Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-34815

_________________________

Westmoreland Resource Partners, LP

(Exact name of registrant as specified in its charter)

____________________________________________________



Delaware	77-0695453
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

9540 South Maroon Circle, Suite 200, Englewood, CO 801112

(Address of principal executive offices and zip code)

(855) 922-6463

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” and “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐NO ☒

As of April 23, 2015, 5,711,630 common units were outstanding. The common units trade on the New York Stock Exchange under the ticker symbol “WMLP.”

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

TABLE OF CONTENTS



	TABLE OF CONTENTS

	PART I. FINANCIAL INFORMATION	Page

ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2015 and 2014	5
	Condensed Consolidated Statements of Partners’ Capital for the Three Months Ended March 31, 2015	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014	7
	Notes to Condensed Consolidated Financial Statements	9
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	28
ITEM 4.	Controls and Procedures	29

	PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	30
ITEM 1A.	Risk Factors	30
ITEM 4.	Mine Safety Disclosures	31
ITEM 6.	Exhibits	31

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for unit data)



	Westmoreland Resource Partners, LP
	(Successor)
	As of March 31, 2015			As of December 31, 2014
Assets	(Unaudited)
Current assets:
Cash	$	1,785		$	5,921
Receivables:
Trade	23,560			22,710
Other	116			116
	23,676			22,826
Inventory	12,696			14,013
Other current assets	2,637			1,317
Total current assets	40,794			44,077
Property, plant and equipment:
Land and mineral rights	72,993			71,715
Plant and equipment	133,949			134,029
	206,942			205,744
Less accumulated depreciation, depletion and amortization	(9,801		)	—
Net property, plant and equipment	197,141			205,744
Advanced coal royalties	11,498			9,153
Restricted investments and bond collateral	9,534			10,621
Intangible assets, net of accumulated amortization of $0.5 million and $0 in March 31, 2015 and December 31, 2014, respectively	30,483			31,000
Deferred financing costs, net	6,607			6,993
Total Assets	$	296,057		$	307,588

See accompanying notes to condensed consolidated financial statements.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for unit data)



	Westmoreland Resource Partners, LP
	(Successor)
	As of March 31, 2015		As of December 31, 2014
Liabilities and Partners' Capital	(Unaudited)
Current liabilities:
Current installments of long-term debt	$	6	$	6
Accounts payable and accrued expenses:
Trade	19,469		19,135
Production taxes	975		1,033
Accrued compensation	401		1,531
Asset retirement obligations	9,855		7,783
Other current liabilities	1,434		4,007
Total current liabilities	32,140		33,495
Long-term debt, less current installments	176,354		175,029
Asset retirement obligations, less current portion	22,714		23,902
Warrants	1,952		1,981
Other liabilities	160		160
Total liabilities	233,320		234,567
Partners' capital:
Limited partners (5,711,630 and 5,505,087 units outstanding as of March 31, 2015 and December 31, 2014, respectively)	29,328		39,549
General partner (35,291 units outstanding as of March 31, 2015 and December 31, 2014)	33,409		33,472
Total partners’ capital	62,737		73,021
Total liabilities and partners’ capital	$	296,057	$	307,588

See accompanying notes to consolidated financial statements.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except for unit and per unit data)



	Westmoreland Resource Partners, LP			Oxford Resource Partners, LP
	(Successor)			(Predecessor)
	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
Revenues:
Coal revenues	$	61,750		$	76,770
Royalty revenues	1,870			99
Non-coal revenues	3,947			1,135
Total Revenues	67,567			78,004
Costs and expenses:
Cost of coal revenues (excluding depreciation, depletion and amortization)	54,651			65,726
Cost of non-coal revenues	3,155			402
Depreciation, depletion and amortization	10,180			11,224
Selling and administrative	2,548			3,656
Loss on sale/disposal of assets	1,034			204
Restructuring charges	553			75
Total cost and expenses	72,121			81,287
Operating loss	(4,554		)	(3,283		)
Other (expense) income:
Interest expense	(5,780		)	(6,870		)
Interest income	—			1
Change in fair value of warrants	29			(415		)
Total other expenses	(5,751		)	(7,284		)
Net loss	(10,305		)	(10,567		)
Less net loss attributable to noncontrolling interest	—			381
Net loss attributable to WMLP unitholders	(10,305		)	(10,186		)
Less net loss allocated to general partner	(63		)	(202		)
Net loss allocated to limited partners	$	(10,242	)	$	(9,984	)

Net loss per limited partner unit:
Basic	$	(1.74	)	$	(4.92	)
Diluted	$	(1.74	)	$	(4.92	)

Weighted average number of limited partner units outstanding:
Basic	5,878,187			2,055,033
Diluted	5,878,187			2,055,033

See accompanying notes to condensed consolidated financial statements.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(UNAUDITED)

(in thousands, except for unit data)



	Limited Partners															Total Partners' Capital
	Common				Liquidation			Total				General Partner
Successor	Units	Capital			Units	Capital		Units	Capital			Units	Capital
Balance at December 31, 2014	5,505,087	$	39,549		856,698	$	—	6,361,785	$	39,549		35,291	$	33,472		$	73,021
Net (loss) income	—	(10,242		)	—	—		—	(10,242		)	—	(63		)	(10,305		)
Common unit distributions	206,543	—			—	—		206,543	—			—	—			—
Equity-based compensation	—	21			—	—		—	21			—	—			21
Balance at March 31, 2015	5,711,630	$	29,328		856,698	$	—	6,568,328	$	29,328		35,291	$	33,409		$	62,737

See accompanying notes to condensed consolidated financial statements.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)



	Westmoreland Resource Partners, LP			Oxford Resource Partners, LP
	(Successor)			(Predecessor)
	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
Cash flows from operating activities:
Net loss	$	(10,305	)	$	(10,567	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion and amortization	10,180			11,224
Accretion of asset retirement obligations	804			565
Restructuring charges	553			75
Equity-based compensation	21			456
Loss on sale/disposal of assets	1,034			204
Non-cash interest expense	1,327			1,862
Amortization of deferred financing costs	405			946
Other	(29		)	415
Changes in operating assets and liabilities:
Receivables, net	(850		)	(1,432		)
Inventories	1,317			(1,894		)
Accounts payable and accrued expenses	276			610
Accrued compensation	(1,130		)	34
Asset retirement obligations	(818		)	(612		)
Other assets and liabilities	(3,165		)	(1,069		)
Net cash (used in) provided by operating activities	(380		)	817
Cash flows from investing activities:
Additions to property, plant, equipment and other	(4,842		)	(2,622		)
Change in restricted investments and bond collateral	1,087			549
Net proceeds from sales of assets	19			294
Net cash used in investing activities	(3,736		)	(1,779		)
Cash flows from financing activities:
Repayments of long-term debt	(2		)	—
Borrowings on revolving lines of credit	—			6,500
Repayment on revolving lines of credit	—			(4,000		)
Debt issuance costs and other refinancing costs	(18		)	9
Net cash (used in) provided by financing activities	(20		)	2,509
Net increase (decrease) in cash and cash equivalent	(4,136		)	1,547
Cash and cash equivalents, beginning of the period	5,921			3,089
Cash and cash equivalents, end of the period	$	1,785		$	4,636

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)



	Westmoreland Resource Partners, LP		Oxford Resource Partners, LP
	(Successor)		(Predecessor)
	Three Months Ended March 31, 2015		Three Months Ended March 31, 2014
Supplemental disclosures of cash flow information:
Cash paid for interest	$	4,047	$	4,075
Non-cash transactions:
Asset retirement obligations capitalized in mine development	1,038		(158		)
Market value of common units vested in LTIP	—		180

See accompanying notes to condensed consolidated financial statements.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except for unit and per unit data)

NOTE 1:BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the accounts and operations of Westmoreland Resources Partners, LP, or the Partnership, and its consolidated subsidiaries and are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and require use of management's estimates. The financial information contained in this Form 10-Q is unaudited, but reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial information for the periods shown. Such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of results to be expected for the year ending December 31, 2015.

Westmoreland Coal Company's ("WCC") cost of acquiring our General Partner, Westmoreland Resources GP, LLC, ("GP") has been pushed-down to establish a new accounting basis for us beginning in the last minutes of the year ended December 31, 2014. Accordingly, the accompanying condensed consolidated financial statements are presented for two periods, Predecessor and Successor, which relate to the accounting periods preceding and succeeding the completion of the transaction. The Predecessor and Successor periods have been separated by a vertical line on the face of the condensed consolidated financial statements to highlight the facts that the financial information for such periods has been prepared under two different historical-cost bases of accounting.

Significant Relationships Referenced in Notes to Consolidated Financial Statements


•	“We,” “us,” “our,” “WMLP,” or the "Partnership” means the business and operations of Westmoreland Resource Partners, LP, the parent entity, as well as its consolidated subsidiaries.


•	Our “GP” means Westmoreland Resources GP, LLC, the general partner of Westmoreland Resource Partners, LP.

Organization

Westmoreland Resource Partners, LP is a Delaware limited partnership formed in August 2007. We are a low-cost producer and marketer of high-value thermal coal to United States (“U.S.”) utilities and industrial users, and we are the largest producer of surface mined coal in Ohio. We market our coal primarily to large electric utilities with coal-fired, base-load scrubbed power plants under long-term coal sales contracts. We focus on acquiring thermal coal reserves that we can efficiently mine with our large-scale equipment. Our reserves and operations are strategically located to serve our primary market area of Indiana, Kentucky, Michigan, Ohio, Pennsylvania and West Virginia. Additionally we hold fee simple interest in coal reserves in Lincoln County, Wyoming for which we have entered into a coal mining lease with a subsidiary of WCC pursuant to which we earn a per ton royalty as these coal reserves are mined.

We operate in a single business segment and have four operating subsidiaries, Oxford Mining Company, LLC, Oxford Mining Company-Kentucky, LLC, Westmoreland Kemmerer Fee Coal Holdings, LLC ("WKFCH") and Harrison Resources, LLC. All of our operating subsidiaries participate primarily in the business of utilizing surface mining techniques to mine domestic coal and prepare it for sale to our customers or lease our controlled coal reserves to others to mine.

We are managed by WCC through our GP and all executives, officers and employees who provide services to us are employed by either WCC or our GP. WCC directly owns our GP. WCC’s common stock trades on the NASDAQ Global Market under the symbol “WLB.”

As of April 23, 2015, WCC and its consolidated subsidiaries owned, through their limited and general partner interests in us, an approximate 79% interest in us. In addition to any distributions it receives, directly or indirectly, from its limited and general partner interests, WCC holds, indirectly, the incentive distribution rights in us held by our GP.

Significant Accounting Policies

There were no changes to our significant accounting policies from those disclosed in the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2014 (the "2014 Form 10-K").

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except for unit and per unit data)

Special Distribution to Public Unitholders

In January 2015, as previously announced, we made a one-time special distribution of 206,543 common units of WMLP, representing an approximate 25% distribution, to our public unitholders on a pro rata basis.

Recently Adopted Accounting Pronouncements

In April 2014, the FASB issued ASU 2014-8, Presentation of Financial Statements and Property, Plant and Equipment, which changes the presentation of discontinued operations on the statements of operations and other requirements for reporting discontinued operations. Under the new standard, a disposal of a component or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component meets the criteria to be classified as held for sale or is disposed. The amendments in this update also require additional disclosures about discontinued operations and disposal of an individually significant component of an entity that does not qualify for discontinued operations. The new guidance is effective for interim and annual periods beginning after December 15, 2014. We adopted ASU 2014-8 effective January 1, 2015.

In August 2014, the FASB issued ASU 2014-17, Pushdown Accounting, which allows entities the option to elect pushdown of purchase accounting each time there is a change-in-control event in which an acquirer obtains control of an acquiree. If an acquiree does not initially elect to apply pushdown accounting upon a change-in-control event, it can subsequently elect to apply pushdown accounting to its most recent change-in-control event in a later reporting period as a change in accounting principle. Once made, the election to apply pushdown accounting is irrevocable. Entities applying pushdown accounting are required to measure the individual assets and liabilities of the acquired entity based on the measurement guidance in ASC 805, including the recognition of goodwill. However, any bargain purchase gain recognized by the acquirer should not be recognized in the acquiree’s income statement, but rather as an adjustment to additional paid-in capital. Acquisition-related debt is recognized by the acquiree only if the acquired entity is required to recognize a liability for debt in accordance with other applicable guidance. See our application of ASU 2014-17 in Note 2.

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized liability, be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The new guidance should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (i.e., debt issuance cost asset and the debt liability). The new guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted for financial statements that have not been previous issued. Management projects the impact to the financial statements resulting in balance sheet reclassification for which the Deferred financing costs, net account is recharacterized as a a contra-liability reducing the Long-term debt, less current installments balance for each of the respective periods upon adoption.

In May 2014, the FASB issued ASU 2014-9, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to receive in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. In April 2015, the FASB agreed to propose a one-year deferral of the revenue recognition standard's effective date. The new guidance is now effective for the interim and annual periods beginning after December 15, 2017; early application is permitted, but not before the original effective date (annual reporting periods beginning after December 15, 2016). We are currently assessing the impact that this standard will have on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except for unit and per unit data)

going concern and to provide related footnote disclosures. Under GAAP, financial statements are prepared based on the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern or to provide related footnote disclosures. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The new guidance is effective for the interim and annual periods beginning after December 15, 2016; early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued.

Reclassifications

Certain prior-year amounts have been reclassified in our condensed statements of operations and statements of cash flows for the three months ended March 31, 2014 to conform with the financial statement line items used by our GP's parent, WCC.

NOTE 2: ACQUISITION AND PUSHDOWN ACCOUNTING

On December 31, 2014, pursuant to a Purchase Agreement dated October 16, 2014, WCC acquired, for $33.5 million in cash, 100% of the equity of our GP from (i) the holders of all of our GP’s outstanding Class A Units, AIM Oxford Holdings, LLC ("AIM") and C&T Coal, Inc. ("C&T"), (ii) the holders of all of our GP’s outstanding Class B Units, certain former executives of our GP, and (iii) the holders of all of the outstanding warrants for our GP’s Class B Units, the Warrantholders. At the same time, WCC also acquired, for no additional consideration, (i) 100% of the Partnership’s outstanding subordinated units from AIM and C&T, which subordinated units were then converted to liquidation units, and (ii) 100% of the Partnership’s outstanding warrants for subordinated units from the Warrantholders, which warrants were then canceled by WCC.

The purchase consideration for our GP and control of our GP’s consolidated subsidiaries is estimated at $238.3 million, which included $33.5 million paid in cash, plus the assumption of approximately $194.0 million of liabilities.

The acquisition of our GP was accounted for by WCC under the acquisition method of accounting that requires the total purchase consideration to be allocated to the assets acquired and liabilities assumed based on estimates of fair value. We have elected to apply pushdown accounting to our consolidated financial statements. By applying pushdown accounting, our financial statements also reflect these adjustments to fair value with a portion allocated to noncontrolling interest for the portion of us that is not owned directly by WCC.

The allocation of the purchase price is preliminary pending the completion of various analyses and the finalization of estimates. During the measurement period (which is not to exceed one year from the acquisition date), additional assets or liabilities may be recognized if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets or liabilities as of that date. The preliminary allocation may be adjusted after obtaining additional information regarding, among other things, asset valuations, liabilities assumed and revisions of previous estimates. These adjustments may be significant and will be accounted for retrospectively.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except for unit and per unit data)

A summary of the estimated purchase consideration and a preliminary allocation of the estimated purchase consideration is as follows (in millions):



Estimated purchase consideration
Market value of limited partners' units	$	10.8
Cash paid	33.5
Total consideration	$	44.3

Estimated fair value of liabilities assumed:
Debt	$	160.1
Asset retirement obligations	31.7
Other liabilities	0.2
Warrants	2.0
Total estimated fair value of liabilities assumed	194.0
Total estimated purchase consideration:	$	238.3

Preliminary allocation of estimated purchase consideration:
Working capital	$	14.7
Land and mineral rights	38.6
Plant and equipment	134.0
Advanced coal royalities	9.2
Restricted investments and bond collateral	10.6
Intangible asset	31.0
Other assets	0.2
Total preliminary allocation of estimated purchase consideration:	$	238.3

NOTE 3:INVENTORY

Inventory consisted of the following:



	Westmoreland Resource Partners, LP
	(Successor)
	March 31,		December 31,
	2015		2014
Coal	$	5,206	$	6,590
Fuel inventory	1,545		1,860
Materials and supplies	5,945		5,563
Total	$	12,696	$	14,013

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except for unit and per unit data)

NOTE 4:RESTRUCTURING CHARGES

Concurrent with the WCC transactions completed in December 2014 (the "WCC Transactions"), a restructuring plan was initiated to streamline operations and eliminate duplicate roles and responsibilities between us and WCC. As of December 31, 2014, we recorded restructuring charges for employee termination benefits of $2.8 million. and incurred an additional restructuring cost of $0.6 million for the three months ended March 31, 2015. We expect to incur $0.1 million of additional restructuring costs as we complete our restructuring plan throughout the first half of 2015.

WCC Transactions restructuring accrual activity is summarized as follows:



	Westmoreland Resource Partners, LP (Successor)
	As of December 31, 2014		Three Months Ended March 31, 2015					As of March 31, 2015
	Liability		Charges		Payments			Liability
Severance and other termination costs	$	2,783	$	553	$	(2,943	)	$	393

The following table summarizes the total WCC Transactions restructuring charges incurred over the course of the restructuring:



	Westmoreland Resource Partners, LP (Successor)
	Charges
	For the Three Months Ended March 31, 2015		Incurred Through March 31, 2015		Total Expected Restructuring Expenses
Severance and other termination costs	$	553	$	3,336	$	3,436

NOTE 5:OTHER CURRENT ASSETS

Other current assets consisted of the following:



	Westmoreland Resource Partners, LP
	(Successor)
	March 31,		December 31,
	2015		2014
Prepaid Insurance	$	1,829	$	418
Other	808		899
Total	$	2,637	$	1,317

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except for unit and per unit data)

NOTE 6:LONG-TERM DEBT

Debt consisted of the following:



	Westmoreland Resource Partners, LP
	(Successor)
	March 31,			December 31,
	2015			2014
First lien debt:
Term loan	$	175,000		$	175,000
Paid-in-kind interest	1,327			—
Total first lien debt	176,327			175,000
Notes payable	33			35
Total debt	176,360			175,035
Less current portion	(6		)	(6		)
Long-term debt	$	176,354		$	175,029

Credit Facilities Generally

On December 31, 2014, we closed on a new credit facility under a Financing Agreement (the “2014 Financing Agreement”) with the lenders party thereto and U.S. Bank National Association as Administrative and Collateral Agent. The new credit facility consists of a $175 million term loan, with an option for up to $120 million in additional term loans for acquisitions if requested by us and approved by the issuing lenders. The new credit facility matures in December 2018. The 2014 Financing Agreement contains customary financial and other covenants. Borrowings under the 2014 Financing Agreement are secured by substantially all of our physical assets. Proceeds of the new credit facility were used to retire our then existing first and second lien credit facilities and to pay fees and expenses related to our new credit facility, with the limited amount of remaining proceeds being available as working capital.

