What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-15 compared with 2020-03-18 · 1058 added, 1106 removed, 1192 unchanged (64% of the section changed)

1 unchanged sentence

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Alpha Metallurgical Resources, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Alpha Metallurgical Resources, Inc.

and subsidiaries (the Company) as of December 31, 2020, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the year then ended, and the related notes (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

As described in Notes 2 and 17 to the consolidated financial statements, the Company’s consolidated asset retirement obligation liability was $165.1 million at December 31, 2020.

The Company records the asset retirement obligation liability at fair value in the period in which the legal obligation associated with the retirement of the long-lived asset is incurred.

Changes to the liability at operations that are not currently being reclaimed are offset by increasing or decreasing the carrying amount of the related long-lived asset.

Changes to the liability at operations that are currently being reclaimed are recorded to depreciation, depletion, and amortization.

The Company annually reviews its estimated future cash flows for its asset retirement obligations.

We identified the valuation of the asset retirement obligation as a critical audit matter because the estimate involves a high degree of subjectivity and auditing the significant assumptions utilized by management in estimating the amount of the liability requires judgment.

In particular, the obligation is determined using a discounted cash flow technique and is based upon mining permit requirements and various assumptions including discount rates, inflation rate, estimates of disturbed acreage, timing of reclamation activities, and third-party reclamation costs.

Our audit procedures related to the Company’s asset retirement obligation liability included the following, among others:

– We obtained an understanding of the relevant controls related to the Company’s accounting for the asset retirement obligation liability, and tested such controls for design and operating effectiveness, including controls over management’s review of the significant assumptions and data inputs described above.

– We compared significant valuation assumptions including the discount rates and inflation rate to market data, and utilized a valuation specialist to assist in testing the Company’s discounted cash flow model.

– We compared the estimates of disturbed acreage, timing of reclamation activities, and third-party reclamation costs to the prior year estimate, assessing consistency between timing of reclamation activities and projected mine life, evaluated the appropriateness of the estimated costs based on mine type, and compared anticipated costs to recent operating data.

– We utilized an external specialist to perform observations of mine site operations, conducted interviews of engineering personnel, assessed the completeness of the mine reclamation estimate with respect to meeting mine closure and post closure plan regulatory requirements, and evaluated the reasonableness of the engineering estimates and assumptions.

/s/ RSM US LLP

We have served as the Company's auditor since 2020.

Atlanta, Georgia

March 15, 2021

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Contura Energy, Inc.:

Alpha Metallurgical Resources, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Contura Energy, Inc.

and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive (loss) income, cash flows, and stockholders’ equity for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S.

We have audited the accompanying consolidated balance sheet of Alpha Metallurgical Resources, Inc.

(formerly Contura Energy, Inc.) and subsidiaries (the Company) as of December 31, 2019, the related consolidated statements of operations, comprehensive loss, cash flows, and stockholders’ equity for the year then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 18, 2020 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for revenue recognition effective January 1, 2018 due to the adoption of Accounting Standards Codification Topic 606 , Revenue from Contracts with Customers .

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2016.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We served as the Company’s auditor from 2016 to 2020.

Richmond, Virginia

March 18, 2020

CONTURA ENERGY, INC.

March 18, 2020, except for the seventh paragraph in Note 1 and Note 3, as to which the date is March 15, 2021

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

3 unchanged sentences

Coal revenues $ 1,413,124 $ 1,995,934

Freight and handling revenues

Other revenues 3,063 5,346

7 unchanged sentences

Merger-related costs — 1,090

Secondary offering costs

Asset impairment

Asset impairment and restructuring 83,878 66,324

Goodwill impairment — 124,353

Total other operating (income) loss:

Total other operating income:

Mark-to-market adjustment for acquisition-related obligations ( 8,750 ) ( 3,564 )

Gain on settlement of acquisition-related obligations

Other (income) expense

Other income ( 2,223 ) ( 974 )

Total costs and expenses 1,586,875 2,170,383

(Loss) income from operations

Other income (expense):

Loss from operations ( 170,688 ) ( 169,103 )

Other (expense) income:

Interest expense ( 74,528 ) ( 67,521 )

2 unchanged sentences

Equity loss in affiliates ( 3,473 ) ( 6,874 )

Bargain purchase gain

Miscellaneous (loss) income, net

Miscellaneous loss, net ( 1,972 ) ( 10,195 )

Total other expense, net ( 72,946 ) ( 103,802 )

(Loss) income from continuing operations before income taxes

Loss from continuing operations before income taxes ( 243,634 ) ( 272,905 )

Income tax benefit 2,164 53,287

Net (loss) income from continuing operations

Net loss from continuing operations ( 241,470 ) ( 219,618 )

Discontinued operations:

2 unchanged sentences

Loss from discontinued operations ( 205,429 ) ( 96,701 )

Net (loss) income

Basic (loss) income per common share:

(Loss) income from continuing operations

Net loss $ ( 446,899 ) $ ( 316,319 )

Basic loss per common share:

Loss from continuing operations $ ( 13.20 ) $ ( 11.68 )

Loss from discontinued operations ( 11.22 ) ( 5.14 )

Net (loss) income

Diluted (loss) income per common share:

(Loss) income from continuing operations

Net loss $ ( 24.42 ) $ ( 16.82 )

Diluted loss per common share:

Loss from continuing operations $ ( 13.20 ) $ ( 11.68 )

Loss from discontinued operations ( 11.22 ) ( 5.14 )

Net (loss) income

Net loss $ ( 24.42 ) $ ( 16.82 )

Weighted average shares - basic 18,298,362 18,808,460

1 unchanged sentence

Refer to accompanying Notes to Consolidated Financial Statements.

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)

Year Ended December 31,

Net (loss) income

Net loss $ ( 446,899 ) $ ( 316,319 )

Other comprehensive loss, net of tax:

1 unchanged sentence

Current period actuarial loss $ ( 60,647 ) $ ( 42,891 )

reclassification adjustments for amounts reclassified to earnings due to amortization of net actuarial loss (gain) and settlements

Income tax — —

$ ( 60,647 ) $ ( 42,891 )

reclassification adjustments for amounts reclassified to earnings due to amortization of net actuarial loss and settlements 7,278 7,405

Income tax — —

$ 7,278 $ 7,405

Total other comprehensive loss, net of tax $ ( 53,369 ) $ ( 35,486 )

Total comprehensive (loss) income

Total comprehensive loss $ ( 500,268 ) $ ( 351,805 )

Refer to accompanying Notes to Consolidated Financial Statements.

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands, except share and per share data)

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Current assets:

Cash and cash equivalents $ 139,227 $ 212,803

Trade accounts receivable, net of allowance for doubtful accounts of $0 as of December 31, 2019 and 2018

Trade accounts receivable, net of allowance for doubtful accounts of $ 293 and $ 0 as of December 31, 2020 and 2019

145,670 224,173

Inventories, net 108,051 150,888

3 unchanged sentences

Property, plant, and equipment, net of accumulated depreciation and amortization of $ 382,423 and $ 256,378 as of December 31, 2020 and 2019

363,620 436,398

Owned and leased mineral rights, net of accumulated depletion and amortization of $ 35,143 and $ 27,548 as of December 31, 2020 and 2019

463,250 523,012

Other acquired intangibles, net of accumulated amortization of $ 25,700 and $ 26,806 as of December 31, 2020 and 2019

88,196 124,246

Long-term restricted cash 96,033 122,524

1 unchanged sentence

Other non-current assets 149,382 189,475

Non-current assets - discontinued operations 9,473 162,624

Total assets $ 1,680,089 $ 2,302,823

Liabilities and Stockholders’ Equity

17 unchanged sentences

Stockholders’ Equity

Preferred stock - par value $0.01, 5.0 million shares authorized at December 31, 2019 and 2018, none issued

Preferred stock - par value $ 0.01 , 5.0 million shares authorized, none issued

Common stock - par value $ 0.01 , 50.0 million shares authorized, 20.6 million issued and 18.3 million outstanding at December 31, 2020 and 20.5 million issued and 18.2 million outstanding at December 31, 2019

2 unchanged sentences

Treasury stock, at cost:

2.3 million shares at December 31, 2019 and 1.1 million shares at December 31, 2018

Retained earnings

2.3 million shares at December 31, 2020 and 2019

( 107,014 ) ( 107,984 )

(Accumulated deficit) retained earnings ( 360,529 ) 86,810

Total stockholders’ equity 200,102 696,122

1 unchanged sentence

Refer to accompanying Notes to Consolidated Financial Statements.

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

3 unchanged sentences

Operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Net loss $ ( 446,899 ) $ ( 316,319 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation, depletion and amortization 151,455 315,162

3 unchanged sentences

Mark-to-market adjustment for acquisition-related obligations ( 8,750 ) ( 3,564 )

Gain on settlement of acquisition-related obligations

Loss (gain) on disposal of assets

Loss on sale of business 36,113 —

(Gain) loss on disposal of assets ( 2,401 ) 8,142

Gain on assets acquired in an exchange transaction — ( 9,083 )

Bargain purchase gain

Accretion on asset retirement obligations 30,658 33,759

1 unchanged sentence

Deferred income taxes 33,123 ( 12,098 )

Loss on sale of Powder River Basin

Goodwill impairment — 124,353

Asset impairment

Asset impairment and restructuring 256,518 83,485

Loss on modification and extinguishment of debt — 26,459

1 unchanged sentence

Equity in loss of affiliates 3,473 6,874

Other, net ( 5,972 ) ( 5,204 )

Changes in operating assets and liabilities

2 unchanged sentences

Prepaid expenses and other current assets 28,152 56,671

Deposits ( 17,926 ) 15,170

Other non-current assets ( 6,753 ) ( 24,460 )

7 unchanged sentences

Capital expenditures ( 153,990 ) ( 192,411 )

Payments on disposal of assets

Proceeds on disposal of assets 4,023 2,780

Cash paid on sale of business ( 52,192 ) —

Capital contributions to equity affiliates ( 3,443 ) ( 10,051 )

Cash, cash equivalents and restricted cash acquired in acquisition, net of amounts paid

Purchase of additional ownership interest in equity affiliate

Cash paid on sale of Powder River Basin

Purchase of investment securities ( 21,129 ) ( 92,855 )

Maturity of investment securities 16,685 100,250

Net cash (used in) provided by investing activities

Other, net 77 535

Net cash used in investing activities ( 209,969 ) ( 191,752 )

Financing activities:

2 unchanged sentences

Principal repayments of financing lease obligations ( 3,176 ) ( 3,654 )

Form S-4 costs

Debt issuance costs — ( 6,689 )

Debt extinguishment costs

Debt amendment costs

Common stock repurchases and related expenses ( 209 ) ( 37,622 )

Special dividend paid

Principal repayments of notes payable ( 16,723 ) ( 14,818 )

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents and restricted cash

Other, net — 952

Net cash used in financing activities ( 22,376 ) ( 69,694 )

Net decrease in cash and cash equivalents and restricted cash ( 103,109 ) ( 129,566 )

Cash and cash equivalents and restricted cash at beginning of period 347,680 477,246

7 unchanged sentences

Accrued capital expenditures $ 7,493 $ 4,110

Issuance of equity in connection with acquisition

Net balance due to Alpha deemed effectively settled

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.

3 unchanged sentences

Long-term restricted cash 96,033 122,524

Total cash and cash equivalents and restricted cash

Total cash and cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows $ 244,571 $ 347,680

Refer to accompanying Notes to Consolidated Financial Statements.

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands)

Additional Paid-in Capital

Comprehensive Income (Loss)

Treasury Stock at Cost

(Accumulated Deficit) Retained Earnings

Total Stockholders’ Equity / Predecessor Business Equity

Balances, December 31, 2016

Retrospective warrants adjustment

Other comprehensive loss, net

Stock-based compensation and net issuance of common stock for share vesting

Special dividend

Common stock repurchase and related expenses

Warrant exercises

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Treasury Stock at Cost Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity

Balances, December 31, 2018 $ 202 $ 761,301 $ ( 23,130 ) $ ( 70,362 ) $ 403,129 1,071,140

Net loss — — — — ( 316,319 ) ( 316,319 )

Other comprehensive loss, net — — ( 35,486 ) — — ( 35,486 )

3 unchanged sentences

Warrant exercises — 19 — — — 19

Form S-4 costs

Equity consideration for the Alpha Merger

Net balances due to Alpha deemed effectively settled

Balances, December 31, 2019 $ 205 $ 775,707 $ ( 58,616 ) $ ( 107,984 ) $ 86,810 $ 696,122

Net loss — — — — ( 446,899 ) ( 446,899 )

Credit losses cumulative-effect adjustment — — — — ( 440 ) ( 440 )

Other comprehensive loss, net — — ( 53,369 ) — — ( 53,369 )

Stock-based compensation and net issuance of common stock for share vesting 1 3,717 — — — 3,718

Exercise of stock options

Common stock repurchases and related expenses — — — 970 — 970

Warrant exercises

Balances, December 31, 2020 $ 206 $ 779,424 $ ( 111,985 ) $ ( 107,014 ) $ ( 360,529 ) $ 200,102

Refer to accompanying Notes to Consolidated Financial Statements.

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

2 unchanged sentences

(1) Business and Basis of Presentation

Contura Energy, Inc.

(“Contura” or the “Company”) is a Tennessee-based coal supplier with affiliate mining operations across major coal basins in Pennsylvania, Virginia and West Virginia.

With customers across the globe, high-quality reserves and significant port capacity, Contura reliably supplies both metallurgical coal to produce steel and thermal coal to generate power.

Contura was formed to acquire and operate certain of Alpha Natural Resources, Inc.’s (“Alpha”) core coal operations, as part of the Alpha Restructuring.

Contura began operations on July 26, 2016 and currently operates mines in the Northern Appalachia and Central Appalachia regions.

Alpha Metallurgical Resources, Inc.

(“Alpha” or the “Company”), previously named Contura Energy, Inc., is a Tennessee-based mining company with operations across Virginia and West Virginia.

With customers across the globe, high-quality reserves and significant port capacity, Alpha is a leading U.S.

supplier of metallurgical products for the steel industry.

The Company was formed to acquire and operate certain of Alpha Natural Resources, Inc.’s core coal operations, as part of the Alpha Natural Resources, Inc.

bankruptcy reorganization.

The Company began operations on July 26, 2016 and currently operates mines in the Central Appalachia region.

A merger with ANR, Inc.

(“ANR”) and Alpha Natural Resources Holdings, Inc.

(“Holdings,” and, together with ANR, the "Alpha Companies”) was completed on November 9, 2018 (the “Merger” or the “Alpha Merger”).

Refer to Note 3 for information on terms of the definitive merger agreement (the “Merger Agreement”).

Upon the consummation of the transactions contemplated by the Merger Agreement, Contura began trading on the New York Stock Exchange under the ticker “CTRA.”

and Alpha Natural Resources Holdings, Inc.

(together, the "Merger Companies”) was completed on November 9, 2018 (the “Merger”) pursuant to terms of the definitive merger agreement (the “Merger Agreement”).

Upon the consummation of the transactions contemplated by the Merger Agreement, the Company began trading on the New York Stock Exchange under the ticker “CTRA.”

Effective February 1, 2021, the Company changed its corporate name from Contura Energy, Inc.

to Alpha Metallurgical Resources, Inc.

to more accurately reflect its strategic focus on the production of metallurgical coal.

Following the effectiveness of its name change, the Company’s ticker symbol on the New York Stock Exchange changed from “CTRA” to “AMR” effective on February 4, 2021.

Basis of Presentation

Together, the consolidated balance sheet and consolidated statements of operations, comprehensive (loss) income, cash flows and stockholders’ equity for the Company are referred to as the “Financial Statements.” The Financial Statements are also referred to as “Consolidated” and references across periods are generally labeled “Balance Sheets,” “Statements of Operations,” and “Statements of Cash Flows.”

Together, the consolidated balance sheet and consolidated statements of operations, comprehensive loss, cash flows and stockholders’ equity for the Company are referred to as the “Financial Statements.” The Financial Statements are also referred to as “Consolidated” and references across periods are generally labeled “Balance Sheets,” “Statements of Operations,” and “Statements of Cash Flows.”

The Consolidated Financial Statements include all wholly owned subsidiaries’ results of operations for the years ended December 31, 2020 and 2019.

All significant intercompany transactions have been eliminated in consolidation.

For the year ended December 31, 2018, the Alpha Companies’ financial results are included in the Financial Statements for the period from November 9, 2018 through December 31, 2018.

The Alpha Companies’ financial results are not included in the Financial Statements in periods prior to November 9, 2018.

Refer to Note 3 for information on Alpha Merger.

On December 10, 2020, the Company closed on a transaction with Iron Senergy Holdings, LLC, to sell its thermal coal mining operations located in Pennsylvania consisting primarily of our Cumberland mining complex and related property (the Company’s former Northern Appalachia (“NAPP”) operations).

