under the circumstances.
Such statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the Partnership's control, which may
cause actual results to differ materially from those implied or expressed by
the forward-looking statements. These risks, uncertainties and contingencies
include, but are not limited to, the following: productivity levels, margins
earned and the level of operating costs; weakness in global economic
conditions or in customers' industries; changes in governmental regulation of
the mining industry or the electric power industry and the increased costs of
complying with those changes; decreases in demand for electricity and changes
in coal consumption patterns of U.S. electric power generators; the
Partnership's dependence on a limited number of customers; the Partnership's
inability to enter into new long-term coal sales contracts at attractive
prices and the renewal and other risks associated with the Partnership's
existing long-term coal sales contracts, including risks related to
adjustments to price, volume or other terms of those contracts; difficulties
in collecting the Partnership's receivables because of credit or financial
problems of major customers, and customer bankruptcies, cancellations or
breaches to existing contracts or other failures to perform; the Partnership's
ability to acquire additional coal reserves; the Partnership's ability to
respond to increased competition within the coal industry; fluctuations in
coal demand, prices and availability due to labor and transportation costs and
disruptions, equipment availability, governmental regulations, including those
pertaining to carbon dioxide emissions, and other factors; significant costs
imposed on the Partnership's mining operations by extensive and frequently
changing environmental laws and regulations, and greater than expected
environmental regulations, costs and liabilities; legislation and regulatory
and related judicial decisions and interpretations including issues pertaining
to climate change and miner health and safety; a variety of operational,
geologic, permitting, labor and weather-related factors, including those
pertaining to both our mining operations and our underground coal reserves
that we do not operate; limitations in the cash distributions the Partnership
receives from its majority-owned subsidiary, Harrison Resources, LLC, and the
ability of Harrison Resources, LLC to acquire additional reserves on
economical terms from CONSOL Energy Inc. in the future; the potential for
inaccuracies in estimates of the Partnership's coal reserves, which could
result in lower than expected revenues or higher than expected costs; the
accuracy of the assumptions underlying the Partnership's reclamation and mine
closure obligations; liquidity constraints, including those resulting from the
cost or unavailability of financing due to current capital markets conditions;
risks associated with major mine-related accidents; results of litigation,
including claims not yet asserted; the Partnership's ability to attract and
retain key management personnel; greater than expected shortage of skilled
labor; the Partnership's ability to maintain satisfactory relations with
employees; and failure to obtain, maintain or renew security arrangements,
such as surety bonds or letters of credit, in a timely manner and on
acceptable terms.

The Partnership undertakes no obligation to publicly update or revise any
forward-looking statements. Readers should not place undue reliance on
forward-looking statements, which reflect management's views only as of the
date hereof. Further information on risks and uncertainties is available in
the Partnership's periodic reports filed with the U.S. Securities and Exchange
Commission or otherwise publicly disseminated by the Partnership.

OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except for unit and per unit data)
                            Three Months Ended        Nine Months Ended
                            September 30              September 30
                            2012         2011         2012         2011
Revenue
Coal sales                  $       $       $        $    
                            83,931       94,919       246,964      262,093
Transportation revenue      11,096       12,867       32,842       34,976
Other revenue               2,187        2,202        7,223        7,015
Total revenue               97,214       109,988      287,029      304,084
Costs and expenses
Cost of coal sales:
Produced coal               62,025       73,193       188,895      201,593
Purchased coal              6,274        3,143        16,121       13,058
Total cost of coal sales
(excluding depreciation,    68,299       76,336       205,016      214,651
depletion and
amortization)
Cost of transportation      11,096       12,867       32,842       34,976
Cost of other revenue       274          248          649          1,309
Depreciation, depletion     13,110       13,323       39,019       38,669
and amortization
Selling, general and        3,901        3,114        11,475       10,458
administrative expenses
Impairment and              206          -            13,843       -
restructuring expenses
(Gain) loss on disposal of  357          516          (4,156)      1,239
assets
Total costs and expenses    97,243       106,404      298,688      301,302
(Loss) income from          (29)         3,584        (11,659)     2,782
operations
Interest income             1            5            7            10
Interest expense            (3,012)      (2,431)      (8,522)      (6,787)
Net (loss) income           (3,040)      1,158        (20,174)     (3,995)
Net income attributable to  (274)        (1,134)      (371)        (4,015)
noncontrolling interest
Net (loss) income
attributable to Oxford      $       $       $        $     
ResourcePartners, LP       (3,314)         24    (20,545)     (8,010)
unitholders
Net loss allocated to       $       $       $       $     
general partner               (66)       -      (410)      (160)
Net (loss) income           $       $       $        $     
allocated to limited        (3,248)         24    (20,135)     (7,850)
partners
Net loss per limited
partner unit:
Basic                       $       $       $       $     
                             (0.16)       0.00      (0.97)      (0.38)
Diluted                     $       $       $       $     
                             (0.16)       0.00      (0.97)      (0.38)
Weighted average number of limited
partner units outstanding:
Basic                       20,717,734   20,635,288   20,702,042   20,631,055
Diluted                     20,717,734   20,706,794   20,702,042   20,631,055
Distributions paid per
unit
Limited partner
unitholders
Common                      $       $       $       $     
                            0.4375       0.4375       1.3125       1.3125
Subordinated                $       $       $       $     
                            0.1000       0.4375       0.6375       1.3125
General partner             $       $       $       $     
unitholders                 0.2688       0.4375       0.9750       1.3125
See accompanying notes to condensed consolidated financial statements.

OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except for unit data)
                                              September 30,    December 31,
                                              2012             2011
ASSETS
Cash and cash equivalents                    $         $       
                                              6,251            3,032
Accounts receivable                          30,634           28,388
Inventory                                    12,478           12,000
Advance royalties - current portion           1,934            1,412
Prepaid expenses and other current assets     3,078            1,226
Assets held for sale                          6,665            -
Total current assets                         61,040           46,058
Property, plant and equipment, net           157,233          195,607
Advance royalties less current portion       6,824            7,945
Other long-term assets                       8,136            11,655
Total assets                                  $           $     
                                              233,233          261,265
LIABILITIES
Accounts payable                             $          $      
                                              27,133           26,940
Current portion of long-term debt            114,974          11,234
Current portion of reclamation and mine       5,075            4,553
closure costs
Accrued taxes other than income taxes        1,340            1,732
Accrued payroll and related expenses         2,220            2,535
Other current liabilities                     2,220            3,822
Total current liabilities                     152,962          50,816
Long-term debt, less current portion          43,057           132,521
Reclamation and mine closure costs, less      16,525           17,236
current portion
Other long-term liabilities                  1,644            1,575
Total liabilities                             214,188          202,148
Commitments and contingencies
PARTNERS' CAPITAL
Limited partner unitholders (20,734,718 and
20,680,124 unitsoutstanding as of September  17,532           57,160
30, 2012 and December 31, 2011,
respectively)
General partner unitholder (422,698 and
422,044 units outstanding as of September     (1,847)          (1,032)
30, 2012 and December 31, 2011,
respectively)
Total Oxford Resource Partners, LP capital   15,685           56,128
Noncontrolling interest                      3,360            2,989
Total partners' capital                      19,045           59,117
Total liabilities and partners' capital      $           $     
                                              233,233          261,265
See accompanying notes to condensed consolidated financial statements.

OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
                                           Nine Months Ended
                                           September 30,
                                           2012              2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss attributable to unitholders      $   (20,545)   $    (8,010)
Adjustments to reconcile net loss to net
cash from operating activities:
Depreciation, depletion and                39,019            38,669
amortization
Impairment charges                         11,645            -
Interest rate swap and fuel contract       (194)             76
adjustment to market
Loan fee amortization                      1,527             1,173
Non-cash equity-based compensation         966               854
expense
Advance royalty recoupment                1,064             1,050
Accretion of reclamation and mine          1,189             1,153
closure costs
(Gain) loss on disposal of property and    (4,156)           1,239
equipment
Noncontrolling interest in subsidiary      371               4,015
earnings
Changes in assets and liabilities:
Accounts receivable                        (2,246)           (5,356)
Inventory                                  (478)             251
Other assets                               (2,212)           (639)
Accounts payable and other liabilities     1,284             4,331
Reclamation and mine closure costs         (6,399)           (3,267)
Provision for below-market contracts       (543)             (1,357)
and deferred revenue
Net cash from operating activities         20,292            34,182
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment        (16,547)          (27,237)
Purchase of coal reserves and land        (51)              (1,124)
Mine development costs                    (2,909)           (3,182)
Advance royalties                          (2,061)           (484)
Proceeds from sale of property and         8,543             -
equipment
Change in restricted cash                 3,092             (2,121)
Net cash from investing activities         (9,933)           (34,148)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on borrowings                    (9,417)           (4,728)
Advances on line of credit                41,000            51,000
Payments on line of credit                 (17,000)          (15,000)
Credit facility issuance costs             (1,086)           -
Capital contributions from partners       7                 12
Distributions to partners                 (20,644)          (27,629)
Distributions to noncontrolling            -                 (3,920)
interest
Net cash from financing activities         (7,140)           (265)
Net increase (decrease) in cash            3,219             (231)
CASH AND CASH EQUIVALENTS, beginning of    3,032             889
period
CASH AND CASH EQUIVALENTS, end of          $     6,251  $       658
period
See accompanying notes to condensed consolidated financial statements.