As of March 31, 2015, we had a term loan of $176.3 million outstanding under the 2014 Financing Agreement. Borrowings on such term loan bear interest at a variable rate per annum equal to, at our option, the London Interbank Offered Rate (as defined in the 2014 Financing Agreement) (“LIBOR”) (floor of 0.75% plus 8.5%) or the Reference Rate (as defined in the 2014 Financing Agreement). As of March 31, 2015, the 2014 Financing Agreement had a cash interest rate of 9.25%, consisting of the LIBOR floor (0.75%) plus 8.5%.

The 2014 Financing Agreement also provides for “PIK Interest” (paid-in-kind interest as defined in the 2014 Financing Agreement) at a variable rate per annum between 1.00% and 3.00% based on our total net leverage ratio (as defined in the 2014 Financing Agreement). The rate of PIK Interest is recalculated on a quarterly basis with the PIK Interest added quarterly to the then-outstanding principal amount of the term loan under the 2014 Financing Agreement. PIK Interest under the 2014 Financing Agreement was $1.3 million for the three months ended March 31, 2015.

As of March 31, 2015, we were in compliance with all covenants under the terms of the 2014 Financing Agreement.

Deferred Financing Costs

We capitalized costs that represented fees paid to lenders and advisors and for legal services included in Deferred financing costs, net. Deferred financing costs are amortized over the life of the agreement, included in interest expense, using the effective interest rate method. Amortization of deferred financing costs was $0.4 million and $0.9 million for the three months ended March 31, 2015 and 2014, respectively.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except for unit and per unit data)

NOTE 7: FAIR VALUE OF FINANCIAL INSTRUMENTS

The book values of cash, accounts receivable, restricted investment and bond collateral, and accounts payable are considered to be representative of their respective fair values because of the immediate short-term maturity of these financial instruments. The fair value of the restricted investment and bond collateral and warrants were determined based upon a market approach and approximates the carrying value at March 31, 2015.

The warrants are fair valued at each balance sheet date using the Black-Scholes model. As of March 31, 2015, the fair value of each warrant was $11.72, based on the following assumptions: spot price of $11.84 per unit, exercise price of $0.12 per unit, term of 3.25 years, volatility of 83.0% and a three-year treasury rate of 0.9%.

The fair value of the restricted investment and bond collateral are Level 1 and warrants are a Level 2 measurement.

NOTE 8:ASSET RETIREMENT OBLIGATIONS

As of March 31, 2015, our asset retirement obligation ("ARO") totaled $32.6 million, including amounts reported as current liabilities. While the precise amount of these future costs cannot be determined with certainty, we estimate that, as of March 31, 2015, the aggregate undiscounted cost of our final ARO is $42.5 million.

Changes in the Partnership's asset retirement obligations were as follows:



	Westmoreland Resource Partners, LP			Oxford Resource Partners, LP
	(Successor)			(Predecessor)
	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
Asset retirement obligations, January 1,	$	31,685		$	31,654
Accretion	804			565
Changes resulting from additional mines	442			—
Changes due to amount and timing of reclamation	596			(188		)
Payments	(958		)	(615		)
Asset retirement obligations, March 31,	32,569			31,416
Less current portion	(9,855		)	(7,420		)
Asset retirement obligations, less current portion	$	22,714		$	23,996

NOTE 9:UNIT-BASED COMPENSATION

We grant employees and non-employee directors restricted common units under our Long-Term Incentive Plan (“LTIP”).

We recognized compensation expense from unit-based arrangements shown in the following table:



	Westmoreland Resource Partners, LP		Oxford Resource Partners, LP
	(Successor)		(Predecessor)
	Three Months Ended March 31, 2015		Three Months Ended March 31, 2014
Recognition of fair value of restricted common units over the vesting period	$	21	$	456

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except for unit and per unit data)

A summary of restricted common unit award activity for the three months ended March 31, 2015 is as follows:



	Westmoreland Resource Partners, LP (Successor)
	Units	Weighted Average Grant-Date Fair Value		Unamortized Compensation Expense
				(in thousands)
Non-vested at December 31, 2014	—	$	—
Granted	21,930	11.40
Vested	—	—
Non-vested at March 31, 2015	21,930	$	11.40	$	229	¹

¹Expected to be recognized over the next 11 months.

NOTE 10: COMMITMENTS AND CONTINGENCIES

Coal Sales Contracts

We are committed under long-term contracts to sell coal that meets certain quality requirements at specified prices. Many of these prices are subject to cost pass-through or cost adjustment provisions that mitigate some risk from rising costs. Quantities sold under some of these contracts may vary from year to year within certain limits at the option of the customer or us. As of March 31, 2015, the remaining terms of our long-term contracts range from one to three years.

Purchase Commitments

From time to time, we purchase coal from third parties in order to meet quality or delivery requirements under our customer contracts. We buy coal on the spot market, and the cost of that coal is dependent upon the market price and quality of the coal.

Surety and Performance Bonds

As of March 31, 2015, we had $32.1 million in surety bonds outstanding to secure certain reclamation obligations which were collateralized by cash deposits of $8.0 million. Such cash collateral is included in Restricted investments and bond collateral on our consolidated balance sheets and Change in restricted investments and bond collateral within investing activities on our consolidated statements of cash flow. Additionally, we had road bonds totaling $0.5 million and performance bonds totaling $2.9 million outstanding to secure contractual performance. We believe these bonds will expire without any claims or payments thereon and therefore will not have a material adverse effect on our financial position, liquidity or operations.

Legal

From time to time, we are involved in various legal proceedings arising in the ordinary course of business. We accrue for such liabilities when it is probable that future costs (including legal fees and expenses) will be incurred and such costs can be reasonably estimated. Accruals are based on developments to date; management's estimates of the outcomes of these matters; our experience in contesting, litigating and settling similar matters; and any related insurance coverage. While the ultimate outcome of these proceedings cannot be predicted with certainty, we have accrued $0.6 million to resolve various claims as of March 31, 2015, of which $0.1 million, net, was accrued during 2015.

Guarantees

Our GP and the Partnership guarantee certain obligations of our subsidiaries. We believe that these guarantees will expire without any liability to the guarantors, and therefore will not have a material adverse effect on our financial position, liquidity or operations.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except for unit and per unit data)

NOTE 11:EARNINGS (LOSSES) PER UNIT

The computation of basic and diluted earnings (losses) per unit under the two class method for limited partner units and general partner units is presented as follows:



	Westmoreland Resource Partners, LP			Oxford Resource Partners, LP
	(Successor)			(Predecessor)
	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
Limited partner units
Average units outstanding basic and diluted^{1, 2}	5,878,187			2,055,033
Net loss allocated to limited partners basic and diluted²	$	(10,244	)	$	(10,014	)
Net loss per limited partner unit basic and diluted²	$	(1.74	)	$	(4.92	)

General partner units
Average units outstanding basic and diluted	35,291			35,291
Net loss allocated to general partners basic and diluted²	$	(61	)	$	(172	)
Net loss per general partner unit basic and diluted	$	(1.74	)	$	(4.92	)

¹Unvested LTIP units are not dilutive units for the years and periods presented herein, but could be in the future. Anti-dilutive units are not used in calculating diluted average units.

²Reflects the impact of the outstanding common unit warrants for the three months ended March 31, 2015 and 2014, respectively..

NOTE 12:RELATED PARTY TRANSACTIONS

In connection with our formation in August 2007, the Partnership and Oxford Mining entered into an administrative and operational services agreement (the “Services Agreement”) with our GP, which agreement was amended in February 2015. The Services Agreement is terminable by either party upon thirty days’ written notice. Under the terms of the Services Agreement, our GP provides services through its employees to us and is reimbursed for all related costs incurred on our behalf. Pursuant to the Agreement, the Partnership engaged the GP to continue providing administrative, engineering, operating and other services to the Partnership. Administrative services include without limitation legal, accounting, treasury, insurance administration and claims processing, risk management, health, safety and environmental, information technology, human resources, credit, payroll, internal audit and tax. The Partnership will pay the GP a fixed annual fee of $500,000 for certain administrative services, and reimburse the GP at cost for other expenses and expenditures. The term of the Services Agreement expires on December 31, 2015, and automatically renews for successive one year periods unless terminated. Pursuant to the Services Agreement, the primary reimbursements to our GP, during the three months ended March 31, 2015, were for costs related to payroll. Reimbursable costs under the Services Agreement totaling $0.9 million and $0.6 million were included in accounts payable as of March 31, 2015 and December 31, 2014, respectively.

Additionally, in December 2014 we entered into a coal mining lease, with a subsidiary of WCC, to mine fee simple interest coal reserves we control at WCC’s Kemmerer Mine in Lincoln County, Wyoming. Under this lease, we earn a per ton royalty as these coal reserves are mined. For the three months ended March 31, 2015, we recognized $1.8 million in coal royalty revenue, which was included in Receivables - trade at March 31, 2015.

Finally, we sold coal to and performed various transportation and operational services for a subsidiary of WCC, which generated $12.2 million in coal revenues and $2.4 million in non-coal revenues for the three months ended March 31, 2015. As of March 31, 2015 revenues totaling $6.5 million were included Receivables - trade.

NOTE 13:SEGMENT INFORMATION

We operate in one business segment. We operated surface coal mines in the Illinois Basis through December 2013, and we operate surface coal mines in Northern Appalachia and sell high-value thermal coal to utilities, industrial customers, municipalities and other coal-related entities primarily in the eastern United States. Our operating and executive management

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except for unit and per unit data)

makes its decisions based on consolidated reports. Three of our operating subsidiaries extract coal utilizing surface-mining techniques and prepare it for sale to their customers. Such operating subsidiaries share customers and a particular customer may receive coal from any one of such operating subsidiaries. We also lease or sublease coal reserves to others through Oxford Mining and Westmoreland Kemmerer Fee Coal Holdings, LLC ("WKFCH") in exchange for a per ton royalty rate.

NOTE 14:SUBSEQUENT EVENTS

Westmoreland Resources GP, LLC, general partner of WMLP, declared a cash distribution for all of our unitholders and warrant unitholders of $0.20 per unit for its first quarter ended March 31, 2015. The distribution will be paid on May 15, 2015 to all unitholders and warrant unitholders of record as of the close of business on May 8, 2015.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2014 included in our 2014 Form 10-K and filed with the United States Securities and Exchange Commission (the “SEC”). This discussion contains forward-looking statements that reflect management’s current views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements or as a result of certain factors such as those set forth below under “Cautionary Statement About Forward-Looking Statements.”

Cautionary Statement About Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements.” Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “may,” “plan,” “predict,” “project,” “should,” “could,” “will” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make throughout this report regarding recent significant transactions and their anticipated effects on us, and statements in “Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding factors that may cause our results of operation in future periods to differ from our expectations.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We therefore caution you against relying on any of these forward-looking statements. They are statements neither of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include political, economic, business, competitive, market, weather and regulatory conditions and the following:


•	Our substantial level of indebtedness and our ability to adhere to financial covenants related to our borrowing arrangements;


•	Inaccuracies in our estimates of our coal reserves;


•	The effect of consummating financing, acquisition and/or disposition transactions;


•	Our potential inability to expand or continue current coal operations due to limitations in obtaining bonding capacity for new mining permits, and/or increases in our mining costs as a result of increased bonding expenses;


•	The effect of prolonged maintenance or unplanned outages at our operations or those of our major power generating customers;


•	The inability to control costs;


•	Competition within our industry and with producers of competing energy sources;


•	Our relationships with, and other conditions affecting, our customers;


•	The availability and costs of key supplies or commodities, such as diesel fuel, steel, explosives and tires;


•	Potential title defects or loss of leasehold interests in our properties, which could result in unanticipated costs or an inability to mine the properties;


•	The effect of legal and administrative proceedings, settlements, investigations and claims, including any related to citations and orders issued by regulatory authorities, and the availability of related insurance coverage;


•	Existing and future legislation and regulation affecting both our coal mining operations and our customers’ coal usage, governmental policies and taxes, including those aimed at reducing emissions of elements such as mercury, sulfur dioxides, nitrogen oxides, particulate matter or greenhouse gases;


•	The effect of the Environmental Protection Agency’s inquiries into and regulations of the operations of the power plants to which we provide coal;


•	Our ability to pay our quarterly distributions which substantially depends upon our future operating performance (which may be affected by prevailing economic conditions in the coal industry), debt covenants, and financial, business and other factors, some of which are beyond our control;


•	Adequacy and sufficiency of our internal controls;

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES


•	Our potential need to recognize additional impairment and/or restructuring expenses associated with our operations, as well as any changes to previously identified impairment or restructuring expense estimates, including additional impairment and restructuring expenses associated with our Illinois Basin operations; and


•	Other factors that are described in “Risk Factors” in this report and under the heading “Risk Factors” found in our other reports filed with the Securities and Exchange Commission (“SEC”), including our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q.

Unless otherwise specified, the forward-looking statements in this report speak as of the filing date of this report. Factors or events that could cause our actual results to differ may emerge from time-to-time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statements, whether because of new information, future developments or otherwise, except as may be required by law.

Reserve engineering is a process of estimating underground accumulations of coal that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by our reserve engineers. In addition, the results of mining, testing and production activities may justify revision of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development of reserves. Accordingly, reserve estimates may differ from the quantities of coal that are ultimately recovered.

Overview

Significant relationships referenced in this management’s discussion and analysis of financial condition and results of operations include the following:


•	References to “we,” “us,” “our” or the “Partnership” mean the business and operations of Westmoreland Resource Partners, LP, the parent company, as well as its consolidated subsidiaries.


•	References to “WMLP” mean Westmoreland Resource Partners, LP, individually as the parent company, and not on a consolidated basis.


•	References to “GP” mean Westmoreland Resources GP, LLC, the managing general partner of Westmoreland Resource Partners, LP also referred to as our general partner.


•	References to “WCC” means Westmoreland Coal Company who owns 100% of Westmoreland Resources GP, LLC and, indirectly, the related incentive distribution rights and 79% of the common units of Westmoreland Resource Partners, LP.

We are a low-cost producer and marketer of high-value thermal coal to U.S. utilities and industrial users, and we are the largest producer of surface mined coal in Ohio. We focus on acquiring thermal coal reserves that we can efficiently mine with our large-scale equipment. Our reserves and operations are strategically located to serve our primary market area of Indiana, Kentucky, Michigan, Ohio, Pennsylvania and West Virginia. Additionally we hold fee simple interest in coal reserves in Lincoln County, Wyoming for which we have entered into a coal mining lease with a subsidiary of WCC pursuant to which we earn a per ton royalty as these coal reserves are mined.

We operate in a single business segment and have four operating subsidiaries, Oxford Mining Company, LLC ("Oxford Mining"), Oxford Mining Company-Kentucky, LLC (“Oxford Mining Kentucky”), Westmoreland Kemmerer Fee Coal Holdings, LLC ("WKFCH") and Harrison Resources, LLC ("Harrison Resources"). Our Oxford Mining operating subsidiaries participate primarily in the business of utilizing surface mining techniques to mine domestic coal and prepare it for sale to our customers or lease our controlled coal reserves to others to mine. Our WKFCH and Harrison Resources operating subsidiaries own and hold coal reserves. WKFCH’s coal reserves are leased to Westmoreland Coal Company ("WCC") from which WKFCH earns a per ton coal royalty. Harrison Resources' coal reserves are surface mined and marketed by Oxford Mining. Oxford Mining Kentucky is an inactive operating subsidiary holding coal reserves in the Illinois Basis for which surface mining operation ceased in December 2013.

Results of Operations

Items that Affect Comparability of Our Results

On December 31, 2014, WCC's cost of acquiring our GP has been pushed-down to establish a new accounting basis for us. Accordingly, the accompanying consolidated financial statements are presented for two periods, Predecessor and Successor, which relate to the accounting periods preceding and succeeding the completion of the acquisition. The Predecessor

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

and Successor periods have been separated by a vertical line on the face of the consolidated financial statements to highlight the fact that the financial information for such periods has been prepared under two different historical-cost bases of accounting. The following narrative analysis of results of operations includes a brief discussion of the factors that materially affected our operating results in the Predecessor period of January 1 - December 31, 2014 along with a brief discussion of Successor activity for the last minutes of the day on December 31, 2014 through March 31, 2015.

For the three months ended March 31, 2015 and 2014, our consolidated results include items that affect comparability of our results. The expense components of these items were as follows:



	Three Months Ended March 31,
	2015		2014
	(in thousands)
	(Successor)		(Predecessor)
Restructuring expense	553		75
Acquisition related costs¹	1,400		—
Impact	$	1,953	$	75

¹ Includes acquisition and transition costs included in cost of coal revenue related to the sale of inventory written up to fair value.

Restructuring Expense

Restructuring expense increased $0.5 million to $0.6 million for the three months ended March 31, 2015 from $0.1 million for the three months ended March 31, 2014. The three months ended March 31, 2015 included $0.6 million in severances payments related to the closing of the corporate offices in Columbus, Ohio and the elimination of other nonessential roles. The three months ended March 31, 2014 included $0.1 million in various inconsequential costs associated with the restructuring related to our Illinois Basin operations.

Acquisition Related Costs

As part of the acquisition method of accounting coal inventory was accounted for at its estimated fair value on December 31, 2014, increasing the coal inventory by $1.4 million. During the three months ended March 31, 2015 the inventory held at December 31, 2014 was sold and we recognized a $1.4 million non-cash charge to cost of coal revenues related to the acquisition method of accounting adjustment.

The Three Months Ended March 31, 2015 (Successor) Compared to the Three Months Ended March 31, 2014 (Predecessor)

Summary



	Three Months Ended March 31,
							Increase (Decrease)
	2015			2014			$			%
	(in thousands)
	(Successor)			(Predecessor)
Total Revenues	$	67,567		$	78,004		$	(10,437	)	(13.4	)%
Net loss	(10,305		)	(10,567		)	262			2.5	%
Adjusted EBITDA¹	9,553			9,241			312			3.4	%
Distributable Cash Flow²	3,195			1,850			1,345			72.7	%
Tons sold - millions of equivalent tons	1.1			1.4			(0.3		)	(21.4	)%

¹Adjusted EBITDA, a non-GAAP measure, is defined and reconciled to net loss at the end of this “Results of Operations” section.

²Distributable cash flow a non-GAAP measure, is defined and reconciled to net loss at the end of this “Results of Operations” section.