On December 8, 2017, the Company closed a transaction with Blackjewel L.L.C.

(“Buyer”) to sell the Eagle Butte and Belle Ayr mines located in the Powder River Basin (“PRB”), Wyoming, along with related coal reserves, equipment, infrastructure and other real properties.

The PRB results of operations and financial position are reported as discontinued operations in the Consolidated Financial Statements.

The historical information in the accompanying Notes to the Consolidated Financial Statements has been restated to reflect the effects of the PRB operations being reported as discontinued operations in the Consolidated Financial Statements.

to sell the Eagle Butte and Belle Ayr mines located in the Powder River Basin (“PRB”), Wyoming, along with related coal reserves, equipment, infrastructure and other real properties.

Refer to Note 3 for information related to Blackjewel L.L.C.’s subsequent bankruptcy filing and the related ESM transaction.

The Company’s former NAPP and PRB operations results of operations and financial position are reported as discontinued operations in the Consolidated Financial Statements.

The historical information in the accompanying Notes 2, 3, 4, 6, 7, 9, 10, 11, 12, 14, 15, 17, 18, 19, 20, 23, 24, and 25 to the Consolidated Financial Statements has been restated to reflect the effects of the former NAPP and PRB operations being reported as discontinued operations in the Consolidated Financial Statements.

Refer to Note 3 for further information on discontinued operations.

4 unchanged sentences

The Company may need to raise additional funds more quickly if market conditions deteriorate and may not be able to do so in a timely fashion, or at all.

The Company has cash on hand which will be sufficient to meet its working capital requirements, anticipated capital expenditures, debt service requirements, acquisition-related obligations, and reclamation obligations for the 12 months subsequent to the issuance of these financial statements.

The Company relies on a number of assumptions in budgeting for future activities.

These include the costs for mine development to sustain capacity of its operating mines, cash flows from operations, effects of regulation and taxes by governmental agencies, mining technology improvements and reclamation costs.

These assumptions are inherently subject to significant business, political, economic, regulatory, environmental and competitive uncertainties, contingencies and risks, all of which are difficult to predict and many of which are beyond the Company’s control.

Therefore, the cash on hand and from future operations will be subject to any significant changes in these assumptions.

CONTURA ENERGY, INC.

The Company believes it will have sufficient liquidity to meet its working capital requirements, anticipated capital expenditures, debt service requirements, acquisition-related obligations, and reclamation obligations for the 12 months subsequent to the issuance of these financial statements.

The Company relies

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

Reclassifications

Freight and handling costs has been reclassified in the prior year periods from a separate line item into cost of coal sales in the Consolidated Statements of Operations to conform to the current year presentation.

on a number of assumptions in budgeting for future activities.

Therefore, the cash on hand and from future operations will be subject to any significant changes in these assumptions.

COVID-19 Pandemic

In the first quarter of 2020, the COVID-19 virus was declared a pandemic by the World Health Organization.

The COVID-19 pandemic has had negative impacts on the Company’s business, results of operations, financial condition and cash flows.

A continued period of reduced demand for the Company’s products could have significant adverse consequences.

The full extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on its customers and suppliers and the range of governmental and community reactions to the pandemic, which are still uncertain and cannot be fully predicted at this time.

As further described in Note 15, on March 20, 2020, the Company borrowed funds under a senior secured asset-based revolving credit facility.

The funds were borrowed to augment the Company’s short-term operational flexibility in the face of uncertainty created by the current spread of the COVID-19 virus and its potential effects.

In the first quarter of 2021, the Company repaid the remaining $ 3,350 of borrowed funds as of December 31, 2020.

In response to the COVID-19 pandemic, on March 27, 2020, the “Coronavirus Aid, Relief, and Economic Security

Act” (“CARES Act”) was enacted into law.

As a result, the Company received $ 66,130 of accelerated refunds of previously generated alternative minimum tax (“AMT”) credits from the Internal Revenue Service (“IRS”) during the fourth quarter of 2020 as further described in Note 19 and deferred 2020 employer payroll taxes incurred after the date of enactment of $ 15,109 , including discontinued operations, with two future payments of $ 7,554 each due by December 31, 2021 and 2022.

On April 3, 2020, the Company announced temporary operational changes in response to market conditions, existing coal inventory levels, and customer deferrals due to concern around the global economic impact of the COVID-19 pandemic.

Beginning April 3, 2020, the majority of the Company’s operations were idled for a period of approximately 30 days, with some sites idling for shorter periods of time and a few continuing to operate at a near-normal rate of production.

Location-specific schedules were implemented based on existing customer agreements, current inventory levels, and anticipated customer demand.

Certain preparation plants, docks, and loadouts continued to operate to support business needs and customer shipments.

As of May 4, 2020, all Company sites were back to nearly normal staffing levels and operating capacity with additional precautions in place to help reduce the risk of exposure to COVID-19.

Refer to Note 8 for discussion of certain strategic actions announced during the second quarter of 2020 with respect to two thermal coal mining complexes in an effort to strengthen the Company’s financial performance.

The Company will continue to evaluate market conditions amid the continuing uncertainty of the COVID-19 pandemic and expects to adjust its operations accordingly.

(2) Summary of Significant Accounting Policies

16 unchanged sentences

however, actual results could differ from those estimates.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Cash and Cash Equivalents

3 unchanged sentences

Restricted Cash

Amounts included in restricted cash represent cash deposits that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral in the amounts of $38,944 , $12,706 , $67,868 , and $3,006 as of December 31, 2019 for securing the Company’s obligations under certain workers’ compensation, black lung, reclamation-related obligations, and financial guarantees and other, respectively, which have been written on the Company’s behalf.

Additionally, the Company had $12,363 of short-term restricted cash held in escrow related to the Company’s contingent revenue payment obligation as of December 31, 2019.

As of December 31, 2018 , collateral was provided in the amounts of $90,759 , $29,611 , $86,217 , $27,386 , and $2,833 for securing the Company’s obligations under certain workers’ compensation, black lung, reclamation-related obligations, general liabilities, and financial guarantees, respectively, which have been written on the Company’s behalf.

Additionally, the Company had $6,841 of short-term restricted cash held in escrow related to the Company’s contingent revenue payment obligation as of December 31, 2018.

Refer to Note 16 for further information regarding the contingent payment revenue obligation.

Amounts included in restricted cash represent cash deposits that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral in the amounts of $ 69,725 , $ 8,445 , and $ 17,863 as of December 31, 2020 to secure workers’ compensation and black lung obligations, reclamation-related obligations, and financial payments and other performance obligations, respectively, which have been written on the Company’s behalf.

As of December 31, 2019, collateral was provided in the amounts of $ 51,650 , $ 67,868 , and $ 3,006 to secure workers’ compensation and black lung obligations, reclamation-related obligations, and financial payments and other performance obligations, respectively, which have been written on the Company’s behalf.

The Company’s restricted cash is primarily invested in interest-bearing accounts.

This restricted cash is classified as both short-term and long-term on the Company’s Consolidated Balance Sheets.

This restricted cash is classified as long-term on the Company’s Consolidated Balance Sheets.

Additionally, as of December 31, 2020 and 2019, the Company had $ 9,311 and $ 12,363 , respectively, of short-term restricted cash held in escrow related to the Company’s contingent revenue payment obligation.

Refer to Note 16 for further information regarding the contingent payment revenue obligation.

Restricted Investments

Amounts included in restricted investments consist of certificates of deposit, mutual funds, and U.S.

Restricted investments consist of Federal Deposit Insurance Company (“FDIC”) insured certificates of deposit, mutual funds, and U.S.

treasury bills classified as either trading securities or held-to-maturity securities.

The trading securities are recorded initially at cost and adjusted to fair value at each reporting period.

The trading securities’ unrealized gains and losses resulting from fair value adjustments are recorded in current period earnings or loss.

The held-to-maturity securities are recorded at amortized cost with interest income recorded in current period earnings.

These restricted investments are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral in the amounts of $3,100 and $18,786 as of December 31, 2019 for securing the Company’s obligations under certain workers’ compensation and reclamation-related obligations, respectively, which have been written on the Company’s behalf, of which $13,508 are classified as trading securities and $8,378 are classified as held-to-maturity securities.

As of December 31, 2018, collateral was provided in the amounts of $1,888 , $27,049 , and $200 for securing the Company’s obligations under certain workers’ compensation, reclamation-related obligations, and general liabilities, respectively, which

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

have been written on the Company’s behalf, of which all were classified as held-to-maturity securities.

Trading securities are recorded initially at cost and are adjusted to fair value at each reporting period with unrealized gains and recorded in current period earnings or loss.

Held-to-maturity securities are recorded at amortized cost with interest income recorded in current period earnings.

As of December 31, 2020, $ 22,498 and $ 1,270 were classified as trading and held-to-maturity securities, respectively.

As of December 31, 2019, $ 11,021 and $ 8,378 were classified as trading and held-to-maturity securities, respectively.

Given the nature of the underlying investments, the Company does not expect any credit losses and has not recorded any credit losses with respect to its held-to-maturity portfolio.

Restricted investments are restricted as to withdrawal by certain agreements and provide collateral in the amounts of $ 51 , $ 22,233 , and $ 1,484 as of December 31, 2020 to secure workers’ compensation obligations, reclamation-related obligations, and financial payments and other performance obligations, respectively.

As of December 31, 2019, collateral was provided in the amounts of $ 613 and $ 18,786 to secure workers’ compensation obligations and reclamation-related obligations, respectively.

These restricted investments are classified as long-term on the Company’s Consolidated Balance Sheets.

Deposits represent cash deposits held at third parties as required by certain agreements entered into by the Company to provide cash collateral.

The Company had cash collateral in the form of deposits in the amounts of $8,887 and $1,836 as of December 31, 2019 and $24,002 and $1,390 as of December 31, 2018 to secure the Company’s obligations under reclamation-related obligations and various other operating agreements, respectively.

The Company had cash collateral in the form of deposits in the amounts of $ 25,633 , $ 1,596 , and $ 1,018 as of December 31, 2020 to secure reclamation-related obligations, financial payments and other performance obligations, and various other operating agreements, respectively.

The Company had cash collateral in the form of deposits in the amounts of $ 8,887 and $ 1,423 as of December 31, 2019 to secure the Company’s obligations under reclamation-related obligations and various other operating agreements, respectively.

These deposits are classified as both short-term and long-term on the Company’s Consolidated Balance Sheets.

Trade Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest.

The Company records an allowance for doubtful accounts at the estimate of the amount of probable credit losses in the Company’s existing accounts receivable.

The Company establishes provisions for losses on accounts receivable when it is probable that all or part of the outstanding balance will not be collected.

The Company regularly reviews its accounts receivable balances and establishes or adjusts the allowance as necessary primarily using the specific identification method.

The allowance for doubtful accounts was $0 at both December 31, 2019 and 2018 .

Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Trade accounts receivable are recorded at their invoiced amounts and do not bear interest.

The Company markets its coal primarily to domestic and international steel producers and electric utilities in the United States.

Credit is extended based on an evaluation of a customer’s financial condition, including a review of third-party credit score information.

Collateral is generally not required.

Accounts receivable balances are monitored against approved credit limits.

Credit limits are monitored and adjusted as considered necessary based on changes to a customer’s credit profile.

If a customer’s credit deteriorates, the Company may reduce credit risk exposure by reducing credit limits, obtaining letters of credit, obtaining credit insurance, or requiring pre-payment for shipments.

Credit losses have historically not been material.

Account balances are written-off against

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Refer to Note 24 for further information.

Coal is reported as inventory at the point in time the coal is extracted from the mine.

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Deferred Longwall Move Expenses

The Company defers the direct costs, including labor and supplies, associated with moving longwall equipment, the related equipment refurbishment costs, costs to drill vent holes and plug existing gas wells in advance of the longwall panel.

These deferred costs are amortized on a units-of-production basis into cost of coal sales over the life of the related panel of coal mined by the longwall equipment.

The amount of deferred longwall move expenses was $11,852 and $9,822 as of December 31, 2019 and 2018 , respectively, included within prepaid expenses and other current assets and other non-current assets in the Company’s Consolidated Balance Sheets.

The Company deferred the direct costs, including labor and supplies, associated with moving longwall equipment, the related equipment refurbishment costs, costs to drill vent holes and plug existing gas wells in advance of the longwall panel associated with its former NAPP operations included in discontinued operations of the Consolidated Balance Sheets as of December 31, 2020 and 2019.

Refer to Note 3.

These deferred costs were amortized on a units-of-production basis into cost of coal sales over the life of the related panel of coal mined by the longwall equipment.

Advanced Mining Royalties

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Advance mining royalties are advance payments made to lessors under terms of mineral lease agreements that are recoupable against future production royalties.

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AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

These advance payments are deferred and charged to operations as the coal reserves are mined.

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Only proven and probable reserves are included in the depletion base.

Refer to Note 10 for further detail on property, plant and equipment, net.

Refer to Note 10 for further detail on

ALPHA METALLURGICAL RESOURCES, INC.

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Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

property, plant and equipment, net.

Owned and Leased Mineral Rights

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These amounts include $ 10,491 and $ 36,723 of asset retirement obligation assets, net of accumulated depletion, associated with active mining operations for the years ended December 31, 2020 and 2019, respectively.

Refer to Note 3 for information on owned and leased mineral rights assumed with the Merger.

During the year ended December 31, 2019, the Company recorded a long-lived asset impairment which reduced the carrying value of owned and leased mineral rights, net, by $35,445 .

During the year ended December 31, 2020 and 2019, the Company recorded a long-lived asset impairment which reduced the carrying value of owned and leased mineral rights, net, by $ 41,579 and $ 35,445 , respectively.

Refer to the asset impairment disclosure included in Note 8.

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Depletion expense is included in depreciation, depletion and amortization on the accompanying Consolidated Statements of Operations and was ($ 13,746 ) and $ 14,551 for the years ended December 31, 2020 and 2019, respectively.

Depletion expense for the years ended December 31, 2019 , 2018, and 2017 includes a credit of ( $19,973 ), an expense of $1,907 , and a credit of ($821) , respectively, related to revisions to asset retirement obligations.

Depletion expense for the years ended December 31, 2020 and 2019 includes a credit of ($ 34,377 ) and ($ 7,162 ), respectively, related to revisions to asset retirement obligations.

Refer to Note 17 for further disclosures related to asset retirement obligations.

In accordance with ASC 842, the Company recognizes right of use assets and lease liabilities on the balance sheet for all leases with a term longer than 12 months.

Some of these leases include both lease and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient to combine these components for all leases.

The discount rates used to determine the present value of the lease assets and liabilities are based on the Company’s incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term.

As the rates implicit in most of the Company’s leases are not readily determinable, the Company uses a collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments.

The Company uses the portfolio approach and group leases by short-term and long-term categories, applying the corresponding incremental borrowing rates to these categories of leases.

For leases with a term of 12 months or less, no right of use assets or liabilities are recognized on the balance sheet and the Company recognizes the lease expense on a straight-line basis over the lease term.

Additionally, the Company recognizes variable lease payments as an expense in the period incurred.

Refer to Note 12 for disclosures related to leases and the Recently Adopted Accounting Guidance section below for further detail related to the initial adoption of the leases accounting standards.

Acquired Intangibles

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The balances and respective balance sheet classifications of such assets and liabilities as of December 31, 2020 and 2019, net of accumulated amortization, are set forth in the following tables:

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Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

December 31, 2020

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Acquired mine permits, net 88,196 — 88,196

Total $ 88,196 $ ( 327 ) $ 87,869

ALPHA METALLURGICAL RESOURCES, INC.

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Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

December 31, 2019

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Acquired mine permits, net 124,228 — 124,228

Total $ 124,246 $ ( 6,018 ) $ 118,228

(1) Included within other acquired intangibles, net of accumulated amortization, on the Company’s Consolidated Balance Sheets.

(2) Included within other non-current liabilities on the Company’s Consolidated Balance Sheets.

During the year ended December 31, 2019, the Company recorded a long-lived asset impairment which reduced the carrying value of acquired mine permits, net, by $5,997 .

Refer to the asset impairment disclosure included in Note 2 .

During the years ended December 31, 2020 and 2019, the Company recorded long-lived asset impairments which reduced the carrying value of acquired mine permits, net, by $ 21,144 and $ 5,997 .

Refer to Note 8 for further information.

The acquired mine permits are amortized over the estimated life of the associated mine.

The coal supply agreement assets and liabilities are amortized over the actual number of tons shipped over the life of each contract.

Amortization of mine permits acquired as a result of the Merger was $23,921 and $3,409 for the years ended December 31, 2019 and 2018, respectively, which is reported within amortization of acquired intangibles, net, in the Consolidated Statements of Operations.

