Alliance in the Community
Alliance believes that being active in the community is imperative to being a great company. Below are just some of the examples of the ways in which Alliance helps out local and international communities.
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Alliance has created and actively fosters close ties with the colleges and universities in the areas near our operations. We maintain long-standing relationships with many of the top Mining Engineering programs in the nation and are very proud of our internship program. Alliance recently provided funding for a new Mining Engineering Lab at the University of Kentucky. In addition, Alliance has committed to the establishment of the Alliance Coal Chair in Mining Engineering at the University of Kentucky, pledging $1.2 million dollars to assist the University in attracting, hiring, and retaining the best and brightest mining engineering professors. The position is expected to be filled in time for the 2010 Fall semester.
We are also proud of our association with the Kentucky Community and Technical College System (KCTCS). Alliance and the KCTCS work together to train new and current employees. New employees are trained extensively so that they may enter the workplace capable of performing their job duties more safely and efficiently than typical novice miners. Current employees are eligible and encouraged to attend classes that will help them perform their jobs with an even higher level of confidence and skill.
Monday, November 29, 2010
ARLP Reports Record Coal Sales
Alliance Resource Partners, L.P.: Record Coal Sales Volumes and Pricing Lead to Record Quarterly Revenues, Up 37.0%, Increased EBITDA, Up 64.0%, and Net Income, Up 100.9%; Quarterly Cash Distribution Increased 2.5% to $0.83 Per Unit
TULSA, Okla., Oct 27, 2010 (BUSINESS WIRE) --
Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported record financial results for the quarter ended September 30, 2010 (the "2010 Quarter"). Strong increases in both coal sales volumes and average realized pricing drove revenues in the 2010 Quarter to a record $410.4 million, an increase of 37.0% compared to the quarter ended September 30, 2009 (the "2009 Quarter"). ARLP also posted significant growth in the 2010 Quarter for EBITDA, which increased 64.0% to $119.4 million; net income, which climbed 100.9% to $73.2 million; and net income per basic and diluted partner unit, which jumped 160.0% to $1.48. (For a discussion of our net income presentation and a definition of EBITDA and related reconciliations to comparable GAAP financial measures, please see the end of this release).
ARLP also announced that the Board of Directors of its managing general partner increased the cash distribution to unitholders for the 2010 Quarter to $0.83 per unit (an annualized rate of $3.32 per unit), payable on November 12, 2010 to all unitholders of record as of the close of trading on November 5, 2010. The announced distribution represents a 9.2% increase over the cash distribution of $0.76 per unit for the 2009 Quarter and a 2.5% increase over the cash distribution of $0.81 per unit for the second quarter of 2010 (the "Sequential Quarter").
"Strong operating and financial performance through the first nine months has kept ARLP firmly on track to deliver our tenth consecutive year of record results in 2010," said Joseph W. Craft III, President and Chief Executive Officer. "Looking ahead, we remain encouraged by opportunities for growth beyond 2010. Ongoing discussions with customers seeking long-term supply commitments at attractive prices are positive indicators of future market strength. ARLP also has clear visibility to future production growth as development of the new Tunnel Ridge mine remains on schedule to begin longwall production in late 2011. Our consistently strong performance and future growth potential allowed our Board of Directors to again provide an attractive increase in quarterly distributions to ARLP's unitholders."
Consolidated Financial Results
Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009
Record revenues in the 2010 Quarter were driven primarily by increased coal sales volumes and higher average coal price realizations due to ARLP's strong coal sales contract position. Increased tons sold from the River View and Mettiki mines pushed coal sales volumes in the 2010 Quarter to a record 7.7 million tons, an increase of 24.2% over the 6.2 million tons sold in the 2009 Quarter. Primarily reflecting improved pricing under ARLP's coal sales contracts, average coal sales prices in the 2010 Quarter rose 13.4% to a record $51.68 per ton sold.
Production volumes rose 13.0% in the 2010 Quarter to 7.1 million tons, compared to 6.3 million tons in the 2009 Quarter, primarily as a result of increased coal production at the River View mine. Higher operating expenses in the 2010 Quarter were primarily related to the continued ramp up of production at our River View mine since commencement of initial production operations in August 2009. Increased coal production and sales volumes at River View and our Mettiki mine particularly impacted materials and supplies expenses, sales-related expenses and labor costs during the 2010 Quarter. Higher operating expenses also reflected costs associated with incidental production at our Tunnel Ridge mine development project.
Financial results for the 2010 Quarter compared to the 2009 Quarter were also impacted by higher depreciation, depletion and amortization, which increased $9.4 million to $37.6 million primarily as a result of additional depreciation expense associated with River View. In addition, outside coal purchases jumped $5.2 million due to increased sales into the export market and general and administrative expenses rose $4.3 million primarily as a result of increased incentive compensation expense.
Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009
For the nine months ended September 30, 2010 (the "2010 Period"), ARLP reported records for all major operating and financial metrics. Led by increased production and sales volumes at River View, tons produced climbed 10.7% and tons sold jumped 19.6%, compared to the nine months ended September 30, 2009 (the "2009 Period"). Higher coal sales volumes and increased average coal sales prices, which rose $4.10 per ton sold, combined to drive revenues for the 2010 Period to a record $1.2 billion, an increase of 27.7%, compared to the 2009 Period, while EBITDA for the 2010 Period increased 42.6% to a record $367.3 million, compared to EBITDA of $257.7 million for the 2009 Period. Net income for the 2010 Period increased 55.3% to $233.7 million, or $4.86 of net income per basic and diluted limited partner unit, compared to net income of $150.4 million, or $2.85 of net income per basic and diluted limited partner unit, for the 2009 Period.
TULSA, Okla., Oct 27, 2010 (BUSINESS WIRE) --
Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported record financial results for the quarter ended September 30, 2010 (the "2010 Quarter"). Strong increases in both coal sales volumes and average realized pricing drove revenues in the 2010 Quarter to a record $410.4 million, an increase of 37.0% compared to the quarter ended September 30, 2009 (the "2009 Quarter"). ARLP also posted significant growth in the 2010 Quarter for EBITDA, which increased 64.0% to $119.4 million; net income, which climbed 100.9% to $73.2 million; and net income per basic and diluted partner unit, which jumped 160.0% to $1.48. (For a discussion of our net income presentation and a definition of EBITDA and related reconciliations to comparable GAAP financial measures, please see the end of this release).
ARLP also announced that the Board of Directors of its managing general partner increased the cash distribution to unitholders for the 2010 Quarter to $0.83 per unit (an annualized rate of $3.32 per unit), payable on November 12, 2010 to all unitholders of record as of the close of trading on November 5, 2010. The announced distribution represents a 9.2% increase over the cash distribution of $0.76 per unit for the 2009 Quarter and a 2.5% increase over the cash distribution of $0.81 per unit for the second quarter of 2010 (the "Sequential Quarter").
"Strong operating and financial performance through the first nine months has kept ARLP firmly on track to deliver our tenth consecutive year of record results in 2010," said Joseph W. Craft III, President and Chief Executive Officer. "Looking ahead, we remain encouraged by opportunities for growth beyond 2010. Ongoing discussions with customers seeking long-term supply commitments at attractive prices are positive indicators of future market strength. ARLP also has clear visibility to future production growth as development of the new Tunnel Ridge mine remains on schedule to begin longwall production in late 2011. Our consistently strong performance and future growth potential allowed our Board of Directors to again provide an attractive increase in quarterly distributions to ARLP's unitholders."
Consolidated Financial Results
Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009
Record revenues in the 2010 Quarter were driven primarily by increased coal sales volumes and higher average coal price realizations due to ARLP's strong coal sales contract position. Increased tons sold from the River View and Mettiki mines pushed coal sales volumes in the 2010 Quarter to a record 7.7 million tons, an increase of 24.2% over the 6.2 million tons sold in the 2009 Quarter. Primarily reflecting improved pricing under ARLP's coal sales contracts, average coal sales prices in the 2010 Quarter rose 13.4% to a record $51.68 per ton sold.
Production volumes rose 13.0% in the 2010 Quarter to 7.1 million tons, compared to 6.3 million tons in the 2009 Quarter, primarily as a result of increased coal production at the River View mine. Higher operating expenses in the 2010 Quarter were primarily related to the continued ramp up of production at our River View mine since commencement of initial production operations in August 2009. Increased coal production and sales volumes at River View and our Mettiki mine particularly impacted materials and supplies expenses, sales-related expenses and labor costs during the 2010 Quarter. Higher operating expenses also reflected costs associated with incidental production at our Tunnel Ridge mine development project.
Financial results for the 2010 Quarter compared to the 2009 Quarter were also impacted by higher depreciation, depletion and amortization, which increased $9.4 million to $37.6 million primarily as a result of additional depreciation expense associated with River View. In addition, outside coal purchases jumped $5.2 million due to increased sales into the export market and general and administrative expenses rose $4.3 million primarily as a result of increased incentive compensation expense.
Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009
For the nine months ended September 30, 2010 (the "2010 Period"), ARLP reported records for all major operating and financial metrics. Led by increased production and sales volumes at River View, tons produced climbed 10.7% and tons sold jumped 19.6%, compared to the nine months ended September 30, 2009 (the "2009 Period"). Higher coal sales volumes and increased average coal sales prices, which rose $4.10 per ton sold, combined to drive revenues for the 2010 Period to a record $1.2 billion, an increase of 27.7%, compared to the 2009 Period, while EBITDA for the 2010 Period increased 42.6% to a record $367.3 million, compared to EBITDA of $257.7 million for the 2009 Period. Net income for the 2010 Period increased 55.3% to $233.7 million, or $4.86 of net income per basic and diluted limited partner unit, compared to net income of $150.4 million, or $2.85 of net income per basic and diluted limited partner unit, for the 2009 Period.
Working at ARLP
I would definitely consider working at ARLP. They offer fair wages and wonderful benefits. Here is just a few of the benefits posted on the company's web-site.
Benefits
Alliance offers an attractive benefit plan that is very competitive compared with both the coal industry and the job market as a whole. We feel that our benefit package is above the standards set by many of our union-dominated competitors. Our workforce is entirely union-free.
Our benefit plan was recognized for its innovation by the Southwest Benefits Administrators Association, receiving that group's Best in Class, Welfare Program Award. During 2008, our benefit plan was named among the top 10 percent of active employee benefit plans by Cammock’s Inc., an independent coal industry benefit survey organization. We also were honored as 2008 Business of the Year in Hopkins County, Kentucky, based on Alliance's job creation in the area and our contributions to the community.
We are proud to offer on-site medical clinics for our employees and their families, offering free care and over-the-counter medicines as well as assistance in managing and reducing their risk for certain illnesses. For more information on this program, click here.
We also support life-enhancement opportunities through educational initiatives, employee education reimbursement, matching gift programs, short-term and long-term bonus incentives, and a generous profit-sharing and savings plan. Our 401(k) plan has more features, greater employee deferral, and higher employer contribution levels than the vast majority of our peers in the coal industry and other similarly-sized companies.
In an effort to help our employees make the most of our benefit plan, we offer a web-based benefit-management system. This system, available at www.coalbenefits.com, allows any employee to review and make changes to his or her benefit coverage electronically. The system also provides employees with easy access to commonly used forms and relevant information about medical benefits, prescription drugs, spending accounts, family and career changes, and profit sharing and savings plans.
Benefits
Alliance offers an attractive benefit plan that is very competitive compared with both the coal industry and the job market as a whole. We feel that our benefit package is above the standards set by many of our union-dominated competitors. Our workforce is entirely union-free.
Our benefit plan was recognized for its innovation by the Southwest Benefits Administrators Association, receiving that group's Best in Class, Welfare Program Award. During 2008, our benefit plan was named among the top 10 percent of active employee benefit plans by Cammock’s Inc., an independent coal industry benefit survey organization. We also were honored as 2008 Business of the Year in Hopkins County, Kentucky, based on Alliance's job creation in the area and our contributions to the community.