We reported total revenues of $67.6 million for the three months ended March 31, 2015 compared to $78.0 million for the three months ended March 31, 2014. The decrease of $10.4 million was principally due to decreased sales and production volumes, which declined to 1.1 million tons sold and produced in the three months ended March 31, 2015 compared to 1.4 million

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

tons sold and produced in the three months ended March 31, 2014. The decrease in tons sold and produced resulted from a decrease in market demand. We reported net loss of $10.3 million for the three months ended March 31, 2015 compared to $10.6 million for the three months ended March 31, 2014. Additionally we reported Adjusted EBITDA of $9.6 million for the three months ended March 31, 2015, an increase of $0.3 million from $9.2 million for the three months ended March 31, 2014. Both the net loss and Adjusted EBITDA were also favorably impacted by a $0.66 increase in average coal sales price per ton sold to $54.02 per ton sold in the three months ended March 31, 2015 compared to $53.36 per ton sold in the three months ended March 31, 2014.

Total Revenues



	Three Months Ended March 31,
					Increase (Decrease)
	2015		2014		$			%
	(in thousands)
	(Successor)		(Predecessor)
Revenues:
Coal revenues	$	61,750	$	76,770	$	(15,020	)	(19.6	)%
Royalty revenues	1,870		99		1,771			1,788.9	%
Non-coal revenues	3,947		1,135		2,812			247.8	%
Total Revenues	$	67,567	$	78,004	$	(10,437	)	(13.4	)%

Coal sales revenue was $61.8 million for the three months ended March 31, 2015, a decrease of $15.0 million, or 19.6%, from $76.8 million for the three months ended March 31, 2014. The decrease was primarily attributable to a 20.6% reduction in tons sold in the amount of $15.8 million, partially offset by a $0.66 per ton, or an aggregate $0.8 million, increase in the average sale price per ton for the three months ended March 31, 2015.

For the three months ended March 31, 2015, we generated $1.9 million in royalty revenues from the receipt of $1.8 million in coal royalty revenues and $0.1 million in oil and gas royalty revenues. In December 2014, pursuant to a contribution agreement, WCC contributed to us 100% of the membership interests in WKFCH. WKFCH holds fee simple interests in 30.4 million tons of coal reserves and related surface lands at WCC’s Kemmerer Mine in Lincoln County, Wyoming. In connection with this contribution, WKFCH entered into a coal mining lease with respect to these coal reserves with a subsidiary of WCC pursuant to which we earn a per ton royalty as these coal reserves are mined. For the three months ended March 31, 2015 we earned $1.8 million in coal royalty revenues for coal mined by WCC during the period. For the three months ended March 31, 2014 we generated $0.1 million which comprised solely oil and gas royalty revenues.

Non-coal revenues, primarily from clay and limestone sales, and other miscellaneous revenue was $3.9 million for the three months ended March 31, 2015, an increase of $2.8 million, from $1.1 million for the three months ended March 31, 2014. Other miscellaneous revenue increased by $3.0 million to $3.3 million for the three months ended March 31, 2015 from $0.3 million in the prior year, due primarily to generating $2.4 million in coal handling and transportation services revenue performed on behalf of a subsidiary of WCC and $0.7 million in one-time coal handling and transportation services revenue performed on behalf of a customer. The $3.0 million increase in miscellaneous revenue was offset in part by a $0.2 million decrease in clay and limestone sales to $0.6 million for the three months ended March 31, 2015 from $0.8 million for the three months ended March 31, 2014.

Cost of Coal Revenues



	Three Months Ended March 31,
					Increase (Decrease)
	2015		2014		$			%
	(in thousands)
	(Successor)		(Predecessor)
Cost of coal revenues (excluding depreciation, depletion and amortization)	$	54,651	$	65,726	$	(11,075	)	(16.9	)%

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

Cost of coal revenues (excluding DD&A) decreased $11.1 million to $54.7 million for the three months ended March 31, 2015 from $65.7 million for the three months ended March 31, 2014, primarily due to decreased coal sales and production volumes. On a per ton basis, cost of coal revenues increased 4.7% to $47.81 per ton sold for the three months ended March 31, 2015 from $45.68 per ton sold for the three months ended March 31, 2014 primarily due to various factors, the most significant of which are discussed below:

•

Equipment repair and maintenance expense per ton sold increased $1.02 per ton to $4.42 per ton for the three months ended March 31, 2015 from $3.39 per ton for the three months ended March 31, 2014. This increase of $1.02 per ton is the result of incurring equipment maintenance during the three months ended March 31, 2015 deferred from fiscal 2014, combined with a 20.6% decrease in tons sold for the three months ended March 31, 2015 compared with the three months ended March 31, 2014.


•	Transportation expense per ton sold increased $0.76 per ton to $8.44 per ton for the three months ended March 31, 2015 from $7.68 per ton for the three months ended March 31, 2014. The increase of $0.76 per ton was attributed to longer haul routes to meet customer demand.

•

Labor and benefit expenses per ton sold increased 8.4% to $9.73 per ton for the three months ended March 31, 2015 from $8.98 per ton for the three months ended March 31, 2014. This increase of $0.75 per ton was attributed to a $0.44 per ton increase in wages and a $0.31 per ton increase in employee benefits. The $0.44 per ton increase in wages is primarily the result of raises implemented in mid-2014 in response to competition in the labor market from the growing oil and gas drilling business in southeastern Ohio. The $0.31 per ton increase in employee benefits is primarily the result of higher health insurance cost per employee.

Depreciation, Depletion and Amortization



	Three Months Ended March 31,
					Increase (Decrease)
	2015		2014		$			%
	(in thousands)
	(Successor)		(Predecessor)
Depreciation, depletion and amortization	$	10,180	$	11,224	$	(1,044	)	(9.3	)%

Depreciation, depletion and amortization expense decreased to $10.2 million for the three months ended March 31, 2015 from $11.2 million for the three months ended March 31, 2014. The decrease of $1.0 million was primarily attributable to the decrease in land and mineral rights asset values resulting from the acquisition method of accounting resulting from WCC’s acquisition of 100% of the equity of our GP on December 31, 2014.

Selling and Administrative



	Three Months Ended March 31,
					Increase (Decrease)
	2015		2014		$			%
	(in thousands)
	(Successor)		(Predecessor)
Selling and administrative	$	2,548	$	3,656	$	(1,108	)	(30.3	)%

Selling and administrative expenses for the three months ended March 31, 2015 decreased $1.1 million to $2.5 million compared to $3.7 million for the three months ended March 31, 2014. The decrease of $1.1 million was primarily due to cost savings from the restructuring efforts put in place to stream line operations and eliminate duplicated roles resulting from the acquisition of our GP by WCC on December 31, 2014.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

Loss on sale/disposal of assets



	Three Months Ended March 31,
			Increase (Decrease)
	2015	2014	$	%
	(in thousands)
	(Successor)	(Predecessor)
Loss on sale/disposal of assets	1,034	204	830	406.9	%

The loss on sale/disposal of assets of $1.0 million and $0.2 million for the three months ended March 31, 2015 and 2014, respectively, resulted from the disposal of equipment in the normal course of business.

Net Income Attributable to Noncontrolling Interest



	Three Months Ended March 31,
					Increase (Decrease)
	2015		2014		$			%
	(in thousands)
	(Successor)		(Predecessor)
Less net loss attributable to noncontrolling interest	$	—	$	381	$	(381	)	(100.0	)%

Effective October 1, 2014, our subsidiary Oxford Mining entered into a membership interest redemption agreement with Harrison Resources and CONSOL of Ohio LLC (“CONSOL”) under which Harrison Resources redeemed all of CONSOL’s interest in Harrison Resources. Harrison Resources had been a joint venture owned 51% by Oxford Mining and 49% by CONSOL, and as a result of the redemption Oxford Mining owns 100% of Harrison Resources.

Net income attributable to noncontrolling interest of $0.4 million for the three months ended March 31, 2014 relates to the 49% ownership interest in Harrison Resources owned by a subsidiary of CONSOL.

Adjusted EBITDA

EBITDA and Adjusted EBITDA are supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA are key metrics used by us to assess our operating performance and we believe that EBITDA and Adjusted EBITDA are useful to an investor in evaluating our operating performance because these measures:


•	are used widely by investors to measure a company’s operating performance without regard to items excluded from the calculation of such terms, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors; and


•	help investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure and asset base from our operating results.

Neither EBITDA nor Adjusted EBITDA is a measure calculated in accordance with GAAP. The items excluded from EBITDA and Adjusted EBITDA are significant in assessing our operating results. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. For example, EBITDA and Adjusted EBITDA:


•	do not reflect our cash expenditures, or future requirements for capital and major maintenance expenditures or contractual commitments;


•	do not reflect changes in, or cash requirements for, our working capital needs; and


•	do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on certain of our debt obligations.

In addition, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. Other companies in our industry and in other industries may calculate EBITDA and Adjusted EBITDA

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

differently from the way that we do, limiting their usefulness as comparative measures. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only as supplemental data.

Distributable Cash Flow

Distributable Cash Flow represents Adjusted EBITDA less cash interest expense (net of interest income), 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. Other maintenance capital expenditures represent expenditures for coal reserve replacement, 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.

The tables below show how we calculated EBITDA, Adjusted EBITDA and Distributable Cash Flow and reconciles Distributable Cash Flow to net loss, the most directly comparable GAAP financial measure.

Reconciliation of Net Loss to Distributable Cash Flows:



	Three Months Ended March 31,
	2015			2014
	(in thousands)
	(Successor)			(Predecessor)
Reconciliation of Net Loss to Adjusted EBITDA
Net loss	$	(10,305	)	$	(10,567	)
Interest expense, net of interest income	5,780			6,869
Depreciation, depletion and amortization	10,180			11,224
Accretion of ARO	804			565
EBITDA	6,459			8,091
Restructuring and impairment charges	553			75
Change in fair value of warrants	(29		)	415
Acquisition related costs¹	1,400			—
Loss on sale/disposal of assets	1,034			204
Unit-based compensation	21			456
Other non-recurring costs	115			—
Adjusted EBITDA	9,553			9,241
Noncontrolling interest's Adjusted EBITDA	—			(94		)
Cash interest expense, net of interest income	(4,047		)	(4,060		)
Other maintenance capital expenditures	(1,353		)	(2,622		)
Reclamation and mine closure costs	(958		)	(615		)
Distributable Cash Flow	$	3,195		$	1,850

¹ Includes acquisition and transition costs included in cost of coal revenue related to the sale of inventory written up to fair value.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

Liquidity and Capital Resources

Liquidity

Our business is capital intensive and requires substantial capital expenditures for, among other things, purchasing, maintaining and upgrading equipment used in developing and mining our coal, and acquiring reserves. Our principal liquidity needs are to finance current operations, replace reserves and fund capital expenditures, including costs of acquisitions from time to time, servicing of our debt and paying quarterly cash distributions to our unitholders. Our primary sources of liquidity to meet these needs are cash generated by our operations and the limited remainder of our initial term loan borrowing under the 2014 Financing Agreement.

Our ability to satisfy our working capital requirements, meet debt service obligations, and fund planned capital expenditures substantially depends upon our future operating performance, which may be affected by prevailing economic conditions in the coal industry. To the extent our future operating cash flow or access to financing sources and the costs thereof are materially different than expected, our future liquidity may be adversely affected.

As of March 31, 2015, our available liquidity was $1.8 million, which consisted entirely of cash on hand.

Please read "— Capital Expenditures" for a further discussion of the impact on liquidity.

Debt Obligations

On December 31, 2014, we entered into a new $295 million credit facility under a Financing Agreement (the “2014 Financing Agreement”) with the lenders party thereto and U.S. Bank National Association as Administrative and Collateral Agent to replace our existing $175 million credit facility consisting of (i) a first lien $75 million term loan and $25 million revolving credit facility and (ii) a second lien $75 million term loan. The new credit facility consists of a $175 million term loan, with an option for up to $120 million in additional term loans for acquisitions if requested by us and approved by the issuing lenders. The 2014 Financing Agreement matures in December 2018 and contains customary financial and other covenants. It also permits distributions to our unitholders under specified circumstances. Borrowings under the 2014 Financing Agreement are secured by substantially all of our physical assets. Proceeds of the new credit facility were used to retire our then existing first and second lien credit facilities and to pay fees and expenses related to our new credit facility, with the limited amount of remaining proceeds being available as working capital.

As of March 31, 2015 the outstanding balance on our 2014 Financing Agreement was $176.3 million. This amount represents the principal balance of $175.0 million, plus PIK Interest of $1.3 million. As of March 31, 2015, our 2014 Financing Agreement had a cash interest rate of 9.25%, consisting of the LIBOR floor (0.75%) plus 8.50%.

The 2014 Financing Agreement also provides for “PIK Interest” (paid-in-kind interest as defined in the 2014 Financing Agreement) at a variable rate per annum between 1.00% and 3.00% based on our total net leverage ratio (as defined in the 2014 Financing Agreement). The rate of PIK Interest is recalculated on a quarterly basis with the PIK Interest added quarterly to the then-outstanding principal amount of the term loan under the 2014 Financing Agreement. PIK Interest expense under the 2014 Financing Agreement was $1.3 million for the three months ended March 31, 2015.

Historical Sources and Uses of Cash

The following is a summary of cash provided by or used in each of the indicated types of activities:



	Three Months Ended March 31,
	2015			2014
	(in thousands)
	(Successor)			(Predecessor)
Net cash provided by (used in):
Operating activities	$	(380	)	$	817
Investing activities	(3,736		)	(1,779		)
Financing activities	(20		)	2,509

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

Net cash used in operating activities was $0.4 million for the three months ended March 31, 2015 compared to $0.8 million of net cash provided by operating activities for the three months ended March 31, 2014, a decrease of approximately $1.2 million. We experienced a net loss for the three months ended March 31, 2015 of $10.3 million, a decrease of $0.3 million, compared to a net loss for the three months ended March 31, 2014 of $10.6 million. The decrease in the net loss was attributable in part to a $1.0 million decrease in depreciation, depletion and amortization, a $0.5 million decrease in non-cash interest expense and amortization of deferred financing costs, respectively, partially offset by a $0.8 million increase in loss on sale/disposal of assets and a $0.5 million increase in amortization of intangible assets and liabilities, net and restructuring and impairment charges, respectively. These differences, combined with a minor change in working capital, are the primary drivers of the decrease in net cash used in operating activities. The changes in working capital comprised of an unfavorable changes of $2.1 million in other assets and liabilities resulting from severance payments, in accordance with employment agreements, to three former executives during the three months ended March 31, 2015, and a unfavorable change of $1.2 million in accrued compensation due to timing, partially offset by a favorable change in inventory of $3.2 million.

Net cash used in investing activities was $3.7 million for the three months ended March 31, 2015 compared to $1.8 million for the three months ended March 31, 2014, an increase of approximately $2.0 million. The increase was attributable to an increase of $2.2 million in cash used for capital expenditures and a decrease of $0.3 million in cash provided from proceeds from the sale of assets, offset in part by $0.5 million increase in cash provided from the change in restricted investments and bond collateral.

Net cash used in financing activities was less than $0.1 million for the three months ended March 31, 2015, down $2.5 million from net cash provided by financing activities of $2.5 million for the three months ended March 31, 2014. The $2.5 million decrease in net cash provided by financing activities was primarily attributable to $2.5 million in less net borrowings for the three months ended March 31, 2015 compared to the three months ended March 31, 2014.

Capital Expenditures

Our mining operations require investments to maintain, expand, and upgrade existing operations and to meet environmental and safety regulations. We have funded and expect to continue funding capital expenditures primarily from cash generated by our operations, the remainder of the initial term loan borrowings under the 2014 Financing Agreement, and proceeds from asset sales.

The following table summarizes our capital expenditures by type for the three months ended March 31, 2015 and 2014.



	Three Months Ended March 31,
	2015		2014
	(in thousands)
	(Successor)		(Predecessor)
Coal reserves	$	—	$	3
Mine development	275		189
Equipment and components	1,295		2,430
Total	$	1,570	$	2,622

Critical Accounting Policies and Estimates

Please refer to the corresponding section in Part II, Item 7 of our 2014 Form 10-K and the footnote disclosures included in Part I, Item I of this report for a discussion of our accounting policies and estimates.

Recent Accounting Pronouncements

See Note 1 of Notes to Consolidated Financial Statements included in “Part I - Item 1 - Financial Statements.”

Off-Balance Sheet Arrangements

In the normal course of business, we are a party to certain off-balance sheet arrangements. These arrangements include guarantees and financial instruments with off-balance sheet risk, such as letters of credit and surety, performance, and

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

road bonds. No liabilities related to these arrangements are reflected in our consolidated balance sheet, and we do not expect any material adverse effects on our financial condition, results of operations or cash flows to result from these arrangements.

Federal and state laws require us to secure certain long-term obligations, such as ARO, and contractual performance. Historically, we secured these obligations with surety bonds supported by letters of credit. Subsequent to our 2014 refinancing, we have supported our surety bonds with cash deposits.

As of March 31, 2015, we had $32.1 million of surety bonds outstanding to secure certain reclamation obligations. Additionally, as of March 31, 2015, we had $8.0 million of cash deposits in support of these bonds. Further, as of March 31, 2015, we had $0.5 million of road bonds and $2.9 million of performance bonds outstanding that required no security. We believe these bonds and letters of credit will expire without any claims or payments thereon, and accordingly we do not expect any material adverse effect on our financial condition, results of operations or cash flows therefrom.

Our off-balance sheet arrangements are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2014 Form 10-K.

Meeting of Non-Management Directors and Communications with Directors

At least quarterly during all of the independent directors of our general partner meet in an executive session without management participation or participation by non-independent directors. Mr. Gerald A. Tywoniuk, the chairman of the Audit Committee, presides over these executive sessions.

The board of directors of our general partner welcomes questions or comments about us and our operations. Unitholders or interested parties may contact the board of directors, including any individual director, by contacting the Secretary of our general partner, Samuel Hagreen, at westmorelandmlp.com/investors/investor-relations-contact-form/ or at the following address: Name of the Director(s), c/o Secretary, Westmoreland Resource Partners, LP, 9450 South Maroon Circle, Suite 200, Englewood, Colorado 80112.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

We are also exposed to market price risk related to diesel fuel pricing. To reduce this risk in part, we enter into forward purchase agreements. Additionally, we are further protected by diesel fuel escalation provisions contained in certain of our coal supply contracts that provide for a change in the price per coal ton sold in the event of changes in diesel fuel pricing. As of March 31, 2015, we had such price protection with respect to 87.0% of our expected diesel fuel purchases for the remainder of 2015.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

Item 4.Controls and Procedures

As required by Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, management has evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures as of March 31, 2015. Disclosure controls and procedures are designed to provide reasonable assurance that material information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding our required disclosure. Based on that evaluation, our management, including our chief executive officer and chief financial officer, concluded that the disclosure controls and procedures were effective as of such date.