Amortization of above-market coal supply agreements was $3,884 , $14,506 , and $59,007 , and amortization of below-market coal supply agreements was ($27,893) , ($23,307) , and $0 , resulting in a net (income) expense of ($24,009) , ($8,801) , and $59,007 for the years ended December 31, 2019 , 2018 , and 2017, respectively, which is reported within amortization of acquired intangibles, net, in the Consolidated Statements of Operations.

The following table details the amortization of mine permits acquired as a result of the Merger and the amortization of above-market and below-market coal supply agreements.

Amortization of mine permits (1)

$ 14,887 $ 23,921

Amortization of above-market coal supply agreements $ 18 $ 783

Amortization of below-market coal supply agreements ( 5,691 ) ( 27,893 )

Net income (1)

$ ( 5,673 ) $ ( 27,110 )

(1) Included within amortization of acquired intangibles, net in the Consolidated Statements of Operations.

Future net amortization expense related to acquired intangibles is expected to be as follows:

Thereafter 40,741

Total net future amortization expense $ 87,869

Goodwill represents the excess of the purchase price over the fair value of the net identifiable tangible and intangible assets of acquired companies.

In connection with the Merger, the Company recorded goodwill of $124,353 and allocated it to the CAPP - Met reportable segment.

Refer to Note 3 for further information.

In connection with the Merger in 2018, the Company recorded goodwill of $ 124,353 and allocated it to the Met reportable segment.

Goodwill is not amortized;

instead, it is tested for impairment annually as of October 31 of each year or more frequently if indicators of impairment exist.

The Company performed an interim goodwill impairment test as of August 31, 2019 due to a decline in the Company’s market capitalization to amounts below book value combined with a decline in global metallurgical coal pricing which indicated that the fair value of the CAPP - Met segment reporting unit may have been below its carrying value.

Following the quantitative testing, the Company concluded that the fair value of the reporting unit exceeded its carrying value and no amounts of goodwill were impaired.

As of October 31, 2019, the Company performed its annual goodwill impairment test and concluded that more likely than not the fair value of its CAPP - Met reporting unit to which the Company’s goodwill is allocated exceeded its carrying value.

As a result, no amounts of goodwill were considered impaired as a result of impairment testing at October 31, 2019.

CONTURA ENERGY, INC.

The Company performed an interim goodwill impairment test as of August 31, 2019 due to a decline in the Company’s market capitalization to amounts below book value combined with a decline in global metallurgical coal pricing which indicated that the fair value of the Met segment reporting unit may have been below its carrying value.

Following the quantitative testing, the Company concluded that the fair value of the reporting unit exceeded its carrying value and no amount of goodwill was impaired.

As of October 31, 2019, the Company performed its annual goodwill impairment test and concluded that more likely than not the fair value of its Met reporting unit to which the Company’s goodwill is allocated exceeded its carrying value.

As a result, no amount of goodwill was considered impaired as a result of impairment testing at October 31, 2019.

ALPHA METALLURGICAL RESOURCES, INC.

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However, due to the continued weakening in coal market pricing combined with a significant market price decline for the Company’s stock late in the fourth quarter of 2019, the Company performed an interim goodwill impairment test as of December 31, 2019.

Following the quantitative testing, the Company concluded that the carrying value of the CAPP - Met reporting unit exceeded its fair value and recorded a goodwill impairment of $124,353 to write down the full carrying amount of goodwill.

Following the quantitative testing, the Company concluded that the carrying value of the Met reporting unit exceeded its fair value and recorded a goodwill impairment of $ 124,353 to write down the full carrying amount of goodwill.

The Company early adopted Accounting Standards Update (“ASU”) 2017-04 for the period ended December 31, 2017, which eliminated Step 2 of the quantitative goodwill impairment test.

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The valuation methodology utilized to estimate the fair value of the reporting units is based on both a market and income approach and is within the range of fair values yielded under each approach.

The income approach is based on a discounted cash flow methodology in which expected future net cash flows are discounted to present value, using an appropriate after-tax weighted average cost of capital (discount rate).

The income approach is based on a discounted cash flow methodology based on estimates of future sales volumes, coal prices, production costs, and a risk-adjusted cost of capital.

These estimates generally constitute unobservable Level 3 inputs under the fair value hierarchy.

The market approach is based on a guideline company and similar transaction methodology.

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Under the similar transactions approach, recent merger and acquisition transactions for companies that have similar operations to the Company’s reporting units are used to estimate the fair value of the Company’s reporting units.

The following table summarizes the changes in goodwill for the year ended December 31, 2019:

Balance as of December 31, 2018 Measurement-Period Adjustments (2)

Impairments Balance as of December 31, 2019

$ 95,624 $ 28,729 $ ( 124,353 ) $ —

(1) There was no goodwill activity during the year ended December 31, 2020.

(2) Prior to the finalization of the Merger purchase price allocation, the Company recorded measurement-period adjustments to the provisional opening balance sheet primarily to property, plant, and equipment, owned and leased mineral rights, asset retirement obligations, and certain actuarial liabilities.

Asset Impairment

Long-lived assets, such as property, plant, and equipment, and acquired intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset groups may not be recoverable.

Long-lived assets, such as property, plant, and equipment, mineral rights, and acquired intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset groups may not be recoverable.

Recoverability of assets or asset groups to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group.

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If the carrying amount of an asset or asset group exceeds its estimated future cash flows, the potential impairment is equal to the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group.

The Company estimates the fair value of an asset group using discounted cash flow analyses utilizing marketplace participant assumptions.

The Company estimates the fair value of an asset group generally using discounted cash flow analysis based on estimates of future sales volumes, coal prices, production costs, and a risk-adjusted cost of capital.

These estimates generally constitute unobservable Level 3 inputs under the fair value hierarchy.

The amount of impairment, if any, is allocated to the long-lived assets on a pro-rata basis, except that the carrying value of the individual long-lived assets are not reduced below their estimated fair value.

During the year ended December 31, 2019, the Company determined that indicators of impairment were present for three long-lived asset groups within each of its CAPP - Met and CAPP - Thermal reporting segments and performed impairment testing as of December 31, 2019.

At December 31, 2019, the Company determined that the carrying amounts of the asset groups exceeded both their undiscounted cash flows and their estimated fair values.

As a result, after allocating the potential impairment to individual assets, the Company recorded a long-lived asset impairment of $60,169 , of which $9,176 was recorded within CAPP - Met and $50,993 was recorded within CAPP - Thermal.

The long-lived asset impairment reduced the carrying values of mineral rights by $35,445 , property, plant, and equipment, net, by $17,056 , acquired mine permits, net, by $5,997 , and long-lived assets related to asset retirement obligations by $1,671 .

There were no asset impairments during the years ended December 31, 2018 and 2017.

Additionally, during the year ended December 31, 2019, the Company recorded an asset impairment of $6,155 primarily related to the write-off of prepaid purchased coal as a result of Blackjewel’s Chapter 11 bankruptcy filing on July 1, 2019.

Refer to Note 4 for further information.

CONTURA ENERGY, INC.

Refer to Note 8.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

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Refer to Note 19 for further disclosures related to income taxes.

Deferred Financing Costs

The costs to obtain new debt financing or amend existing financing agreements are generally deferred and amortized to interest expense over the life of the related indebtedness or credit facility using the effective interest method.

Unamortized deferred financing costs are presented in the Consolidated Balance Sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts or premiums.

Unamortized deferred financing costs associated with undrawn credit facilities are included in the Consolidated Balance Sheets within other non-current assets.

Revenue Recognition

The Company adopted ASC 606 Revenue from Contracts with Customers (“ASC 606”), with a date of initial application of January 1, 2018, using the modified retrospective method.

The Company applied the guidance only to contracts that were not completed as of the date of adoption, with no cumulative adjustment to retained earnings as a result of the adoption of this guidance.

As a result, the Company made changes to its accounting policy for revenue recognition as outlined below.

Subsequent to the adoption of ASC 606, the Company measures revenue based on the consideration specified in a contract with a customer and recognizes revenue as a result of satisfying its promise to transfer goods or services in a contract with a customer using the following general revenue recognition five-step model:

In accordance with ASC 606 Revenue from Contracts with Customers (“ASC 606”), the Company measures revenue based on the consideration specified in a contract with a customer and recognizes revenue as a result of satisfying its promise to transfer goods or services in a contract with a customer using the following general revenue recognition five-step model:

(1) identify the contract;

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Freight and handling costs paid to third-party carriers and invoiced to coal customers are recorded as freight and handling costs and freight and handling fulfillment revenues within cost of coal sales and coal revenues, respectively.

Prior to the adoption of ASC 606, the Company earned revenues primarily through the sale of coal produced at Company operations and coal purchased from third parties.

The Company recognized revenue using the following general revenue recognition criteria:

(i) persuasive evidence of an arrangement exists;

(ii) delivery had occurred or services have been rendered;

(iii) the price to the buyer was fixed or determinable;

and (iv) collectability was reasonably assured.

Delivery on the Company’s coal sales was determined to be complete for revenue recognition purposes when title and risk of loss had passed to the customer in accordance with stated contractual terms and there are no other future obligations related

CONTURA ENERGY, INC.

Refer to Note 4 for further disclosures related to revenue.

Workers’ Compensation and Pneumoconiosis (Black Lung) Benefits

Workers’ Compensation

As of December 31, 2020, the Company’s subsidiaries generally utilize high-deductible insurance programs for workers’ compensation claims at its operations with the exception of certain subsidiaries in which the Company is a qualified self-insurer

ALPHA METALLURGICAL RESOURCES, INC.

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(Amounts in thousands except share and per share data)

to the shipment.

For domestic shipments, title and risk of loss generally passed as the coal is loaded into transport carriers for delivery to the customer.

For international shipments, title generally passed at the time coal is loaded onto the shipping vessel.

Freight and handling costs paid to third-party carriers and invoiced to coal customers were recorded as freight and handling costs and freight and handling revenues, respectively.

Adoption of ASC 606

Subsequent to adoption of ASC 606, freight and handling revenues are now classified within coal revenues.

Under ASC 606, the Company has elected to treat all shipping and handling costs as fulfillment costs and to recognize these amounts within coal revenues upon control transfer.

Prior to the adoption of ASC 606, all freight and handling activities occurring subsequent to control transfer were accounted for as deferred revenue and recognized within freight and handling revenues as the Company fulfilled the related shipping activity.

Refer to Note 5 for further disclosure requirements under the new standard.

The following table summarizes the impact of the adoption of ASC 606 to the Company’s Consolidated Statements of Operations:

Year Ended December 31, 2018

Adjustments (1)

Balances prior to adoption of ASC 606

Coal revenues

Freight and handling revenues

Other revenues

Total revenues

Freight and handling costs

(1) Adjustments primarily represent freight and handling revenues being treated as fulfillments costs and included within coal revenues under ASC 606.

The remainder of these adjustments represent freight and handling activity occurring subsequent to control transfer also impacting freight and handling costs and prepaid expenses.

Deferred Financing Costs

Unamortized deferred financing costs are presented in the Consolidated Balance Sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts or premiums.

Unamortized deferred financing costs associated with undrawn credit facilities are included in the Consolidated Balance Sheets within other non-current assets.

Workers’ Compensation and Pneumoconiosis (Black Lung) Benefits

Workers’ Compensation

As of December 31, 2019 , the Company’s subsidiaries generally utilize high-deductible insurance programs for workers’ compensation claims at its operations with the exception of certain subsidiaries in which the Company is a qualified self-insurer for workers’ compensation related obligations.

for workers’ compensation obligations.

The liabilities for workers’ compensation claims are estimates of the ultimate losses incurred based on the Company’s experience and include a provision for incurred but not reported losses.

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Black Lung Benefits

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AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The Company is required by federal and state statutes to provide benefits to employees for awards related to black lung.

As of December 31, 2020, certain of the Company’s subsidiaries are insured for black lung obligations by a third-party insurance provider and certain subsidiaries are self-insured for state black lung obligations.

Certain other subsidiaries are self-insured for federal black lung benefits and may fund benefit payments through Section 501(c)(21) tax-exempt trust fund.

Certain other subsidiaries are self-insured for federal black lung benefits and may fund benefit payments through a Section 501(c)(21) tax-exempt trust fund.

Charges are made to operations for black lung claims, as determined by an independent actuary at the present value of the actuarially computed liability for such benefits over the employee’s applicable term of service.

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Refer to Note 20 for further disclosures related to pension.

Life Insurance Benefits

As part of the Alpha Restructuring and the Retiree Committee Settlement Agreement, the Company assumed the liability for life insurance benefits for certain disabled and non-union retired employees.

Postretirement Life Insurance Benefits

As part of the Alpha Natural Resources, Inc.

bankruptcy reorganization plan and the Retiree Committee Settlement Agreement, the Company assumed the liability for life insurance benefits for certain disabled and non-union retired employees.

Provisions are made for estimated benefits based on annual evaluations prepared by independent actuaries.

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These obligations are included in the Consolidated Balance Sheet as accrued expenses and other current liabilities and other non-current liabilities.

Refer to Note 20 for further disclosures related to life insurance benefits.

Refer to Note 20 for further disclosures related to postretirement life insurance benefits.

Net (Loss) Income per Share

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The Company recognizes expense for stock-based compensation awards based on their grant-date fair value.

The expense is recorded over the respective service period of the underlying award.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

is recorded over the respective service period of the underlying award.

Liability classified stock-based compensation awards are remeasured each reporting period at fair value until the award is settled.

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Refer to Note 21 for further disclosures related to stock-based compensation arrangements.

On July 26, 2016 (the “Initial Issue Date”), the Company issued 810,811 warrants, which are classified as equity instruments, each with an initial Exercise Price, as defined in the Series A Warrants Agreement (the “Warrants Agreement”), of $55.93 per share of common stock and exercisable for one share of the Company’s common stock, par value $0.01 per share.

On July 26, 2016 (the “Initial Issue Date”), the Company issued 810,811 warrants, which are classified as equity instruments, each with an initial exercise price, as defined in the Series A Warrants Agreement (the “Warrants Agreement”), of $ 55.93 per share of common stock and exercisable for one share of the Alpha’s common stock, par value $ 0.01 per share.

Pursuant to the Warrants Agreement, the warrants are exercisable for cash or on a cashless basis at any time from the Initial Issue Date until July 26, 2023, and no fractional shares shall be issued upon warrant exercises.

The exercise price and the warrant share number will be adjusted in respect of certain dilutive events with respect to the common stock (namely, dividends

CONTURA ENERGY, INC.

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Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

or distributions on the common stock, share splits and combinations, above-market tender offers for common stock by Contura or a subsidiary thereof, and discounted issuances of common stock or rights or options to purchase common stock or securities convertible or exchangeable into common stock).

Additionally, in the case of any reorganization (i.e., a consolidation, merger, or sale of all or substantially all of the consolidated assets of Contura) pursuant to which the common stock is converted into cash, securities or other property, the warrants would become exercisable for such property.

During the year ended December 31, 2017, the Exercise Price and the Warrant Share Number, as defined in the Warrants Agreement, were adjusted as a result of the occurrence of the Special Dividend.

The Warrant Share Number was adjusted from 1.00 to 1.15 , and the Exercise Price was adjusted from $55.93 per share to $48.741 per share as of the July 5, 2017 record date.

The United States Bankruptcy Court for the Eastern District of Virginia issued an order and final decree on June 28, 2018, granting a motion to close the Chapter 11 case of Alpha Natural Resources, Inc.

and its affiliates, as reorganized debtors (the “Reorganized Debtors”), and authorizing the Reorganized Debtors to make a distribution (the “Distribution”) of additional cash as defined in the Warrants Agreement.

The Distribution was effected on October 26, 2018 (the “Distribution Date”) in the aggregate amount of approximately $18,350 .

During the year ended December 31, 2018, the Exercise Price was adjusted as a result of the occurrence of the Distribution.

The Exercise Price was adjusted from $48.741 per share to $46.911 per share as of the Distribution Date.

The Warrant Share Number remained equal to 1.15 .

As of December 31, 2018, of the 810,811 warrants that were originally issued, 801,730 remained outstanding, with a total of 921,990 shares underlying the un-exercised warrants.

For the year ended December 31, 2018, the Company issued 325 shares of common stock resulting from exercises of its Series A Warrants and, pursuant to the terms of the Warrants Agreement, withheld 125 of the issued shares in satisfaction of the Warrant Exercise Price, which were subsequently reclassified as treasury stock.

As of December 31, 2019, of the 810,811 warrants that were originally issued, 801,370 remained outstanding, with a total of 921,576 shares underlying the un-exercised warrants.

The exercise price and the warrant share number will be adjusted in respect of certain dilutive events with respect to the common stock (namely, dividends or distributions on the common stock, share splits and combinations, above-market tender offers for common stock by the Company or a subsidiary thereof, and discounted issuances of common stock or rights or options to purchase common stock or securities convertible or exchangeable into common stock).

Additionally, in the case of any reorganization (i.e., a consolidation, merger, or sale of all or substantially all of the consolidated assets of Alpha) pursuant to which the common stock is converted into cash, securities or other property, the warrants would become exercisable for such property.