We are proud to offer on-site medical clinics for our employees and their families, offering free care and over-the-counter medicines as well as assistance in managing and reducing their risk for certain illnesses. For more information on this program, click here.
We also support life-enhancement opportunities through educational initiatives, employee education reimbursement, matching gift programs, short-term and long-term bonus incentives, and a generous profit-sharing and savings plan. Our 401(k) plan has more features, greater employee deferral, and higher employer contribution levels than the vast majority of our peers in the coal industry and other similarly-sized companies.
In an effort to help our employees make the most of our benefit plan, we offer a web-based benefit-management system. This system, available at www.coalbenefits.com, allows any employee to review and make changes to his or her benefit coverage electronically. The system also provides employees with easy access to commonly used forms and relevant information about medical benefits, prescription drugs, spending accounts, family and career changes, and profit sharing and savings plans.
The most interesting theing I have learned
The most interesting thing I have learned about the company was how giving they are to the community. It is wonderful to see industries getting involved in economic development at community relations.
Sunday, November 21, 2010
State fines Alliance Coal $410,000 for Webster County operation
It is important for all coal suppliers to keep up with their mineral rights and permits to mine coal. The following found in the Gleaner, in August, illustrates some of the consequences for not doing so.
FRANKFORT, Ky. (AP) — Kentucky natural resources officials have fined a subsidiary of Alliance Coal $410,000 for mining land not covered by a permit issued last year.
The Courier-Journal in Louisville reported the fine against Warrior Coal LLC over an underground mine in Webster County.
Rusty Ashcraft, manager of environmental affairs and permitting for Alliance, said the company will appeal the fine to a cabinet hearing, as it has the citations.
Central to the issue is a state policy that allows mining where at least two-thirds of the property owners have given a coal operator legal authorization. The policy allows mining to begin, but only on land for which permission has been given.
FRANKFORT, Ky. (AP) — Kentucky natural resources officials have fined a subsidiary of Alliance Coal $410,000 for mining land not covered by a permit issued last year.
The Courier-Journal in Louisville reported the fine against Warrior Coal LLC over an underground mine in Webster County.
Rusty Ashcraft, manager of environmental affairs and permitting for Alliance, said the company will appeal the fine to a cabinet hearing, as it has the citations.
Central to the issue is a state policy that allows mining where at least two-thirds of the property owners have given a coal operator legal authorization. The policy allows mining to begin, but only on land for which permission has been given.
Monday, November 15, 2010
Alliance Resource Partners, L.P.: Kentucky Mine Safety Report Confirms Dotiki Mine Accident Due to Undetectable Geologic Conditions
TULSA, Okla.--(BUSINESS WIRE)--Alliance Resource Partners, L.P. (NASDAQ: ARLP) today announced that the Kentucky Office of Mine Safety and Licensing (OMSL) has issued its final report on the fatal roof fall accident that occurred April 28, 2010 at the Dotiki mine operated by ARLP’s independent operating subsidiary Webster County Coal, LLC. The accident tragically claimed the lives of two Dotiki miners, Justin Travis and Michael Carter.
Following the accident, Webster County Coal, OMSL and the Mine Safety and Health Administration (MSHA) cooperatively conducted independent investigations to determine both the causes of the fatal roof fall accident and means to prevent a similar occurrence in the future. Webster County Coal submitted its investigative findings to OMSL and MSHA on June 4, 2010. After reviewing the OMSL report with Kentucky state officials earlier today, Webster County Coal confirmed that the findings of the OMSL report were consistent with its internal investigations concluding that the accident was the result of unpredictable and unforeseeable geologic conditions that were highly unusual at the Dotiki mine. Although the occurrence of the roof fall necessitated the issuance of a Notice of Non-Compliance, the OMSL report also confirmed that at the time of the accident the Dotiki mine was operating in full compliance with the roof control plan approved by OMSL and the MSHA. In addition, the report noted OMSL’s approval of the voluntary modifications to the Dotiki roof control plan implemented by Webster County Coal immediately following the accident.
Dotiki, the largest mine in Kentucky and one of the largest underground mines in the United States, employs more than 400 miners and has almost 600 miles of ventilated underground tunnel – longer than the distance from the Dotiki mine near Madisonville, Kentucky to Washington, D.C.
About Alliance Resource Partners, L.P.
ARLP is a diversified producer and marketer of coal to major United States utilities and industrial users. As the nation's only publicly traded master limited partnership involved in the production and marketing of coal, ARLP is currently the fifth largest coal producer in the eastern United States with mining operations in the Illinois Basin, Northern Appalachian and Central Appalachian coal producing regions. ARLP operates nine mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia and is also constructing a new mining complex in West Virginia. In addition, ARLP operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana.
Following the accident, Webster County Coal, OMSL and the Mine Safety and Health Administration (MSHA) cooperatively conducted independent investigations to determine both the causes of the fatal roof fall accident and means to prevent a similar occurrence in the future. Webster County Coal submitted its investigative findings to OMSL and MSHA on June 4, 2010. After reviewing the OMSL report with Kentucky state officials earlier today, Webster County Coal confirmed that the findings of the OMSL report were consistent with its internal investigations concluding that the accident was the result of unpredictable and unforeseeable geologic conditions that were highly unusual at the Dotiki mine. Although the occurrence of the roof fall necessitated the issuance of a Notice of Non-Compliance, the OMSL report also confirmed that at the time of the accident the Dotiki mine was operating in full compliance with the roof control plan approved by OMSL and the MSHA. In addition, the report noted OMSL’s approval of the voluntary modifications to the Dotiki roof control plan implemented by Webster County Coal immediately following the accident.
Dotiki, the largest mine in Kentucky and one of the largest underground mines in the United States, employs more than 400 miners and has almost 600 miles of ventilated underground tunnel – longer than the distance from the Dotiki mine near Madisonville, Kentucky to Washington, D.C.
About Alliance Resource Partners, L.P.
ARLP is a diversified producer and marketer of coal to major United States utilities and industrial users. As the nation's only publicly traded master limited partnership involved in the production and marketing of coal, ARLP is currently the fifth largest coal producer in the eastern United States with mining operations in the Illinois Basin, Northern Appalachian and Central Appalachian coal producing regions. ARLP operates nine mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia and is also constructing a new mining complex in West Virginia. In addition, ARLP operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana.
Tuesday, November 9, 2010
Judge Rules Against Alliance Resource Partners in Royalties Lawsuit
SPRINGFIELD, Ill. (AP) - A judge says a coal company and two other Alliance Resource Partners subsidiaries must pay $3.8 million to resolve a lawsuit over royalty payments involving a southern Illinois coal mine.
Second Circuit Court Judge David Overstreet ruled Friday that White County Coal Co. failed to make the payments to widows and heirs of men who discovered a 200-million-ton coal reserve in White County.
The judgment includes unpaid royalties on 6.4 million tons of coal mined at White County's Pattiki Mine near Carmi between 2002 and September 2009.
Alliance also must calculate and pay additional sums for royalties and interest due on coal mined since September 2009 and reinstate the plaintiffs' royalty rights on 6,000 remaining coal acres.
A spokesman for Tulsa, Okla.-based Alliance Resources has declined to comment.
Second Circuit Court Judge David Overstreet ruled Friday that White County Coal Co. failed to make the payments to widows and heirs of men who discovered a 200-million-ton coal reserve in White County.
The judgment includes unpaid royalties on 6.4 million tons of coal mined at White County's Pattiki Mine near Carmi between 2002 and September 2009.
Alliance also must calculate and pay additional sums for royalties and interest due on coal mined since September 2009 and reinstate the plaintiffs' royalty rights on 6,000 remaining coal acres.
A spokesman for Tulsa, Okla.-based Alliance Resources has declined to comment.
Monday, November 1, 2010
Joe Craft, CEO of Alliance Resource Partners
Joseph W. Craft III has been President, Chief Executive Officer and a Director since August 1999 and has indirect majority ownership of our managing general partner. Mr. Craft also serves as President, Chief Executive Officer and Chairman of the Board of Directors of AGP, the general partner of AHGP. Previously Mr. Craft served as President of MAPCO Coal Inc. since 1986. During that period, he also was Senior Vice President of MAPCO Inc. and had previously been that company?s General Counsel and Chief Financial Officer. He is a former Chairman of the National Coal Council, a Board and Executive Committee Member and Chairman of the Safety, Health and Human Resources Committee of the National Mining Association, a Director of American Coalition for Clean Coal Electricity, a Director of BOK Financial Corporation (NASDAQ: BOKF) since April of 2007, a member of the Board of Trustees for the University of Tulsa and a Director of the Tulsa Community Foundation. Mr. Craft holds a Bachelor of Science degree in Accounting and a Juris Doctorate degree from the University of Kentucky. Mr. Craft also is a graduate of the Senior Executive Program of the Alfred P. Sloan School of Management at Massachusetts Institute of Technology. The specific experience, qualifications, attributes or skills that led to the conclusion Mr. Craft should serve as a Director include his long history of significant involvement in the coal industry, his demonstrated business acumen and his exceptional leadership of the Partnership since its inception.
Tradgedy Strikes Alliance
WAVERLY, KY (WFIE) - A miner is killed in a Union County accident.
According to the Kentucky Office of Mine Safety, James J. Falk, 39, of Slaughters, was killed at the River View mine in Waverly, KY.
Investigators are saying that Falk died when he was hit by a shuttle car about a mile away from the mine's entrance. The accident happened around 8 a.m.
Investigators from the Kentucky Office of Mine Safety and Licensing are on the scene and will be conducting an investigation into how the accident occurred.
The mine has been closed until further notice as interviews and the investigation continue.
River View employs approximately 437 miners
This is the sixth deadly mine accident in Kentucky this year.
According to the Kentucky Office of Mine Safety, James J. Falk, 39, of Slaughters, was killed at the River View mine in Waverly, KY.
Investigators are saying that Falk died when he was hit by a shuttle car about a mile away from the mine's entrance. The accident happened around 8 a.m.
Investigators from the Kentucky Office of Mine Safety and Licensing are on the scene and will be conducting an investigation into how the accident occurred.
The mine has been closed until further notice as interviews and the investigation continue.
River View employs approximately 437 miners
This is the sixth deadly mine accident in Kentucky this year.
Friday, October 15, 2010
US Coal Consumption Forecast
U.S. Coal Consumption. Coal consumption in the electric power sector rose by 5 percent in the first half of this year compared with the first half of last year, primarily the result of higher electricity consumption. EIA forecasts that higher electric power sector coal consumption will continue for the remainder of the year, with the total annual increase projected at nearly 7 percent. Despite a very slight decrease (0.3 percent) in electricity consumption in 2011, projected coal-fired electricity generation and related coal consumption will decline at a higher rate, primarily because of forecast increases in nuclear and renewable-based generation (U.S. Coal Consumption Growth Chart).
U.S. Coal Supply. Coal production for the first 6 months of 2010 fell by 3 percent despite a 5 percent increase in U.S. coal consumption. Drawdowns in inventories (U.S. Electric Power Sector Coal Stocks Chart) are forecasted to meet the majority of the increased coal consumption in 2010. Projected coal production increases in the second half of 2010, with annual growth projected at 1 percent. EIA projects another 1-percent increase in coal production in 2011 (U.S. Annual Coal Production Chart).
U.S. Coal Trade. The United States is a net exporter of coal, averaging 3.4 percent of production in 2009. Projected coal net exports increase by 58 percent in 2010, then decline by 17 percent in 2011. Metallurgical coal exports have nearly doubled in the first half of 2010 compared with the first half of last year. Metallurgical coal's share of total coal exports has grown from 52 percent in 2008 to a projected 74 percent in 2010. EIA projects coal imports to decline by 17 percent in 2010 recover next year with growth of 37 percent. However, the annual import tonnage (26 million short tons) remains significantly below the 2005-through-2008 average of 34 million short tons.
