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.