Additionally, there have been no changes in internal control over financial reporting that occurred during the three months ended March 31, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

Item 1.Legal Proceedings

We are subject, from time-to-time, to various proceedings, lawsuits, disputes, and claims (“Actions”) arising in the ordinary course of our business. Many of these Actions raise complex factual and legal issues and are subject to uncertainties. We cannot predict with assurance the outcome of Actions brought against us. Accordingly, adverse developments, settlements, or resolutions may occur and may result in a negative impact on income in the quarter of such development, settlement, or resolution. However, we do not believe that the outcome of any current Action would have a material adverse effect on our financial results.

In November 2014 we entered into a plea agreement regarding, and in December 2014 the United States filed and we pleaded guilty to, a single count misdemeanor information in the United States District Court for the Southern District of Ohio, Eastern Division. The information filing alleged negligent violation of a condition and limitation of a National Pollutant Discharge Elimination System permit. This matter arose from our voluntary disclosure of the filing of false reports by a rogue employee who was terminated shortly after his false reporting was discovered. We are subject to a probationary period of 6-12 months and are paying a fine of $500,000 and community service payments of $150,000 which were accrued for in 2014.

Item 1A. Risk Factors

We have disclosed under the heading “Risk Factors” in our 2014 Form 10-K, the risk factors that we believe materially affect our business, financial condition or results of operations. There have been no material changes from the risk factors previously disclosed. You should carefully consider the risk factors set forth in the 2014 Form 10-K and the other information set forth elsewhere in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and or operating results.

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

Item 4.Mine Safety Disclosures

On July 21, 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act. Section 1503(a) of the Dodd-Frank Act contains reporting requirements regarding mine safety. Mine safety violations and other regulatory matters, as required by Section 1503(a) of the Dodd-FrankAct and Item 104 of Regulation S-K, are included as Exhibit 95.1 to this report on Form 10-Q.

Item 6. Exhibits

The exhibits listed in the Exhibit Index are incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		WESTMORELAND RESOURCE PARTNERS, LP
		By:	WESTMORELAND RESOURCES GP, LLC, its general partner

Date:	April 28, 2015	By:	/s/ KEVIN A. PAPRZYCKI
			Kevin A. Paprzycki
			Chief Financial Officer and Treasurer
			(Principal Financial Officer and A Duly Authorized Officer)

Date:	April 28, 2015	By:	/s/ MICHAEL J. MEYER
			Michael J. Meyer
			Controller
			(Principal Accounting Officer and A Duly Authorized Officer)

WESTMORELAND RESOURCE PARTNERS, LP AND SUBSIDIARIES

Index to Exhibits



Exhibit Number		Description
3.1		Certificate of Limited Partnership of Westmoreland Resource Partners, LP (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (Commission File No. 333-165662) filed on March 24, 2010)

3.1A		Certificate of Amendment to Certificate of Limited Partnership of Westmoreland Resource Partners, LP executed as of December 23, 2014 to be effective December 30, 2014 (incorporated by reference to Exhibit 3.1A to the Annual Report on Form 10-K (Commission File No. 001-34815) for the year ended December 31, 2014 filed on March 6, 2015)

3.2		Fourth Amended and Restated Agreement of Limited Partnership of Westmoreland Resource Partners, LP dated December 31, 2014 (incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K (Commission File No. 001-34815) for the year ended December 31, 2014 filed on March 6, 2015)

3.3		Certificate of Formation of Westmoreland Resources GP, LLC (incorporated by reference to Exhibit 3.3 to Amendment No. 1 to the Registration Statement on Form S-1 (Commission File No. 333-165662) filed on April 21, 2010)

3.3A		Certificate of Amendment to Certificate of Formation of Westmoreland Resources GP, LLC executed as of December 23, 2014 to be effective December 30, 2014 (incorporated by reference to Exhibit 3.3A to the Annual Report on Form 10-K (Commission File No. 001-34815) for the year ended December 31, 2014 filed on March 6, 2015)

3.4		Third Amended and Restated Limited Liability Company Agreement of Westmoreland Resources GP, LLC dated January 1, 2012 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K (Commission File No. 001-34815) filed on January 4, 2011)

3.4A		First Amendment to Third Amended and Restated Limited Liability Company Agreement of Westmoreland Resources GP, LLC dated June 24, 2013 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K (Commission File No. 001-34815) filed on June 25, 2013)

3.4B		First Amendment to Third Amended and Restated Limited Liability Company Agreement of Westmoreland Resources GP, LLC executed as of March 12, 2014 to be effective as of June 24, 2013, entered into to correct, clarify, supersede and replace in its entirety the First Amendment to Third Amended and Restated Limited Liability Company Agreement of Westmoreland Resources GP, LLC dated June 24, 2013 (incorporated by reference to Exhibit 3.4B to the Quarterly Report on Form 10-Q (Commission File No. 001-34815) for the quarter ended March 31, 2014 filed on May 6, 2014)

10.1*^†		Coal Purchase and Sale Agreement No. 10-62-15-900, dated as of February 26, 2015, by and between Oxford Mining Company, LLC and AEP Generation Resources, Inc.

10.2		Services Agreement, dated as of March 13, 2015, by and between Westmoreland Resources GP, LLC and Westmoreland Resource Partners, LP (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (Commission File No. 001-34815) filed on March 16, 2015)

10.3		Amendment No. 1 to Financing Agreement, dated as of March 13, 2015, by and among Oxford Mining Company, LLC, Westmoreland Resource Partners, LP and each of its subsidiaries, the lenders party there to and U.S. Bank National Association (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (Commission File No. 001-34815) filed on March 16, 2015)

10.4*		Award Agreement for Grant of Phantom Units to Non-Employee Directors dated March 2, 2015 under the Westmoreland Resource Partners, LP Amended and Restated Long-Term Incentive Plan.

31.1*		Certification of Keith E. Alessi, Chief Executive Officer of Westmoreland Resources GP, LLC, the general partner of Westmoreland Resource Partners, LP, for the March 31, 2015 Quarterly Report on Form 10-Q, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Kevin A. Paprzycki, Chief Financial Officer and Treasurer of Westmoreland Resources GP, LLC, the general partner of Westmoreland Resource Partners, LP, for the March 31, 2015 Quarterly Report on Form 10-Q, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32*		Certification of Keith E. Alessi, Chief Executive Officer of Westmoreland Resources GP, LLC, the general partner of Westmoreland Resource Partners, LP, and Kevin A. Paprzycki, Chief Financial Officer and Treasurer of Westmoreland Resources GP, LLC, the general partner of Westmoreland Resource Partners, LP, for the March 31, 2015 Quarterly Report on Form 10-Q, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

95*		Mine Safety Disclosure

101*		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) our Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014; (ii) our Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014; (iii) our Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014; (iv) our Condensed Consolidated Statements of Partners’ Capital for the three months ended March 31, 2015; and (v) the notes to our Condensed Consolidated Financial Statements (this information is furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and Section 18 of the Securities Exchange Act of 1934, as amended)

*		Filed herewith (or furnished in the case of Exhibits 32 and 101).
#		Compensatory plan or arrangement.
†		Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the Securities and Exchange Commission.

Exhibit 10.1

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act. Omitted information marked “[***]” in this Exhibit has been filed with the Securities and Exchange Commission together with such request for confidential treatment.

COAL PURCHASE AND SALE AGREEMENT NO. 10-62-15-900

This COAL PURCHASE AND SALE AGREEMENT No. 10-62-15-900 (this “Agreement”) is entered into as of February 26, 2015 (the “Effective Date”), by and between AEP Generation Resources Inc. (“Buyer”) and Oxford Mining Company, LLC (“Seller”). Buyer and Seller are also referred to herein individually as a “Party” and collectively as the “Parties.”

The Parties hereby agree as follows:

DEFINITIONS

“AEP” means American Electric Power Company, Inc.

“AEP Plants” shall have the meaning set forth in Article IX, Section 9.2(b).

“Affiliates” means with respect to any entity, any other entity that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such entity. For this purpose, “control” means the direct or indirect ownership of 50% or more of the outstanding capital stock or other equity interests having ordinary voting power.

“Agent(s)” shall have the meaning set forth in Article III, Section 3.2.

“Agreement” shall have the meaning set forth in the preamble.

“Approved Production Source(s)” shall have the meaning set forth in Schedule 2.1.

“Approved Reserve(s) of Coal” shall have the meaning set forth in Schedule 2.1.

“ASTM” means ASTM International, formerly known as the American Society for Testing and Materials.

“Bankruptcy Proceeding” means, with respect to a Party or entity, a proceeding or circumstance where such Party or entity (a) makes an assignment or any general arrangement for the benefit of creditors, (b) files a petition, has a petition filed against it or its assets, or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy or similar law for the protection of creditors, (c) otherwise becomes bankrupt or insolvent (however evidenced), or (d) is unable to pay its debts as they fall due.

“Btu” means the amount of energy required to raise the temperature of one (1) pound of pure water one (1) degree Fahrenheit from 59.5° Fahrenheit to 60.5° Fahrenheit at a constant pressure of 14.73 pounds per square inch absolute.

“Btu/lb.” shall be the form to represent heating value.

“Business Day” means a day on which Federal Reserve member banks in New York City, New York are open for business; and a Business Day shall open at 8:00 a.m. and close at 5:00 p.m. Eastern Prevailing Time.

“Buyer” shall have the meaning set forth in the preamble.

“Buyer Indemnitees” shall have the meaning set forth in Article XIV, Section 14.3(b).

“Claiming Party” shall have the meaning set forth in the definition of Force Majeure Event.

“Coal” means crushed, bituminous coal to be sold by Seller and purchased by Buyer, the quality of which shall conform to the Quality Specifications set forth in Article III, and which does not trigger Buyer’s rejection

rights under Article II, or is otherwise acceptable by Buyer under this Agreement. Such Coal shall (a) be substantially free from any extraneous materials (including, but not limited to mining debris, synthetic fuels, bone, slate, iron, steel, petroleum coke, earth, rock, pyrite, wood or blasting wire), (b) be substantially consistent in quality throughout a Shipment, (c) meet the size required, and (d) have no intermediate sizes (including fines) added or removed.

“Commercially Reasonable Efforts” means the taking by a Party of such action as would be in accordance with reasonable commercial practices as applied to the particular matter in question to achieve the result as expeditiously as practicable; provided, however, that such action shall not require that such Party incur unreasonable expense.

“Contract RFR Quantity” shall have the meaning set forth in Article II.

“Contract Price” means the price in United States dollars per Ton to be paid by Buyer to Seller for the purchase of Coal and any other proper charges pursuant to this Agreement, which price is set forth in Article V.

“Contract Quantity” shall have the meaning set forth in Article II.

“Contract Year” means the period commencing January 1, 2016 and ending December 31, 2016 and each period thereafter commencing January 1 and ending the immediately succeeding December 31 during the Delivery Period.

“Costs” means any brokerage fees, commissions and other transactional costs and expenses reasonably incurred either by the Non-Defaulting Party as a result of terminating any hedges or other risk management contracts and/or entering into new arrangements in order to replace the Contract Quantity not delivered by Seller or not accepted by Buyer, as the case may be, and legal costs incurred by the Non-Defaulting Party.

“Credit Support” means the support of the obligations of Seller through a guaranty in a format acceptable to Buyer or through a letter of credit in a format and from an issuer acceptable to Buyer.

“Credit Support Provider” means the entity, if any, that provides Credit Support.

“Defaulting Party” shall have the meaning set forth in Article XVII, Section 17.1.

“Delivery Period” shall have the meaning set forth in Article I, Section 1.2.

“Designated Delivery Point” shall have the meaning set forth in Schedule 2.1.

“Early Termination Date” shall have the meaning set forth in Article XVII, Section 17.2.

“Eastern Prevailing Time” means Eastern Standard Time or Eastern Daylight Saving Time in effect in New York, New York, as the case may be on the relevant date.

“Effective Date” shall have the meaning set forth in the preamble.

“Event of Default” shall have the meaning set forth in Article XVII, Section 17.1.

“FOB” shall have the meaning given to the term “F.O.B.” in the Ohio UCC.

“Force Majeure Event” means an event or circumstance that prevents a Party (the “Claiming Party”) from performing its obligations under this Agreement, which event or circumstance is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which by the exercise of due diligence the Claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure Event includes, but is not limited to, an event or occurrence beyond the control of a Party, such as, without limitation, acts of God, war, insurrection, riots, nuclear disaster, strikes, labor disputes, threats of violence, labor and material shortages, fires, explosions, floods, river freeze-ups, breakdowns or damage to mines, plants, equipment, or facilities (including a forced outage or an extension of a scheduled outage of equipment or facilities to make repairs to avoid breakdowns thereof or damage thereto), interruptions to or slowdowns in transportation, railcar shortages, barge shortages, embargoes, orders, or acts of civil or military authority, laws, regulations, or administrative rulings, or total or partial interruptions of a Party’s operations which are due to any enforcement action or other administrative or judicial action arising from an environmental law

or regulation. A Force Majeure Event shall not be based on: (a) Buyer’s inability economically to use or resell the Coal purchased hereunder; (b) adverse geological or mining conditions; (c) Seller’s ability to sell the Coal at a price greater than the Contract Price; or (d) Seller’s inability to economically produce or obtain the Coal.

“Free Loading Day” means a loading day for which Seller shall not be obligated to pay demurrage charges with respect to a barge. A loading day shall commence at 7:00 a.m. of a calendar day and end at 7:00 a.m. the next calendar day. The first Free Loading Day shall commence at the later of the first 7:00 a.m. immediately following the delivery of said barge to a Designated Delivery Point, or 7:00 a.m. on the barge loading date specified in Seller’s request for placement of barges.

“Free Loading Period” means a period of two (2) consecutive Free Loading Days.

“Gains” means, with respect to a Party, an amount equal to the present value of the economic benefit, if any, (exclusive of Costs) to it resulting from the termination of its obligations with respect to this Agreement, determined in a commercially reasonable manner.

“Governmental Action” shall have the meaning set forth in Article IX, Section 9.2.

“Half-Month” means, with respect to any calendar month, both (a) the period from and including the first day of such month through and including the fifteenth day of such month and (b) the period from and including the sixteenth day of such month through and including the last day of such month.

“Imaged Agreement” shall have the meaning set forth in Article XXX.

“Interest Rate” shall have the meaning set forth in Article IV, Section 4.3.

“Letter of Credit” means an irrevocable, standby letter of credit, issued by a major United States commercial bank or the United States branch office of a foreign bank, reasonably acceptable to the beneficiary with, in either case, a senior unsecured credit rating of at least (a) "A-" by S&P and "A3" by Moody's, if such entity is rated by both S&P and Moody’s or (b) "A-" by S&P or "A3" by Moody's, if such entity is rated by either S&P or Moody’s but not both.

“Losses” means, with respect to a Party, an amount equal to the present value of the economic loss, if any, (exclusive of Costs) to it resulting from the termination of its obligations with respect to this Agreement, determined in a commercially reasonable manner.

“Material Adverse Change” means a Party has reasonable grounds to believe that the creditworthiness of the other Party or such other Party’s Credit Support Provider, as applicable, has become unsatisfactory, or the ability of the other Party or such other Party’s Credit Support Provider to perform under this Agreement has been materially impaired.

“Moody’s” means Moody’s Investors Service, Inc. or its successor.

“New Taxes” means any Taxes, fees, or assessments enacted and effective after the Effective Date, including, without limitation, that portion of any Taxes or New Taxes that constitutes an increase.

“NIST Handbook #44” means National Institute of Standards and Technology Handbook #44.

“Non-Defaulting Party” shall have the meaning set forth in Article XVII.

“Ohio UCC” means the Uniform Commercial Code as in effect in the State of Ohio.

“Party” and “Parties” shall have the meanings set forth in the preamble.

“Performance Assurance” means collateral in the form of either cash or Letters of Credit or such other security of the type and amount requested by the Party demanding Performance Assurance.

“PII” shall have the meaning set forth in Article XXVI.

“Plant” means the Conesville generating facility, Units 5 and 6, located near Conesville, Ohio.

“Quality Specifications” means the quality characteristics specified in Article III, Table 3.1. on an “As-Received” basis, using ASTM standards.

“Referee Sample” shall have the meaning set forth in Article VIII, Section 8.2(e).

“Replacement Price” means the market price for the applicable quantity at the Designated Delivery Point as determined by Buyer in a commercially reasonable manner.

“S&P” means the Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or its successor.

“Sales Price” means the market price for the applicable quantity at the Designated Delivery Point as determined by Seller in a commercially reasonable manner.

“Secured Party” shall have the meaning set forth in Article XIX.

“Seller” shall have the meaning set forth in the preamble.

“Selling Price” shall have the meaning set forth in Article VII.

“Settlement Amount” shall have the meaning set forth in Article XX.

“Shipment” means, as applicable: (a) the aggregate of the truckloads of Coal that are unloaded at the Designated Delivery Point on any one (1) day in accordance with the applicable Transportation Specifications; (b) the aggregate of the amounts of Coal delivered FOB Plant on any one (1) day via the belt.

“SO₂” means sulfur dioxide and “SO₂ per mmBtu” means sulfur dioxide per million Btu.

“Taxes” means any or all ad valorem, property, business and occupation, occupation, severance, generation, first use, conservation, Btu or energy, utility, gross receipts, privilege, sales, use, consumption, excise, lease, transaction, and other taxes, governmental charges, licenses, fees, permits and assessments, or increases therein, other than taxes based on net income or net worth.

“Term” shall have the meaning set forth in Article I, Section 1.1.

“Third Party Impositions” shall have the meaning set forth in Article VI, Section 6.1.

“Ton” means 2,000 pounds avoirdupois weight.

“Transportation Specifications” means the timing and tonnage requirements for Shipment(s) set forth in Schedule 2.4.

ARTICLE I

Term and Delivery Period

Section 1.1. Term. The term of this Agreement (the “Term”) shall commence on the Effective Date, and shall remain in effect through December 31, 2018, except as provided elsewhere in this Agreement.

Section 1.2. Delivery Period. The delivery period under this Agreement (the “Delivery Period”) shall be from January 1, 2016 through December 31, 2018, except as provided elsewhere in this Agreement.

ARTICLE II

Obligations and Deliveries

Section 2.1. Contract Quantity. During the Delivery Period, Seller agrees to sell and deliver to Buyer and Buyer agrees to purchase and accept delivery from Seller, FOB Plant, from the Approved Production Source(s) and the Approved Reserve(s) of Coal at the Designated Delivery Point as specified in Schedule 2.1, the Contract Quantity of Coal set forth herein.