U.S. Coal Prices. The electric-power-sector coal price rose by 1.3 percent in the first half of 2010 compared with the first half of last year. This higher cost of delivered coal reflects the effect of longer-term power sector coal contracts initiated during a period of high prices, rising transportation costs, increased consumption, and increases in spot coal prices. The projected electric-power-sector delivered coal price averages $2.26 per MMBtu in 2010, and then declines to an average of $2.23 per MMBtu in 2011.
U.S. Coal Supply. Coal production for the first 6 months of 2010 fell by 3 percent despite a 5 percent increase in U.S. coal consumption. Drawdowns in inventories (U.S. Electric Power Sector Coal Stocks Chart) are forecasted to meet the majority of the increased coal consumption in 2010. Projected coal production increases in the second half of 2010, with annual growth projected at 1 percent. EIA projects another 1-percent increase in coal production in 2011 (U.S. Annual Coal Production Chart).
U.S. Coal Trade. The United States is a net exporter of coal, averaging 3.4 percent of production in 2009. Projected coal net exports increase by 58 percent in 2010, then decline by 17 percent in 2011. Metallurgical coal exports have nearly doubled in the first half of 2010 compared with the first half of last year. Metallurgical coal's share of total coal exports has grown from 52 percent in 2008 to a projected 74 percent in 2010. EIA projects coal imports to decline by 17 percent in 2010 recover next year with growth of 37 percent. However, the annual import tonnage (26 million short tons) remains significantly below the 2005-through-2008 average of 34 million short tons.
U.S. Coal Prices. The electric-power-sector coal price rose by 1.3 percent in the first half of 2010 compared with the first half of last year. This higher cost of delivered coal reflects the effect of longer-term power sector coal contracts initiated during a period of high prices, rising transportation costs, increased consumption, and increases in spot coal prices. The projected electric-power-sector delivered coal price averages $2.26 per MMBtu in 2010, and then declines to an average of $2.23 per MMBtu in 2011.
Top 10 Most Efficient Coal Stocks: NRP, PVR, WLT, CLD, BTU, ARLP, AHGP, HNRG, CNX, JRCC
Below are the top 10 most efficient Coal stocks, based on earnings per employee for the last 12 months.
Natural Resource Partners LP (NYSE:NRP) is the 1st most efficient company in this segment of the market. Its earnings per employee was $1,933,986 for the last 12 months. Its revenue per employee was $3,899,572 for the same period. Penn Virginia Resource Partners L P (NYSE:PVR) is the 2nd most efficient company in this segment of the market. Its earnings per employee was $472,565 for the last 12 months. Its revenue per employee was $4,390,800 for the same period. Walter Energy, Inc. (NYSE:WLT) is the 3rd most efficient company in this segment of the market. Its earnings per employee was $103,080 for the last 12 months. Its revenue per employee was $589,162 for the same period. Cloud Peak Energy Inc. (NYSE:CLD) is the 4th most efficient company in this segment of the market. Its earnings per employee was $99,939 for the last 12 months. Its revenue per employee was $880,229 for the same period. Peabody Energy Corporation (NYSE:BTU) is the 5th most efficient company in this segment of the market. Its earnings per employee was $79,247 for the last 12 months. Its revenue per employee was $876,466 for the same period.
Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the 6th most efficient company in this segment of the market. Its earnings per employee was $77,232 for the last 12 months. Its revenue per employee was $446,224 for the same period. Alliance Holdings GP, L.P. (NASDAQ:AHGP) is the 7th most efficient company in this segment of the market. Its earnings per employee was $76,533 for the last 12 months. Its revenue per employee was $446,110 for the same period. Hallador Energy Co (NASDAQ:HNRG) is the 8th most efficient company in this segment of the market. Its earnings per employee was $72,983 for the last 12 months. Its revenue per employee was $424,857 for the same period. CONSOL Energy Inc. (NYSE:CNX) is the 9th most efficient company in this segment of the market. Its earnings per employee was $52,698 for the last 12 months. Its revenue per employee was $606,987 for the same period. James River Coal Company (NASDAQ:JRCC) is the 10th most efficient company in this segment of the market. Its earnings per employee was $28,563 for the last 12 months. Its revenue per employee was $393,928 for the same period.
Natural Resource Partners LP (NYSE:NRP) is the 1st most efficient company in this segment of the market. Its earnings per employee was $1,933,986 for the last 12 months. Its revenue per employee was $3,899,572 for the same period. Penn Virginia Resource Partners L P (NYSE:PVR) is the 2nd most efficient company in this segment of the market. Its earnings per employee was $472,565 for the last 12 months. Its revenue per employee was $4,390,800 for the same period. Walter Energy, Inc. (NYSE:WLT) is the 3rd most efficient company in this segment of the market. Its earnings per employee was $103,080 for the last 12 months. Its revenue per employee was $589,162 for the same period. Cloud Peak Energy Inc. (NYSE:CLD) is the 4th most efficient company in this segment of the market. Its earnings per employee was $99,939 for the last 12 months. Its revenue per employee was $880,229 for the same period. Peabody Energy Corporation (NYSE:BTU) is the 5th most efficient company in this segment of the market. Its earnings per employee was $79,247 for the last 12 months. Its revenue per employee was $876,466 for the same period.
Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the 6th most efficient company in this segment of the market. Its earnings per employee was $77,232 for the last 12 months. Its revenue per employee was $446,224 for the same period. Alliance Holdings GP, L.P. (NASDAQ:AHGP) is the 7th most efficient company in this segment of the market. Its earnings per employee was $76,533 for the last 12 months. Its revenue per employee was $446,110 for the same period. Hallador Energy Co (NASDAQ:HNRG) is the 8th most efficient company in this segment of the market. Its earnings per employee was $72,983 for the last 12 months. Its revenue per employee was $424,857 for the same period. CONSOL Energy Inc. (NYSE:CNX) is the 9th most efficient company in this segment of the market. Its earnings per employee was $52,698 for the last 12 months. Its revenue per employee was $606,987 for the same period. James River Coal Company (NASDAQ:JRCC) is the 10th most efficient company in this segment of the market. Its earnings per employee was $28,563 for the last 12 months. Its revenue per employee was $393,928 for the same period.
Historical Acquisitions by ARLP
The story of Alliance begins in 1971 when MAPCO Inc., then a Fortune 500 diversified energy company, entered the coal-production business, acquiring the Dotiki mine. This underground operation in Webster County, Kentucky, soon became, and remains to this day, one of the most productive coal mines in the country.
By the time the company reached its silver anniversary, MAPCO Coal owned five mining complexes in three states — Kentucky, Illinois, and Maryland. It also owned the Mt. Vernon Facility, a rail-to-barge loading terminal on the Ohio River. Located in Indiana, the Mt. Vernon facility is capable of handling 8 million tons of coal per year.
In 1996, management formed Alliance Coal Corporation and led a buyout of MAPCO Inc.'s coal operations with the financial support of The Beacon Group. Within two years, Alliance acquired Hopkins County Coal, a surface/underground operation in Hopkins County, Kentucky, and opened MC Mining, an underground mine in Pike County, Kentucky. In 1998, Alliance sold 15.1 million tons of coal and was recognized as the sixth-largest coal producer in the eastern United States.
During 1999, Alliance Resource Partners, L.P. was formed, and after completion of its initial public offering as a publicly-traded master limited partnership, acquired the coal operations of Alliance Coal Corporation. The new company soon broke ground for a new underground mining complex in Gibson County, Indiana. Production began at Gibson County Coal the following year.
ARLP began a $30 million extension of its Pattiki mine in southern Illinois during 2000. Construction of a new mine shaft and ancillary facilities began in 2001 at the Dotiki mining complex. Both of these projects were completed during the second quarter of 2003 and positioned Alliance Coal to meet increasing demand for its coal.
In 2002, management purchased all of The Beacon Group's interest in ARLP. The acquisition was not funded or secured with any of Alliance's assets.
In February 2003, ARLP completed a secondary public offering. Proceeds from this offering were used in part to purchase Warrior Coal, LLC. Warrior operates an underground mining complex located near Madisonville, in Hopkins County, Kentucky, between and adjacent to our other western Kentucky operations. Warrior has since become one of the most productive mines in the state of Kentucky.
The late 2000s saw Alliance in an aggressive growth period. Acquisitions of the reserve that became the River View Mine, which opened in 2009, and the Tunnel Ridge and Penn Ridge reserves have positioned Alliance to meet the nation's energy needs well into the future.
By the time the company reached its silver anniversary, MAPCO Coal owned five mining complexes in three states — Kentucky, Illinois, and Maryland. It also owned the Mt. Vernon Facility, a rail-to-barge loading terminal on the Ohio River. Located in Indiana, the Mt. Vernon facility is capable of handling 8 million tons of coal per year.
In 1996, management formed Alliance Coal Corporation and led a buyout of MAPCO Inc.'s coal operations with the financial support of The Beacon Group. Within two years, Alliance acquired Hopkins County Coal, a surface/underground operation in Hopkins County, Kentucky, and opened MC Mining, an underground mine in Pike County, Kentucky. In 1998, Alliance sold 15.1 million tons of coal and was recognized as the sixth-largest coal producer in the eastern United States.
During 1999, Alliance Resource Partners, L.P. was formed, and after completion of its initial public offering as a publicly-traded master limited partnership, acquired the coal operations of Alliance Coal Corporation. The new company soon broke ground for a new underground mining complex in Gibson County, Indiana. Production began at Gibson County Coal the following year.
ARLP began a $30 million extension of its Pattiki mine in southern Illinois during 2000. Construction of a new mine shaft and ancillary facilities began in 2001 at the Dotiki mining complex. Both of these projects were completed during the second quarter of 2003 and positioned Alliance Coal to meet increasing demand for its coal.
In 2002, management purchased all of The Beacon Group's interest in ARLP. The acquisition was not funded or secured with any of Alliance's assets.
In February 2003, ARLP completed a secondary public offering. Proceeds from this offering were used in part to purchase Warrior Coal, LLC. Warrior operates an underground mining complex located near Madisonville, in Hopkins County, Kentucky, between and adjacent to our other western Kentucky operations. Warrior has since become one of the most productive mines in the state of Kentucky.
The late 2000s saw Alliance in an aggressive growth period. Acquisitions of the reserve that became the River View Mine, which opened in 2009, and the Tunnel Ridge and Penn Ridge reserves have positioned Alliance to meet the nation's energy needs well into the future.
Miracle in Chile
After more than two months underground, all 33 miners have now emerged from the collapsed Chilean copper mine in the Atacama desert to the excitement and relief of waiting family and friends.
Rescue teams lifted the miners to the surface one by one in a narrow, missile-like capsule, nicknamed Phoenix. The operation, which rescuers originally said would take around two days, finished in 22 hours. Miners who were told they would be lucky to make it out by Christmas now all saw daylight by the third week of October.
Each miner stepping out of the capsule was greeted by three family members - and President Sebastian Pinera - before being seen by waiting doctors and flown to a triage centre for at least two days of check-ups.
In depth
Live blog: Latest events
Your views: Mine rescue
Q&A: Chile mine rescue
In pictures: Rescue drama
The 33rd and last miner to be rescued was Luis Urzua, 54, the shift supervisor who organised the miners and was credited as a calming presence in the mine. He reportedly would not let anyone eat until everyone's food had arrived through the rescue shaft.
The last of the rescue specialists involved in the extraction was lifted to safety early on Thursday, ending the ordeal.
The 32 Chileans and one Bolivian trapped in the San Jose mine in northern Chile were initially believed to have perished, but they had found refuge in an emergency shelter and survived by strictly rationing their food and water.
On Wednesday, Evo Morales, the Bolivian president, visited Carlos Mamani, his rescued compatriot, at the triage centre.