As of December 31, 2020 and 2019, the exercise price was $ 46.911 per share and the warrant share number was equal to 1.15 , as adjusted in respect to certain diluted events with respect to the common stock during 2017 and 2018.

As of December 31, 2020 and 2019, of the 810,811 warrants that were originally issued, 801,370 remained outstanding, with a total of 921,576 shares underlying the un-exercised warrants.

For the year ended December 31, 2020, there were no warrant exercises.

For the year ended December 31, 2019, the Company issued 414 shares of common stock resulting from exercises of its Series A Warrants and, pursuant to the terms of the Warrants Agreement, withheld five of the issued shares in satisfaction of the warrant exercise price, which were subsequently reclassified as treasury stock.

1 unchanged sentence

Investments in unconsolidated affiliates that the Company has the ability to exercise significant influence over, but not control, are accounted for under the equity method of accounting.

Under the equity method of accounting, the Company records its proportionate share of the entity’s net income or loss at each reporting period in the Consolidated Statements of Operations in other income (expense), with a corresponding entry to increase or decrease the carrying value of the investment.

Under the equity method of accounting, the Company records its proportionate share of the entity’s net income or loss at each reporting period in the Consolidated Statements of Operations in other (expense) income, with a corresponding entry to increase or decrease the carrying value of the investment.

The carrying value of the Company’s equity method investments was $ 18,383 and $ 18,413 as of December 31, 2020 and 2019, respectively.

Recently Adopted Accounting Guidance

I n February 2016, the Financial Accounting Standards Board (the “FASB”) issued an Accounting Standards Update and subsequent amendments related to ASC 842, Leases, (“ASC 842”).

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued an Accounting Standards Update and subsequent amendments related to ASC 842, Leases, (“ASC 842”).

ASC 842 requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet.

4 unchanged sentences

The following table summarizes the impact of the adoption of ASC 842 to the Company’s Consolidated Balance Sheet:

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

Balance at December 31, 2018 (1)

Balance at January 1, 2019

Balance Sheet Classification

Operating lease right-of-use assets

Other non-current assets

Financing lease assets

Property, plant, and equipment, net

Balance at December 31, 2018 Adjustments Balance at January 1, 2019

Assets Balance Sheet Classification

Operating lease right-of-use assets Other non-current assets $ — $ 10,136 $ 10,136

Financing lease assets Property, plant, and equipment, net 9,786 — 9,786

Total lease assets $ 9,786 $ 10,136 $ 19,922

Balance Sheet Classification

Operating lease liabilities - current

Accrued expenses and other current liabilities

Financing lease liabilities - current

Current portion of long-term debt

Operating lease liabilities - long-term

Other non-current liabilities

Financing lease liabilities - long-term

Long-term debt

Liabilities Balance Sheet Classification

Operating lease liabilities - current Accrued expenses and other current liabilities $ — $ 3,232 $ 3,232

Financing lease liabilities - current Current portion of long-term debt 2,110 — 2,110

Operating lease liabilities - long-term Other non-current liabilities — 6,904 6,904

Financing lease liabilities - long-term Long-term debt 4,313 — 4,313

Total lease liabilities $ 6,423 $ 10,136 $ 16,559

(1) Balances do not include measurement-period adjustments recorded during the period.

Refer to Note 3 for further details on measurement-period adjustments recorded during the period.

The adoption of ASC 842 did not have a material impact on our Consolidated Statements of Operations, Consolidated Statements of Comprehensive (Loss) Income, or Consolidated Statements of Cash Flows.

The adoption of ASC 842 did not have a material impact on our Consolidated Statements of Operations, Consolidated Statements of Comprehensive Loss, or Consolidated Statements of Cash Flows.

Refer to Note 12 for further disclosure requirements under the new standard.

Stock Compensation :

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”).

The amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees.

The Company adopted ASU 2018-07 during the first quarter of 2019.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Recent Accounting Guidance Issued Not Yet Effective

Credit Losses:

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Credit Losses (“ASU 2016-13”).

ASU 2016-13, along with related amendments and improvements issued in 2018 and 2019, replaces the incurred loss impairment methodology in current U.S.

GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable supportable information to inform credit loss estimates.

The Company will adopt ASU 2016-13 during the first quarter of 2020.

The adoption of this ASU is not expected to have a material impact on the Company's Consolidated Financial Statements and related disclosures.

ASU 2016-13, along with related amendments and improvements issued in 2018 and 2019, replaces the previous incurred loss impairment methodology in U.S.

GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable supportable information to inform credit loss estimates for financial instruments that are in the scope of this update, including trade accounts receivable.

The Company adopted ASU 2016-13 during the first quarter of 2020.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures and resulted in a cumulative-effect adjustment to retained earnings of $ 440 in the Consolidated Balance Sheet as of January 1, 2020.

Fair Value Measurement :

1 unchanged sentence

The amendments in this update modify the disclosure requirements for fair value measurements.

For public business entities, the standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.

Defined Benefit Plans :

In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20) Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”).

The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

For public business entities, the standard is effective for fiscal years ending after December 15, 2020.

The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.

The Company adopted ASU 2018-13 during the first quarter of 2020.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Income Taxes :

2 unchanged sentences

The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The a mendments also improve consistent application of and simplify

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The amendments also improve consistent application of and simplify U.S.

GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

For public business entities, ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, with early adoption permitted.

The Company is currently assessing the impact of this ASU on the Company’s consolidated financial statements and related disclosures.

( 3 ) Mergers and Acquisitions

On November 9, 2018, Contura, along with the Alpha Companies, completed the Merger in which the Company acquired 100% of the outstanding Class C-1 shares of ANR and the 100% of the outstanding shares of Holdings.

Under the terms of the Merger Agreement, the Alpha Companies stockholders received 0.4417 Contura common shares for each ANR Class C-1 share and each share of common stock of Holdings they owned, representing approximately 48.5% ownership in the merged entity, or an aggregate 9,378,199 shares of Contura common stock.

Prior to the closing of the transaction, the Alpha Companies stockholders also received a special cash dividend (the “Dividend”) in an amount equal to $ 2.725 for each Class C-1 share and each share of common stock of Holdings they owned.

Each outstanding share of Class C-2 common stock of ANR (held exclusively by Holdings) was canceled.

The fair value of the issued Contura common stock was equal to the $75.00 closing price of Contura’s common stock on the day of acquisition.

The transaction was entered into to enhance the Company’s competitive position in both domestic and international coal markets.

The Company possesses diverse high-quality, metallurgical and thermal coal mines, allowing for near-term organic growth opportunities.

The transaction was entered into to generate costs synergies, including those resulting from coal blending and marketing optimization and purchasing, operating, and administrative efficiencies.

During 2018, the Company recorded $3,918 as a reduction to equity for costs incurred in connection with the Merger.

Purchase Price

The following table presents the details of the finalized purchase price of $688,534 :

Fair value of common stock issued

Issued and redeemed equity awards (1)

Net balances due to Alpha deemed effectively settled

Purchase Price (2)

(1) Amount includes $20,681 of tax withholdings related to share settlements of option exercises, $1,905 paid to certain former ANR employees pursuant to change in control provisions, $6,570 of shares repurchased from certain former ANR directors pursuant to the Merger Agreement, $3,056 of pre-Merger service period value of restricted stock unit ANR employee awards, and $5 in cash paid in lieu of fractional shares of Contura common stock issued pursuant to the Merger Agreement.

Of these amounts, $24,074 were obligations assumed and paid by Contura.

(2) Purchase price of $688,534 is composed of equity consideration of $664,460 and cash consideration of $24,074 .

Allocation of Purchase Price

The finalized purchase price of $688,534 has been allocated to the net tangible and intangible assets of Alpha Companies as follows:

CONTURA ENERGY, INC.

The Company adopted ASU 2019-12 during the first quarter of 2020.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Reference Rate Reform :

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

The amendments in this update provide optional expedients and exceptions, if certain criteria are met, for applying U.S.

GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

The Company adopted ASU 2020-04, with respect to topics in Accounting Standards Codification (“ASC”) 310 Receivables , ASC 470 Debt , ASC 815 Derivatives and Hedging and ASC 842 Leases , during the first quarter of 2020.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Defined Benefit Plans :

In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

Provisional as of December 31, 2018

Cash and cash equivalents

Trade and other receivables

Short-term restricted cash

Other current assets

Property, plant, and equipment

Owned and leased mineral rights

Other intangible assets

Long-term restricted cash

Long-term restricted investments

Other non-current assets

Accounts payable

Accrued expenses and other current liabilities

Long-term debt, including current portion

Acquisition-related obligations

Pension obligations

Asset retirement obligation, including current portion

Deferred income taxes, including current portion

Other intangible liabilities

Other non-current liabilities

Total liabilities

Allocation of purchase price

Prior to the finalization of the purchase price allocation, the Company recorded measurement-period adjustments to the provisional opening balance sheet as shown in the table above.

Adjustments were made primarily to property, plant, and equipment, owned and leased mineral rights, asset retirement obligations, and certain actuarial liabilities.

There were no material measurement-period adjustments impacting current-period earnings that would have been recorded in the previous reporting period if the adjustments to the provisional amounts had been recognized as of the acquisition date.

In connection with the Merger, the Company originally recorded provisional goodwill of $95,624 , which represented the excess of the purchase price over the estimated fair value of tangible and intangible assets acquired, net of liabilities assumed.

As a result of measurement-period adjustments recorded during the period, the provisional amount of goodwill increased by $28,729 resulting in final goodwill of $124,353 , which was allocated to the Company’s CAPP-Met reportable segment.

The goodwill was attributed primarily to the following factors:

(i) anticipated operating and administrative synergies, and (ii) deferred income taxes arising from the differences between the preliminary purchase price allocated to the assets and liabilities acquired based on fair value and the tax basis of these assets and liabilities.

The goodwill was not deductible for tax purposes.

Refer to Note 2 for disclosures related to the goodwill impairment recorded during the quarter ended December 31, 2019.

The following table represents the intangible assets and the weighted-average amortization periods as of the acquisition date:

CONTURA ENERGY, INC.

Benefit Plans—General (Subtopic 715-20) Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”).

The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

For public business entities, the standard is effective for fiscal years ending after December 15, 2020.

The Company adopted ASU 2018-14 during the fourth quarter of 2020.

The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements and related disclosures.

Recent Accounting Guidance Issued Not Yet Effective

Convertible Debt and Contracts in Entity’s Own Equity :

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”).

The amendments in this update simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity, such as the Company’s outstanding Series A warrants.

For public business entities, the standard is effective for fiscal years beginning after December 15, 2021, with early adoption permitted.

The adoption of this ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements and related disclosures.

(3) Discontinued Operations

Discontinued operations consisted of activity related to the Company’s former NAPP and PRB operations.

Former NAPP Operations

On November 11, 2020, the Company entered into an unit purchase agreement (the “UPA”) to sell its thermal coal mining operations located in Pennsylvania consisting primarily of its Cumberland mining complex and related property (“Cumberland Transaction”) to a third party purchaser Iron Senergy Holdings, LLC (“Iron Senergy”).

The Cumberland Transaction closed on December 10, 2020.

In accordance with terms of the UPA, the Company transferred its equity interests in certain subsidiaries (Cumberland Contura, LLC, Contura Coal Resources, LLC, Contura Pennsylvania Land, LLC, Emerald Contura, LLC, and Contura Pennsylvania Terminal, LLC) along with total consideration of $ 49,987 to Iron Senergy.

Pursuant to the terms of the UPA, the Company also retained certain assets and liabilities associated with its former NAPP operations.

The mining permits associated with the Cumberland mining operations were obtained by Iron Senergy at closing.

Due to the administrative process, the Company expects the release of the Company’s existing surety bonds and the acceptance of Iron Senergy’s replacement bonds to be completed by March 30, 2021.

The following table presents the details of the Cumberland Transaction:

Year Ended December 31, 2020

Cash $ 19,987

Surety bonding collateral 30,000

Total consideration 49,987

Transaction costs 2,205

Carrying value of assets and liabilities (1)

Loss on sale $ 36,113

(1) Assets and liabilities were primarily comprised of property, plant and equipment, net of $ 32,872 , deferred longwall move expenses of $ 15,173 , and coal and supplies inventory of $ 5,112 and asset retirement obligations of $ 39,573 , severance of $ 17,143 , black lung obligations of $ 8,290 , and subsidence liability of $ 3,559 .

In connection with the UPA, the Company entered into certain agreements with Iron Senergy under which Iron Senergy will sell to the Company all of the coal that the Company is obligated to sell to customers under Cumberland coal supply agreements (“Cumberland CSAs”) which existed as of the transaction closing date but did not transfer to Iron Senergy at closing (each, a “Cumberland Back-to-Back Coal Supply Agreement”).

Each Cumberland Back-to-Back Coal Supply Agreement has economic terms identical to, but offsetting, the related Cumberland CSA.

If a Cumberland customer subsequently consents to assign a Cumberland CSA to Iron Senergy after closing, the related Cumberland CSA will immediately and automatically transfer to Iron Senergy and the related Cumberland Back-to-Back Coal Supply Agreements executed by the parties shall thereupon terminate as set forth therein.

As the Company does not control the purchased coal prior to customer delivery, the Company will record coal purchases and sales under the related agreements on a net basis.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

Weighted-Average Amortization Period

Mining permits

Above-market coal supply agreements

Below-market coal supply agreements

Total acquired intangibles:

The Consolidated Statements of Operations include acquisition related expenses (on a pre-tax basis) of $1,090 and $20,571 in merger-related costs for the years ended December 31, 2019 and 2018 , respectively.

Acquisition-related expenses include professional fees related to legal, tax, advisory integration services, and contract-related matters.

Total revenues reported in the Consolidated Statements of Operations for the year ending December 31, 2018 included revenues of $149,161 from operations acquired from the Alpha Companies.

The amount of earnings from continuing operations acquired from the Alpha Companies included in the consolidated results of operations for the year ending December 31, 2018 is not readily determinable due to various intercompany transactions and allocations that have occurred in connection with the integration of the operations of the newly combined company.

The following unaudited pro forma information has been prepared for illustrative purposes only and assumes the Merger occurred on January 1, 2017.

The unaudited pro forma results have been prepared based on estimates and assumptions, which the Company believes are reasonable;

however, they are not necessarily indicative of the consolidated results of operations had the Merger occurred on January 1, 2017, or of future results of operations.

Year Ended December 31, 2018

Year Ended December 31, 2017

Total revenues

Income from continuing operations

These amounts have been calculated after applying the Company's accounting policies and adjusting the results of ANR to reflect the additional depreciation, amortization, depletion, and cost of coal sales that would have been charged assuming the fair value adjustments to property, plant, and equipment, as well as intangibles, asset retirement obligations, and inventory, had been applied at January 1, 2017, together with the consequential tax effects.

The pro forma results for the year ended December 31, 2018 include $51,800 of merger-related costs, which includes $20,571 of acquisition-related expenses and $31,229 of expenses related primarily to severance payments and one-time bonus payments, $17,064 of incremental cost of coal sales related to the inventory step-up included in the purchase price allocation, and a tax benefit of $126,440 related to the reduction of the Company's deferred tax asset valuation allowance.

( 4 ) Discontinued Operations

Discontinued operations consist of ongoing activity related to the Company’s former PRB operations.

of the Cumberland Back-to-Back Coal Supply Agreements, the Company is required to purchase and sell 2,681 and 2,615 tons of coal in 2021 and 2022 totaling $ 104,051 and $ 101,990 , respectively.

For the year ended December 31, 2020, the Company purchased and sold 104 tons, totaling $ 3,997 under the Cumberland Back-to-Back Coal Supply Agreements.

Former PRB operations

On December 8, 2017, the Company closed a transaction (“PRB Transaction”) with Blackjewel L.L.C.

(“Blackjewel” or the “Buyer”) to sell its Eagle Butte and Belle Ayr mines located in Wyoming (the “Western Mines” or “Western Assets”).

The Company was in a post closing mine permit transfer period, when on July 1, 2019, prior to the transfer of the permits, Blackjewel announced that it and certain affiliated entities had filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of West Virginia (the “Bankruptcy Court”).

On July 1, 2019, prior to the transfer of the permits, Blackjewel announced that it and certain affiliated entities had filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of West Virginia (the “Bankruptcy Court”).

As the mine permit transfer process relating to the Company’s sale of the Western Assets to Blackjewel had not been completed prior to Blackjewel’s filing for Chapter 11 bankruptcy protection, the Company remained the permit holder in good standing for both mines and maintained surety bonding to cover related reclamation and other obligations.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The Company remeasured the asset retirement obligations based on the expectation that the mining permits would not transfer and that Blackjewel would not perform on its contractual obligation to reclaim the properties due to the bankruptcy filing.

The increase in the asset retirement obligation of $ 145,913 was expensed within depreciation, depletion, and amortization within discontinued operations in the Consolidated Statements of Operations during the year ended December 31, 2019 as the Company no longer owned the underlying mining assets.

