BRP LLC is a joint venture formed in June 2010 between Natural Resource Partners L.P. (NYSE:NRP) and International Paper (NYSE:IP). BRP will own and manage the current leases as well as the further development of the more than 7 million acres previously held by International Paper. NRP will be the managing and controlling partner with a 51% interest and IP will hold the remaining 49% interest. NRP will receive a $4.25 million annual cumulative preferred distribution from the joint venture before profit sharing commences.
The mineral acres are located in 31 states and consist of:
- Oil and gas reserves
- Coal reserves
- Aggregate reserves
- Coal bed methane rights
- Geothermal rights
- CO2 sequestration rights
- Water rights
- Cell tower rights
- Precious metal reserves
- Industrial minerals
- Base metals
Approximately three-fourths of the acreage is located in the Gulf Coast Region, with the second largest area being the Pacific Northwest.
The business plan for BRP is very similar to the business plan for Natural Resource Partners. BRP will own and manage the reserves and will lease them to various companies in exchange for a royalty on the production from the property or a fee depending on the asset.
The assets currently have active leases for oil and gas, coal, aggregates and cell towers with upside potential from additional leasing and development.
As of December 31, 2010, BRP had acquired, in several stages, approximately 7.35 million mineral acres in 29 states from International Paper. While the vast majority of the 7.35 million acres remain largely undeveloped and underexplored, BRP currently holds 81 revenue generating leases. In addition, a significant number of mineral prospects and deposits with yet undetermined commercial potential have been identified through a variety of efforts including exploration drilling, coring, drill logs, electric logs, inferences derived from published information, geological reports, geological maps, in-house efforts and consulting investigations. These prospects and deposits are not necessarily near-term commercial opportunities due to a variety of factors such as location, market, economic and production uncertainties, but have long-term development potential.
BRP's assets include approximately 300,000 gross acres of oil and gas mineral rights in Louisiana, of which over 60,000 acres were under lease as of December 31, 2010. In addition, BRP holds a gross production royalty interest on approximately 17,000 mineral acres currently under lease in Louisiana. The remaining oil and gas mineral acreage in Louisiana is not leased, but a significant number of acres are in areas with development potential.
As of December 31, 2010, BRP owned nearly 246,000 gross mineral acres of primarily lignite coal rights in the Gulf Coast region, of which approximately 5,000 acres are leased under three separate leases in Louisiana and Alabama. In addition to the coal rights, BRP held aggregate reserves, including limestone, granite, clay, and sand and gravel reserves, under lease in seven states.
Other mineral rights held by BRP as of December 31, 2010 included coalbed methane rights in four Gulf Coast states, metals rights in three states, approximately 450,000 acres of water rights in East Texas, geothermal rights and royalty interests in the Gulf Coast and Pacific Northwest and carbon sequestration rights primarily in the Gulf Coast region.