'All healthy'
Officials decided the order in which the miners would be pulled up based on their health and capacities. The first group would be the healthiest, the middle group comparatively infirm, and the last group also healthy.
Rescued miners
Florencio Avalos, 31
Mario Sepulveda, 40
Juan Illanes, 52
Carlos Mamani, 24
Jimmy Sanchez, 19
Osman Araya, 30
Jose Ojeda, 47
Claudio Yanez, 34
Mario Gomez, 63
Alex Vega, 31
Jorge Galleguillos, 55
Edison Pena, 34
Carlos Barrios, 27
Victor Zamora, 33
Victor Segovia, 48
Daniel Herrera, 27
Omar Reygadas, 56
Esteban Rojas, 44
Pablo Rojas, 45
Dario Segovia, 48
Yonni Barrios, 50
Samuel Avalos, 43
Carlos Bugueno, 27
Jose Henriquez, 54
Renan Avalos, 29
Claudio Acuna, 44
Franklin Lobos, 53
Richard Villarroel, 26
Juan Aguilar, 49
Raul Bustos, 40
Pedro Cortez, 24 or 26
Ariel Ticona, 29
Luis Urzua, 54
The first miner to be rescued was Florencio Avalos, a 31-year-old driver, chosen because he was considered among the most physically and mentally fit of the group.
He smiled broadly as he emerged and hugged his weeping seven-year-old son and wife. He then embraced president Pinera, who had been at the scene overseeing the rescue operation.
Mario Sepulveda, a 39-year-old electrical specialist, was the second to reach the surface.
After hugging his wife, he jubilantly handed souvenir rocks to laughing rescuers.
"I'm so happy!" Sepulveda yelled, punching his fist in the air and hugging everyone in sight.
The miners were pulled up through a 600m-deep shaft in a rescue capsule wide as the shoulders of an average built miner, designed specifically for the operation.
The miners communicated with rescue teams using an intercom in the capsule.
It took only 16 minutes for miners to be pulled up the shaft. It was originally estimated that the journey would take half an hour, though the final ascents lasted only around nine.
Avalos began his journey after a mining rescue expert and a paramedic were lowered down the rescue tunnel to prepare the miners for their rescue.
Rescue teams lifted the miners to the surface one by one in a narrow, missile-like capsule, nicknamed Phoenix. The operation, which rescuers originally said would take around two days, finished in 22 hours. Miners who were told they would be lucky to make it out by Christmas now all saw daylight by the third week of October.
Each miner stepping out of the capsule was greeted by three family members - and President Sebastian Pinera - before being seen by waiting doctors and flown to a triage centre for at least two days of check-ups.
In depth
Live blog: Latest events
Your views: Mine rescue
Q&A: Chile mine rescue
In pictures: Rescue drama
The 33rd and last miner to be rescued was Luis Urzua, 54, the shift supervisor who organised the miners and was credited as a calming presence in the mine. He reportedly would not let anyone eat until everyone's food had arrived through the rescue shaft.
The last of the rescue specialists involved in the extraction was lifted to safety early on Thursday, ending the ordeal.
The 32 Chileans and one Bolivian trapped in the San Jose mine in northern Chile were initially believed to have perished, but they had found refuge in an emergency shelter and survived by strictly rationing their food and water.
On Wednesday, Evo Morales, the Bolivian president, visited Carlos Mamani, his rescued compatriot, at the triage centre.
'All healthy'
Officials decided the order in which the miners would be pulled up based on their health and capacities. The first group would be the healthiest, the middle group comparatively infirm, and the last group also healthy.
Rescued miners
Florencio Avalos, 31
Mario Sepulveda, 40
Juan Illanes, 52
Carlos Mamani, 24
Jimmy Sanchez, 19
Osman Araya, 30
Jose Ojeda, 47
Claudio Yanez, 34
Mario Gomez, 63
Alex Vega, 31
Jorge Galleguillos, 55
Edison Pena, 34
Carlos Barrios, 27
Victor Zamora, 33
Victor Segovia, 48
Daniel Herrera, 27
Omar Reygadas, 56
Esteban Rojas, 44
Pablo Rojas, 45
Dario Segovia, 48
Yonni Barrios, 50
Samuel Avalos, 43
Carlos Bugueno, 27
Jose Henriquez, 54
Renan Avalos, 29
Claudio Acuna, 44
Franklin Lobos, 53
Richard Villarroel, 26
Juan Aguilar, 49
Raul Bustos, 40
Pedro Cortez, 24 or 26
Ariel Ticona, 29
Luis Urzua, 54
The first miner to be rescued was Florencio Avalos, a 31-year-old driver, chosen because he was considered among the most physically and mentally fit of the group.
He smiled broadly as he emerged and hugged his weeping seven-year-old son and wife. He then embraced president Pinera, who had been at the scene overseeing the rescue operation.
Mario Sepulveda, a 39-year-old electrical specialist, was the second to reach the surface.
After hugging his wife, he jubilantly handed souvenir rocks to laughing rescuers.
"I'm so happy!" Sepulveda yelled, punching his fist in the air and hugging everyone in sight.
The miners were pulled up through a 600m-deep shaft in a rescue capsule wide as the shoulders of an average built miner, designed specifically for the operation.
The miners communicated with rescue teams using an intercom in the capsule.
It took only 16 minutes for miners to be pulled up the shaft. It was originally estimated that the journey would take half an hour, though the final ascents lasted only around nine.
Avalos began his journey after a mining rescue expert and a paramedic were lowered down the rescue tunnel to prepare the miners for their rescue.
Trouble at Alliance
Federal mine regulators have cited the Dotiki Mine for not doing enough to prevent the underground roof fall that killed two miners on April 28.
Mine owner Alliance Resources Partners L.P. took issue with the citation, noting that the federal Mine Safety and Health Administration's investigation report declared that the accident came without warning.
The MSHA report, released Friday, also declared that the mine was obeying its federally approved roof control plan at the time of the accident.
Nonetheless, MSHA cited Dotiki because "(t)he roof was not adequately supported or otherwise controlled to protect persons from hazards related to falls of the roof."
An earlier state investigation resulted in a similar ruling.
The roof collapse killed miners miners Justin Travis, 27, of Dixon and Michael Carter, 28, of Hanson. Travis was a continuous mining machine operator with more than three years of mining experience; Carter, a continuous mining machine helper, had two years of experience.
Federal investigators concluded that the roof fall occurred shortly after the mining machine cut coal from a seam approximately 900 feet beneath the surface of the ground. Unknown to the miners, the shale in that portion of mine roof had been weakened by natural fractures or faults, resulting in hidden slickensides or "slips" in the roof.
Even though the roof immediately above Travis and Carter's heads had been reinforced with long bolts, the removal of coal nearby and the presence of the overhead slips resulted in the collapse of what MSHA called a "massive" section of roof -- up to 76 feet long, 19 feet wide and as much as 10 feet thick.
"The absence of any sign of 'slips' in the immediate roof gave no warning for the need to install supplemental or additional support," MSHA concluded in its report.
The coal company applauded the findings of the federal investigation but objected to being cited for a violation of mine safety law.
"The MSHA investigation confirms the factual findings of our own internal investigation -- this roof fall was an unpredictable accident involving unforeseeable geological conditions," Kenny Murray, vice president of operations at Webster County Coal (the Alliance subsidiary that operates Dotiki), said in a statement.
"At no time during its investigation did MSHA indicate that this accident was preventable or that Webster County Coal was in any way negligent," Murray continued. "To the contrary, the MSHA report specifically acknowledges" that the approved roof control plan was being followed and that there was no signs of slips in the roof before the accident.
"Furthermore, in its citation MSHA specifically found that Webster County Coal was not negligent. In light of these facts, we strongly believe the citation issued today by MSHA is not justified," he said.
MSHA's Office of Assessment will fine the company sometime later, according to spokeswoman Amy Louviere.
Alliance, meanwhile, can appeal the agency's citation.
"The company always has an opportunity to request a conference with the district (MSHA) manager," Louviere said in an e-mail message. "If the matter can't be resolved, the company can take the case before an administrative law judge with the Federal Mine Safety and Health Review Commission."
In July, the state issued a notice of non-compliance to Webster County Coal related to the April 28 roof fall, saying the company was in violation of Kentucky law that require companies to have a roof control plan that adequately provides protection to miners from falls of the mine's roof or ribs.
The company said at the time that "the accident was the result of unpredictable and unforeseeable geologic conditions that were highly unusual at the Dotiki mine."
A slickenside, as cited in the MSHA report, is an indication of a crack or fault line in rock, according to Kentucky State Geologist Jim Cobb, director of the Kentucky Geological Survey.
"It's a polished surface along a fracture" caused by friction when the two sides have "moved past one another," Cobb said.
MSHA's Louviere noted that "the slickensides were not evidenced until the roof fell. You had to look up over the fallen material to the newly exposed roof approximately 10 to 12 feet to see the slickenside. That is what made it unusual. Generally, the slickenside would be visible in the mine roof."
Dotiki, one of nine mining complexes operated by Alliance, employs more than 400 miners. It produced 4.2 million tons of coal last year, according to the company.
The mine has operated since 1966. Before the April roof fall, three miners had died in separate accidents: An electrocution in 1984, an underground tram accident in 1988 and an above-ground dozer accident in 1995.
Although the mine had been cited for violations at various times, the MSHA investigation reported that Dotiki's safety record, by at least one measure, was better than the industry average last year.
The mine experienced 3.68 injuries for every 200,000 hours worked in 2009, compared with the national average of 4.16 for underground mines.
Mine owner Alliance Resources Partners L.P. took issue with the citation, noting that the federal Mine Safety and Health Administration's investigation report declared that the accident came without warning.
The MSHA report, released Friday, also declared that the mine was obeying its federally approved roof control plan at the time of the accident.
Nonetheless, MSHA cited Dotiki because "(t)he roof was not adequately supported or otherwise controlled to protect persons from hazards related to falls of the roof."
An earlier state investigation resulted in a similar ruling.
The roof collapse killed miners miners Justin Travis, 27, of Dixon and Michael Carter, 28, of Hanson. Travis was a continuous mining machine operator with more than three years of mining experience; Carter, a continuous mining machine helper, had two years of experience.
Federal investigators concluded that the roof fall occurred shortly after the mining machine cut coal from a seam approximately 900 feet beneath the surface of the ground. Unknown to the miners, the shale in that portion of mine roof had been weakened by natural fractures or faults, resulting in hidden slickensides or "slips" in the roof.
Even though the roof immediately above Travis and Carter's heads had been reinforced with long bolts, the removal of coal nearby and the presence of the overhead slips resulted in the collapse of what MSHA called a "massive" section of roof -- up to 76 feet long, 19 feet wide and as much as 10 feet thick.
"The absence of any sign of 'slips' in the immediate roof gave no warning for the need to install supplemental or additional support," MSHA concluded in its report.
The coal company applauded the findings of the federal investigation but objected to being cited for a violation of mine safety law.
"The MSHA investigation confirms the factual findings of our own internal investigation -- this roof fall was an unpredictable accident involving unforeseeable geological conditions," Kenny Murray, vice president of operations at Webster County Coal (the Alliance subsidiary that operates Dotiki), said in a statement.
"At no time during its investigation did MSHA indicate that this accident was preventable or that Webster County Coal was in any way negligent," Murray continued. "To the contrary, the MSHA report specifically acknowledges" that the approved roof control plan was being followed and that there was no signs of slips in the roof before the accident.
"Furthermore, in its citation MSHA specifically found that Webster County Coal was not negligent. In light of these facts, we strongly believe the citation issued today by MSHA is not justified," he said.
MSHA's Office of Assessment will fine the company sometime later, according to spokeswoman Amy Louviere.
Alliance, meanwhile, can appeal the agency's citation.
"The company always has an opportunity to request a conference with the district (MSHA) manager," Louviere said in an e-mail message. "If the matter can't be resolved, the company can take the case before an administrative law judge with the Federal Mine Safety and Health Review Commission."
