Alliance Resource Partners, L.P.

What they do

Alliance Resource Partners is the second largest coal producer in the eastern United States, operating seven underground mining complexes across Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia, plus a coal-loading terminal on the Ohio River in Indiana. The company also owns oil & gas mineral interests in the Permian, Anadarko, Bakken, and Haynesville basins, generating royalty income. It manages and reports coal operations under two regions, Illinois Basin and Appalachia, and also holds coal mineral reserves and resources that generate intercompany royalty income.

Revenue drivers

• Illinois Basin Coal Operations — Produces and markets coal from mining complexes in Illinois, Indiana, and Kentucky; a primary revenue source.
• Appalachia Coal Operations — Produces and markets coal from mining complexes in West Virginia, Maryland, and Pennsylvania; another key coal revenue segment.
• Oil & Gas Royalties — Generates royalty income from oil & gas mineral interests in premier basins; reached record quarterly revenue of $46.3 million in Q2 2026.
• Coal Royalties — Earns royalty income from coal mineral reserves and resources owned or leased by Alliance Resource Properties.

Recent performance

For Q2 2026, total revenues were $551.6 million, up from $547.5 million in Q2 2025. Net income rose 33.9% to $79.6 million, and Adjusted EBITDA increased 14.7% to $185.7 million. Record oil & gas royalty revenues of $46.3 million were up 30.5% year-over-year. For the six months ended June 30, 2026, revenue was $1.07 billion, net income was $88.7 million, and Adjusted EBITDA was $340.7 million. The company declared a quarterly cash distribution of $0.60 per unit.

Strategy

The company aims to maximize value from its mineral asset base through coal production and leasing/development of coal and oil & gas mineral interests. It plans to grow its Oil & Gas Royalties segment through acquisitions, as evidenced by the $206.2 million AllDale III & IV acquisition adding 48,500 net royalty acres. It also invests in growth-oriented businesses and energy-related technologies, including Matrix Group (industrial and mining products), Bitiki (bitcoin mining), and minority investments in Infinitum, NGP ET IV, and Gavin Generation. Management focuses on reliable baseload fuel supply and long-term growth through strategic partnerships and infrastructure investments.

Risks

• Regulatory air emissions rules — The Clean Air Act and related EPA rules (e.g., MATS, regional haze) increase costs for coal-fired power plants, potentially reducing demand for coal.
• Coal demand decline from utility retirements — Retirements of coal-fired generating units due to environmental regulations could materially reduce demand for the company's coal.
• Commodity price volatility — Coal sales prices per ton have declined sequentially, and oil & gas royalty revenues are subject to commodity price fluctuations.
• Operational disruptions at mining complexes — Longwall moves and mining conditions can impact production; a non-cash asset impairment of $37.8 million at the Mettiki mine was taken in Q1 2026.

Outlook

Management expects the recently restarted longwall production at Hamilton to meaningfully increase production and cash flow in the second half of 2026, with no additional longwall moves expected until 2027. The company has secured 21.2 million additional committed and priced sales tons over the 2026-2031 period. The Oil & Gas Royalties segment is positioned for growth following the AllDale III & IV acquisition, with cumulative investment exceeding $1.0 billion.