Table 2.1



Contract Year	Contract Quantity (in Tons)	Contract RFR Quantity (in Tons)
2016	1,300,000	400,000
2017	1,200,000	300,000
2018	750,000	200,000

Such tonnage of the Contract Quantity of Coal shall be delivered ratably during each month of each Contract Year.

Seller will have a right of first refusal (“RFR”) to supply Buyer’s additional need at the Plant up to the Contract RFR Quantity in each Contract Year listed above. Buyer shall first notify Seller of its interest (the “RFR Notice”) in any portion of the Contract RFR Quantity (the “Noticed RFR Tons”) at least thirty (30) days prior to the start of desired delivery of the Noticed RFR Tons, and for any part of the Noticed RFR Tons for which Seller does not give Buyer a notice of commitment to supply hereunder within four (4) Business Days after Seller’s receipt of the RFR Notice, Buyer may purchase that part of the Noticed RFR Tons from other sources or suppliers.

Time for delivery of the quantities set forth herein is of the essence.

Section 2.2. Reconsignment and/or Resale Rights. From time to time, and at any time, Buyer shall have the right, but not the obligation, to have all or any part of the Coal sold hereunder consigned for delivery to an alternate destination, and/or to make all or any part of the Coal sold hereunder available for purchase by any person(s), whether or not affiliated with Buyer, through Buyer’s permitted assignment of this Agreement or Buyer’s purchase and subsequent resale to others of such Coal.

Should Buyer exercise its right to consign the Coal for delivery to an alternate consigned destination and/or exercise its right to resell the Coal, Seller shall arrange for transportation to the reconsigned destination designated by Buyer, at Buyer’s expense, in accordance with the Transportation Specifications attached hereto as Schedule 2.4 or as otherwise provided by Buyer at the time of exercising its rights under this Article II, Section 2.2.

Should Buyer exercise its right to resell all or any part of the Coal, the Parties agree that Buyer’s customer may perform some of Buyer’s obligations but that Buyer shall remain liable for all of Buyer’s obligations under this Agreement. All information to be supplied by Seller to Buyer under this Agreement (including, without limitation, analysis, weights, train manifest, and invoicing information) shall be supplied to Buyer and Buyer shall be responsible for transmitting such information to Buyer’s customer. In addition, Buyer is specifically released from its confidentiality obligations under Article XXVI with respect to quality and weighing information and other relevant information provided by Buyer to Buyer’s customer.

Section 2.3. Scheduling. The Parties will work together in good faith to agree on a reasonable and mutually acceptable delivery schedule in ratable quantities within the Term and within each month during the Term.

Section 2.4. Delivery. The Coal shall be delivered to Buyer FOB Plant at the Designated Delivery Point in accordance with the Transportation Specifications detailed in Schedule 2.4.

Seller shall be responsible for any costs or charges imposed on or associated with the delivery of the Contract Quantity up to the Designated Delivery Point. Buyer shall be responsible for any costs or

charges imposed on or associated with the Contract Quantity upon taking title to the Coal at the Designated Delivery Point in accordance with Article XV.

If a Party is charged for any increased transportation charges, penalties, or other costs, including demurrage, attributable to the other Party’s failure to timely load or unload the Coal in accordance with the terms of this Agreement, including the timing and tonnage requirements of the Transportation Specifications, and if such failure is not due to a Force Majeure Event, such failing Party shall reimburse the other Party for such charges.

Each Party shall immediately contact the other Party in the event of a curtailment or interruption in the delivery or receipt of Coal hereunder. Each Party shall contact the other Party with as much advance notice as reasonably possible regarding any such impending curtailment or interruption.

ARTICLE III

Quality Specifications

Section 3.1. Quality Specifications. Seller shall cause all Coal delivered to Buyer, pursuant to this Agreement, to comply with the Quality Specifications set forth in Table 3.1 below. The Coal required and delivered hereunder shall meet the “Quality Specifications” as identified in Table 3.1, which includes the “Contracted Specification(s),” the “Half-Month Suspension Limit(s)” and the “Shipment Rejection Limit(s),” as applicable.

Table 3.1

QUALITY SPECIFICATIONS:



	“As-Received” Basis
	Contracted Specification(s)	Half-Month Suspension Limit(s) (A)*	Shipment Rejection Limit(s) (B)(D)(E)*
Ash (%)	[***]	[***]	[***]
Heating Value (Btu/lb.)	[***]	[***]	[***]
Moisture (%)	[***]	[***]	[***]
Sulfur Dioxide (lbs. SO₂/mmBtu) (C)*	[***]	[***]	[***]
Ash Fusion Temp. (H=½w) ^oF Red. Atm. (E)*	[***]	[***]	[***]
Chlorine (% dry) (E)*	[***]	[***]	[***]
Hardgrove Grindability	[***]	[***]	[***]
Mercury (lbs./TBtu) (F)*	[***]	[***]	[***]
Volatile Matter (%)(E)*	[***]	[***]	[***]
Sizing:	[***]

*Definitions:


(A) =	the Half-Month weighted average analysis result (as determined under Article VIII).


(B) =	the analysis result of the sample (or composite of samples, if more than one) representing each Shipment of Coal.

For the purpose of determining the pounds of sulfur dioxide per million Btu, the figures shall be rounded to the nearest one hundredth. For example, [***] pounds SO₂ per million Btu shall mean [***] pounds SO₂ per million Btu, while [***] pounds SO₂ per million Btu shall mean [***] pounds SO₂ per million Btu and shall be deemed, for example, not to have met a [***] pounds SO₂ per million Btu specification.


(D) =	Buyer shall also have the right to reject any Coal that: 1) exceeds [*]% capable of passing a [*] square wire cloth sieve; 2) is not free flowing and free of extraneous material upon unloading; 3) has intermediate sizes (including fines) added or removed.; and 4) is either smoking or in some form of combustion.

(E) = Mercury data shall be measured in pounds per trillion Btu. Shipments will not be rejected based on the Mercury value as it will be determined after the shipment has been unloaded. Shipment value is provided for guidance in meeting the monthly suspension limit.

Subject to Buyer following the procedures set forth in this paragraph, Buyer may terminate deliveries from an Approved Production Source(s) if Buyer, in its commercially reasonable judgment, determines

through actual operating experience that the Coal delivered by Seller under this Agreement from such Approved Production Source(s), even if the Coal meets the requirements and specifications of Table 3.1, (i) causes unsatisfactory performance at the Plant, or (ii) requires Buyer to modify equipment, facilities, practices, or processes, and provided that such circumstances in (i) and (ii) do not result from Buyer changing its blending or operational procedures for the purpose of purporting to terminate deliveries from an Approved Production Source(s) pursuant to this Section 3.1. Buyer shall provide Seller with written notice thereof, specifying the basis of such unsatisfactory performance or modification and Buyer shall have the right to suspend all further deliveries of Coal from such Approved Production Source(s) by giving notice thereof to Seller. Promptly after such notice is delivered, the Parties shall meet and attempt in good faith to reach a mutually agreeable solution to resolve the difficulties. Buyer shall provide to Seller documentation of the unsatisfactory performance due to use of Seller’s Coal from such Approved Production Source and Buyer shall make such documentation available for Seller’s review during such time as the Parties are attempting in good faith to resolve the difficulties. If the Parties are unable to reach a mutually agreeable solution within twenty (20) days after delivery of Buyer’s notice to Seller, then Buyer may terminate deliveries from such Approved Production Source(s) upon fifteen (15) days prior notice to Seller. If more than three Approved Production Sources have been terminated and in Buyer’s reasonable judgment the Coal continues to causes unsatisfactory performance at the Plant, or requires Buyer to modify equipment, facilities, practices, or processes, then Buyer shall have the right to terminate this Agreement. Upon termination of this Agreement, neither Party shall have any obligation to the other Party, except for payment obligations for performance prior to termination. Additionally, the Parties agree that such termination of either this Agreement or deliveries from such Approved Production Source shall not constitute an Event of Default as provided for in Article XVII, Section 17.1, and therefore no damages shall apply.

Section 3.2 Agent(s) for Rail Coal. At Buyer's request to be promptly confirmed electronically, Seller shall cause a freeze-conditioning agent and/or a side-release agent ("Agent(s)") to be applied to the Coal or the railcar, respectively. Seller will cause only the Agent(s) specified by Buyer to be used and will cause the Agent(s) to be applied in a reasonable manner as specified by Buyer. Buyer will provide reasonable advance notice of the dates for starting and ending the Agent(s) application. Buyer shall pay Seller an amount equal to Seller’s actual reasonable costs of the Agent(s) and the application work, provided Seller has done so in strict accordance with Buyer’s instructions.

Section 3.3. Rejection and Suspension. In addition to all other remedies at law or in equity, and in addition to the price adjustments provided for in Article VII, Buyer shall have the following rights and remedies upon Seller's failure to conform to the requirements as set forth in this Article III.

(a) Buyer shall have the right to reject any Shipment hereunder if the Coal therein fails to conform to any requirement set forth in this Article III. Should Buyer exercise such right of rejection, it shall notify Seller by telephone upon discovery of the nonconformance, such notification to be promptly confirmed in writing.

(b) Buyer shall have the right to suspend all further Shipments hereunder if: (i) there are three (3) non-conforming Shipments, whether rejected or not, in any three (3) month period; (ii) two (2) out of four (4) consecutive Shipments are non-conforming Shipments; or (iii) the Coal quality fails to meet the defined minimum or exceeds the defined maximum “Half-Month Suspension” specifications applicable under this Article III. Should Buyer exercise such right to suspend further Shipments, Buyer shall notify Seller of its exercise of such right of suspension within fifteen (15) calendar days after the day or Half-Month period in which such failure occurs.

(c) Upon receipt of Buyer's notice of suspension, Seller shall immediately suspend further Shipments and make every reasonable effort to correct the conditions giving rise to the Shipments failing to conform to such specifications or requirements. Seller shall inform Buyer in writing on a weekly basis of such corrective actions taken by Seller.

During such suspension, Seller shall permit Buyer's full access to the production sources and related facilities hereunder and to all engineering data related thereto. Buyer shall have the right, but not the duty, to participate in any and all discussions relating to the matter and to recommend procedures to correct said matter.

Such suspension shall continue until Seller provides Buyer with assurances in writing that are satisfactory to Buyer that the conditions causing Shipments not in accordance with this Agreement have been corrected and that Seller can and shall deliver Coal meeting the Article III requirements and meeting the Quality Specifications of Table 3.1.

Upon receipt by Buyer of Seller's satisfactory written assurances, as determined by Buyer in its sole discretion, Shipments shall be resumed at the rate specified in Article II.

(d) In the event that: (i) Seller fails to provide Buyer with such assurances within ten (10) days after the date of Buyer's notice of suspension as described in this Section 3.3; or (ii) having provided such assurances, Seller fails to correct such conditions and resume Shipments in the ensuing thirty (30) days thereafter; or (iii) after such resumption of Shipments, Seller's subsequent deliveries at any time during the ensuing ninety (90) days does not meet the “Half-Month Suspension” or “Shipment Rejection” specifications applicable under this Article III; then such event shall constitute an Event of Default under Article XVII, Section 17.1.

(e) Whether Shipments suspended pursuant to this Article III shall be made up, as well as the scheduling of such make up, shall be at Buyer's sole discretion. In the event Buyer exercises its right to require such make up, delivery of make up tonnage shall be scheduled so that such deliveries shall be shipped no later than three hundred sixty-five (365) calendar days following the resumption of Shipments.

ARTICLE IV

Billing and Payment; Financial Reports

Section 4.1. Billing. Billing for Shipments shall be as follows:

(a)Buyer shall submit to Seller the weight, analytical, and cost data on delivered Coal taken into account during each Half-Month at each respective consigned destination within five (5) Business Days after each such Half-Month period. Thereafter, Seller shall submit to Buyer at the address provided herein, within two (2) Business Days of receipt of such information, an invoice covering such Half-Month deliveries at each respective consigned destination. Such invoice shall include a reference to this Agreement's number 10-62-15-900

(b) All information and communications with Seller regarding invoices shall be sent to the following address, or such other address specified by Seller in a written notice to Buyer:

Oxford Mining Company, LLC

544 Chestnut Street

Coshocton, Ohio 43812

Fax: 740-623-0365

E-mail: aashcraft@oxfordresources.com

(c) All information and communications with Buyer regarding and/or furnishing invoices shall be sent to the following address, or such other address specified by Buyer in a written notice to Seller:

AEP Fuel Accounting

155 W. Nationwide Blvd., 3^rd Floor

Columbus, Ohio 43215

Fax: 614-583-1640

E-mail: cantonfuelaccounting@aep.com

Section 4.2. Payment. Buyer shall make payment by electronic transfer to Seller within twenty (20) calendar days after the Half-Month period, provided Seller's invoice is submitted in accordance with Article IV, Section 4.1. Buyer shall not be obligated to make payment to Seller for Shipments of Coal until the analytical results have been obtained by Buyer.

Payment shall be made by wire transfer or electronic means in immediately available United States dollars for all Coal received, unloaded, taken into account, and accepted hereunder. If not already provided

in this Agreement, Seller shall provide Buyer all pertinent remittance instructions in a letter (containing the bank name, account name, account number, ABA number and bank contact with phone number, as well as Seller’s federal tax identification number) which shall be signed by an officer of Seller. Any change in the remittance instructions shall be provided in the same manner.

Remit to: Bank Name: FirstMerit Bank, N.A.

Account Name: Oxford Mining Company, LLC

Account Number: 5050012492

ABA Number: 041200555

Section 4.3. Disputed Invoices. If Buyer in good faith reasonably disputes an invoice, it shall provide a written explanation specifying in detail the basis for the dispute and pay any undisputed portion no later than the due date. Upon resolution of any dispute involving an invoice, any additional amount owing shall be paid with interest (the prime rate of interest for United States dollars as published from time to time under the section titled, “Money Rates” by The Wall Street Journal, plus two percent (2%) per annum, but not to exceed the maximum applicable lawful interest rate (the “Interest Rate”)). If any Party fails to pay amounts under this Agreement when due, unless such amount is the subject of a good faith dispute as provided above, or is excused by a Force Majeure Event, in addition to the rights and remedies provided in this Agreement, the aggrieved Party shall have the right to suspend performance under this Agreement until such amounts plus interest at the Interest Rate have been paid, and/or exercise any remedy available at law or in equity to enforce payment of such amount plus interest at the Interest Rate.

Section 4.4. Financial Reports. If requested by either Party, the other Party (or its guarantor, if any) shall deliver to the requesting Party (i) within one hundred twenty (120) days following the end of each fiscal year, a copy of the Party’s portion of the annual report containing audited consolidated financial statements for such fiscal year for such Party and (ii) within sixty (60) days after the end of each of its first three (3) quarters of each fiscal year, a copy of the quarterly report containing unaudited consolidated financial statements for such fiscal quarter for such Party. In all cases, the statements shall be for the most recent accounting period and shall be prepared in accordance with generally accepted accounting principles, provided however, that should any such statements not be available on a timely basis due to a delay in preparation or certification, such delay shall not be an Event of Default so long as the relevant entity diligently pursues the preparation, certification, and delivery of such statements.

In the event a Party’s financial statements are filed with the Securities and Exchange Commission and are available at www.sec.gov, then such Party has fulfilled its obligations under this Article IV, Section 4.4.

ARTICLE V

Contract Price

Section 5.1. Contract Price. The Contract Price for Coal FOB Plant at the Designated Delivery Point will be on a fixed price basis determined as follows:

Table 5.1



Contract Year	Contract Quantity Price per Ton	Contract RFR Quantity Price per Ton
[***]	$[***]	$[***]
[***]	$[***]	$[***]
[***]	$[***]	$[***]

Section 5.2. Firm Price. Except as provided under Article VII, the Contract Price shall be firm and not subject to any adjustment.

ARTICLE VI

Taxes and Indemnity

Section 6.1. Taxes. Each Party shall use Commercially Reasonable Efforts to administer this Agreement and implement the provisions in accordance with the intent to minimize Taxes, but neither Party shall be obligated to incur additional expenses in doing so. Seller shall be solely responsible for all assessments, fees, costs, expenses, and Taxes (including without limitation, New Taxes, but not income taxes) imposed by governmental authorities or other third parties (“Third Party Impositions”) relating to the mining, beneficiation, production, sale, use, loading and delivery of Coal to Buyer or in any way accrued or levied at or prior to the transfer of title to the Coal to Buyer, and including, without limitation, all severance taxes, royalties, black lung fees, reclamation fees and other costs, charges, and liabilities accrued at or prior to such transfer of title. Buyer shall be solely responsible for Third Party Impositions relating to the Coal accrued or levied after the transfer of title to the Coal to Buyer.

Section 6.2. Exemption from Taxes. If either Party is exempt from Taxes, it shall provide a certificate of exemption or direct pay permit, or other reasonable satisfactory evidence of such exemption.

Section 6.3. Indemnification. Each Party shall indemnify, release, defend, and hold harmless the other Party, and its officers, directors, affiliates, agents, and employees, from and against any and all Third Party Impositions with respect to the Coal that are the responsibility of such Party.

ARTICLE VII

Quality Adjustments

Adjustments to the Contract Price for variances in quality shall be made in accordance with the provisions of this Article VII. All quality adjustment calculations shall be carried out four decimal places. The resulting amount shall be added to or subtracted from, as applicable, the Contract Price. The Contract Price as adjusted by such provisions shall then be rounded to the nearest tenth of a cent ($0.001) and referred to as the “Selling Price.”

In order for the Selling Price to accommodate variations in heating value (Btu/lb.), sulfur dioxide value, and ash value of all Coal delivered hereunder, there shall be an amount(s) added to or subtracted from the Contract Price using the weighted averages of the Coal delivered FOB Plant and of each Designated Delivery Point. These price adjustments shall be in addition to any rights which Buyer may have as provided or referenced under Article II.

(a) If the weighted average Btu/lb. of all Coal unloaded and taken into account hereunder during a Half-Month is not equal to the Contracted Btu/lb. Specification, then there shall be an amount added to the Contract Price (if the calculated number is positive) or subtracted from the Contract Price (if such number is negative), as determined by the following formula, to arrive at the adjusted price for such Coal:

Amount Per Ton of Increase = (Actual Btu/lb. - Contracted Btu/lb. Specification) x Contract Price

or Decrease for Btu/lb. Contracted Btu/lb. Specification

provided, however, no premium will be paid for Btu/lb. to the extent it exceeds the Contracted Btu/lb. Specification by more than [***] Btu/lb.