In July, the state issued a notice of non-compliance to Webster County Coal related to the April 28 roof fall, saying the company was in violation of Kentucky law that require companies to have a roof control plan that adequately provides protection to miners from falls of the mine's roof or ribs.
The company said at the time that "the accident was the result of unpredictable and unforeseeable geologic conditions that were highly unusual at the Dotiki mine."
A slickenside, as cited in the MSHA report, is an indication of a crack or fault line in rock, according to Kentucky State Geologist Jim Cobb, director of the Kentucky Geological Survey.
"It's a polished surface along a fracture" caused by friction when the two sides have "moved past one another," Cobb said.
MSHA's Louviere noted that "the slickensides were not evidenced until the roof fell. You had to look up over the fallen material to the newly exposed roof approximately 10 to 12 feet to see the slickenside. That is what made it unusual. Generally, the slickenside would be visible in the mine roof."
Dotiki, one of nine mining complexes operated by Alliance, employs more than 400 miners. It produced 4.2 million tons of coal last year, according to the company.
The mine has operated since 1966. Before the April roof fall, three miners had died in separate accidents: An electrocution in 1984, an underground tram accident in 1988 and an above-ground dozer accident in 1995.
Although the mine had been cited for violations at various times, the MSHA investigation reported that Dotiki's safety record, by at least one measure, was better than the industry average last year.
The mine experienced 3.68 injuries for every 200,000 hours worked in 2009, compared with the national average of 4.16 for underground mines.
Sunday, October 10, 2010
Regulation Affecting the Coal Industry
Because coal mining can have a number of significant impacts on the surrounding environment and miners, coal producers are required to go through a complicated process for obtaining local, sate, and federal permits to mine.
Coal mining is one of the most extensively regulated industries in the United States. Before one shovel of earth can be turned, or one ton of coal removed from the ground, a company must comply with literally hundreds of laws and thousands of regulations. Meeting all the requirements is arduous and time-consuming, even for the most efficient and well-managed companies. As long as 10 years can elapse between the start of planning a mine and mining the first ton of coal.
The process begins with a mining company providing detailed information about such activities as how the coal will be mined, and the land reclaimed; the quality and quantity of surface and underground sources of water and how mining activities will affect them; and how the coal will be transported from the mine and how that will affect the area.
Surface mining operators also must consider the soil and prevailing climatological conditions prior to mining, because the land has to be returned to approximately the same physical contour, and to a state of productivity equal to or better than the pre-mining condition. Wildlife habitats cannot be permanently disrupted, and archeological resources must be protected. The principal federal surface mining law sets forth 25 reclamation requirements for operators to meet. These include public hearings and procedures for obtaining permits. To make certain that lands being mined will be restored, the law requires companies to post bonds, as high as $10,000 per acre, to cover reclamation.
Concern for the environment was not always a high priority for the coal industry or our society as a whole. Consequently, in some areas of the country abandoned mines dot the landscape. Their operators simply stopped mining because the coal seam was exhausted, they were bankrupt, or for some other reason they no longer could or would mine coal. To restore these "orphan lands," and eliminate unsightly and unsafe conditions, today's coal producers pay a special tax on every ton of coal they produce. The money, which goes into the federal Abandoned Mine Lands Fund, provides financing for reclamation projects initiated by state agencies.
Coal mining companies work hard to maintain the environment. The law requires it, but they also understand that the right to remove coal carries with it a great responsibility. Based on Office of Surface Mining data, it is estimated that mined lands totaling an area greater than the size of the state of Delaware have been reclaimed since 1977. Over time, as today's coal producers pay for the shortsightedness of their predecessors with their tax contributions to the Abandoned Mine Lands Fund, the percentage of lands reclaimed will rise.
As long ago as the 1930s some states had reclamation laws on their books. But in the late 1970s, when there was significant energy development activity in the West, Congress enacted the Surface Mining Control and Reclamation Act (SMCRA), which mandated strict regulation of surface mining. It because the first comprehensive national surface mining law, and a tough one.
The most extensive regulations affecting surface mining are a consequence of SMCRA. Under the law, individual states which establish federally approved enforcement programs have the primary responsibility for enforcing mining regulations in their jurisdictions. Where no such programs exist, the federal law is implemented by the Office of Surface Mining Reclamation and Enforcement in the Department of Interior.
Other federal laws with significant impact are the Clean Air Act, the Clean Water Act, and the National Environmental Policy Act. In addition, each state where surface mining occurs has its own set of laws and regulations.
Beyond the specific requirements of the federal laws already noted, many other legislative acts affect some or all surface mining in this country:
American Indian Religious Freedom Act of 1978
Antiquities Act of 1906
Archeological Nd Historical Preservation Act of 1974
Archeological Salvage Act
Bald Eagle Protection Act of 1969
Endangered Species Act of 1963
Fish and Wildlife Coordination Act of 1934
Forest and Rangeland Resources Planning Act of 1974
Historic Preservation Act of 1966
Migratory Bird Treaty Act of 1918
Mining and Minerals Policy Act of 1970
Multiple Use - Sustained Yield Act of 1960
National Forests Management Act of 1976
National Trails System Act
Noise Control Act of 1976
Resource Conservation and Recovery Act
Safe Drinking Water Act of 1974
Soil and Water Resources Conservation Act of 1977
Wild and Scenic Rivers Act
Wilderness Act of 1964
In directing the states to enforce the federal surface mining law, Congress recognized that effective coal mining regulation must take into account local conditions and problems unique to certain areas. To a large degree, that process has worked well. Where problems exist, they are generally caused by a handful of irresponsible operators, who flout the law and take the coal without preserving the land.
Coal mining is one of the most extensively regulated industries in the United States. Before one shovel of earth can be turned, or one ton of coal removed from the ground, a company must comply with literally hundreds of laws and thousands of regulations. Meeting all the requirements is arduous and time-consuming, even for the most efficient and well-managed companies. As long as 10 years can elapse between the start of planning a mine and mining the first ton of coal.
The process begins with a mining company providing detailed information about such activities as how the coal will be mined, and the land reclaimed; the quality and quantity of surface and underground sources of water and how mining activities will affect them; and how the coal will be transported from the mine and how that will affect the area.
Surface mining operators also must consider the soil and prevailing climatological conditions prior to mining, because the land has to be returned to approximately the same physical contour, and to a state of productivity equal to or better than the pre-mining condition. Wildlife habitats cannot be permanently disrupted, and archeological resources must be protected. The principal federal surface mining law sets forth 25 reclamation requirements for operators to meet. These include public hearings and procedures for obtaining permits. To make certain that lands being mined will be restored, the law requires companies to post bonds, as high as $10,000 per acre, to cover reclamation.
Concern for the environment was not always a high priority for the coal industry or our society as a whole. Consequently, in some areas of the country abandoned mines dot the landscape. Their operators simply stopped mining because the coal seam was exhausted, they were bankrupt, or for some other reason they no longer could or would mine coal. To restore these "orphan lands," and eliminate unsightly and unsafe conditions, today's coal producers pay a special tax on every ton of coal they produce. The money, which goes into the federal Abandoned Mine Lands Fund, provides financing for reclamation projects initiated by state agencies.
Coal mining companies work hard to maintain the environment. The law requires it, but they also understand that the right to remove coal carries with it a great responsibility. Based on Office of Surface Mining data, it is estimated that mined lands totaling an area greater than the size of the state of Delaware have been reclaimed since 1977. Over time, as today's coal producers pay for the shortsightedness of their predecessors with their tax contributions to the Abandoned Mine Lands Fund, the percentage of lands reclaimed will rise.
As long ago as the 1930s some states had reclamation laws on their books. But in the late 1970s, when there was significant energy development activity in the West, Congress enacted the Surface Mining Control and Reclamation Act (SMCRA), which mandated strict regulation of surface mining. It because the first comprehensive national surface mining law, and a tough one.
The most extensive regulations affecting surface mining are a consequence of SMCRA. Under the law, individual states which establish federally approved enforcement programs have the primary responsibility for enforcing mining regulations in their jurisdictions. Where no such programs exist, the federal law is implemented by the Office of Surface Mining Reclamation and Enforcement in the Department of Interior.
Other federal laws with significant impact are the Clean Air Act, the Clean Water Act, and the National Environmental Policy Act. In addition, each state where surface mining occurs has its own set of laws and regulations.
Beyond the specific requirements of the federal laws already noted, many other legislative acts affect some or all surface mining in this country:
American Indian Religious Freedom Act of 1978
Antiquities Act of 1906
Archeological Nd Historical Preservation Act of 1974
Archeological Salvage Act
Bald Eagle Protection Act of 1969
Endangered Species Act of 1963
Fish and Wildlife Coordination Act of 1934
Forest and Rangeland Resources Planning Act of 1974
Historic Preservation Act of 1966
Migratory Bird Treaty Act of 1918
Mining and Minerals Policy Act of 1970
Multiple Use - Sustained Yield Act of 1960
National Forests Management Act of 1976
National Trails System Act
Noise Control Act of 1976
Resource Conservation and Recovery Act
Safe Drinking Water Act of 1974
Soil and Water Resources Conservation Act of 1977
Wild and Scenic Rivers Act
Wilderness Act of 1964
In directing the states to enforce the federal surface mining law, Congress recognized that effective coal mining regulation must take into account local conditions and problems unique to certain areas. To a large degree, that process has worked well. Where problems exist, they are generally caused by a handful of irresponsible operators, who flout the law and take the coal without preserving the land.
Commitment to Community and Strategic Partnerships
Alliance believes that being active in the community is imperative to being a great company. Below are just some of the examples of the ways in which Alliance helps out local and international communities.
Alliance has created and actively fosters close ties with the colleges and universities in the areas near our operations. Alliance maintains long-standing relationships with many of the top Mining Engineering programs in the nation and are very proud of their internship program. Alliance recently provided funding for a new Mining Engineering Lab at the University of Kentucky. In addition, Alliance has committed to the establishment of the Alliance Coal Chair in Mining Engineering at the University of Kentucky, pledging $1.2 million dollars to assist the University in attracting, hiring, and retaining the best and brightest mining engineering professors. The position is expected to be filled in time for the 2010 Fall semester.
Alliance is proud of its association with the Kentucky Community and Technical College System (KCTCS). Alliance and the KCTCS work together to train new and current employees. New employees are trained extensively so that they may enter the workplace capable of performing their job duties more safely and efficiently than typical novice miners. Current employees are eligible and encouraged to attend classes that will help them perform their jobs with an even higher level of confidence and skill. This allows Alliance to have a pool of possible employees trained and ready to work in the coal mining industry.
Alliance has created and actively fosters close ties with the colleges and universities in the areas near our operations. Alliance maintains long-standing relationships with many of the top Mining Engineering programs in the nation and are very proud of their internship program. Alliance recently provided funding for a new Mining Engineering Lab at the University of Kentucky. In addition, Alliance has committed to the establishment of the Alliance Coal Chair in Mining Engineering at the University of Kentucky, pledging $1.2 million dollars to assist the University in attracting, hiring, and retaining the best and brightest mining engineering professors. The position is expected to be filled in time for the 2010 Fall semester.
Alliance is proud of its association with the Kentucky Community and Technical College System (KCTCS). Alliance and the KCTCS work together to train new and current employees. New employees are trained extensively so that they may enter the workplace capable of performing their job duties more safely and efficiently than typical novice miners. Current employees are eligible and encouraged to attend classes that will help them perform their jobs with an even higher level of confidence and skill. This allows Alliance to have a pool of possible employees trained and ready to work in the coal mining industry.
Alliance Commitment to the Environment
Alliance is committed to restoring the areas around our mines upon completion of mining activities. Our goal is to leave the land in a better condition than it was prior to mining operations. Below are two examples of successful Alliance restoration projects.