On October 4, 2019, the Bankruptcy Court entered an order approving the sale by Blackjewel of the Western Assets to Eagle Specialty Materials (“ESM”), an affiliate of FM Coal, LLC (“FM Coal”).

The closing of the ESM acquisition occurred on October 18, 2019 (the “ESM Transaction”).

In connection with the ESM Transaction, Contura and ESM finalized an agreement which provided, among other items, for the transfer of the Western Asset permits from Contura to ESM once certain approvals for their transfer have been obtained and for the assumption by ESM of the related reclamation obligations.

In connection with the ESM Transaction, the Company and ESM finalized an agreement which provided, among other items, for the transfer of the Western Asset permits from the Company to ESM once certain approvals for their transfer have been obtained and for the assumption by ESM of the related reclamation obligations.

Additionally, the surety bonding previously maintained by the Company for the benefit of the Wyoming Department of Environmental Quality (“DEQ”) was released and replaced with substitute surety bonds arranged for by ESM.

2 unchanged sentences

Year Ended December 31, 2019

Cash $ 90,000

DIP obligation (1)

3 unchanged sentences

(1) The Company paid certain Blackjewel debtor-in-possession lenders $ 3,008 of principal and interest pursuant to an existing agreement between the Company and those lenders.

Refer to Note 22 .

(2) The Company recorded a $59,543 gain within the depreciation, depletion, and amortization within discontinued operations in the Consolidated Statements of Operations during the year ended December 31, 2019 as a result of the reduction of the reclamation obligation partially offset by the consideration paid.

(2) The Company recorded a $ 59,543 gain within depreciation, depletion, and amortization within discontinued operations in the Consolidated Statements of Operations during the year ended December 31, 2019 as a result of the reduction of the reclamation obligation partially offset by the consideration paid.

Additionally, in connection with the closing of the ESM Transaction, the Company paid $ 13,500 to Campbell County, Wyoming for accrued ad valorem back taxes for 2018 and was released from all claims related thereto.

Pursuant to an agreement with ESM, the State of Wyoming Department of Revenue, and Blackjewel, the State of Wyoming Department of Revenue released the Company from any outstanding claims related to state tax obligations arising from or related to the Western Mines for any period through and including the closing date of the transaction.

The major components of net income (loss) from discontinued operations in the Consolidated Statements of Operations are as follows:

On May 29, 2020, certain subsidiaries of the Company (Contura Coal West, LLC and Contura Wyoming Land, LLC), one of which held the mining permits for the Western Mines, were merged with certain subsidiaries of ESM to become wholly-owned subsidiaries of ESM and to complete the permit transfer process in connection with the ESM Transaction.

Pursuant to terms of the transaction, the Company received from ESM approximately $ 625 in consideration for assets owned by Contura

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Coal West, LLC but not previously conveyed.

In connection with the PRB Transaction, the Company entered into certain agreements with Blackjewel under which Blackjewel would sell to the Company all of the coal that the Company was obligated to sell to customers under Western Mines coal supply agreements (“Western Mines CSAs”) which existed as of the transaction closing date but did not transfer to Blackjewel at closing (each, a “PRB Back-to-Back Coal Supply Agreement”).

The original PRB Back-to-Back Coal Supply Agreements were not assumed in connection with the ESM Transaction.

Instead, the Company entered into new back-to-back coal supply agreements with Bluegrass Commodities LP, the sales and marketing agent for ESM, whereby the Company agreed to purchase and pay for, all coal that the Company is obligated to supply, deliver and sell under the Company’s PRB coal supply agreements that were still in effect as of the closing date of the ESM Transaction.

Each PRB Back-to-Back Coal Supply Agreement had economic terms identical to, but offsetting, the related Western Mines CSA.

As the Company did not control the purchased coal prior to customer delivery, the Company recorded coal purchases and sales under the related agreements on a net basis.

Per terms of the PRB Back-to-Back Coal Supply Agreements, the Company purchased and sold 1,149 tons of coal totaling $ 11,682 for the year ended December 31, 2020.

For the year ended December 31, 2019, the Company purchased and sold 929 tons, totaling $ 9,941 under the PRB Back-to-Back Coal Supply Agreements.

As of December 31, 2020, the PRB Back-to-Back Coal Supply Agreements were expired.

Major Financial Statement Components of Discontinued Operations

The major components of net loss from discontinued operations before income taxes in the Consolidated Statements of Operations are as follows:

Year Ended December 31,

3 unchanged sentences

Depreciation, depletion and amortization (2)

11,570 99,405

Accretion on asset retirement obligations (3)

Asset impairment (4)

Asset impairment and restructuring (4)

172,640 17,161

Selling, general and administrative expenses (5)

Other expenses

Other non-major (income) expense items, net

(1) Total revenues for the years ended December 31, 2019 and 2018 consisted entirely of other revenues.

(2) During the year ended December 31, 2019 , $145,913 of the depreciation, depletion and amortization was related to an

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

increase in the Company’s estimate of its asset retirement obligations which was partially offset by ($59,543) as a result of the ESM transaction.

Other (income) expenses ( 926 ) 4,742

Other non-major expense items, net 374 2,504

Loss on sale 36,113 —

Loss from discontinued operations before income taxes $ ( 205,429 ) $ ( 105,185 )

(1) For the year ended December 31, 2020, discontinued operations consisted entirely of activity related to the former NAPP operations.

(2) During the year ended December 31, 2019, depreciation, depletion and amortization includes $ 145,913 related to an increase in the Company’s estimate of its PRB asset retirement obligations which was partially offset by ($ 59,543 ) as a result of the ESM transaction.

Refer to the disclosures above for details.

(3) The accretion on asset retirement obligations for the year ended December 31, 2019 was related to the asset retirement obligation as a result of Blackjewel’s bankruptcy filing.

Refer to the above disclosures for further details.

(4) The asset impairment for the year ended December 31, 2019 is primarily related to the write-off of tax related indemnification receivables from Blackjewel.

Refer to the disclosures below for further details.

(3) For the year ended December 31, 2019, the former PRB operations’ accretion on asset retirement obligations of $ 5,961 related to the asset retirement obligations recorded as a result of the Blackjewel bankruptcy filing.

Refer to the disclosures above for details.

(4) Refer to Note 8.

(5) Represents professional and legal fees.

1 unchanged sentence

The major components of assets and liabilities that are classified as discontinued operations in the Consolidated Balance Sheets are as follows:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Trade accounts receivable, net of allowance for doubtful accounts $ 7,504 $ 20,493

Inventory, net $ — $ 11,771

Prepaid expenses and other current assets $ 3,431 $ 13,628

Property, plant, and equipment, net of accumulated depreciation and amortization $ — $ 146,864

Other non-current assets $ 9,473 $ 15,760

Trade accounts payable, accrued expenses and other current liabilities $ 7,433 $ 24,769

Asset retirement obligations $ — $ 21,568

Workers’ compensation and black lung obligations $ 32,672 $ 36,149

Other non-current liabilities $ 1,291 $ 4,593

As of December 31, 2018 , the residual assets and liabilities related to the discontinued operations were primarily composed of taxes for which Contura was considered to be the primary obligor, but which the Buyer was contractually obligated to pay.

The Company had recorded the taxes as a liability with an offsetting receivable from the Buyer.

The major components of cash flows related to discontinued operations were as follows:

4 unchanged sentences

Accretion on asset retirement obligations $ 4,154 $ 9,894

Asset impairment

( 5 ) Revenue

Asset impairment and restructuring $ 172,640 $ 17,161

Disaggregation of Revenue from Contracts with Customers

1 unchanged sentence

ASC 606 explains that the extent to which an entity’s revenue is disaggregated depends on the facts and circumstances that pertain to the entity’s contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The Company earns revenues primarily through the sale of coal produced at Company operations and coal purchased from third parties.

The Company extracts, processes and markets met and thermal coal from surface and deep mines for sale to electric utilities, steel and coke producers, and industrial customers.

The Company conducts mining operations only in the United States with mines in Northern and Central Appalachia.

The Company has three reportable segments:

CAPP - Met, CAPP - Thermal, and NAPP.

In addition to the three reportable segments, the All Other category includes general corporate overhead and corporate assets and liabilities, the elimination of certain intercompany activity, and the Company’s discontinued operations.

The Company extracts, processes and markets met and thermal coal from deep and surface mines for sale to steel and coke producers, industrial customers, and electric utilities.

The Company conducts mining operations only in the United States with mines in Central Appalachia.

The Company has two reportable segments:

Met and CAPP - Thermal.

In addition to the two reportable segments, the All Other category includes general corporate overhead and corporate assets and liabilities, the elimination of certain intercompany activity, and the Company’s discontinued operations.

Refer to Note 25 for further segment information.

The following tables disaggregate the Company’s coal revenues by product category and by market to depict how the nature, amount, timing, and uncertainty of the Company’s coal revenues and cash flows are affected by economic factors:

Year Ended December 31, 2019

Export coal revenues

Domestic coal revenues

Total coal revenues

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31, 2020

Met Coal Thermal Coal Total

Export coal revenues $ 870,121 $ 27,904 $ 898,025

2 unchanged sentences

Year Ended December 31, 2019

Met Coal Thermal Coal Total

Export coal revenues $ 1,174,942 $ 48,166 $ 1,223,108

1 unchanged sentence

Total coal revenues $ 1,726,748 $ 269,186 $ 1,995,934

(1) Includes freight and handling revenues.

Performance Obligations

3 unchanged sentences

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied as of December 31, 2020.

2021 2022 2023 2024 2025 Total

Estimated coal revenues (1)

$ 113,676 $ 28,000 $ — $ — $ — $ 141,676

(1) Amounts only include estimated coal revenues associated with contracts with customers with fixed pricing with original expected duration of more than one year.

2 unchanged sentences

or 2) the remaining performance obligation has variable consideration that is allocated entirely to a wholly unsatisfied performance obligation.

( 6 ) Accumulated Other Comprehensive (Loss) Income

The following tables summarize the changes to accumulated other comprehensive (loss) income during the years ended December 31, 2019 , 2018 and 2017 :

CONTURA ENERGY, INC.

(5) Accumulated Other Comprehensive Loss

The following tables summarize the changes to accumulated other comprehensive loss during the years ended December 31, 2020 and 2019:

Balance January 1, 2020 Other comprehensive loss before reclassifications Amounts reclassified from accumulated other comprehensive loss Balance December 31, 2020

Employee benefit costs $ ( 58,616 ) $ ( 60,647 ) $ 7,278 $ ( 111,985 )

Balance January 1, 2019

Other comprehensive loss before reclassifications Amounts reclassified from accumulated other comprehensive loss Balance December 31, 2019

Employee benefit costs $ ( 23,130 ) $ ( 42,891 ) $ 7,405 $ ( 58,616 )

The following table summarizes the amounts reclassified from accumulated other comprehensive loss and the Consolidated Statements of Operations line items affected by the reclassification during the years ended December 31, 2020 and 2019:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

January 1, 2019

Other comprehensive (loss) income before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income

December 31, 2019

Employee benefit costs

January 1, 2018

Other comprehensive (loss) income before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income

Balance December 31, 2018

Employee benefit costs

January 1, 2017

Other comprehensive (loss) income before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income

Balance December 31, 2017

Employee benefit costs

The following table summarizes the amounts reclassified from accumulated other comprehensive (loss) income and the Statements of Operations line items affected by the reclassification during the years ended December 31, 2019 , 2018 and 2017 :

Details about accumulated other comprehensive (loss) income components

Amounts reclassified from accumulated other comprehensive (loss) income

Affected line item in the Statements of Operations

Details about accumulated other comprehensive loss components Amounts reclassified from accumulated other comprehensive loss Affected line item in the Consolidated Statements of Operations

Year Ended December 31,

Employee benefit costs:

Amortization of actuarial (gain) loss

(1) Miscellaneous (loss) income, net

Amortization of actuarial loss (1)

$ 3,929 $ 959 Miscellaneous loss, net

Settlement (1)

3,349 6,446 Miscellaneous loss, net

Total before income tax $ 7,278 $ 7,405

Income tax expense

Income tax benefit

Income tax — — Income tax benefit

Total, net of income tax $ 7,278 $ 7,405

(1) These accumulated other comprehensive (loss) income components are included in the computation of net periodic benefit costs for certain employee benefit plans.

(1) These accumulated other comprehensive loss components are included in the computation of net periodic benefit costs for certain employee benefit plans.

Refer to Note 20.

( 7 ) Net (Loss) Income per Share

The number of shares used to calculate basic net (loss) income per common share is based on the weighted average number of the Company’s outstanding common shares during the respective period.

The number of shares used to calculate diluted net (loss) income per common share is based on the number of common shares used to calculate basic net (loss) income per share plus the dilutive effect of stock options and other stock-based instruments held by the Company’s employees and directors during the period, and the Company’s outstanding Series A warrants.

The warrants become dilutive for net (loss) income per common share calculations when the market price of the Company’s common stock exceeds the exercise price.

For the year ended December 31, 2018 , 129,520 stock options were excluded from the computation of dilutive (loss) earnings per share because they would have been anti-dilutive.

For the year ended December 31, 2017 , 129,520 stock options and 108,657 other stock-based instruments were excluded from the computation of dilutive earnings (loss) per share because they would have been anti-dilutive.

These potential shares could dilute net (loss) income per share in the future.

In periods of net loss, the number of shares used to calculate diluted earnings per share is the same as basic earnings per share.

The following table presents the net (loss) income per common share for the years ended December 31, 2019 , 2018 and 2017 :

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31,

Net (loss) income

(Loss) income from continuing operations

Loss from discontinued operations

Net (loss) income

Weighted average common shares outstanding - basic

Basic (loss) income per common share:

(Loss) income from continuing operations

Loss from discontinued operations

Net (loss) income

Weighted average common shares outstanding - basic

Diluted effect of warrants

Diluted effect of stock options

Diluted effect of restricted stock units and restricted stock

Weighted average common shares outstanding - diluted

Diluted (loss) income per common share:

(Loss) income from continuing operations

Loss from discontinued operations

Net (loss) income

(6) Net Loss per Share

The number of shares used to calculate basic net loss per common share is based on the weighted average number of the Company’s outstanding common shares during the respective period.

The number of shares used to calculate diluted net loss per common share is based on the number of common shares used to calculate basic net loss per common share plus the dilutive effect of stock options and other stock-based instruments held by the Company’s employees and directors during the period, and the Company’s outstanding Series A warrants.

The diluted effect of outstanding stock-based instruments is determined by application of the treasury stock method.

The warrants become dilutive for diluted net loss per common share calculations when the market price of the Company’s common stock exceeds the exercise price.

Dilutive securities are not included in the computation of diluted net loss per common share as the impact would be anti-dilutive.

Refer to the Consolidated Statements of Operations for net loss per common share for the years ended December 31, 2020 and 2019.

For the years ended December 31, 2020 and 2019, 1,317,351 and 537,918 warrants, stock options, and other stock-based instruments, respectively, were excluded from the computation of dilutive net loss per share because they would have been anti-dilutive.

When applying the treasury stock method, anti-dilution generally occurs when the exercise prices or unrecognized compensation cost per share are higher than the Company’s average stock price during an applicable period.

Anti-dilution also occurs in periods of a net loss, and the dilutive impact of all share-based compensation awards are excluded.

For the years ended December 31, 2020 and 2019, the weighted average share impact of warrants, stock options, and other stock-based instruments that were excluded from the calculation of diluted shares due to the Company incurring a net loss for the period were 142,250 and 256,668 , respectively.

(7) Inventories, net

Inventories, net consisted of the following:

Raw coal $ 15,084 $ 26,584

Saleable coal 69,262 100,275

Materials, supplies and other, net (1)

23,705 24,029

Total inventories, net $ 108,051 $ 150,888

CONTURA ENERGY, INC.

(1) Includes an increase in allowance for obsolete material and supplies inventory of $ 807 recorded as restructuring expense during the year ended December 31, 2020 (refer to Note 8).

(8) Asset Impairment and Restructuring

Long-lived Asset Impairment for the Year Ended December 31, 2020

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

During the year ended December 31, 2020, weakening coal market conditions due in part to the impact of the global COVID-19 Pandemic, as well as the following events resulted in quarterly impairment testing:

• During the second quarter of 2020, the Company announced that it would take certain strategic actions with respect to two of its thermal coal mining complexes in an effort to strengthen its financial performance and improve forecasted liquidity.

The Company announced that an underground mine and preparation plant located in West Virginia would be idled during the third quarter of 2020.

In addition, the Company decided not to move forward with the construction of a new refuse impoundment at its Cumberland mine in Pennsylvania and would therefore no longer spend the significant capital required in connection with the project.

As a result, the Cumberland mine was expected to cease production by the end of 2022.

On December 10, 2020, the Company sold its Cumberland mining operations.