(b) If the weighted average SO₂ content of all Coal shipped and taken into account hereunder during a Half-Month is not equal to the Contracted Specification for SO₂, then there shall be an amount subtracted from the Contract Price (if the calculated number is positive) or added to the Contract Price (if such number is negative), as determined by the following formula, to arrive at the adjusted price for such Coal:

((Actual lbs. SO₂/mmBtu - Contracted lbs. SO₂/mmBtu) x Actual Btu/lb. x E)

[***]

E = $[***]. On or before April 1 of any Contract Year beginning in 2016 and annually thereafter, Buyer shall provide to Seller the Plant’s cost to scrub for the prior year and such value shall become the value of “E” for the purpose of this calculation for the April 1 to March 31 period.

provided, however, that no premium will be paid for lbs. SO₂ per mmBtu to the extent it is less than [***] lbs. SO₂ per mmBtu.

In addition to the above price reduction formula, for each Shipment of Coal having an SO₂ value greater than the Shipment Rejection Limit, should Buyer choose not to elect its rejection rights under Article II, a price discount shall be negotiated, with a minimum amount of [***] dollars ($[***]) per Ton to be deducted from the Contract Price.

(c) If the weighted average Ash (%) content of all Coal unloaded/shipped and taken into account hereunder during a Half-Month is greater than the Contracted Specification for Ash (%), the Contract Price for Coal in such Half-Month will be decreased by $[***] for each [***]% ash increment, or portion thereof, by which such Half-Month‘s Ash (%) content is tested to be above the Contracted Specification for Ash (%). (For example, if the Contracted Specification for Ash (%) is [***]% and the weighted average Ash (%) content of all Coal unloaded/shipped and taken into account hereunder during a Half-Month has an Ash percent value of [***]%, then the Contract Price decrease shall be $[***] per Ton for such Coal.)

ARTICLE VIII

Weighing, Sampling, and Analysis

Section 8.1. Weighing. Weighing shall be performed in accordance with the provisions of this Article VIII, Section 8.1. Weights taken in accordance with this Article VIII, Section 8.1 shall be deemed accepted as correct (absent manifest error) and shall govern all invoicing and payments hereunder.

(a) The weight of the Coal delivered hereunder FOB Plant via Belt shall be determined by Buyer as the weighing Party at its expense on Buyer’s conveyor belt scales at Buyer’s unloading facility(ies). Such scales shall be calibrated once each month to maintain them to within a plus or minus one-quarter of one percent (± 0.25%) accuracy tolerance. At Seller’s request, which Seller may make from time to time, Buyer shall inform Seller of the results of such testing and calibration. The testing and calibration of such scales shall be accomplished in accordance with the guidelines outlined in NIST Handbook #44 or other procedures which shall be mutually agreeable to Seller and Buyer. During any period when Buyer’s scales are inoperable, determination of the quantities of Coal delivered shall be made by a procedure to be established at such time by the mutual agreement of Buyer and Seller.

(b) The weight of the Coal delivered hereunder FOB Plant via Truck shall be determined by Buyer as the weighing Party at its expense by use of a truck scale system located at the Designated Delivery Point. The weight of such Shipments shall be consistent with the identified provisions of an applicable transportation contract. Such truck scales shall be calibrated semiannually by the appropriate certifying agency to maintain them to within a plus or minus two-tenths of one percent (± 0.20%) accuracy tolerance. At Seller’s request, which Seller may make from time to time, Buyer shall inform Seller of the results of such testing and calibration. The testing and calibration of such scales shall be accomplished in accordance with the guidelines outlined in NIST Handbook #44 or other procedures which shall be mutually agreeable to Seller and Buyer. During any period when no truck weights are available, determination of the quantities of Coal delivered shall be made by a procedure to be established at such time by the mutual agreement of Buyer and Seller.

(c) The weighing Party shall give prompt notice by telephone, electronic means, or facsimile and confirm such notice in writing to the other Party if and when any scales are discovered to be in error beyond the applicable accuracy tolerance provided for in subsections (a) and (b) above. If at any time scales are determined to be in error beyond the applicable accuracy tolerance, an adjustment of the payment to Seller shall be made based on the assumption that the condition causing such scales to be in error beyond such limits shall have existed with respect to all Coal unloaded during the period of thirty (30) calendar days prior to such discovery, or the date of the previous scale calibration, whichever is later. Such adjustment shall be in an amount equal to (i) the difference in the weights as specified in the applicable invoices and the weights that would have been obtained had the scales been accurate (without applying the applicable accuracy tolerance), multiplied by (ii) the price per Ton as stated in said invoices.

(d) The non-weighing Party shall have the right, but not the duty, to have a representative present at any and all times to observe the determination of weights; however, the weighing Party shall not be obligated to notify the non-weighing Party to be present. If the non-weighing Party should at any time question the accuracy of the weights thus determined, the non-weighing Party shall so advise the weighing Party and confirm the same in writing, and the weighing Party shall arrange to test the scales. If such test shows the scales to be in error, they shall be adjusted to the required accuracy established above. If such test requested by the non-weighing Party shows the scales to be within the applicable accuracy tolerance established in subsections (a) and (b) above for the respective scales, then the non-weighing Party shall pay all costs of such test; otherwise, the weighing Party shall pay all such costs.

(e) Any payments due by either Party to the other Party, as a result of adjustment and/or payment of costs made pursuant to this Article VIII, Section 8.1 shall be paid in accordance with Article IV.

Section 8.2. Sampling and Analysis. Sampling and analysis shall be performed in accordance with the provisions of this Article VIII, Section 8.2. Sampling and analysis done in accordance with this Article VIII, Section 8.2 shall be deemed accepted as correct (absent manifest error) and shall govern all invoicing and payments hereunder.

(a) All sampling and analysis hereunder shall be performed in accordance with methods approved by ASTM or such other methods as may be mutually agreeable to Buyer and Seller. For purposes of determining moisture hereunder, the two-stage procedures as defined in ASTM 3302 shall be used.

(b) For all Coal delivered FOB Plant via Belt or FOB Plant via Truck, Buyer as the sampling Party shall sample the Coal or shall provide for the Coal to be sampled as it is delivered across the belt or unloaded from each truck.

(c) All Coal delivered hereunder shall be sampled by the sampling Party using a mechanical sampling system that has been certified within the previous sixty (60) calendar months to be free of significant bias and that is properly operated and maintained, before such Coal is commingled with other Coal and approximately at the time it is weighed by the sampling Party as the weighing Party.

(d) Each Coal sample collected by the sampling Party shall be properly divided into at least three (3) subsamples. The first subsample shall be analyzed by Buyer as provided in subsection (e). The second subsample shall be sealed in an airtight container and sent to the non-sampling party. The third subsample (the “Referee Sample”) shall be sealed in an airtight container and held by the sampling party for a period of at least thirty (30) days.

(e) Buyer shall determine, by proper analysis made in its laboratory and at its expense, the “As-Received” quality and characteristics of all Coal delivered to it. Promptly following such analysis, Buyer shall notify Seller of the short proximate (Btu per pound, percent moisture, percent ash, and percent sulfur) average analytical results of each Shipment. If Buyer was the weighing Party, Buyer’s notification to Seller shall include Buyer’s weight determination and the identifying number of each truck unloaded where applicable.

(f) Following the analysis by Buyer, the non-sampling Party may request analysis of the Referee Sample by an independent laboratory mutually agreed upon by the Parties. If the results of the Referee Sample analysis and the governing contractual analysis are within ASTM Reproducibility Limits, the original governing analysis shall control and the cost of analyzing the Referee Sample shall be borne by the non-sampling Party. If the results of the Referee Sample analysis are outside such ASTM Reproducibility Limits, then the results of the Referee Sample analysis shall be used for payment, and the cost of analyzing the Referee Sample shall be borne by the sampling Party.

(g) Unless the non-sampling Party challenges the accuracy of a sampling made by the sampling Party by a written notice to the sampling Party given by the 15th day of the Half-Month immediately following the Half-Month in which the Shipment(s) represented by the applicable sample(s) were made, the non-sampling Party shall be deemed to have waived all claims with respect to such sampling. Also, unless Seller challenges the accuracy of an analysis made by Buyer by a written notice to Seller given by the 15th day of the Half-Month following the Half-Month in which the Shipment(s) represented by the applicable analyzed sample(s) were made, Seller shall be deemed to have waived all claims with respect to such analysis.

(h) Coal received, unloaded, and taken into account that is not sampled or is sampled but not analyzed shall be taken into account as follows: If during any Half-Month period at least fifty percent (50%) (by weight) of Coal delivered at a respective consigned destination during such period has been sampled and analyzed, then the weighted average analytical results of such samples shall be applicable to all Coal delivered to such consigned destination during such Half-Month period. If more than fifty percent (50%) (by weight) of Coal delivered at a consigned destination during any such Half-Month period has not been sampled and analyzed, then the weighted average analytical results of the portion of sampled and analyzed Coal shall apply to such portion, and the weighted average analytical result of the last preceding Half-Month period in which at least fifty percent (50%) (by weight) of the Coal delivered to such consigned destination was sampled and analyzed shall be applicable to such portion of the Coal delivered which was not sampled and/or was not analyzed for such Half-Month period.

(i) Except as otherwise provided in this Article VIII, Section 8.2, the results of the sampling and analysis by the Parties as provided in this Article VIII, Section 8.2 shall be accepted as the quality and characteristics of the Coal unloaded hereunder at each respective consigned destination.

ARTICLE IX

Governmental Legislation, Regulations, and Orders

Section 9.1. Compliance with Laws. Seller and Buyer shall make good faith efforts to comply with the provisions of all federal, state, and other governmental laws and any applicable orders and/or regulations, or any amendments or supplements thereto, which have been, or may at any time be, issued by a governmental agency.

Section 9.2. Governmental Action Affecting Buyer. If any federal, state, or other governmental law, regulation, or order (including but not limited to any judicial or administrative decision or order), or any amendments thereto (including but not limited to amendments to the Clean Air Act), is enacted promulgated, issued, or enforced or imposed upon Buyer (collectively, “Governmental Action”) that:

(a) makes economically unfeasible, restricts so as to materially curtail, or prohibits or effectively prohibits Buyer’s use of coal, including the Coal, or the operation of the Plant, as reasonably determined by Buyer, in Buyer’s sole judgment and discretion, requires closing, rebuilding, or modifying of existing ponds or landfills, or classifies coal combustion byproducts as hazardous wastes, Buyer may reduce deliveries of Coal to the Plant or terminate this Agreement; or

(b) (i) modifies the emission limitations, (ii) imposes additional or more stringent effluent discharge limitations, or (iii) alters the sulfur or other chemical content specifications for the Coal and/or the stack emission limitations, such that the Plant or a group of plants comprised of the Plant and any other generating plant(s) operated by Buyer or its Affiliates (collectively, “AEP Plants”), as constructed as of the time of the Governmental Action, cannot reasonably comply, and if, as a result of any of the foregoing, Buyer voluntarily or involuntarily reduces the stack emission limitations and/or effluent discharge limits at the Plant, in order that the Plant or a group of the AEP Plants may be in compliance with the Governmental Action, or, as reasonably determined by Buyer, in Buyer’s sole judgment and discretion, Buyer decides to discontinue the use of coal at the Plant, then Buyer may terminate this Agreement; or

(c) if the Governmental Action alters, directly or indirectly, Buyer’s rights to sell electric power, then Buyer may terminate this Agreement.

Section 9.3. Laws Affecting Seller. In the event of the enactment of any new federal, state, or other governmental law, or the promulgation of any regulation or order thereunder which prohibits (or restricts so as effectively to prohibit) the mining or processing, or shipping, as may be applicable, of the Coal specified in this Agreement, then Seller may elect to be relieved of its obligation upon the effective date of implementation (compliance date) of such law, regulation, or order to deliver the total quantity of Coal to be delivered under this Agreement to the extent of the amount of tonnage represented by the percentage of production by Seller of such mining or processing, or shipping, as may be applicable, of Coal so affected by such law, regulation, or order to the total amount of Coal produced and processed to meet the quantity requirements of this Agreement, and, if such law, regulation, or order prevents delivery of the total quantity of Coal to be delivered under this Agreement, Seller may terminate this Agreement.

Section 9.4. Notice. Should either Buyer or Seller elect to invoke its rights under Section 9.2 or Section 9.3, respectively, the Party so invoking shall notify the other Party in writing, stating the grounds upon which such invocation is based. Said notice shall also state the date upon which the invoking Party’s election shall become effective, which date shall in no event be earlier than sixty (60) days after the date of delivery of the notice.

Section 9.5. Effect of Termination. If either Party elects to terminate this Agreement under the provisions of this Article IX, then neither Party shall have, after the effective date of such termination, any further obligation or liability with respect to such termination; provided, however, that such termination shall not affect any rights or obligations of Buyer or Seller existing under this Agreement for Coal shipped or required to be shipped prior to the effective date of said termination.

Section 9.6. Governmental EEO and Related Regulations. Unless exempted, the Parties shall comply with the equal employment opportunity clause in Section 202 of Executive Order 11246 and all applicable rules, regulations, and relevant orders pertaining to Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and Section 4212 of the Vietnam Era Readjustment Assistance Act of 1974, as amended. The Parties represent that they do not, and shall not for the Term of this Agreement, provide or maintain for its employees facilities that are segregated on the basis of race, color, religion, sex or national origin. The Parties represent that they will not assign their employees to perform any work related to this Agreement at a location where facilities are segregated on the basis of race, color, religion, sex or national origin. The Parties agree that they will not enter into any agreement to obtain goods or services relating to this Agreement with any entity that provides, maintains or assigns its employees to work at locations where facilities are segregated on the basis of race, color, religion, sex or national origin. As used in this Article IX, Section 9.6, “facilities” means waiting rooms; work areas; restaurants and other eating areas; time clocks; locker rooms and other storage or sleeping areas, except as necessary to assure privacy between male and female employees; parking lots, drinking fountains; recreation or entertainment areas; and transportation. If not otherwise exempted by Title 48 and to the extent applicable, the Parties will comply with 48 CFR §52.219-8, Utilization of Small, Small Disadvantaged, and Women-Owned Small Business Concerns, and 48 CFR §52.219-9, Small, Small Disadvantaged, and Women-Owned Small Business

Subcontracting Plan. If not otherwise exempted by 41 CFR §60-1.5, the Parties represent that they will file all reports or other required information specified in 41 CFR §60-1.7.

ARTICLE X

Representations and Warranties

Each Party represents and warrants to the other Party that, as of the Effective Date:

a)it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation;

b)it has all regulatory authorizations necessary for it to legally perform its obligations under this Agreement;

c)the execution, delivery and performance of this Agreement are within its powers, have been duly authorized by all necessary action and do not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or any law, rule, regulation, order or the like applicable to it;

(d) the person signing this Agreement on its behalf has been duly authorized to do so;

(e) this Agreement and each other document executed and delivered in accordance with this Agreement constitutes and is a legally valid and binding obligation enforceable against it in accordance with its terms, subject to any equitable defenses;

(f) it is acting for its own account, it has made its own independent decision to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment, it is not relying upon the advice or recommendations of the other Party in so doing, and it is capable of assessing the merits of and understanding, and understands and accepts, the terms, conditions and risks of this Agreement;

(g) it is not bankrupt and there are no Bankruptcy Proceedings pending or being contemplated by it or, to its knowledge, threatened against it which would result in it being or becoming bankrupt;

(h) there is not pending or, to its knowledge, threatened against it or any of its Affiliates any legal proceedings that could materially adversely affect its ability to perform its obligations under this Agreement;

(i) no Event of Default with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement;

(j) it is a “forward contract merchant” and this Agreement is a “forward contract” within the meaning of the United States Bankruptcy Code;

(k) it has entered into this Agreement in connection with the conduct of its business and it has the capacity or ability to make or take, as applicable, delivery of all Coal referred to in this Agreement;

(l) with respect to this Agreement, it is an “eligible contract participant” as defined in Section 1a(18) of the Commodity Exchange Act, as amended [7USC § 1a(18)];

(m) all applicable information that is furnished in writing by it, or on behalf of it, to the other Party pursuant to this Agreement (as described in Schedule 10) is, as of the date provided, true, accurate and complete in every material respect. For purposes of this representation, financial information provided via posting on the Internet shall be deemed to be written information provided to the other Party; and

(n) no event or circumstance exists at any Approved Production Source that would constitute a Force Majeure Event.

ARTICLE XI

Audit

Each Party (and its representatives) has the right, at its sole expense during normal working hours and upon reasonable advance notice, to examine the records of the other Party, but only to the extent reasonably necessary to verify the accuracy of any statement, charge or computation made pursuant to this Agreement or to examine other matters that relate to a Party’s performance or nonperformance of this Agreement. If requested, a Party shall provide to the requesting Party statements evidencing the quantities and qualities of Coal delivered or received at the Designated Delivery Point, or other documentation relating to a Party’s performance or nonperformance. If any such examination reveals any inaccuracy in any statement, the necessary adjustments in such statements and the payments thereof will be promptly made and shall bear interest calculated at the Interest Rate from the date the overpayment or underpayment was made until paid; provided, however, that no adjustment for any statement or payment will be made unless objection to the accuracy thereof was made in writing, in reference hereto, prior to the lapse of one (1) year from the rendition thereof; and provided further, that for the purpose of such statement and payment objections, this Article XI will survive any termination of this Agreement.

ARTICLE XII

Force Majeure Event

To the extent either Party is prevented by a Force Majeure Event from carrying out, in whole or part, its obligations under this Agreement and such Party (the “Claiming Party”) gives notice and details, orally and confirmed promptly in writing, of such Force Majeure Event to the other Party as soon as practicable (but in no event later than thirty (30) days after the occurrence thereof), then the Claiming Party shall be excused from the performance of its obligations during such Force Majeure Event. The Claiming Party shall remedy the Force Majeure with all reasonable dispatch. The non-Claiming Party shall not be required to perform or resume performance of its obligations to the Claiming Party corresponding to the obligations of the Claiming Party excused by the Force Majeure Event. Failure to give such notice and furnish such information within the time specified shall be deemed a waiver of all rights under this Article for such period of time during which notice was not given. Buyer and Seller shall exercise reasonable efforts to mitigate or eliminate the conditions which have caused the Force Majeure Event, provided, however, nothing herein contained shall be construed as requiring Seller or Buyer to accede to any demands of labor, or labor unions, or suppliers, or other parties which Seller or Buyer considers unacceptable. No suspension or reduction by reason of a Force Majeure Event shall invalidate the remainder of this Agreement but, on the removal of the cause therefor, Shipments shall resume at the specified rate. The Claiming Party shall furnish the non-Claiming Party a monthly statement by the fifteenth (15^th) day of the calendar month setting forth the amount of tonnage not shipped or to be reduced because of the Force Majeure Event during the second preceding calendar month.