During mining in Western Kentucky at Hopkins County Coal, Alliance impacted 660 acres of hardwood wetlands. After mining was completed, Alliance restored the wetlands with more than 40,000 seedlings, many of which are growing at the exceptional rate of 2-3 feet per year. Although Alliance only impacted 660 acres, we revitalized nearly 1,200 additional acres, meaning over 1,800 acres have been returned to a natural state as of 2009. Of this acreage, 734 acres have been transferred to the Kentucky Department of Fish & Wildlife for further use.
In Eastern Kentucky, Alliance successfully restored 200 acres of wetlands in the Dollar Branch area as part of a Compensatory Mitigation project. For this project, which was not on Alliance-mined lands, we worked with state and federal agencies, environmental groups, and the bankrupt owner of the Dollar Branch site. Prior to mitigation, the water in the Dollar Branch area was very acidic and high in iron content. After the efforts of Alliance and its partners on this project, the water was restored to normal pH and iron levels.
During mining in Western Kentucky at Hopkins County Coal, Alliance impacted 660 acres of hardwood wetlands. After mining was completed, Alliance restored the wetlands with more than 40,000 seedlings, many of which are growing at the exceptional rate of 2-3 feet per year. Although Alliance only impacted 660 acres, we revitalized nearly 1,200 additional acres, meaning over 1,800 acres have been returned to a natural state as of 2009. Of this acreage, 734 acres have been transferred to the Kentucky Department of Fish & Wildlife for further use.
In Eastern Kentucky, Alliance successfully restored 200 acres of wetlands in the Dollar Branch area as part of a Compensatory Mitigation project. For this project, which was not on Alliance-mined lands, we worked with state and federal agencies, environmental groups, and the bankrupt owner of the Dollar Branch site. Prior to mitigation, the water in the Dollar Branch area was very acidic and high in iron content. After the efforts of Alliance and its partners on this project, the water was restored to normal pH and iron levels.
Cap and Trade affects on the coal industry in Kentucky
Cap and trade is a system by which the government sets an arbitrary level, or “cap”, on the amount of carbon that companies are allowed to emit. Companies must then purchase credits from the government that represent the right to emit a specific amount. Companies that wish to increase their emissions must buy credits (the “trade”) from those who produce less.
Most energy production is from burning coal and natural gas. This produces a gas called carbon dioxide from the complete combustion of carbon with oxygen. Any utilities using coal or natural gas for electricity will be required by law to purchase "carbon credits" from the Federal Government to offset the carbon dioxide that is emitted from the combustion of carbon with oxygen when burned.
In an effort to maintain United State’s competitiveness and productivity, there is not a current cap and trade system in effect. Every cap and trade system proposed in the U.S. Congress has been rejected by not only members, but the general public as well.
Over 95 percent of Kentucky's electricity comes from coal generated power plants. Kentucky is third in the nation in coal production, generating over $3 billion in sales and hundreds of millions in tax revenue. The Kentucky coal industry employs more than 15,000 people.
The "cap and trade" provision will not only devastate the coalfield communities in eastern and western Kentucky, it will destroy large segments of Kentucky's manufacturing base, particularly energy intensive industries like steel and aluminum.
Cap and Trade would have a devastating effect on Kentucky economy. It wouldn't result in a world wide carbon reduction. The cap and trade program would put thousands of Kentuckians out of work, and would put thousands of Kentucky's highest paid union and engineering jobs at risk. The coal mines, power industry, chemical manufacturers, petroleum refineries, steel mines, and auto manufacturers would be put in an Obama made economic crisis. These businesses would end up closing, and would stop expanding. Many coal plants would go over seas where less efficient and less regulated overseas coal plants would produce our products and increase worldwide carbon emissions. Energy cost will increase as will prices.
Kentucky currently produces 30 percent of our nation's steel and aluminum. Together, these industries employ thousands of Kentuckians in communities like Ashland, Russellville, Sebree, Hawesville and Lewisport. The energy tax in the "cap and trade" provision will significantly increase the cost of producing steel and aluminum, putting our companies at a severe competitive disadvantage compared to their competitors in other countries.
High-end estimates suggest that Cap and Trade will cost the average Kentuckian an extra $1000 a year on their utility bills. This increase in cost may come to Kentuckians when they are already boiling over with the consequences of a weak economy and are least able to condone an attack on the Coal industry, the state's backbone.
While a Cap and Trade battle in Congress may or may not materialize; the EPA has reported that they may consider going around Congress via regulatory statute in the Clean Air Act.
Most energy production is from burning coal and natural gas. This produces a gas called carbon dioxide from the complete combustion of carbon with oxygen. Any utilities using coal or natural gas for electricity will be required by law to purchase "carbon credits" from the Federal Government to offset the carbon dioxide that is emitted from the combustion of carbon with oxygen when burned.
In an effort to maintain United State’s competitiveness and productivity, there is not a current cap and trade system in effect. Every cap and trade system proposed in the U.S. Congress has been rejected by not only members, but the general public as well.
Over 95 percent of Kentucky's electricity comes from coal generated power plants. Kentucky is third in the nation in coal production, generating over $3 billion in sales and hundreds of millions in tax revenue. The Kentucky coal industry employs more than 15,000 people.
The "cap and trade" provision will not only devastate the coalfield communities in eastern and western Kentucky, it will destroy large segments of Kentucky's manufacturing base, particularly energy intensive industries like steel and aluminum.
Cap and Trade would have a devastating effect on Kentucky economy. It wouldn't result in a world wide carbon reduction. The cap and trade program would put thousands of Kentuckians out of work, and would put thousands of Kentucky's highest paid union and engineering jobs at risk. The coal mines, power industry, chemical manufacturers, petroleum refineries, steel mines, and auto manufacturers would be put in an Obama made economic crisis. These businesses would end up closing, and would stop expanding. Many coal plants would go over seas where less efficient and less regulated overseas coal plants would produce our products and increase worldwide carbon emissions. Energy cost will increase as will prices.
Kentucky currently produces 30 percent of our nation's steel and aluminum. Together, these industries employ thousands of Kentuckians in communities like Ashland, Russellville, Sebree, Hawesville and Lewisport. The energy tax in the "cap and trade" provision will significantly increase the cost of producing steel and aluminum, putting our companies at a severe competitive disadvantage compared to their competitors in other countries.
High-end estimates suggest that Cap and Trade will cost the average Kentuckian an extra $1000 a year on their utility bills. This increase in cost may come to Kentuckians when they are already boiling over with the consequences of a weak economy and are least able to condone an attack on the Coal industry, the state's backbone.
While a Cap and Trade battle in Congress may or may not materialize; the EPA has reported that they may consider going around Congress via regulatory statute in the Clean Air Act.
Sunday, September 26, 2010
ARLP competes in the Industrial Metals & Minerals industry with BHP Billiton Ltd. (BHP) [Chart - Analysis - News]---the largest firm in the industry group---and Massey Energy Co. (MEE) [Chart - Analysis - News], who have returned 10.43% and -6.72% during the past month, respectively. ARLP is likely to be sensitive to its competitors so future weakness in the Industrial Metals & Minerals industry could be an early warning sign that things might be turning around.
ARLP'sStrengths
Some of Alliance Resource Partner LLP's strengths include;
- contracted coal prices,
- strength in export markets,
- operation in 9 facilities, and
- large coal stockpile inventory.
Sunday, September 19, 2010
Press Release
ALLIANCE RESOURCE PARTNERS, L.P. Announces Record Coal Sales Volumes and Pricing Lead to Record Quarterly Revenues, EBITDA and Net Income; Quarterly Cash Distribution Increased 2.5% to $0.81 Per Unit; 2010 Guidance Increased
TULSA, Okla., Jul 26, 2010 (BUSINESS WIRE) --
Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported record financial results for the quarter ended June 30, 2010 (the "2010 Quarter"). Strong increases to coal sales volumes and average realized pricing drove revenues in the 2010 Quarter to a record $400.3 million, an increase of 31.7% compared to the quarter ended June 30, 2009 (the "2009 Quarter"). ARLP also posted records in the 2010 Quarter for EBITDA, which increased 67.3% to $129.0 million, and net income, which climbed 106.1% to $85.5 million, or $1.82 of net income per basic and diluted limited partner unit. (For a discussion of our net income presentation and a definition of EBITDA and related reconciliations to comparable GAAP financial measures, please see the end of this release).
ARLP also announced that the Board of Directors of its managing general partner increased the cash distribution to unitholders for the 2010 Quarter to $0.81 per unit (an annualized rate of $3.24 per unit), payable on August 13, 2010 to all unitholders of record as of the close of trading on August 6, 2010. The announced distribution represents an 8.7% increase over the cash distribution of $0.745 for the 2009 Quarter and a 2.5% increase over the cash distribution of $0.79 for the first quarter of 2010.
"ARLP continued to benefit from our ongoing growth initiatives and strong sales contract position as we again delivered record results for the second quarter and first half of 2010," said Joseph W. Craft III, President and Chief Executive Officer. "These results, supported by our continuing expectations for a tenth consecutive year of record performance in 2010 and visible growth opportunities in the future, gave our Board of Directors the confidence to increase ARLP's quarterly unitholder distribution growth rate by 25% above the 2% per quarter rate of growth we have followed for the last seven quarters."
Consolidated Financial Results
Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009
Record revenues in the 2010 Quarter were driven primarily by increased coal sales volumes and ARLP's strong coal sales contract position. Increased tons sold from the River View and Mettiki mines pushed coal sales volumes in the 2010 Quarter to a record 7.5 million tons, an increase of 19.9% over the 6.2 million tons sold in the 2009 Quarter. Primarily reflecting improved pricing under ARLP's coal sales contracts, average coal sales prices in the 2010 Quarter rose 11.9% to a record $51.53 per ton sold. Other sales and operating revenues, which jumped 60.9% primarily due to increased third-party sales of mine safety equipment at Matrix Design Group, also contributed to higher revenues in the 2010 Quarter.
Production volumes rose 9.4% in the 2010 Quarter to 6.9 million tons, compared to 6.3 million tons in the 2009 Quarter, primarily as a result of increased coal production at the River View mine. Expenses related to increased coal production and sales volumes drove operating expenses higher in the 2010 Quarter, and particularly impacted materials and supplies expenses and sales-related expenses. Higher operating expenses also reflect expenses related to production disruptions at the Dotiki and Pattiki mining operations during the 2010 Quarter.
Financial results for the 2010 Quarter compared to the 2009 Quarter were also impacted by higher depreciation, depletion and amortization, up $7.4 million to $35.7 million, outside coal purchases, which jumped $4.1 million due to increased sales into the export market, and general and administrative expenses, which rose $2.3 million primarily as a result of increased incentive compensation expense.
Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009
For the six months ended June 30, 2010 (the "2010 Period"), ARLP reported records for all major operating and financial metrics. Led by increased production and sales volumes at River View, tons produced climbed 9.6% and tons sold jumped 17.3%, compared to the six months ended June 30, 2009 (the "2009 Period"). Higher coal sales volumes and increased average coal sales prices, which rose $3.11 per ton sold, combined to drive revenues for the 2010 Period up by 23.3%, compared to the 2009 Period, to $781.0 million while EBITDA for the 2010 Period increased 34.1% to $247.9 million, compared to EBITDA of $184.9 million for the 2009 Period. Net income for the 2010 Period increased 40.8% to $160.4 million, or $3.38 of net income per basic and diluted limited partner unit, compared to net income of $114.0 million, or $2.28 of net income per basic and diluted limited partner unit, for the 2009 Period.