NON-GAAP FINANCIAL MEASURES TABLES

Reconciliation of net (loss) income attributable to Oxford Resource Partners,
LP unitholders
to Adjusted EBITDA and Distributable Cash Flow:
                              Three Months Ended      Nine Months Ended
                              September 30,           September 30,
                              2012       2011         2012          2011
                              (in thousands, unaudited)
Net (loss) income
attributable to Oxford        $ (3,314)  $    24  $ (20,545)   $ (8,010)
Resource Partners, LP
unitholders
Adjustments:
Interest expense, net of      3,011      2,426        8,515         6,777
interest income
Depreciation, depletion and   13,110     13,323       39,019        38,669
amortization
Impairment and restructuring  206        -            13,843        -
expenses
(Gain) loss on disposal of    357        516          (4,156)       1,239
assets
Below-market coal sales       (121)      (244)        (543)         (741)
contract amortization
Non-cash equity-based         490        245          966           854
compensation expense
Non-cash change in future     384        356          1,189         3,004
reclamation obligations
Non-recurring costs           (227)      15           1,238         507
Noncontrolling interest       274        1,134        371           4,015
Adjusted EBITDA               14,170     17,795       39,897        46,314
Adjustments:
Cash interest expense, net    (2,399)    (2,009)      (7,095)       (5,528)
of interest income
Estimated reserve             (1,264)    (1,529)      (2,988)       (4,357)
replacement expenditures
Maintenance capital           (4,874)    (7,323)      (17,252)      (20,097)
expenditures
Cash reclamation              (2,283)    (1,920)      (5,844)       (3,726)
expenditures
Noncontrolling interest       (274)      (1,134)      (371)         (4,015)
Distributable Cash Flow       $  3,076  $  3,880    $   6,347  $  8,591

Adjusted EBITDA

Adjusted EBITDA represents net income (loss) attributable to our unitholders
before interest, income taxes, DD&A, non-cash equity-based compensation
expense, gain or loss on the disposal of assets, amortization of below-market
coal sales contracts, impairment and restructuring charges, certain
non-recurring costs, non-cash change in future reclamation obligations, and
noncontrolling interest. Although Adjusted EBITDA is not a measure of
performance calculated in accordance with GAAP, we believe it is useful in
evaluating our financial performance and compliance with certain credit
facility financial covenants. Because not all companies calculate Adjusted
EBITDA in the same way, our calculation may not be comparable to similarly
titled measure of other companies.

Adjusted EBITDA is used as a supplemental financial measure by management and
by external users of our financial statements, such as investors and lenders,
to assess:

  oour financial performance without regard to financing methods, capital
    structure or income taxes;
  oour ability to generate cash sufficient to pay interest on our
    indebtedness and to make cash distributions to our limited partners and
    general partners;
  oour compliance with certain credit facility financial covenants; and
  oour ability to fund capital expenditure projects from operating cash flow.

Distributable Cash Flow

Distributable Cash Flow represents Adjusted EBITDA less cash interest expense
(net of interest income), estimated reserve replacement expenditures,
maintenance capital expenditures, cash reclamation expenditures, and
noncontrolling interest. Cash interest expense represents the portion of our
interest expense accrued and paid in cash during the reporting periods
presented or that we will pay in cash in future periods as the obligations
become due. Estimated reserve replacement expenditures represent an estimate
of the average periodic (quarterly or annual, as applicable) reserve
replacement expenditures that we will incur over the long term and then
applied to the applicable period. We use estimated reserve replacement
expenditures to calculate Distributable Cash Flow instead of actual reserve
replacement expenditures, consistent with our partnership agreement which
requires that we deduct estimated reserve replacement expenditures when
calculating operating surplus. Maintenance capital expenditures include,
among other things, actual expenditures for plant, equipment, and mine
development. Cash reclamation expenditures represent the reduction to our
reclamation and mine closure costs resulting from cash payments. Earnings
attributable to the noncontrolling interest are not available for distribution
to our unitholders and accordingly are deducted.

Distributable Cash Flow should not be considered as an alternative to net
income (loss) attributable to our unitholders, income from operations, cash
flows from operating activities or any other measure of performance presented
in accordance with GAAP. Although Distributable Cash Flow is not a measure of
performance calculated in accordance with GAAP, we believe Distributable Cash
Flow is useful to investors because this measurement is used by many analysts
and others in the industry as a performance measurement tool to evaluate our
operating and financial performance, facilitating comparison with the
performance of other publicly traded limited partnerships.

^1 Definitions of Adjusted EBITDA and Distributable Cash Flow, which are
non-GAAP financial measures, and reconciliations to comparable GAAP financial
measures, are included in the non-GAAP financial measures tables presented at
the end of this press release.

SOURCE Oxford Resource Partners, LP

Website: http://www.OxfordResources.com
Contact: Bradley W. Harris, (614) 643-0314, ir@OxfordResources.com