If a Force Majeure Event persists for (a) a continuous period of sixty (60) days or (b) an aggregate of seventy-five (75) days in any twelve-month rolling period, then, at any time thereafter during the period of the Force Majeure Event, the non-Claiming Party shall have the option, upon three (3) days prior written notice, to terminate this Agreement and the obligations of the Parties hereunder.

If there is a Force Majeure Event, delivery of the affected quantity of Coal shall not be made up except at Buyer’s sole discretion.

If Seller claims a Force Majeure Event under this Agreement and has obligations to provide coal of a similar type and quality as the Coal under other coal sales agreements, or if Buyer claims a Force Majeure Event and has obligations to purchase coal of a similar type and quality as the Coal under other coal sales agreements, then any reductions in Seller’s deliveries or Buyer’s purchases (as applicable) shall be allocated by the Party claiming the Force Majeure Event on a pro rata basis among this Agreement and such other

coal purchase or sales agreements involving coal of a similar type and quality as the Coal, to the extent contractually permitted by such agreements.

Without limiting the generality of this Article XII, if there is a Force Majeure Event that causes a partial or total curtailment of electrical generation from or electrical generating capacity at the consigned destination or partial or total curtailment of transmission or distribution of electricity therefrom, Buyer shall, at its option, be relieved under this Article XII from its obligation to accept up to the pro rata (based on such partial curtailment) quantity or entire (based on such total curtailment) quantity of Seller’s Coal scheduled for delivery during the period of the Force Majeure Event.

ARTICLE XIII

Seller Representations and Covenants

Section 13.1. Seller Representations. Seller (a) represents that as of the Effective Date it and its Affiliates own or control sufficient reserves of Coal as described in Schedule 2 to satisfy the quantity and quality provisions of this Agreement; (b) certifies that as of the Effective Date it is in good faith compliance with the rules, practices, and standards issued by any and all governmental agency(ies) with respect to legislation, regulations, rules, or mandates which are in effect either by interim or final rules, or passed, adopted, or promulgated but to go into later effect, including all laws and regulations regarding the mining and sale of coal (notices and orders issued under the Federal Coal Mine Health and Safety Act and State and Federal Reclamation Acts excepted); and (c) has filed and will file in a timely manner to obtain by the time necessary all licenses, permits, certificates and other documents necessary for it to fulfill its obligations under this Agreement.

Section 13.2. Seller Covenants. Seller covenants that it will, and does hereby, dedicate to this Agreement such quantity of its coal reserves as is required for the full performance of Seller’s obligations hereunder and that Seller will not sell nor contract to sell to others coal from said reserves in such quantity and quality as to jeopardize its ability to deliver the total quantity and quality of Coal called for by this Agreement. Nothing in this Article XIII shall be construed as preventing Seller from mining and selling Coal from said reserves to others provided the foregoing provisions with respect to said reserves are complied with.

ARTICLE XIV

Title, Risk of Loss, and Indemnity

Section 14.1. Title and Risk of Loss. Title for Coal delivered under this Agreement shall pass to Buyer as follows:

a) Title to and risk of loss of the Coal will pass to Buyer as (i) the belt coal is transferred through the transfer station to Buyer’s coal belt, or (ii) the coal is unloaded by truck.

b) Title to and risk of loss of the Coal in any Shipment shall revert back to Seller immediately upon such Shipment being rejected by Buyer as provided elsewhere in this Agreement.

Section 14.2. Seller Title to Coal. Seller warrants that it has title to the Coal and will deliver the Coal to Buyer free and clear of all liens, claims, and encumbrances arising prior to the transfer of title to Buyer.

Section 14.3. Indemnity. There shall be indemnification under this Agreement as follows:

(a) Each Party shall indemnify, defend, and save harmless the other Party and its Affiliates, and their officers, directors, agents, and employees, from and against any liabilities, expenses, losses, claims, damages, penalties, causes of action, or suits arising out of or in connection with such indemnifying Party’s failure to comply with its obligations under this Agreement.

(b) Seller shall indemnify, defend, and save harmless Buyer and its Affiliates, and their officers, directors, agents, and employees (the “Buyer Indemnitees”), from and against any liabilities, expenses, losses, claims, damages, penalties, causes of action, or suits, and all other obligations whatsoever, including without limitation all judgments rendered against and all fines and penalties imposed upon the Buyer Indemnitees (whether severally, or in combination with others) and any reasonable attorneys’ fees and other costs of litigation arising out of injuries or death to any person(s), or damage to any property, caused by or related to, in whole or in part, the railcars furnished hereunder (as applicable), between the time that such railcars are delivered to Seller or Seller’s agent and the time that custody thereof is properly returned to Buyer (or to Buyer’s agent carrier, if applicable), or if deliveries are by truck, arising out of injuries or death to any person(s), or damage to any property, caused by or related to, in whole or in part, the trucking of Coal, whether such Coal is trucked by Seller or Seller’s trucking contractor(s), or if deliveries are by conveyor, arising out of injuries or death to any person(s), or damage to any property, caused by or related to, in whole or in part, the use of a conveyor to deliver the Coal, whether such Coal is transported using a conveyor by Seller, Seller’s affiliate or Seller’s contractors. Any injury or death to person(s) or damage to property as hereinbefore described shall be reported to Buyer by Seller immediately upon the occurrence thereof, and confirmed in writing as soon as possible.

ARTICLE XV

Netting and Set Off

In addition to any other remedies provided by law or in equity, if the Parties are required to pay any amount under this Agreement in the same month, then such amounts with respect to each Party may be aggregated and the Parties may discharge their obligations to pay through the netting of coal supply agreements with the other Party, in which case the Party, if any, owing the greater aggregate amount shall pay to the Party owed the difference between the amounts owed. Each Party reserves to itself all rights, setoffs, counterclaims, combination of accounts, liens and other remedies and defenses which such Party has or may be entitled to (whether by operation of law or otherwise). The obligations to make payments under this Agreement may be offset against each other, set off or recouped therefrom.

ARTICLE XVI

Delivery-Related Damages

Section 16.1. Amount of Damages. Unless excused by a Force Majeure Event, by written agreement of Buyer and Seller, or the other Party’s failure to perform:

(a) If Seller fails to deliver all or part of the Contract Quantity pursuant to this Agreement (including any failure due to rejection or suspension of delivery obligations), Seller shall pay Buyer, on the date payment would otherwise be due to Seller, an amount for each Ton of such deficiency equal to the positive difference, if any, obtained by subtracting the Contract Price from the Replacement Price.

(b) If Buyer fails to accept delivery of all or part of the Contract Quantity pursuant to this Agreement, Buyer shall pay Seller, on the date payment would otherwise be due, an amount for each Ton of such deficiency equal to the positive difference, if any, obtained by subtracting the Sales Price from the Contract Price.

All determinations of such delivery-related damages shall be made in a commercially reasonable manner. The non-defaulting Party shall not be required to enter into any actual replacement transaction in order to determine the Replacement Price or Sales Price, as appropriate, provided that the non-defaulting Party shall take all reasonable steps to mitigate its damages.

Section 16.2. Payment of Damages. Payment of amounts, if any, determined under this Article XVI shall be made in accordance with Article IV, provided that payment of any such amounts shall be made on

the fifteenth (15^th) day of the month following the month in which occurs such failure to deliver or accept delivery of Coal, as applicable.

ARTICLE XVII

Events of Default, Remedies and Limitation of Liabilities

Section 17.1. Events of Default. An event of default (“Event of Default”) with respect to a Party (the “Defaulting Party”) shall mean any of the following:

a) the failure of the Defaulting Party to pay when due any required payment where such failure is not remedied within three (3) Business Days, after receipt of written notice thereof, provided the payment is not subject to a good faith dispute as described in Article IV;

b) an event described under Article III, Section 3.3(d), has occurred;

c) any representation or warranty made by a Party herein shall prove to be untrue in any material respect when made;

d) the failure of the Defaulting Party to comply with its other respective covenants or obligations under this Agreement (excluding subsections (a) through (c) above) and such failure continues uncured for five (5) Business Days after receipt of written notice thereof;

e) the Defaulting Party shall be subject to a Bankruptcy Proceeding;

f) (i) the expiration or termination of any Credit Support for the Defaulting Party’s obligations under this Agreement (other than in accordance with its terms) prior to the satisfaction of all of its obligations under each transaction to which such Credit Support relates without the written consent of the other Party; or (ii) the failure by the Defaulting Party providing Credit Support to make, within ten (10) Business Days prior to the expiration or termination of any Credit Support, adequate arrangements for new and equivalent (or a renewal of existing) Credit Support to become effective immediately upon the expiration of the existing Credit Support without the written consent of the other Party; (iii) the failure of the Defaulting Party’s Credit Support Provider, if any, to perform any of its covenants; or (iv) the Defaulting Party’s Credit Support Provider becomes subject to a Bankruptcy Proceeding.

g) the Defaulting Party fails to establish, maintain, extend, or increase Performance Assurance when required pursuant to this Agreement;

h) the occurrence of a Material Adverse Change with respect to the Defaulting Party; provided, that such Material Adverse Change shall not be considered an Event of Default if the Defaulting Party, within forty-eight (48) hours but at least one (1) Business Day after the date of notice, provides to the Non-Defaulting Party for so long as the Material Adverse Change is continuing, Performance Assurance in an amount determined by the Non-Defaulting Party in a commercially reasonable manner.

Section 17.2. Remedies. Upon the occurrence and during the continuance of an Event of Default with respect to a Defaulting Party, the other Party (the “Non-Defaulting Party”) may, in its sole discretion:

a) terminate, accelerate, and liquidate the Parties’ respective obligations under this Agreement by establishing, and notifying the Defaulting Party of, an early termination date (which shall be no earlier than the date of such notice nor later than thirty (30) days after the date of such notice) on which this Agreement shall terminate (“Early Termination Date”);

b) withhold any payments due to the Defaulting Party until such Event of Default is cured;

c) suspend performance of its obligations under this Agreement until such Event of Default is cured; and/or

d) exercise such other remedies as may be provided for in this Agreement.

If notice of an Early Termination Date is given under this Article XVII, Section 17.2, the Early Termination Date will occur on the designated date, whether or not the relevant Event(s) of Default is then continuing.

Section 17.3. Limitation of Liabilities. Notwithstanding any provision to the contrary contained in this Agreement, the Non-Defaulting Party shall not be required to pay the Defaulting Party any amount under this Article XVII, until the Non-Defaulting Party receives confirmation satisfactory to it, in its reasonable discretion (which may include an opinion of its counsel), that all other obligations of any kind whatsoever of the Defaulting Party to make any payments to the Non-Defaulting Party under this Agreement (or otherwise) have been fully and finally performed.

ARTICLE XIX

Grant of Security Interest

For the avoidance of doubt, the following grant of a security interest does not cover the general assets of either Party, but is limited solely to any Performance Assurance delivered by a Party to the other Party under this Agreement, and is not intended to be read as inconsistent with the lending arrangements of a Party hereunder as this is not a general grant of a security interest, but only a grant of security interest with respect to any Performance Assurance delivered hereunder. Accordingly, to secure its obligations under this Agreement and only to the extent either or both Parties deliver Performance Assurance hereunder, each Party as a pledgor hereby grants to the other Party as a secured party (the “Secured Party”) a present and continuing first priority secured interest in, and lien on (and right of recoupment and setoff against), and assignment of, all such Performance Assurance, including, any such cash collateral delivered as Performance Assurance and cash equivalent collateral delivered as Performance Assurance and any and all proceeds resulting therefrom or the liquidation thereof, whether now or hereafter held by, on behalf of, or for the benefit of, such Secured Party, and each Party agrees to take such action as the other Party reasonably requires in order to perfect the Secured Party’s first-priority security interest in, and lien on (and right of recoupment and/or setoff against), such collateral and any and all proceeds resulting therefrom or from the liquidation thereof.

ARTICLE XIX

Holding and Using of Performance Assurance

Each Party will be entitled to hold Performance Assurance in the form of cash so long as the credit rating of the senior unsecured debt obligation of the entity or its guarantor is rated at least BBB- by S&P’s and Baa3 by Moody’s and further provided that an Event of Default has not occurred and is not continuing with respect to the Party. If an Event of Default has occurred and is continuing with respect to a Party or its guarantor (if any) or if a Party or its guarantor, if any, is not rated or has a rating below the aforesaid standard, then, if it holds Performance Assurance in the form of cash, it shall be required to immediately place all such Performance Assurance in the form of cash in an escrow account with an independent third-party financial institution mutually acceptable to the Parties.

ARTICLE XX

Early Termination Payment and Remedies

If this Agreement terminates on an Early Termination Date, the Non-Defaulting Party shall calculate, in a good faith commercially reasonable manner, the Settlement Amount as of the Early Termination Date as soon as is reasonably practicable and shall promptly notify the Defaulting Party of the amount thereof.

“Settlement Amount” means the present value of the single net aggregate amount for the remaining Term, including any exercised option period, of any Losses, Costs, and Gains, expressed in United States dollars, which the Non-Defaulting Party incurs as a result of the early termination of this Agreement in accordance with Article XVII, including, but not limited to, Losses or Gains based upon the current Replacement Price of this Agreement, the amounts of any unpaid invoices, and the amount for Coal delivered but not yet billed. In calculating the Settlement Amount, the Non-Defaulting Party shall set off all amounts that are due to the Defaulting Party against such Settlement Amount so that the Settlement Amount shall

be netted to a single liquidated amount. Any collateral being held by the Non-Defaulting Party shall be setoff against the amount owed to the Non-Defaulting Party. If the Defaulting Party is holding collateral posted by the Non-Defaulting Party, then the Non-Defaulting Party will have the right to set off that amount against any payment to be made to the Defaulting Party.

The Non-Defaulting Party shall provide the Defaulting Party with an explanation of how it calculated the Settlement Amount, as well as supporting calculations and documentation reasonably requested by the Defaulting Party. The Non-Defaulting Party shall use Commercially Reasonable Efforts to mitigate any Costs or Losses it is entitled to hereunder. The Defaulting Party shall have the right to audit (through a third-party independent auditor mutually agreed to by the Parties) the calculation of all of the Non-Defaulting Party’s Gains, Losses and Costs.

If the present value of the Non-Defaulting Party’s aggregate Losses and Costs (net of any amounts due to the Defaulting Party) exceed the present value of its aggregate Gains, all as finally determined in accordance with the preceding provisions of this Article XX, the Defaulting Party shall, within five (5) Business Days of such final determination, pay the Settlement Amount to the Non-Defaulting Party, including interest thereon at the Interest Rate from the Early Termination Date until paid in full. If the Defaulting Party disputes the Non-Defaulting Party’s calculation of the Settlement Amount, the Defaulting Party will provide its calculations to the Non-Defaulting Party within two (2) Business Days of receipt of calculation from the Non-Defaulting Party. The Defaulting Party shall nevertheless pay to the Non-Defaulting Party the undisputed portion of the Settlement Amount and provide Performance Assurance for the remaining amount.

ARTICLE XXI

Successors, Assigns, and Assignment

This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and assigns and shall not be assigned or otherwise conveyed, in whole or in part, by either Party without the prior written consent of the other Party, except that either Party may without the written consent of the other Party:

(a) assign to any financing institution or institutions this Agreement or any monies due or to become due hereunder; and/or

(b) assign or convey any and/or all of its interest in this Agreement to an Affiliate, provided that, if this Agreement is assigned or otherwise conveyed to an Affiliate, the assignor or conveying Party shall take all necessary actions, and shall require its affiliated assignee or affiliated receiving entity, and any subsequent affiliated assignee(s) and affiliated receiving entity(ies), to take all necessary actions to prevent a non-Affiliate from acquiring the assignor’s or conveyor’s rights and obligations pursuant to this Agreement.

No assignment under this Article XXI or conveyance of any interest in this Agreement shall in any way relieve the assignor or the conveyor from liability for full performance under this Agreement. Any such affiliated assignee, or other entity to whom an interest is conveyed (which conveyance must be with prior written consent of the other Party), shall assume and agree to be bound by the terms and conditions of this Agreement.

Written consent to one or more assignments shall not be construed as waiving the necessity of obtaining written consent to other and/or additional assignments.

ARTICLE XXII

Counterparts, Survival and Severability

This Agreement may be executed in several counterparts, each of which is an original and all of which constitute one and the same instrument. All audit rights shall survive the termination of this Agreement in full for a period of two (2) years (except with respect to audit rights as to Third Party Impositions which shall survive for the applicable statute of limitations, including any extensions thereof).

Should any provision of this Agreement for any reason be declared invalid or unenforceable by final and applicable order of any court or regulatory body having jurisdiction, such decision shall not affect the validity of the remaining portions, and the remaining portions shall remain in effect as if this Agreement had been executed without the invalid portion. In the event any provision of this Agreement is declared invalid, the Parties shall promptly renegotiate to restore this Agreement as near as possible to its original intent and effect.

ARTICLE XXIII

Expenses

In addition to the other indemnification rights set forth in this Agreement, the Defaulting Party will, on demand, defend, indemnify and hold harmless the Non-Defaulting Party from and against all reasonable out-of-pocket expenses, including legal costs, incurred by the Non-Defaulting Party by reason of the enforcement and protection of its rights under this Agreement, including, but not limited to, costs of collection.

ARTICLE XXIV

Non-Waiver and Duty to Mitigate

No waiver by any Party of any of its rights with respect to any other Party or with respect to any matter or default arising in connection with this Agreement shall be construed as a waiver of any subsequent right, matter or default whether of a like, kind, or different nature. Any waiver shall be in writing signed by the waiving Party.

Each Party agrees that it has a duty to mitigate damages.

Except as otherwise set forth in this Agreement, nothing contained in this Agreement shall be construed or constitute either Party as the employee, agent, partner, joint venturer or contractor of the other Party.

This Agreement is made and entered into for the sole protection and legal benefit of the Parties, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement.

ARTICLE XXV

Notices

Section 25.1 Shipping Notices.

(a) Following each Shipment, Seller shall provide Buyer with a shipping notice that includes: (i) this Agreement’s number; (ii) the Plant or other consigned destination; (iii) the short proximate (Btu per pound, percent moisture, percent ash, percent sulfur), average analytical results of each Shipment; and (iv) Seller’s weight determination and the identifying number(s) of each Shipment. Such notice shall be provided within twenty-four (24) hours after the Coal is loaded for shipment, or within thirty-six (36) hours should the Shipment be loaded on a Saturday. Seller’s analysis shall be reported to the recipients designated by and in the manner specified by Buyer.

(b) Shipping notices shall be sent to the Plant at cv_financial@aep.com, as set forth in this Agreement, or other plant as requested by Buyer.