Increased coal sales volumes in the Illinois Basin and Northern Appalachian regions spurred ARLP to a record 7.5 million tons sold in the 2010 Quarter, compared to 6.2 million tons in the 2009 Quarter and 7.4 million tons in the first quarter of 2010 (the "Sequential Quarter"). Higher Illinois Basin coal sales volumes primarily reflect expanded production capacity at the River View mine and increased sales from coal inventories in the region. Increased sales into the export market during the 2010 Quarter drove coal sales volumes in Northern Appalachia higher compared to both the 2009 and Sequential Quarters. Lower Central Appalachian coal sales volumes in the 2010 Quarter were impacted by the timing of shipments as well as reduced production due to increased regulatory oversight. Although total coal inventories at the end of the 2010 Quarter remained approximately 162,000 tons above inventories at the end of the 2009 Quarter, coal inventories declined approximately 462,000 tons compared to the Sequential Quarter and ARLP expects coal inventories will continue to trend lower over the balance of this year.
Improved contract pricing in the Illinois Basin and Central Appalachian regions drove average coal sales prices higher in the 2010 Quarter compared to both the 2009 Quarter and the Sequential Quarter. In Northern Appalachia, sales into the significantly higher priced export markets pushed the average realized price per ton higher in the 2010 Quarter up by $15.62 per ton and $11.28 per ton compared to the 2009 Quarter and Sequential Quarter, respectively.
Higher total Segment Adjusted EBITDA Expense per ton during the 2010 Quarter was in line with ARLP's expectations and, compared to the 2009 Quarter, reflects the previously discussed increases in consolidated coal sales, coal production and operating expenses. Production disruptions at the Dotiki and Pattiki mines, partially offset by increased production at the River View mine, also led to higher Segment Adjusted EBITDA Expense per ton in the Illinois Basin compared to the 2009 Quarter and the Sequential Quarter. In Central Appalachia, lower coal sales volumes and increased regulatory costs also contributed to higher Segment Adjusted EBITDA Expense per ton in the 2010 Quarter compared to both the 2009 and Sequential Quarters. In Northern Appalachia, increased Segment Adjusted EBITDA Expense per ton in the 2010 Quarter reflect higher costs associated with producing metallurgical quality coal and purchases of outside coal for sale into the export markets. Segment Adjusted EBITDA Expense per ton in Northern Appalachia was also impacted by increased expenses related to development of the Tunnel Ridge mine as incidental coal production began during the 2010 Quarter.
Outlook
Commenting on ARLP's outlook, Mr. Craft said, "Buoyed by favorable weather conditions and recovering industrial activity, the Energy Information Administration estimates electricity demand has increased 3.8% during the first half of this year compared to the first half of 2009. EIA currently anticipates similar year-over-year growth of 3.5% for the remainder of 2010. The domestic steam coal markets have also begun to show signs of improvement as increased consumption of electricity, lower coal production volumes and continued strength in the export markets have contributed to reduced utility stockpiles and improved coal demand and prices."
Mr. Craft added, "ARLP has recently executed several new coal sales agreements for deliveries totaling 7.1 million tons over the next four years. Shipments under these new contracts are scheduled to begin next year at average sales prices above current realizations. Based upon current negotiation and other expressions of interest by utilities for our production, Alliance is hopeful, that we can sign additional new long term contracts this year enabling us to maintain 16 continuous mining shifts of production at the River View mine. These recent indications of an improving market environment support our optimism about the prospects for future growth at ARLP."
For 2010, ARLP anticipates coal production will remain in a range of approximately 29.9 to 30.6 million tons and coal sales volumes in a range of approximately 30.8 to 31.5 million tons, essentially all of which is priced and committed. ARLP has also secured sales commitments for approximately 29.8 million tons, 24.2 million tons and 22.3 million tons in 2011, 2012 and 2013, respectively, of which approximately 2.0 million tons and 5.4 million tons currently remain open to market pricing in 2012 and 2013, respectively.
Based on results to date and updated estimates, ARLP is currently anticipating 2010 revenues, excluding transportation revenues, near the upper end of its previously provided range of approximately $1.50 to $1.60 billion. In addition, ARLP is increasing its 2010 estimated ranges for EBITDA and net income to approximately $475.0 to $515.0 million and $305.0 to $335.0 million, respectively. Capital expenditures for 2010, including maintenance capital expenditures, are now estimated in the range of $285.0 to $325.0 million.
A conference call regarding ARLP's 2010 Quarter financial results is scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial (866) 543-6405 and provide pass code 98054809. International callers should dial (617) 213-8897 and provide the same pass code. Investors may also listen to the call via the "investor information" section of ARLP's website at http://www.arlp.com.
An audio replay of the conference call will be available for approximately one week. To access the audio replay, dial (888) 286-8010 and provide pass code 11919075. International callers should dial (617) 801-6888 and provide the same pass code.
This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, ARLP's distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.
About Alliance Resource Partners, L.P.
ARLP is a diversified producer and marketer of coal to major United States utilities and industrial users. ARLP, the nation's first publicly traded master limited partnership involved in the production and marketing of coal, is currently the fifth largest coal producer in the eastern United States with mining operations in the Illinois Basin, Northern Appalachian and Central Appalachian coal producing regions. ARLP operates nine mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia and is also constructing a new mining complex in West Virginia. In addition, ARLP operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana.
News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission, are available at http://www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7674 or via e-mail at investorrelations@arlp.com.
The statements and projections used throughout this release are based on current expectations. These statements and projections are forward-looking, and actual results may differ materially. These projections do not include the potential impact of any mergers, acquisitions or other business combinations that may occur after the date of this release. At the end of this release, we have included more information regarding business risks that could affect our results.
TULSA, Okla., Jul 26, 2010 (BUSINESS WIRE) --
Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported record financial results for the quarter ended June 30, 2010 (the "2010 Quarter"). Strong increases to coal sales volumes and average realized pricing drove revenues in the 2010 Quarter to a record $400.3 million, an increase of 31.7% compared to the quarter ended June 30, 2009 (the "2009 Quarter"). ARLP also posted records in the 2010 Quarter for EBITDA, which increased 67.3% to $129.0 million, and net income, which climbed 106.1% to $85.5 million, or $1.82 of net income per basic and diluted limited partner unit. (For a discussion of our net income presentation and a definition of EBITDA and related reconciliations to comparable GAAP financial measures, please see the end of this release).
ARLP also announced that the Board of Directors of its managing general partner increased the cash distribution to unitholders for the 2010 Quarter to $0.81 per unit (an annualized rate of $3.24 per unit), payable on August 13, 2010 to all unitholders of record as of the close of trading on August 6, 2010. The announced distribution represents an 8.7% increase over the cash distribution of $0.745 for the 2009 Quarter and a 2.5% increase over the cash distribution of $0.79 for the first quarter of 2010.
"ARLP continued to benefit from our ongoing growth initiatives and strong sales contract position as we again delivered record results for the second quarter and first half of 2010," said Joseph W. Craft III, President and Chief Executive Officer. "These results, supported by our continuing expectations for a tenth consecutive year of record performance in 2010 and visible growth opportunities in the future, gave our Board of Directors the confidence to increase ARLP's quarterly unitholder distribution growth rate by 25% above the 2% per quarter rate of growth we have followed for the last seven quarters."
Consolidated Financial Results
Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009
Record revenues in the 2010 Quarter were driven primarily by increased coal sales volumes and ARLP's strong coal sales contract position. Increased tons sold from the River View and Mettiki mines pushed coal sales volumes in the 2010 Quarter to a record 7.5 million tons, an increase of 19.9% over the 6.2 million tons sold in the 2009 Quarter. Primarily reflecting improved pricing under ARLP's coal sales contracts, average coal sales prices in the 2010 Quarter rose 11.9% to a record $51.53 per ton sold. Other sales and operating revenues, which jumped 60.9% primarily due to increased third-party sales of mine safety equipment at Matrix Design Group, also contributed to higher revenues in the 2010 Quarter.
Production volumes rose 9.4% in the 2010 Quarter to 6.9 million tons, compared to 6.3 million tons in the 2009 Quarter, primarily as a result of increased coal production at the River View mine. Expenses related to increased coal production and sales volumes drove operating expenses higher in the 2010 Quarter, and particularly impacted materials and supplies expenses and sales-related expenses. Higher operating expenses also reflect expenses related to production disruptions at the Dotiki and Pattiki mining operations during the 2010 Quarter.
Financial results for the 2010 Quarter compared to the 2009 Quarter were also impacted by higher depreciation, depletion and amortization, up $7.4 million to $35.7 million, outside coal purchases, which jumped $4.1 million due to increased sales into the export market, and general and administrative expenses, which rose $2.3 million primarily as a result of increased incentive compensation expense.
Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009
For the six months ended June 30, 2010 (the "2010 Period"), ARLP reported records for all major operating and financial metrics. Led by increased production and sales volumes at River View, tons produced climbed 9.6% and tons sold jumped 17.3%, compared to the six months ended June 30, 2009 (the "2009 Period"). Higher coal sales volumes and increased average coal sales prices, which rose $3.11 per ton sold, combined to drive revenues for the 2010 Period up by 23.3%, compared to the 2009 Period, to $781.0 million while EBITDA for the 2010 Period increased 34.1% to $247.9 million, compared to EBITDA of $184.9 million for the 2009 Period. Net income for the 2010 Period increased 40.8% to $160.4 million, or $3.38 of net income per basic and diluted limited partner unit, compared to net income of $114.0 million, or $2.28 of net income per basic and diluted limited partner unit, for the 2009 Period.
Increased coal sales volumes in the Illinois Basin and Northern Appalachian regions spurred ARLP to a record 7.5 million tons sold in the 2010 Quarter, compared to 6.2 million tons in the 2009 Quarter and 7.4 million tons in the first quarter of 2010 (the "Sequential Quarter"). Higher Illinois Basin coal sales volumes primarily reflect expanded production capacity at the River View mine and increased sales from coal inventories in the region. Increased sales into the export market during the 2010 Quarter drove coal sales volumes in Northern Appalachia higher compared to both the 2009 and Sequential Quarters. Lower Central Appalachian coal sales volumes in the 2010 Quarter were impacted by the timing of shipments as well as reduced production due to increased regulatory oversight. Although total coal inventories at the end of the 2010 Quarter remained approximately 162,000 tons above inventories at the end of the 2009 Quarter, coal inventories declined approximately 462,000 tons compared to the Sequential Quarter and ARLP expects coal inventories will continue to trend lower over the balance of this year.
Improved contract pricing in the Illinois Basin and Central Appalachian regions drove average coal sales prices higher in the 2010 Quarter compared to both the 2009 Quarter and the Sequential Quarter. In Northern Appalachia, sales into the significantly higher priced export markets pushed the average realized price per ton higher in the 2010 Quarter up by $15.62 per ton and $11.28 per ton compared to the 2009 Quarter and Sequential Quarter, respectively.
Higher total Segment Adjusted EBITDA Expense per ton during the 2010 Quarter was in line with ARLP's expectations and, compared to the 2009 Quarter, reflects the previously discussed increases in consolidated coal sales, coal production and operating expenses. Production disruptions at the Dotiki and Pattiki mines, partially offset by increased production at the River View mine, also led to higher Segment Adjusted EBITDA Expense per ton in the Illinois Basin compared to the 2009 Quarter and the Sequential Quarter. In Central Appalachia, lower coal sales volumes and increased regulatory costs also contributed to higher Segment Adjusted EBITDA Expense per ton in the 2010 Quarter compared to both the 2009 and Sequential Quarters. In Northern Appalachia, increased Segment Adjusted EBITDA Expense per ton in the 2010 Quarter reflect higher costs associated with producing metallurgical quality coal and purchases of outside coal for sale into the export markets. Segment Adjusted EBITDA Expense per ton in Northern Appalachia was also impacted by increased expenses related to development of the Tunnel Ridge mine as incidental coal production began during the 2010 Quarter.
Outlook
Commenting on ARLP's outlook, Mr. Craft said, "Buoyed by favorable weather conditions and recovering industrial activity, the Energy Information Administration estimates electricity demand has increased 3.8% during the first half of this year compared to the first half of 2009. EIA currently anticipates similar year-over-year growth of 3.5% for the remainder of 2010. The domestic steam coal markets have also begun to show signs of improvement as increased consumption of electricity, lower coal production volumes and continued strength in the export markets have contributed to reduced utility stockpiles and improved coal demand and prices."