Refer to Note 3 for further details.

• During the fourth quarter of 2020, changes in mine plans and the determination that certain mineral reserves previously forecasted to be mined were no longer considered economic due to poor geologic conditions reduced forecasted cash flows for one Met and one CAPP - Thermal asset group to amounts below those required for full recoverability.

The Company performed long-lived asset impairment tests as of November 30, 2020, August 31, 2020, May 31, 2020, and February 29, 2020.

In total, the Company determined that indicators of impairment with respect to five long-lived asset groups within its Met reporting segment, three long-lived asset groups within its CAPP - Thermal reporting segment, and one long-lived asset group within discontinued operations existed during the year ended December 31, 2020.

The following tables present the details of the long-lived asset impairments during the year ended December 31, 2020:

Year Ended December 31, 2020

First Quarter Second Quarter Third Quarter Fourth Quarter Year Ended

Continuing operations:

$ 32,951 $ — $ — $ 13,366 $ 46,317

CAPP - Thermal

758 17,385 219 16,270 34,632

All Other — 5 — — 5

Total from continuing operations $ 33,709 $ 17,390 $ 219 $ 29,636 $ 80,954

Discontinued operations:

$ — $ 144,348 $ 3,297 $ — $ 147,645

Total long-lived asset impairment:

$ 33,709 $ 161,738 $ 3,516 $ 29,636 $ 228,599

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31, 2020

First Quarter Second Quarter Third Quarter Fourth Quarter Year Ended

Continuing operations:

Mineral rights, net

$ 21,825 $ 2,241 $ — $ 17,513 $ 41,579

Property, plant, and equipment, net

6,066 6,496 219 5,450 $ 18,231

Acquired mine permits, net 5,818 8,653 — 6,673 $ 21,144

Total from continuing operations $ 33,709 $ 17,390 $ 219 $ 29,636 $ 80,954

Discontinued operations:

Mineral rights, net

$ — $ 16,364 $ — $ — $ 16,364

Property, plant, and equipment, net

— 127,984 3,297 — $ 131,281

Total from discontinued operations $ — $ 144,348 $ 3,297 $ — $ 147,645

Total long-lived asset impairment:

Mineral rights, net

$ 21,825 $ 18,605 $ — $ 17,513 $ 57,943

Property, plant, and equipment, net

6,066 134,480 3,516 5,450 149,512

Acquired mine permits, net 5,818 8,653 — 6,673 21,144

Total long-lived asset impairment $ 33,709 $ 161,738 $ 3,516 $ 29,636 $ 228,599

Long-lived Asset Impairment for the Year Ended December 31, 2019

During the year ended December 31, 2019, the Company determined that indicators of impairment were present for three long-lived asset groups within each of its Met and CAPP - Thermal reporting segments and performed impairment testing as of December 31, 2019.

At December 31, 2019, the Company determined that the carrying amounts of the asset groups exceeded both their undiscounted cash flows and their estimated fair values.

As a result, after allocating the potential impairment to individual assets, the Company recorded a long-lived asset impairment of $ 60,169 , of which $ 9,176 was recorded within Met and $ 50,993 was recorded within CAPP - Thermal within continuing operations of the Consolidated Statements of Operations.

The long-lived asset impairment reduced the carrying values of mineral rights by $ 35,445 , property, plant, and equipment, net, by $ 17,056 , acquired mine permits, net, by $ 5,997 , and long-lived assets related to asset retirement obligations by $ 1,671 .

Additionally, during the year ended December 31, 2019, the Company recorded an asset impairment of $ 6,155 within continuing operations of the Consolidated Statements of Operations primarily related to the write-off of prepaid purchased coal as a result of Blackjewel’s Chapter 11 bankruptcy filing on July 1, 2019.

During the year ended December 31, 2019, the Company also recorded an asset impairment of $ 17,161 within discontinued operations of the Consolidated Statements of Operations which was primarily related to the write-off of tax related indemnification receivables within the former PRB operations.

The Company was considered to be the primary obligor for certain taxes that Blackjewel was contractually obligated to pay.

During the year ended December 31, 2019, the Company recorded an impairment charge for the offsetting receivable form Blackjewel as a result of the Blackjewel bankruptcy filing.

Refer to Note 3 for further information.

Restructuring

As a result of the strategic actions discussed above, the Company recorded restructuring expense during the year ended December 31, 2020 as follows:

Year Ended December 31, 2020

Total Restructuring Continuing Operations (3)

Discontinued Operations

Severance and employee-related benefits (1)

$ 26,037 $ 2,117 $ 23,920

Other costs (2)

1,882 807 1,075

Total restructuring expense $ 27,919 $ 2,924 $ 24,995

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

(1) Severance and employee-related benefits were considered probable and estimable based on provisions of contractual agreements and existing employee benefit plans.

(2) The year ended December 31, 2020 includes accelerated amortization of deferred longwall move expenses of $ 668 , allowance for advanced mining royalties of $ 407 , and allowance for obsolete materials and supplies inventory of $ 807 .

(3) During the year ended December 31, 2020, total restructuring expenses of $ 2,087 and $ 837 were recorded within the reportable segments CAPP - Thermal and All Other, respectively.

The total restructuring expenses of $ 2,924 affected Accrued expenses and other current liabilities, Other non-current liabilities, inventories, net, and Other non-current assets.

There were no restructuring expenses recorded during the year ended December 31, 2019.

(9) Prepaid Expenses and Other Current Assets

1 unchanged sentence

Prepaid freight $ 8,515 $ 8,268

Deferred longwall move expenses

Notes and other receivables 13,245 8,447

10 unchanged sentences

Mine development 96,008 36,721

Land 26,606 30,506

Office equipment, software and other 1,379 1,396

5 unchanged sentences

Depreciation and amortization expense associated with property, plant, equipment, and non-mineral asset retirement obligation assets, net, was $ 153,631 and $ 201,206 for the years ended December 31, 2020 and 2019, respectively.

Depreciation expense for the years ended December 31, 2019 , 2018 , and 2017 includes a credit of $(1,522) , an expense of $233 and a credit of ($898) , respectively, related to revisions to asset retirement obligations.

Depreciation expense for the years ended December 31, 2020 and 2019 includes a credit of ($ 3,689 ) and ($ 1,522 ), respectively, related to revisions to asset retirement obligations.

Refer to Note 17 for further disclosures related to asset retirement obligations.

During the year ended December 31, 2019, the Company recorded a long-lived asset impairment which reduced the carrying value of property, plant, and equipment, net, by $17,056 .

Refer to the asset impairment disclosure included in Note 2 for further information.

As of December 31, 2019 , the Company had commitments to purchase approximately $19,283 and $279 of new equipment, expected to be acquired at various dates in 2020 and 2022, respectively.

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

During the years ended December 31, 2020 and 2019, the Company recorded long-lived asset impairments which reduced the carrying value of property, plant, and equipment, net, by $ 18,231 and $ 17,056 , respectively.

Refer to Note 8 for further information.

As of December 31, 2020, the Company had commitments to purchase approximately $ 5,008 and $ 170 of new equipment, expected to be acquired at various dates in 2021 and 2023, respectively.

(11) Other Non-Current Assets

6 unchanged sentences

Workers’ compensation receivables 48,320 52,757

Other 25,040 17,827

Total other non-current assets $ 149,382 $ 189,475

( 12 ) Leases

Subsequent to the adoption of ASC 842, the Company recognizes right of use assets and lease liabilities on the balance sheet for all leases with a term longer than 12 months.

The Company uses the portfolio approach and group leases by short-term and long-term categories, applying the corresponding incremental borrowing rates to these categories of leases.

Additionally, the Company recognizes variable lease payments as an expense in the period incurred.

The Company’s lease population consists primarily of vehicle and heavy equipment leases and leases for office equipment.

1 unchanged sentence

The Company determines whether a contract contains a lease based on whether the Company obtains the right to control the use of specifically identifiable property, plant, and equipment for a period of time in exchange for consideration.

For the year ended December 31, 2019 , the Company identified no instances requiring significant judgment in determining whether any contracts entered into during the period were or were not leases.

Additionally, the Company had no material sublease agreements within the scope of ASC 842 or lease agreements for which the Company was the lessor for the year ended December 31, 2019 .

For the years ended December 31, 2020 and 2019, the Company identified no instances requiring significant judgment in determining whether any contracts entered into during the period were or were not leases.

Additionally, the Company had no material sublease agreements within the scope of ASC 842 or lease agreements for which the Company was the lessor for the years ended December 31, 2020 and 2019.

Renewal options in the Company’s lease population primarily relate to month-to-month extensions on vehicle leases and are immaterial both individually and in the aggregate.

1 unchanged sentence

As of December 31, 2020, the Company does not intend to exercise any termination options on existing leases.

As of December 31, 2019 , the Company had the following right-of-use assets and lease liabilities within the Company’s Consolidated Balance Sheets:

CONTURA ENERGY, INC.

As of December 31, 2020 and 2019, the Company had the following right-of-use assets and lease liabilities within the Company’s Consolidated Balance Sheets:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

December 31, 2019

Balance Sheet Classification

Financing lease assets

Property, plant, and equipment, net

Operating lease right-of-use assets

Other non-current assets

December 31, 2020 December 31, 2019

Assets Balance Sheet Classification

Financing lease assets Property, plant, and equipment, net $ 4,262 $ 9,687

Operating lease right-of-use assets Other non-current assets 5,671 7,298

Total lease assets $ 9,933 $ 16,985

Balance Sheet Classification

Financing lease liabilities - current

Current portion of long-term debt

Operating lease liabilities - current

Accrued expenses and other current liabilities

Financing lease liabilities - long-term

Long-term debt

Operating lease liabilities - long-term

Other non-current liabilities

Liabilities Balance Sheet Classification

Financing lease liabilities - current Current portion of long-term debt $ 2,014 $ 3,266

Operating lease liabilities - current Accrued expenses and other current liabilities 595 1,402

Financing lease liabilities - long-term Long-term debt 1,996 4,651

Operating lease liabilities - long-term Other non-current liabilities 5,076 5,896

Total lease liabilities $ 9,681 $ 15,215

Total lease costs and other lease information for the year ended December 31, 2019 included the following:

Year Ended December 31, 2019

Total lease costs and other lease information for the years ended December 31, 2020 and 2019 included the following:

Year Ended December 31, 2020 Year Ended December 31, 2019

Lease cost (1)

5 unchanged sentences

Total lease cost $ 7,219 $ 8,455

(1) The Company had no variable lease costs or sublease income for the year ended December 31, 2019 .

Year Ended December 31, 2019

(1) The Company had no variable lease costs or sublease income for the years ended December 31, 2020 and 2019.

Year Ended December 31, 2020 Year Ended December 31, 2019

Other information

4 unchanged sentences

Right-of-use assets obtained in exchange for new financing lease liabilities $ 221 $ 1,429

Right-of-use assets obtained in exchange for new operating lease liabilities $ ( 12 ) $ 371

Lease Term and Discount Rate

5 unchanged sentences

The following table summarizes the maturity of the Company’s lease liabilities on an undiscounted cash flow basis and a reconciliation to the lease liabilities recognized in the Company’s Consolidated Balance Sheet as of December 31, 2020:

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

Financing Leases

Operating Leases

Financing Leases Operating Leases

2021 $ 2,210 $ 1,210

2022 1,827 1,076

2023 269 1,101

Thereafter — 4,018

Total future minimum lease payments $ 4,312 $ 9,284

2 unchanged sentences

As of December 31, 2020, the Company had no leases with future commencement dates that will create significant rights or obligations for the Company.

( 13 ) Stock Repurchases and Dividend

2019 Capital Return Program

(13) Stock Repurchases

In May 2019, the Company’s Board of Directors adopted a capital return program that permits the Company to return to stockholders up to an aggregate amount of $ 250,000 of capital.

3 unchanged sentences

On August 29, 2019, the Company announced that its Board of Directors had approved a stock repurchase plan (the “Company Repurchase Plan”) to acquire up to $ 100,000 in the aggregate of the Company’s common stock at prices as set forth in such plan over a specified period.

Through September 30, 2019, the Company had repurchased an aggregate of 529,303 shares of common stock under the Company Repurchase Plan for an aggregate purchase price of $15,969 (comprised of $15,953 of share repurchases and $16 of related fees) for an average price paid for share of $30.17 .

On October 1, 2019, the Company suspended the Company Repurchase Plan.

Through September 30, 2019, the Company had repurchased an aggregate of 529,303 shares of common stock under the Company Repurchase Plan for an aggregate purchase price of $ 15,969 (comprised of $ 15,953 of share repurchases and $ 16 of related fees) for an average price paid per share of $ 30.17 .

As of October 1, 2019, the Company suspended the Company Repurchase Plan.

Additionally, on September 12, 2019, the Company entered into a common stock repurchase agreement with Whitebox Multi-Strategy Partners, L.P., Whitebox Asymmetric Partners, L.P., Whitebox Credit Partners, L.P.

and Whitebox Institutional Partners, L.P.

(“Whitebox”).

(together, “Whitebox”).

Pursuant to terms of the common stock repurchase agreement, the Company repurchased an aggregate of 500,000 shares of common stock from Whitebox at $ 32.99 per share for an aggregate purchase price of $ 16,495 .

2018 Stock Repurchase Plan

The Company entered into the Amended and Restated Credit Agreement and the Amended and Restated Asset-Based Revolving Credit Agreement on November 9, 2018.

These agreements, among other things, permitted an aggregate amount of $15,000 of cash to be used for the repurchase of its common stock in any twelve-month period after the closing date of the agreement, subject to certain terms and conditions.

On December 6, 2018, the Company announced that its Board of Directors had approved a stock repurchase plan (the “Company Repurchase Plan”) to acquire up to $15,000 in the aggregate of the company’s common stock.

As of December 31, 2018, the Company had repurchased an aggregate of 223,218 shares under the plan for an aggregate purchase price of approximately $15,007 (comprised of $15,000 of share repurchases and $7 of related fees).

2017 Dividend and Tender Offer

The Company entered into the First Amendment to the Asset-Based Revolving Credit Agreement on June 9, 2017 and the First Amendment to the Term Loan Credit Agreement on June 13, 2017.

The amendments, among other things, permitted an

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

aggregate amount of $150,000 of cash to be used for the (i) payment of a one-time cash dividend on its common stock no later than July 28, 2017, and (ii) repurchase of its common stock at any time no later than December 31, 2017, subject to certain terms and conditions.

On June 16, 2017, the Company declared a special cash distribution of approximately $92,786 in the aggregate (the “Special Dividend”), payable to eligible holders of record of its common stock as of the close of business on July 5, 2017.

In addition, pursuant to the terms of the Company’s management incentive plan, dividend equivalent payments of approximately $7,949 in the aggregate (including the amounts payable with respect to each share underlying outstanding stock option awards and restricted stock unit awards and outstanding restricted stock awards under the Management Incentive Plan (the “MIP”)) were paid to plan participants.

The dividend equivalent payments were made on July 11, 2017, and the Special Dividend was paid on July 12, 2017.

Pursuant to terms of the debt amendments, the Company made an offer to all Term Loan Credit Facility lenders under the Credit Agreement dated March 17, 2017, as amended, to repay the loans at par concurrently with the payment of the Special Dividend, in an aggregate principal amount equal to $10,000 .

All the Term Loan Facility lenders under the Credit Agreement dated March 17, 2017, as amended, accepted the offer, and the Company repaid $10,000 on July 13, 2017.

On September 15, 2017, the Company repurchased 309,310 shares of its common stock issued pursuant to awards under the MIP for a total purchase amount of $17,445 , or $56.40 per share.

On September 26, 2017, the Company announced that it had commenced a modified “Dutch Auction” tender offer to repurchase up to $31,800 of common stock.

On December 21, 2017, Contura repurchased an aggregate of 530,000 shares of common stock at a purchase price of $60.00 per share.

The total repurchase price of $32,595 (comprised of $31,800 of share repurchases and $795 of related fees) was recorded in the fourth quarter of 2017 as treasury stock in the Consolidated Balance Sheet.

Upon completion of the tender offer, provisions within the Company’s Term Loan Credit Facility under the Credit Agreement dated March 17, 2017, as amended, and the Asset-Based Revolving Credit Agreement dated April 3, 2017, as amended, limited the ability of the Company to make future repurchases of its common stock.

(14) Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

Operating lease liabilities

Wages and benefits $ 40,330 $ 37,983

Workers’ compensation 10,355 11,317

Black lung 6,784 7,409

Taxes other than income taxes 21,540 24,662

Current portion of asset retirement obligations 24,990 38,731

Accrued interest and fees 15,902 4,362

Deferred revenue 13,197 —

Freight accrual 2,610 5,851

Other 4,698 9,164

Total accrued expenses and other current liabilities $ 140,406 $ 139,479

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

(15) Long-Term Debt

Long-term debt consisted of the following:

Term Loan Credit Facility - due November 2025

Term Loan Credit Facility - due June 2024 $ 553,373 $ 558,991

ABL Facility - due April 2022 3,350 —

LCC Note Payable 27,500 45,000

4 unchanged sentences

Long-term debt, net of current portion $ 553,697 $ 564,458

(1) Includes financing leases, refer to Note 12 for additional information.