Section 25.2. Other Notices. All notices, other than shipping notices, required hereunder shall be sent to the following addresses or such other address specified in writing by the respective Party from time to time:

For notices to Buyer:

American Electric Power Service Corporation

Attn: Fuel Contract Administration

155 West Nationwide Boulevard, Suite 500

Columbus, OH 43215

Fax: 614-583-1606

E-mail: Contracts_Notices@aep.com

For notices to Seller:

Oxford Mining Company, LLC

c/o Westmoreland Resource Partners, LP

9450 South Maroon Circle

Suite 200

Englewood, CO 80112

Attn: Chief Legal Officer

Fax: 720-354-4564

E-mail: jgrafton@westmoreland.com

Section 25.3. Sending of Notices. All notices required hereunder may be sent by certified mail, postage prepaid, return receipt requested, nationally recognized overnight mail or courier, facsimile, electronic means, first class mail or hand delivery. Notices provided by certified mail, postage prepaid, return receipt requested, or by overnight mail or courier shall be deemed delivered upon mailing. Notices provided by facsimile shall be deemed to have been received upon the sending Party’s receipt of its facsimile machine’s confirmation of a successful transmission. If the day on which such facsimile is received is not a Business Day or is after 5:00 p.m. Eastern Prevailing Time on a Business Day, then such facsimile shall be deemed to have been received on the following Business Day. Notices delivered by electronic means or hand delivery shall be deemed delivered by the close of the Business Day on which it was delivered by electronic means or hand delivery. If delivered by electronic means or hand delivered after the close of the Business Day, then it shall be deemed received by the close of the next Business Day.

Section 25.4. Notice Address Changes. A Party may change its address by providing notice thereof in accordance with this Article XXV.

ARTICLE XXVI

Confidentiality

Neither Party shall disclose, either directly or indirectly, the terms of this Agreement to a third party without the written consent of the other Party (other than a Party’s and its Affiliates’ employees, officers, directors, lenders, counsel, accountants, consultants, agents or prospective purchasers, whose access is necessary and who have been informed of the confidentiality restrictions contained in this Agreement), except in order to comply with any applicable law, order, regulation or exchange rule; provided, each Party shall notify the other Party of any proceeding of which it is aware which may result in disclosure and use reasonable efforts to prevent or limit the disclosure. Notwithstanding anything to the contrary in the previous sentence, the Parties may disclose to third parties having a direct percentage ownership in a Party specific terms of this Agreement regarding the current effective Contract Price, Quality, and provisions related to

liquidated damages. The Parties agree that filings made with the United States Securities and Exchange Commission shall be exempted from the notice requirement provided for in the first sentence of this paragraph

“PII” means any information to which a Party and/or its subcontractor(s) is provided access that could identify an individual either directly or indirectly including, without limitation, to the individual’s name, credit card numbers, social security number, biometric, bank account numbers, passport numbers, computer passwords or health, financial, or employment information and other individual confidential information.

To the extent that during the performance of this Agreement a Party and/or its subcontractor(s) acquires access to or encounters any PII, Seller and/or its subcontractor(s) shall treat such PII as confidential and safeguard such PII from unauthorized use and disclosure.

ARTICLE XXVII

Entire Agreement, Amendments, and Interpretation

This Agreement and Schedules 2.1 and 2.4 attached hereto and made a part hereof, constitute the entire agreement between the Parties relating to the subject matter contemplated by this Agreement and supersedes any prior or contemporaneous agreements or representations affecting the same subject matter. The Parties agree that parol or extrinsic evidence may not be used to vary or contradict the express terms of this Agreement.

No amendment, modification or change to this Agreement shall be enforceable unless reduced to a writing executed by the Party against whom such amendment, modification or change is sought to be enforced and shall reference this Agreement.

The Parties acknowledge that each Party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not be used in interpretation of this Agreement.

All headings for articles and sections herein are for convenience and reference purposes only. Any capitalized terms used herein and not defined in the article or section in which it appears shall have the meaning set forth herein under Definitions.

ARTICLE XXVIII

Governing Law; Waiver of Jury Trial

This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio. Each Party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this Agreement. Except as otherwise provided for herein, the provisions of the Ohio UCC shall apply to this Agreement and any Coal supplied hereunder shall be deemed to be “goods” for purposes of the Ohio UCC.

ARTICLE XXIX

Venue

Each Party hereby submits to the exclusive jurisdiction of state or federal courts located in Franklin County, Ohio and all appellate courts therefrom and waives any objection which it may have at any time to the laying of venue of any proceedings brought in such court, waives any claim that such proceedings have been brought in an inconvenient forum, and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such Party.

ARTICLE XXX

Imaged Agreement

Any original executed agreement or other related document may be photocopied and stored electronically (an “Imaged Agreement”). If an Imaged Agreement is introduced as evidence in any judicial,

arbitration, mediation or administrative proceedings, it shall be considered as admissible evidence. Neither Party shall object to the admissibility of the Imaged Agreement on the basis that it was not originated or maintained in documentary form under the hearsay rule, the best evidence rule, or any other rule of evidence.

[Remainder of Page Intentionally Left Blank with Signatures on Following Page]

IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be executed on its behalf by its proper officer thereunder duly authorized, all as of the day and year first above written.

Buyer: Seller:

AEP Generation Resources Inc. Oxford Mining Company, LLC

/s/ Charles E. Zebula /s/ Gregory J. Honish

signature signature

Charles E. Zebula Gregory J. Honish

name (print) name (print)

President & COO SVP, Operations

title title

SCHEDULE 2.1

APPROVED PRODUCTION SOURCE(S), APPROVED RESERVE(S) OF COAL,

AND DESIGNATED DELIVERY POINT(S)

Approved Production Source(s) and Approved Reserve(s) of Coal:




Mine Name	All mines of Oxford Mining Company, LLC and its affiliates.
Surface or Underground	Surface
Coal Seam(s)	Various
County(ies)/State	Various in Ohio
MSHA Mine ID No.	Various

Environmental Permit Nos.

Designated Delivery Point(s):



Plant:	Conesville Plant Units 5 & 6

SCHEDULE 2.4

TRANSPORTATION SPECIFICATIONS

TRUCK

The Coal to be delivered hereunder (unless and until otherwise directed by Buyer as hereinafter provided) shall be properly consigned by Seller to the Plant. Except as otherwise provided by this Agreement, all Coal shall be delivered hereunder FOB Plant in trucks provided by, or on behalf of, Seller. Seller shall accordingly deliver and dump such Coal at the Plant at such time of day and at such plant location as Buyer may direct, at which time title and risk of loss to Coal so delivered shall pass to Buyer (all references to “Seller” in these Transportation Specifications, shall apply additionally to Seller’s trucking contractor[s], if any, that deliver Coal on Seller’s behalf under this Agreement). Buyer shall have no obligation to pay for any Coal being delivered via truck that Buyer determines is in excess of the maximum number of Tons of Coal that is legally deliverable to the Plant or other consigned destination by such truck at the time of such delivery in accordance with applicable law.

Seller, at its expense, shall have coverage of the insurance specified below, which shall be placed with insurance carrier(s) acceptable to Buyer, and shall maintain this insurance at all times during performance of this Agreement:

1) Certificate of Insurance:


a.	Commercial general liability insurance with a limit of not less than $1,000,000 each occurrence and aggregate.


b.	Commercial automobile liability insurance with a limit for bodily injury and property damage of not less than $5,000,000 each accident.

2) Excess or Umbrella Liability:


a.	Commercial Excess or Umbrella liability with not less than $4,000,000 each occurrence and aggregate limit.

3) Worker’s Compensation Certificate:


a.	Coverage for the legal liability of Seller and its subcontractors under the worker’s compensation laws of the state in which the work is to be performed.


b.	Employer’s liability coverage in an amount not less than $1,000,000 for each accident shall be included.

Seller also warrants that it is in compliance with the Federal and State Motor Carrier Safety Acts (Financial Responsibility is USDOT 387.9).

Buyer may prohibit Seller’s trucks from entering the premises of the consigned destination hereunder until Buyer receives from Seller, two (2) copies each of acceptable certificates of the insurance coverages stated above. Buyer’s failure to demand copies of such certificates shall not relieve Seller of the obligation to continually have in force the insurance coverage stated above. Such certificates, which shall specifically reference this Agreement’s number 10-62-15-900, shall state that the insurance carrier has issued the policies providing for the insurance specified herein, that such policies are in force, and that the insurance carrier will give Buyer thirty (30) days prior written notice of any material change in, or cancellation of, such policies. If such insurance policies are subject to any exceptions to the terms specified herein, such exception shall be explained in full in such certificates. Buyer may, at its discretion, require Seller to obtain insurance policies that are not subject to any exceptions. Certificates of insurance shall be sent to the notice address provided for Buyer in Article XXV.

Buyer may also prohibit any truck from entering the premises of the consigned destination if the driver of such truck does not abide by Buyer’s instructions as to Buyer’s safety and other requirements for the operation of such trucks on such premises.

EXHIBIT 10.4

Westmoreland Resource Partners, LP

Amended and Restated Long-Term Incentive Plan

Award Agreement for Grant of Phantom Units to Non-Employee Director

Grantee: [DIRECTOR]_______

Grant Date: March 2, 2015

Vesting Date: March 2, 2016

Grant of Phantom Units. Effective on the Grant Date set forth above, Westmoreland Resource Partners, LP (“Westmoreland LP”) hereby grants to you as Grantee _____ [NUMBER] Phantom Units under the Amended and Restated Long-Term Incentive Plan of Westmoreland LP (the “Plan”) on the terms and conditions set forth in this Award Agreement for Grant of Phantom Units to Non-Employee Director (this “Agreement”) and in the Plan, which is incorporated herein by reference as a part of this Agreement. In the event of any conflict between the terms of this Agreement and the Plan, the Plan shall control. Capitalized terms used in this Agreement but not defined herein shall have the meanings ascribed to such terms in the Plan, unless the context requires otherwise. This grant is made to you in consideration of your future service as a non-employee director of Westmoreland LP’s general partner (a “Westmoreland LP Director”).


2.	Vesting. The Phantom Units granted hereunder shall vest in full on the Vesting Date if you are continuing to serve as a Westmoreland LP Director on such Vesting Date. If and at such time as you cease to serve as a Westmoreland LP Director prior to the Vesting Date, the Phantom Units granted hereunder automatically shall be forfeited without any rights thereto on your part.


3.	Issuance of Common Units Following Vesting. As soon as administratively practicable after the vesting of the Phantom Units, Westmoreland LP shall cause that number of the Common Units of the Company (“Common Units”) equal to the number of Phantom Units awarded hereunder to be issued to you in book-entry form.

Transfer Limitations. All rights under this Agreement shall belong to you alone and may not be transferred, assigned, pledged, or hypothecated by you in any way (whether by operation of law or otherwise), and shall not be subject to execution, attachment, or similar process. Upon any attempt by you to transfer, assign, pledge, hypothecate, or otherwise dispose of such rights contrary to the provisions in this Agreement, or upon the levy of any attachment or similar process upon such rights, such rights shall immediately become null and void.


5.	Partnership Agreement Provisions. Upon the issuance of the Common Units to you, you shall be subject to those terms and conditions of the Fourth Amended and Restated Agreement of Limited Partnership of Westmoreland Resource Partners, LP dated December 31, 2014, as amended from time to time (the “Partnership Agreement”), that are applicable to a limited partner owning Common Units.

Restrictions. By accepting this grant, you agree that any Common Units that you may acquire upon issuance of the Common Units pursuant hereto shall not be sold or otherwise disposed of in any manner that would constitute a violation of any applicable federal or state securities laws. You also agree that (a) any Common Units issued to you hereunder may bear such restrictions as Westmoreland LP deems appropriate in order to assure compliance with applicable securities laws, (b) Westmoreland

LP may refuse to register the transfer of any Common Units issued to you hereunder on the transfer records of Westmoreland LP if such proposed transfer would in the opinion of counsel satisfactory to Westmoreland LP constitute a violation of any applicable securities law, and (c) Westmoreland LP may give related instructions to its transfer agent, if any, to stop registration of the transfer of any Common Units issued to you hereunder.


7.	Rights as Unitholder. You shall have the right to vote and receive distributions on Common Units awarded hereunder and all of the other privileges of a unitholder of Westmoreland LP with respect to such Common Units only from the date of issuance to you of such Common Units in book-entry form in your name as provided herein.


8.	Insider Trading Policy. The terms of any insider trading policy with respect to Common Units are incorporated herein by reference. The timing of the issuance of any Common Units pursuant hereto shall be subject to and comply with such policy.


9.	Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successor or successors of Westmoreland LP and upon any person lawfully claiming under you.


10.	Entire Agreement. This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and contains all of the covenants, promises, representations, warranties and agreements between the parties with respect to the Phantom Units granted hereunder and any Common Units hereafter issued hereunder in accordance with the terms hereof.


11.	Modifications. Any modification of this Agreement shall be effective only if it is in writing and signed by both of the parties.


12.	Governing Law. This Agreement, the grant of Phantom Units made hereunder and the issuance of Common Units hereunder upon vesting of such Phantom Units shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to conflicts of laws principles thereof.

WESTMORELAND RESOURCE PARTNERS, LP

By Westmoreland Resources GP, LLC, its general

partner

By:

Name:

Title:

(Signature of Grantee)

[DIRECTOR]

(Name of Grantee)

Exhibit 31.1

Certification

I, Keith E. Alessi, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Westmoreland Resource Partners, LP;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;


d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	April 28, 2015	/s/ Keith E. Alessi
		Name:	Keith E. Alessi
		Title:	Chief Executive Officer
			(Principal Executive Officer)

Exhibit 32

Statement Pursuant to 18 U.S.C. § 1350

Pursuant to 18 U.S.C. § 1350, each of the undersigned certifies that this Quarterly Report on Form 10-Q for the period ended March 31, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Westmoreland Resource Partners, LP.



Date:	April 28, 2015	/s/ Keith E. Alessi
		Name:	Keith E. Alessi
		Title:	Chief Executive Officer
			(Principal Executive Officer)

Date:	April 28, 2015	/s/ Kevin A. Paprzycki
		Name:	Kevin A. Paprzycki
		Title:	Chief Financial Officer and Treasurer
			(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to Westmoreland Resource Partners, LP and will be retained by Westmoreland Resource Partners, LP and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 31.2

Certification

I, Kevin A. Paprzycki, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Westmoreland Resource Partners, LP;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;


d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	April 28, 2015	/s/ Kevin A. Paprzycki
		Name:	Kevin A. Paprzycki
		Title:	Chief Financial Officer and Treasurer

Exhibit 95

Mine Safety Disclosure

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 104 of Regulation S-K, is included in this Exhibit 95.

For each coal mine for which we or a subsidiary of ours was an operator within the meaning of Section 3 of the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) during the three months ended March 31, 2015, we include the following table that sets forth: (A) the total number of violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard under Section 104 of the Mine Act for which we received a citation from the Mine Safety and Health Administration (“MSHA”); (B) the total number of failure to abate orders issued under Section 104(b) of the Mine Act; (C) the total number of citations and orders for unwarrantable failure to comply with mandatory health or safety standards under Section 104(d) of the Mine Act; (D) the total number of flagrant violations under Section 110(b)(2) of the Mine Act; (E) the total number of imminent danger orders issued under Section 107(a) of the Mine Act; (F) the total dollar value of the proposed MSHA assessments under the Mine Act; and (G) the total number of mining-related fatalities.

In addition, no coal mine for which we or a subsidiary of ours was the operator received written notice from MSHA of a pattern of violations, or the potential to have such a pattern, of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of coal or other mine health or safety hazards under Section 104(e) of the Mine Act.

The total number of legal actions pending before the Federal Mine Safety and Review Commission (the “FMSR Commission”) as of March 31, 2015 was zero (0). The aggregate number of legal actions during the period covered by this report instituted (either by MSHA or by us) was two (2) and resolved (meaning final order entered and not appealed) was five (5). Of the legal actions pending before the FMSR Commission as of December 31, 2014, the number of such legal actions that fall into each of the following categories was as follows: (a) contests of citations and orders: zero (0); (b) contests of proposed penalties: zero (0); (c) complaints for compensation under Section 111 of the Mine Act: zero (0); (d) complaints of discharge, discrimination or interference under Section 105 of the Mine Act: zero (0); (e) applications for temporary relief under Section 105(b)(2) of the Mine Act: zero (0); and (f) appeals of judges' decisions or orders to the FMSR Commission: zero (0).



Oxford Complex	MSHA Mine ID	MSHA Mine Name	(A) Section 104 S&S Citations (#)	(B) Section 104(b) Orders (#)	(C) Section 104(d) Citations & Orders (#)	(D) Section 110(b)(2) Violations (#)	(E) Section 107(a) Orders (#)	(F) Total Value of Proposed MSHA Assessments¹ ($)			(G) Fatalities (#)
Muhlenberg	1518134	Halls Creek	—	—	—	—	—	—			—
	1518912	Island Dock	—	—	—	—	—	—			—
	1519365	Schoate Preparation Plant	—	—	—	—	—	—			—
	1519452	Star	—	—	—	—	—	—			—
	1519466	Rose France	—	—	—	—	—	—			—
	1519655	Geibel	—	—	—	—	—	—			—
Belmont	3300965	Rice #1	—	—	—	—	—	—			—
	3302937	Loading Dock	—	—	—	—	—	—			—
	3303758	Valley Mining Inc. Auger #1	—	—	—	—	—	—			—
Cadiz	3304413	Standing Stone Mine	—	—	—	—	—	—			—
	3304414	Snyder Mine	3	—	—	—	—	300			—
	3304538	Dairy Jean	1	—	—	—	—	100			—
	4609067	Crosscreek Mine	—	—	—	—	—	—			—
Harrison	3304577	Harrison Resources, LLC Sexton 2 Pit	—	—	—	—	—	—			—
New Lexington	3304336	Oxford Mining #3	—	—	—	—	—	—			—
New Lexington	3304637	Athens	—	—	—	—	—	—			—
Noble	3303770	Rice #2	—	—	—	—	—	—			—
	3304624	King Crum	1	—	—	—	—	100			—
	3304624	Oxford Guemsey	—	—	—	—	—	—			—
Plainfield	3303288	Rice #7	—	—	—	—	—	—			—
	3303907	Conesville Plant	—	—	—	—	—	—			—
	3304180	Coshocton Strip	—	—	—	—	—	—			—
	3304213	Oxford Mining #2	—	—	—	—	—	—			—
Tuscarawas	3303930	Lisbon Mine	—	—	—	—	—	—			—
	3304179	Tuscarawas Strip	3	—	—	—	—	300			—
	3304181	Stark Strip	—	—	—	—	—	—			—
TOTAL			8	—	—	—	—	—	$	800	—

¹ The total dollar value of proposed MSHA assessments is the amount issued during the current reporting period for all citations, orders or violations, not just those indicated herein, and does not necessarily relate to the citations, orders or violations issued by MSHA during the current reporting period or to the pending legal actions reported in Exhibit 95.

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