Mr. Craft added, "ARLP has recently executed several new coal sales agreements for deliveries totaling 7.1 million tons over the next four years. Shipments under these new contracts are scheduled to begin next year at average sales prices above current realizations. Based upon current negotiation and other expressions of interest by utilities for our production, Alliance is hopeful, that we can sign additional new long term contracts this year enabling us to maintain 16 continuous mining shifts of production at the River View mine. These recent indications of an improving market environment support our optimism about the prospects for future growth at ARLP."
For 2010, ARLP anticipates coal production will remain in a range of approximately 29.9 to 30.6 million tons and coal sales volumes in a range of approximately 30.8 to 31.5 million tons, essentially all of which is priced and committed. ARLP has also secured sales commitments for approximately 29.8 million tons, 24.2 million tons and 22.3 million tons in 2011, 2012 and 2013, respectively, of which approximately 2.0 million tons and 5.4 million tons currently remain open to market pricing in 2012 and 2013, respectively.
Based on results to date and updated estimates, ARLP is currently anticipating 2010 revenues, excluding transportation revenues, near the upper end of its previously provided range of approximately $1.50 to $1.60 billion. In addition, ARLP is increasing its 2010 estimated ranges for EBITDA and net income to approximately $475.0 to $515.0 million and $305.0 to $335.0 million, respectively. Capital expenditures for 2010, including maintenance capital expenditures, are now estimated in the range of $285.0 to $325.0 million.
A conference call regarding ARLP's 2010 Quarter financial results is scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial (866) 543-6405 and provide pass code 98054809. International callers should dial (617) 213-8897 and provide the same pass code. Investors may also listen to the call via the "investor information" section of ARLP's website at http://www.arlp.com.
An audio replay of the conference call will be available for approximately one week. To access the audio replay, dial (888) 286-8010 and provide pass code 11919075. International callers should dial (617) 801-6888 and provide the same pass code.
This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, ARLP's distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.
About Alliance Resource Partners, L.P.
ARLP is a diversified producer and marketer of coal to major United States utilities and industrial users. ARLP, the nation's first publicly traded master limited partnership involved in the production and marketing of coal, is currently the fifth largest coal producer in the eastern United States with mining operations in the Illinois Basin, Northern Appalachian and Central Appalachian coal producing regions. ARLP operates nine mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia and is also constructing a new mining complex in West Virginia. In addition, ARLP operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana.
News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission, are available at http://www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7674 or via e-mail at investorrelations@arlp.com.
The statements and projections used throughout this release are based on current expectations. These statements and projections are forward-looking, and actual results may differ materially. These projections do not include the potential impact of any mergers, acquisitions or other business combinations that may occur after the date of this release. At the end of this release, we have included more information regarding business risks that could affect our results.
Alliance Resource Partner's Analyst Coverage
Analyst Coverage
Barclays Capital Peter D. Ward, CFA
Citigroup John Tysseland
Deutsche Bank Securities, Inc. David S. Martin
Hilliard Lyons Joel K. Havard
Raymond James James Rollyson
RBC Capital Markets Lasan Johong
Madison Williams Mark Reichman
Stifel Nicolaus Paul Forward
Wells Fargo Securities Ron Londe
Analyst Ratings
1-Strong Buy 1
2-Buy 2
3-Hold 6
4-Underperform 0
5-Sell 0
Mean Recommendation: 2.6
Sell Strong Buy
Available Measures
Earnings Per Share (EPS) Book Value Per Share(BPS) Cash Flow Per Share (CPS) Dividend Per Share (DPS) EBIT (EBI) EBITDA (EBT) GAAP Earnings Per Share (GPS) Net Asset Value (NAV) Net Debt (NDT) Net Income (NET) Operating Profit (OPR) Return On Equity (ROE) Sales (SAL) Earnings Per Share (Parent) (SEPPAR) Net Income (Parent) (SNIPAR) Operating Profit (Parent) (SOPPAR) Sales (Parent) (SSAPAR)
Analyst Forecasts -
Fiscal Period Mean High Low Median
Annual Dec 12 7.29 7.98 6.05 7.56
Annual Dec 11 6.87 7.70 5.70 6.96
Annual Dec 10 6.79 7.18 6.01 6.90
Quarterly Sep 10 1.65 1.82 1.20 1.67
Quarterly Dec 10 1.69 1.86 1.40 1.74
Quarterly Mar 11 1.75 1.97 1.53 1.75
Quarterly Jun 11 1.95 1.96 1.93 1.95
Long Term Growth 10.00 10.00 10.00 10.00
Last Month Revisions
Fiscal Period # of Estimates #Up #Down Mean % Change
Annual Dec 12 4 0 0 0.00
Annual Dec 11 8 0 0 0.00
Annual Dec 10 8 1 0 0.07
Quarterly Sep 10 7 0 0 0.00
Quarterly Dec 10 6 0 0 0.00
Quarterly Mar 11 2 0 0 0.00
Quarterly Jun 11 2 0 0 0.00
Long Term Growth 1 0 0 0.00
Actuals -
Reported EPU Mean Estimate Surprise % Change
Annual Dec 09 3.56 3.52 1.14
Quarterly Sep 09 0.57 0.63 -9.93
Quarterly Dec 09 0.70 0.66 6.26
Quarterly Mar 10 1.56 0.98 59.00
Quarterly Jun 10 1.82 1.38 32.24
Annual Dec 08 2.41 2.63 -8.19
Annual Dec 07 3.78 3.72 1.67
Data Provided by Thomson Reuters
Alliance Resource Partners, L.P. is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Alliance Resource Partners, L.P.'s performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of Alliance Resource Partners, L.P. or its management. Alliance Resource Partners, L.P. does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.
Barclays Capital Peter D. Ward, CFA
Citigroup John Tysseland
Deutsche Bank Securities, Inc. David S. Martin
Hilliard Lyons Joel K. Havard
Raymond James James Rollyson
RBC Capital Markets Lasan Johong
Madison Williams Mark Reichman
Stifel Nicolaus Paul Forward
Wells Fargo Securities Ron Londe
Analyst Ratings
1-Strong Buy 1
2-Buy 2
3-Hold 6
4-Underperform 0
5-Sell 0
Mean Recommendation: 2.6
Sell Strong Buy
Available Measures
Earnings Per Share (EPS) Book Value Per Share(BPS) Cash Flow Per Share (CPS) Dividend Per Share (DPS) EBIT (EBI) EBITDA (EBT) GAAP Earnings Per Share (GPS) Net Asset Value (NAV) Net Debt (NDT) Net Income (NET) Operating Profit (OPR) Return On Equity (ROE) Sales (SAL) Earnings Per Share (Parent) (SEPPAR) Net Income (Parent) (SNIPAR) Operating Profit (Parent) (SOPPAR) Sales (Parent) (SSAPAR)
Analyst Forecasts -
Fiscal Period Mean High Low Median
Annual Dec 12 7.29 7.98 6.05 7.56
Annual Dec 11 6.87 7.70 5.70 6.96
Annual Dec 10 6.79 7.18 6.01 6.90
Quarterly Sep 10 1.65 1.82 1.20 1.67
Quarterly Dec 10 1.69 1.86 1.40 1.74
Quarterly Mar 11 1.75 1.97 1.53 1.75
Quarterly Jun 11 1.95 1.96 1.93 1.95
Long Term Growth 10.00 10.00 10.00 10.00
Last Month Revisions
Fiscal Period # of Estimates #Up #Down Mean % Change
Annual Dec 12 4 0 0 0.00
Annual Dec 11 8 0 0 0.00
Annual Dec 10 8 1 0 0.07
Quarterly Sep 10 7 0 0 0.00
Quarterly Dec 10 6 0 0 0.00
Quarterly Mar 11 2 0 0 0.00
Quarterly Jun 11 2 0 0 0.00
Long Term Growth 1 0 0 0.00
Actuals -
Reported EPU Mean Estimate Surprise % Change
Annual Dec 09 3.56 3.52 1.14
Quarterly Sep 09 0.57 0.63 -9.93
Quarterly Dec 09 0.70 0.66 6.26
Quarterly Mar 10 1.56 0.98 59.00
Quarterly Jun 10 1.82 1.38 32.24
Annual Dec 08 2.41 2.63 -8.19
Annual Dec 07 3.78 3.72 1.67
Data Provided by Thomson Reuters
Alliance Resource Partners, L.P. is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Alliance Resource Partners, L.P.'s performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of Alliance Resource Partners, L.P. or its management. Alliance Resource Partners, L.P. does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.
Alliance Resource Partner's, L.P. Mission
Be the partner of choice for providing economical life-essential energy resources, the employer of choice for ensuring maximum worker safety, the investment of choice through leading optimally efficient operations, and the environmental steward of choice through sustainable development.
Sunday, September 12, 2010
Alliance Resource Parters. L.P. Strength in Technological Advancement
A strenth that Alliance has over other mining firms, is their commitment to the advancement and utilization of safety technology in the mining industry. As an industry leader, Alliance has installed tracking and communication systems ahead of the schedule specified in the MINER Act.
A 2010 Mine Safety & Health Administration survey showed that only eight percent of all underground mining operations are using communication and tracking systems. All Alliance operations have used tracking and communication systems since 2007. This exhibits Alliance's commitment to safety of its employees.
Further innovations in technology have triggered the company-wide installation of the METS 2.1 tracking and communication system developed by our subsidiary, Matrix Design Group. METS 2.1 is not only a valuable production tool that allows for efficient communications between surface and underground personnel, but it also is a vital safety tool in the event of a mine evacuation or other emergency incident.
Several of the company's operating subsidiaries have installed and are testing proximity-detection sensors developed by its subsidiary, Matrix Design Group, in cooperation with Joy Mining Machinery. This system trains machinery operators to remain clear of unsafe areas, or "red zones", by warnings and machine shut-downs.
Alliance is using these products to reinforce its position as the industry's leader in technological advancement.
A 2010 Mine Safety & Health Administration survey showed that only eight percent of all underground mining operations are using communication and tracking systems. All Alliance operations have used tracking and communication systems since 2007. This exhibits Alliance's commitment to safety of its employees.
Further innovations in technology have triggered the company-wide installation of the METS 2.1 tracking and communication system developed by our subsidiary, Matrix Design Group. METS 2.1 is not only a valuable production tool that allows for efficient communications between surface and underground personnel, but it also is a vital safety tool in the event of a mine evacuation or other emergency incident.
Several of the company's operating subsidiaries have installed and are testing proximity-detection sensors developed by its subsidiary, Matrix Design Group, in cooperation with Joy Mining Machinery. This system trains machinery operators to remain clear of unsafe areas, or "red zones", by warnings and machine shut-downs.
Alliance is using these products to reinforce its position as the industry's leader in technological advancement.
Thursday, September 2, 2010
There are risk factors in the in the external environment that pose a threat not only to ARLP, but also share holders. These risk factors include;
• The amount of coal available on ARLP’s properties,
• Weather conditions,
• Proximity to and capacity of transportation facilities,
• Domestic and foreign governmental regulations, and taxes,
• Price and availability of alternative fuels,
• The effect of worldwide energy consumptions, and
• Economic conditions.
• The amount of coal available on ARLP’s properties,
• Weather conditions,
• Proximity to and capacity of transportation facilities,
• Domestic and foreign governmental regulations, and taxes,
• Price and availability of alternative fuels,
• The effect of worldwide energy consumptions, and
• Economic conditions.
Tuesday, August 31, 2010
Why Alliance Resource Partners, L.P.
I currently work as a fuels analyst at Big Rivers Electric Corporation. In my position, I must keep abreast of the latest in the coal and utility industry. By creating a blog based on a coal company, I am able to stay aware of what is going on in the coal industry, itself.
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