Term Loan Credit Facility - due June 2024

1 unchanged sentence

Principal repayments equal to approximately $ 1,405 are due each March, June, September and December (commencing with September 30, 2019) with the final principal repayment installment repaid on the maturity date and in an amount equal to the aggregate principal amount outstanding on such date.

The Term Loan Credit Facility bears an interest rate per annum based on the character of the loan (defined as either “Base Rate Loan” or “Eurocurrency Rate Loan”) plus an applicable rate of 6.00% for Base Rate Loans and 7.00% for Eurocurrency Rate Loans on or prior to the second anniversary of the Closing Date and 7.00% or 8.00% thereafter (the “Applicable Rate”).

The Term Loan Credit Facility bears an interest rate per annum based on the character of the loan (defined as either “Base Rate Loan” or “Eurocurrency Rate Loan”).

Each loan type bears interest at a rate per annum comprised of a base rate (as defined) plus an applicable percentage ( 6.00 % for Base Rate Loans and 7.00 % for Eurocurrency Rate Loans on or prior to the second anniversary of the Closing Date and 7.00 % or 8.00 % thereafter (the “Applicable Rate”)).

The Eurocurrency base rate is subject to a 2.00 % floor.

Interest accrued on each Base Rate Loan is payable in arrears on the last business day of each March, June, September and December and the maturity date.

Interest accrued on each Eurocurrency Rate Loan is payable in arrears on the last day of each interest period as defined therein.

As of December 31, 2019 , the interest rate on borrowings made under the Term Loan Credit Facility was 9.00% , calculated as the eurocurrency rate during the period plus 7.00% .

As of December 31, 2020, the borrowings made under the Term Loan Credit Facility were comprised of Eurocurrency Rate Loans with an interest rate of 9.00 %, calculated as the Eurocurrency rate during the period plus an applicable rate of 7.00 %.

As of December 31, 2020, the carrying value of the Term Loan Credit Facility was $ 540,643 , with $ 5,618 classified as current, within the Consolidated

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Balance Sheets.

As of December 31, 2019, the carrying value of the term loan credit facility was $ 538,765 , with $ 5,618 classified as current, within the Consolidated Balance Sheets.

2 unchanged sentences

The Company used the proceeds from the Term Loan Credit Facility to repay the outstanding principal balance of $ 543,125 under the Amended and Restated Credit Agreement dated November 9, 2018 and fees related to such refinancing.

The Company recorded a loss on modification of debt of $255 , primarily related to modification fees paid under the refinance, and a loss on extinguishment of debt of $26,204 , primarily related to the write-off of outstanding debt discounts and unamortized debt issuance costs under the Amended and Restated Credit Agreement dated November 9, 2018, which are recorded in loss on modification and extinguishment of debt within the Consolidated Statements of Operations.

All obligations under the Term Loan Credit Facility are substantially guaranteed by the Company’s existing wholly owned domestic subsidiaries, and are required to be guaranteed by the Company’s future wholly-owned domestic subsidiaries.

Certain obligations under the Term Loan Facility are secured by a senior lien, subject to certain exceptions (including the ABL Priority Collateral described below), by substantially all of the Company’s assets and the assets of the Company’s subsidiary guarantors (“Term Loan Priority Collateral”), in each case subject to exceptions.

The Company recorded a loss on modification of debt of $ 255 , primarily related to modification fees paid under the refinance, and a loss on extinguishment of debt of $ 26,204 , primarily related to the write-off of outstanding debt discounts and unamortized debt issuance costs under the Amended and Restated Credit Agreement dated November 9, 2018, which are recorded in loss on modification and extinguishment of debt within the Consolidated Statements of Operations for the year ended December 31, 2019.

All obligations under the Term Loan Credit Facility are guaranteed by substantially all of Alpha’s direct and indirect subsidiaries.

Certain obligations under the Term Loan Facility are secured by a senior lien, subject to certain exceptions (including the ABL Priority Collateral described below), by substantially all of Alpha’s assets and the assets of Alpha’s subsidiary guarantors (“Term Loan Priority Collateral”), in each case subject to exceptions.

The obligations under the Term Loan Credit Facility are also secured by a junior lien, again subject to certain exceptions, against the ABL Priority Collateral.

1 unchanged sentence

The Company was in compliance with all covenants under this agreement as of December 31, 2020.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Term Loan Credit Facility - due November 2025

On November 9, 2018, the Company entered into an Amended and Restated Credit Agreement with Jefferies Finance LLC, as administrative agent and collateral agent, and the other lenders party thereto (as defined therein) (the “Amended and Restated Credit Agreement”) that provided for a senior secured term loan facility in the aggregate amount of $550,000 with a maturity date of November 9, 2025 (the “Old Term Loan Credit Facility”).

Principal repayments equal to $6,875 were due each March, June, September and December (commencing with March 31, 2019) with the final principal repayment installment repaid on the maturity date and in any event would be in an amount equal to the aggregate principal amount outstanding as of such date.

The Old Term Loan Credit Facility incurred an interest rate per annum based on the character of the loan (defined as either “Base Rate Loan” or “Eurocurrency Rate Loan”) plus an applicable rate of 4.00% to 5.00% depending on loan type (the “Applicable Rate”), payable bi-monthly in arrears.

As of December 31, 2018, the Old Term Loan Credit Facility was classified as a Eurocurrency Rate Loan with an interest rate of 7.39% , calculated as the eurocurrency rate during the period plus an applicable rate of 5.00% .

As of December 31, 2018, the carrying value of the Old Term Loan Credit Facility was $521,667 , with $20,625 classified as current, within the Consolidated Balance Sheet.

On June 14, 2019, the Company used the proceeds from the Term Loan Credit Facility to repay the outstanding principal of the Old Term Loan Credit Facility.

In connection with entering into the Amended and Restated Credit Agreement, the Company repaid the outstanding principal balance of $380,667 under the credit agreement dated March 17, 2017 and the outstanding principal balance of $82,811 under the term loan agreement dated October 23, 2017 between ANR and Cantor Fitzgerald Securities (the “Alpha Term Loan”).

In connection with the Amended and Restated Credit Agreement, the Company recorded a loss on modification of debt of $9,370 , primarily related to modification fees paid under the refinance, and a loss on extinguishment of debt of $2,591 , primarily related to a prepayment premium on the Alpha Term Loan and the write-off of outstanding debt discounts under the Credit Agreement dated March 17, 2017, which are recorded in loss on modification and extinguishment of debt within the Consolidated Statements of Operations.

In connection with entering into the Credit Agreement dated March 17, 2017, the Company paid all of its $300,000 outstanding 10.00% Senior Secured First Lien Notes due 2021, the $42,500 outstanding Term Facility due 2020, the $8,500 outstanding Closing Tranche Term Loan due 2018, and the $5,500 outstanding GUC Distribution Note due 2018.

For the year ended December 31, 2017, the Company recorded a loss on early extinguishment of debt of $38,701 , primarily related to a prepayment premium on the 10.00% Senior Secured First Lien Notes and the write-off of outstanding debt discounts on the 10.00% Senior Secured First Lien Notes and GUC Distribution Note.

Amended and Restated Asset-Based Revolving Credit Agreement

3 unchanged sentences

The Amended and Restated Asset-Based Revolving Credit Agreement amended and restated the Asset-Based Revolving Credit Agreement dated April 3, 2017, in its entirety, and includes a senior secured asset-based revolving credit facility (the “ABL Facility”).

Under the ABL Facility, the Company may borrow cash from the Lender or cause the LC Lenders to issue letters of credit, on a revolving basis, in an aggregate amount of up to $225,000 , of which no more than $200,000 may be drawn through letters of credit.

Under the ABL Facility, the Company may borrow cash from the Lenders (as defined therein) or cause the L/C Issuers (as defined therein) to issue letters of credit, on a revolving basis, in an aggregate amount of up to $ 225,000 , of which no more than $ 200,000 may be drawn through letters of credit.

Any borrowings under the ABL Facility will have a maturity date of April 3, 2022 and will bear interest based on the character of the loan (defined as either “Base Rate Loan” or “Eurocurrency Rate Loan”) plus an applicable rate ranging from 1.00 % to 1.50 % for Base Rate Loans and 2.00 % to 2.50 % for Eurocurrency Rate Loans, depending on the amount of credit available.

Any letters of credit issued under the ABL Facility will bear a commitment fee rate ranging from 0.25% to 0.375% depending on the amount of availability per terms of the agreement, and a 0.25% fronting fee payable to the ABL Facility’s administrative agent.

Pursuant to terms of the Amended and Restated Asset-Based Revolving Credit Agreement at each notice period, the Company elects the character of the loan, the interest period, and may provide notice of continuation or conversion of the borrowed principal amount with the ability to repay the borrowed principal amount in advance of the maturity date without penalty.

The Amended and Restated Asset-Based Revolving Credit Agreement provides that a specified percentage of billed, unbilled and approved foreign receivables and raw and clean inventory meeting certain criteria are eligible to be counted for purposes of collateralizing the amount of financing available, subject to certain terms and conditions.

The Company recorded a loss on early extinguishment of debt of $81 related to the write-off of unamortized issuance costs on the Old ABL Facility, which is recorded in loss on modification and extinguishment of debt within the Consolidated Statements of Operations.

As of December 31, 2019 and 2018 , the Company had no borrowings and $99,876 and $28,700 letters of credit outstanding under the ABL Facility, respectively.

CONTURA ENERGY, INC.

Availability under the ABL Facility is calculated on a monthly basis and fluctuates based on qualifying amounts of coal inventory and trade accounts receivable (the “Borrowing Base”) and the facility's covenant limitations related to the Fixed Charge Coverage Ratio (as defined in therein).

In accordance with terms of the ABL Facility, the Company may be required to collateralize the ABL Facility to the extent outstanding borrowings and letters of credit under the ABL Facility exceed the Borrowing Base after considering covenant limitations.

Due to fluctuations of the Borrowing Base, the Company was required to post $ 25,000 of collateral in January 2021 to remain in compliance with the terms of the ABL Facility as of December 31, 2020.

On March 20, 2020, the Company borrowed $ 57,500 principal amount under the ABL Facility.

The funds were borrowed to augment the Company’s short-term operational flexibility in the face of uncertainty created by the current spread of the COVID-19 virus and its potential effects (see further discussion in Note 1).

As of December 31, 2020, the borrowings made under the ABL Facility were comprised of Eurocurrency Rate Loans with an interest rate of 2.73 %, calculated as the Eurocurrency rate during the period plus an applicable rate of 2.50 %.

The interest rate is subject to periodic adjustment and is subject to adjustment again on April 7, 2021.

As of December 31, 2020, the carrying value of the ABL Facility was $ 3,350 , all

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

of which was classified as long-term within the Consolidated Balance Sheets.

As of December 31, 2019, the Company had no borrowings under the ABL Facility.

Any letters of credit issued under the ABL Facility will bear a commitment fee rate ranging from 0.25 % to 0.375 % depending on the amount of availability per terms of the agreement, and a fronting fee of 0.25 % of the face amount under each letter of credit, payable to the ABL Facility’s administrative agent.

As of December 31, 2020 and December 31, 2019, the Company had $ 123,108 and $ 99,876 letters of credit outstanding under the ABL Facility, respectively.

The ABL Facility is guaranteed by substantially all of Alpha’s direct and indirect subsidiaries (together with the Alpha, the “Loan Parties”) and secured by all or substantially all assets of the Loan Parties, including equity in its direct domestic subsidiaries and first-tier foreign subsidiaries, as collateral for the obligations under the ABL Facility.

The ABL Facility has a first lien on ABL priority collateral and a second lien on term loan priority collateral.

The Amended and Restated Asset-Based Revolving Credit Agreement, as amended, and related documents contain negative and affirmative covenants including certain financial covenants.

The Company was in compliance with all covenants under these agreements as of December 31, 2019 .

The ABL Credit Facility is guaranteed by substantially all of Contura’s direct and indirect subsidiaries (together with Contura, the “Loan Parties”) and secured by all or substantially all assets of the Loan Parties, including equity in its direct domestic subsidiaries and first-tier foreign subsidiaries, as collateral for the obligations under the New ABL Credit Facility.

The New ABL Credit Facility has a first lien on ABL priority collateral and a second lien on term loan priority collateral.

The Company entered into the First Amendment to the Asset-Based Revolving Credit Agreement on June 9, 2017.

The amendment, among other things, permitted an aggregate amount of $150,000 of cash to be used for the (i) payment of a one-time cash dividend on its common stock no later than July 28, 2017, and (ii) repurchase of its common stock at any time no later than December 31, 2017, subject to certain terms and conditions.

On April 3, 2017, the Company entered into an Asset-Based Revolving Credit Agreement with Citibank N.A.

as administrative agent, collateral agent, and swingline lender and the other lenders party thereto (the “Old Lenders”), and Citibank N.A., BMO Harris Bank N.A.

and Credit Suisse AG as letter of credit issuers (“Old LC Lenders”).

The Asset-Based Revolving Credit Agreement included a senior secured asset-based revolving credit facility (the “Old ABL Facility”).

Under the Old ABL Facility, the Company could borrow cash from the Old Lender or cause the Old LC Lenders to issue letters of credit, on a revolving basis, in an aggregate amount of up to $125,000 , of which no more than $80,000 could be drawn through letters of credit.

Any borrowings under the Old ABL Facility had a maturity date of April 4, 2022 and incurred interest based on the character of the loan (defined as either “Base Rate Loan” or “Eurocurrency Rate Loan”) plus an applicable rate ranging from 1.00% to 1.50% for Base Rate Loans and 2.00% to 2.50% for Eurocurrency Rate Loans, depending on the amount of credit that was available.

Any letters of credit issued under the Old ABL Facility incurred a commitment fee rate ranging from 0.25% to 0.375% depending on the amount of availability per terms of the agreement, and a 0.25% fronting fee that was payable to the Old ABL Facility’s administrative agent.

The Asset-Based Revolving Credit Agreement provided that a specified percentage of billed, unbilled and approved foreign receivables and raw and clean inventory meeting certain criteria were eligible to be counted for purposes of collateralizing the amount of financing available, subject to certain terms and conditions.

As of December 31, 2017, the Company had no borrowings and $11,300 in letters of credit outstanding under the Old ABL Facility.

The Company is in compliance with all covenants under these agreements as of December 31, 2020.

LCC Note Payable

8 unchanged sentences

The carrying value of the LCC Water Treatment Stipulation was $ 5,636 and $ 7,211 , with $ 1,875 and $ 1,875 reported within the current portion of long-term debt as of December 31, 2020 and 2019, respectively.

Financing Leases

The Company entered into financing leases for certain property and other equipment during 2019 and 2018 .

The Company’s liability for financing leases was $7,949 and $6,423 , with $3,275 and $2,110 reported within the current portion of long-term debt as of December 31, 2019 and 2018 , respectively.

Financing leases are included in the other line item in the table above.

Refer to Note 12 for additional information on leases.

Future Maturities

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Future maturities of long-term debt as of December 31, 2020 are as follows:

2021 $ 28,830

Total long-term debt $ 599,573

1 unchanged sentence

Acquisition-related obligations consisted of the following:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Contingent Revenue Obligation $ 28,967 $ 52,427

1 unchanged sentence

Reclamation Funding Liability — 12,000

Retiree Committee VEBA Funding Settlement Liability

UMWA Funds Settlement Liability 2,000 4,000

Discount ( 1,491 ) ( 4,834 )

Total acquisition-related obligations 39,867 79,898

1 unchanged sentence

Acquisition-related obligations, net of current portion $ 20,768 $ 46,259

The Company entered into various settlement agreements with Alpha and/or the Alpha bankruptcy successor ANR and third parties as part of the Alpha bankruptcy reorganization process.

The Company assumed acquisition-related obligations through those settlement agreements which became effective on July 26, 2016, the effective date of Alpha’s plan of reorganization.

Additionally, as a result of the Merger, the Company assumed certain acquisition-related obligations pursuant to the terms stipulated within the bankruptcy settlement previously entered into by the Alpha Companies.

The Company entered into various settlement agreements with Alpha Natural Resources, Inc.

and/or the Alpha Natural Resources, Inc.

bankruptcy successor ANR, Inc.

and third parties as part of the Alpha Natural Resources, Inc.

bankruptcy reorganization process.

The Company assumed acquisition-related obligations through those settlement agreements which became effective on July 26, 2016, the effective date of Alpha Natural Resources, Inc.’s plan of reorganization.

Contingent Revenue Obligation

As a result of the Merger, the Company assumed a contingent revenue payment obligation (the “Contingent Revenue Obligation”) to certain of the Alpha Companies’ creditors pursuant to the terms stipulated within the bankruptcy settlement previously entered into by the Alpha Companies.

Pursuant to terms of the obligation, the annual obligation will be limited to revenues derived from legacy operations for the Alpha Companies and will not include revenues related to legacy Contura operations.

The Contingent Revenue Obligation consists of a contingent revenue payment of 1.5% of annual gross revenues of the legacy operations for the Alpha Companies up to $500,000 and 1.0% of annual gross revenue of the legacy operations for the Alpha Companies in excess of $500,000 through the period ended December 31, 2022.

As a result of the Merger, the Company assumed a contingent revenue payment obligation (the “Contingent Revenue Obligation”) to certain of the Merger Companies’ creditors pursuant to the terms stipulated within the bankruptcy settlement previously entered into by the Merger Companies.

Pursuant to terms of the obligation, the annual obligation will be limited to revenues derived from legacy operations for the Merger Companies and will not include revenues related to legacy Alpha Metallurgical Resources, Inc.

The Contingent Revenue Obligation consists of a contingent revenue payment of 1.5 % of annual gross revenues of the legacy operations for the Merger Companies up to $ 500,000 and 1.0 % of annual gross revenue of the legacy operations for the Merger Companies in excess of $ 500,000 through the period ended December 31, 2022.

As of December 31, 2020 and 2019, the carrying value of the Contingent Revenue Obligation was $ 28,967 and $ 52,427 , with $ 11,393 and $ 14,646 classified as current, respectively, and classified as an acquisition-related obligation in the Consolidated Balance Sheets.

Refer to Note 18 for further disclosures related to the fair value assignment and methods used.

During the second quarter of 2020, the Company paid $ 15,084 , including $ 374 of unclaimed unsecured claims distributions, pursuant to terms of the Contingent Revenue Obligation.

During the second quarter of 2019, the Company paid $ 9,627 pursuant to terms of the Contingent Revenue Obligation.

Environmental Settlement Obligations

As a result of the Merger, the Company assumed certain environmental settlement obligations (the “Environmental Settlement Obligations”) pursuant to the terms stipulated within the bankruptcy settlement previously entered into by the Alpha Companies.

These obligations include payments to a third-party environmental agency and the funding of certain reclamation related projects through 2022.

As of December 31, 2019 and 2018 , the carrying value of the Environmental Settlement

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Obligations was $13,594 and $14,768 , net of discounts of $2,711 and $4,538 , with $6,185 and $3,375 classified as current, respectively, all of which was classified as an acquisition-related obligation in the Consolidated Balance Sheets.

As of December 31, 2020 and 2019, the carrying value of the Environmental Settlement Obligations was $ 9,237 and $ 13,594 , net of discounts of $ 1,154 and $ 2,711 , with $ 6,044 and $ 6,185 classified as current, respectively, all of which was classified as an acquisition-related obligation in the Consolidated Balance Sheets.

Reclamation Funding Agreement

Pursuant to the Reclamation Funding Agreement dated July 12, 2016, the Company must pay the aggregate amount of $50,000 into the various Restricted Cash Reclamation Accounts as follows:

Pursuant to the Reclamation Funding Agreement dated July 12, 2016, the Company paid the aggregate amount of $ 50,000 into the various Restricted Cash Reclamation Accounts as follows:

$ 8,000 immediately upon the effective date of the agreement;

1 unchanged sentence

and $ 12,000 on the anniversary of the effective date in 2020.

As of December 31, 2019 and 2018 , the carrying value of the Funding of Restricted Cash Reclamation liability was $10,808 and $18,106 , net of discounts of $1,192 and $3,894 , with $10,808 and $10,000 classified as current, respectively, all of which was classified as an acquisition-related obligation in the Consolidated Balance Sheets.

As of December 31, 2020, the Company has no remaining payments for the Funding of Restricted Cash Reclamation liability.

As of December 31, 2019 the carrying value of the Funding of Restricted Cash Reclamation liability was $ 10,808 , net of discounts of $ 1,192 , all of which was classified as a current acquisition-related obligation in the Consolidated Balance Sheets.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

(17) Asset Retirement Obligations

1 unchanged sentence

Total asset retirement obligations at December 31, 2018 $ 192,038

Merger measurement-period adjustments 12,718

Accretion for the period (1)

2 unchanged sentences

Expenditures for the period ( 23,421 )

Reclassification to liabilities held for sale

Total asset retirement obligations at December 31, 2019 $ 203,137

Measurement-period adjustments (3)

Accretion for the period 26,504

5 unchanged sentences

Long-term portion $ 140,074

Represents amounts assumed in connection with the Merger.

The revisions in estimated cash flows resulted primarily from discount rate adjustments and changes in mine plans.

Refer to Note 3 for additional information on the Merger and related measurement-period adjustments recorded during the year ended December 31, 2019 .

(1) Amount does not include the accretion related to asset retirement obligations classified as liabilities held for sale.

(2) The revisions in estimated cash flows resulted primarily from discount rate adjustments and changes in mine plans.

(3) Included within accrued expenses and other current liabilities on the Company’s Consolidated Balance Sheets.

Refer to Note 14.

(18) Fair Value of Financial Instruments and Fair Value Measurements

2 unchanged sentences

The carrying amounts for cash and cash equivalents, trade accounts receivable, net, prepaid expenses and other current assets, short-term and long-term restricted cash, short-term and long-term deposits, trade accounts payable, and accrued expenses and other current liabilities approximate fair value as of December 31, 2020 and 2019 due to the short maturity of these instruments.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The following tables set forth by level, within the fair value hierarchy, the Company’s long-term debt at fair value as of December 31, 2020 and 2019:

December 31, 2020

Quoted Prices in Active Markets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Term Loan Credit Facility - due June 2024 $ 540,643 $ 379,614 $ — $ 379,614 $ —

ABL Facility - due April 2022 3,350 3,057 — — 3,057

LCC Note Payable 24,423 20,328 — — 20,328

1 unchanged sentence

Total long-term debt $ 574,052 $ 407,280 $ — $ 379,614 $ 27,666

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

December 31, 2019

Quoted Prices in Active Markets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Term Loan Credit Facility - due November 2025

Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Term Loan Credit Facility - due June 2024 $ 538,765 $ 461,402 $ 461,402 $ — $ —

LCC Note Payable 37,695 33,884 — — 33,884

4 unchanged sentences

December 31, 2020

Total Fair Value

Quoted Prices in Active Markets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

UMWA Funds Settlement Liability $ 1,662 $ 1,426 $ — $ — $ 1,426

Reclamation Funding Liability

Environmental Settlement Obligations 9,237 7,760 — — 7,760

1 unchanged sentence

December 31, 2019

Total Fair Value

Quoted Prices in Active Markets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Retiree Committee VEBA Funding

Settlement Liability

Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

UMWA Funds Settlement Liability $ 3,069 $ 2,929 $ — $ — $ 2,929

3 unchanged sentences

(1) Net of discounts.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The following table sets forth by level, within the fair value hierarchy, the Company’s financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2020 and 2019.

2 unchanged sentences

December 31, 2020

Total Fair Value

Quoted Prices in Active Markets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Contingent Revenue Obligation $ 28,967 $ — $ — $ 28,967

Trading securities $ 22,498 $ 20,092 $ 2,406 $ —

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

December 31, 2019

Total Fair Value

Quoted Prices in Active Markets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Contingent Revenue Obligation $ 52,427 $ — $ — $ 52,427

Trading securities $ 11,021 $ 5,506 $ 5,515 $ —

The following table is a reconciliation of the financial and non-financial assets and liabilities that were accounted for at fair value on a recurring basis and that were categorized within Level 3 of the fair value hierarchy:

December 31, 2018

Measurement Period Adjustments (1)

Loss Recognized in Earnings

Transfer In (Out) of Level 3 Fair Value Hierarchy

December 31, 2019

December 31, 2019 Payments Gain Recognized in Earnings Transfer In (Out) of Level 3 Fair Value Hierarchy December 31, 2020

Contingent Revenue Obligation $ 52,427 $ ( 14,710 ) $ ( 8,750 ) $ — $ 28,967

(1) Refer to Note 3 for additional information on the Merger and related measurement-period adjustments recorded during the year ended December 31, 2019 .

December 31, 2017

Loss (Gain) Recognized in Earnings

Transfer In (Out) of Level 3 Fair Value Hierarchy

December 31, 2018

(1) The gain recognized in earnings resulted primarily from a change in the forecasted future revenue associated with this obligation and an increase in annualized volatility as of December 31, 2020.

December 31, 2018 Payments Measurement-Period Adjustments Gain Recognized in Earnings Transfer In (Out) of Level 3 Fair Value Hierarchy December 31, 2019

Contingent Revenue Obligation $ 59,880 $ ( 9,627 ) $ 5,738 $ ( 3,564 ) $ — $ 52,427

(1) The measurement-period adjustments are related to Merger recorded during the year ended December 31, 2019.

The following methods and assumptions were used to estimate the fair values of the assets and liabilities in the tables above:

Level 1 Fair Value Measurements

Term Loan Credit Facility - due June 2024 and Term Loan Credit Facility - due November 2025 - The fair value is based on observable market data.

Term Loan Credit Facility - due June 2024 - As of December 31, 2019, the fair value is based on observable market data.

Trading Securities - Includes money market funds and other cash equivalents.

The fair value is based on observable market data.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Level 2 Fair Value Measurements

Term Loan Credit Facility - due June 2024 - As of December 31, 2020, the fair value is based on the average between bid and ask prices provided by a third-party.

As the fair value is based on observable market inputs, the Company has classified the fair value within Level 2 of the fair value hierarchy.

Due to limited trading volume in the Term Loan Credit Facility, the Company reclassified the fair value from Level 1 within the fair value hierarchy during the year ended December 31, 2020.

Trading Securities - Includes certificates of deposit, mutual funds, corporate debt securities and U.S.

5 unchanged sentences

Level 3 Fair Value Measurements

LCC Note Payable, LCC Water Treatment Obligation, Retiree Committee VEBA Funding Settlement Liability, UMWA Funds Settlement Liability, Environmental Settlement Obligations and Reclamation Funding Liability - Observable transactions are not available to aid in determining the fair value of these items.

Therefore, the fair value was derived by using the expected present value approach in which estimated cash flows are discounted using a risk-free interest rate adjusted for market risk.

ABL Facility - due April 2022 - Observable transactions are not available to aid in determining the fair value of this item.

Therefore, the fair value was derived by using the expected present value approach in which estimated cash flows are discounted using a risk-free interest rate adjusted for credit risk (discount rate of approximately 9 %) as of December 31, 2020.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

LCC Note Payable, LCC Water Treatment Obligation, UMWA Funds Settlement Liability, Environmental Settlement Obligations and Reclamation Funding Liability - Observable transactions are not available to aid in determining the fair value of these items.

Contingent Revenue Obligation - The fair value of the contingent revenue obligation was estimated using a Black-Scholes pricing model and is marked to market at each reporting period with changes in value reflected in earnings.

The inputs included in the Black-Scholes pricing model are the Company's forecasted future revenue, the stated royalty rate, the remaining periods in the obligation;

annual risk-free interest rate based on the US Constant Maturity Treasury Curve and annualized volatility.

annual risk-free interest rate based on the U.S.

Constant Maturity Treasury Curve and annualized volatility.

The annualized volatility was calculated by observing volatilities for comparable companies with adjustments for the Company's size and leverage.

Acquisition accounting - The Company accounts for business combinations under the acquisition method of accounting.

The total cost of acquisitions is allocated to the underlying identifiable net tangible and intangible assets based on their respective estimated fair values.

Determining the fair value of assets acquired and liabilities assumed requires management’s judgment, the utilization of independent valuation experts and often involves the use of significant estimates and assumptions with respect to the timing and amounts of future cash inflows and outflows, discount rates, market prices and asset lives, among other items.

A combination of income, market and cost approaches are used for the valuation where appropriate, depending on the assets or liabilities being valued.

The valuation inputs in these models and analyses give consideration to market participant assumptions.

The range of significant unobservable inputs used to value the contingent revenue obligation as of December 31, 2020 and December 31, 2019, are set forth in the following table:

December 31, 2020 December 31, 2019

Forecasted future revenue $ 0.9 - $ 1.1 billion

$ 1.1 - $ 1.2 billion

Stated royalty rate 1.0 % - 1.5 %

1.0 % - 1.5 %

Annualized volatility 19.4 % - 52.1 % ( 28.0 %)

9.4 % - 28.1 % ( 19.9 %)

(19) Income Taxes

Total income tax benefit provided on income (loss) before income taxes was allocated as follows:

Total income tax benefit provided on loss before income taxes was allocated as follows:

Year Ended December 31,

1 unchanged sentence

Discontinued operations — ( 8,484 )

Significant components of income tax expense (benefit) from continuing operations were as follows:

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Total $ ( 2,164 ) $ ( 61,771 )

Significant components of income tax (benefit) expense from continuing operations were as follows:

Year Ended December 31,

Current tax (benefit) expense:

Federal $ ( 35,187 ) $ ( 45,356 )

State ( 99 ) 1,891

Total current $ ( 35,286 ) $ ( 43,465 )

Deferred tax (benefit) expense:

Federal $ 33,348 $ ( 747 )

State ( 226 ) ( 9,075 )

Total deferred $ 33,122 $ ( 9,822 )

Total income tax (benefit) expense:

A reconciliation of statutory federal income tax expense (benefit) on income from continuing operations to the actual income tax expense (benefit) is as follows:

Total income tax benefit:

Federal $ ( 1,839 ) $ ( 46,103 )

State ( 325 ) ( 7,184 )

Total $ ( 2,164 ) $ ( 53,287 )

A reconciliation of statutory federal income tax benefit on loss from continuing operations to the actual income tax benefit is as follows:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31,

Federal statutory income tax expense (benefit)

Federal statutory income tax benefit $ ( 51,163 ) $ ( 57,310 )

Increase (reductions) in taxes due to:

Percentage depletion allowance ( 2,039 ) ( 6,270 )

Federal tax rate change

SAB 118 finalization

Estimated sequestration impact

AMT sequestration refund ( 2,123 ) —

State taxes, net of federal tax impact ( 9,640 ) ( 10,255 )

3 unchanged sentences

Amended return - capital loss impact — 919

Non-taxable bargain purchase gain

Non-deductible goodwill impairment — 26,114

Non-deductible transaction costs

Stock-based compensation 1,739 ( 1,085 )

Charitable contribution carryforward expiration

Provision to return adjustment

Other, net 2,368 2,070

Income tax benefit $ ( 2,164 ) $ ( 53,287 )

1 unchanged sentence

The net deferred tax assets and liabilities included in the Consolidated Balance Sheets include the following amounts:

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31,

5 unchanged sentences

Equity method investments 2,050 2,509

Charitable contribution carryforwards

Alternative minimum tax credit carryforwards — 33,065

1 unchanged sentence

Acquisition-related obligations 10,002 17,902

Other 10,976 12,299

Gross deferred tax assets 444,275 366,205

6 unchanged sentences

Restricted cash ( 11,516 ) ( 20,313 )

Other ( 55 ) ( 822 )

Total deferred tax liabilities ( 181,368 ) ( 200,542 )

1 unchanged sentence

Changes in the valuation allowance were as follows:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31,

Valuation allowance beginning of period $ 133,020 $ 94,802

Increase (decrease) in valuation allowance recorded to income tax expense (benefit)

Increase in valuation allowance recorded to income tax benefit 117,829 29,950

Increase in valuation allowance not affecting income tax expense 12,538 8,268

1 unchanged sentence

On December 22, 2017, President Trump signed into law legislation commonly referred to as the “Tax Cuts and Jobs Act” (“TCJA”).

Effective for tax years beginning after December 31, 2017, the TCJA reduced the corporate income tax rate from 35% to 21%.

As a result of the reduction in the corporate income tax rate, the Company recorded a reduction to the value of its net deferred tax assets before the valuation allowance of $179,825 , resulting in an offsetting release in the valuation allowance of $179,825 , during the year ended December 31, 2017.

The TCJA also repealed the corporate alternative minimum tax (“AMT”), provided a mechanism for corporations to monetize alternative minimum tax credits (“AMT Credits”) during the 2018 to 2021 tax years, limited the tax deduction for interest expense to 30% of adjusted earnings, and made changes to net operating loss provisions (“NOL”) to repeal NOL carrybacks, allow NOLs to be carried forward indefinitely, and limit the utilization of an NOL carryforward to 80% of taxable income generated.

The changes to the NOL provisions apply to NOLs generated in 2018 and future tax years.

During the one-year measurement period ended December 22, 2018, the Company finalized its accounting for the AMT Credits under SAB 118, resulting in the recording of an income tax benefit of $6,735 during the year ended December 31, 2018.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Based on the accounting policy election made, the Company classifies the AMT Credits as a deferred tax asset until the taxable year in which the credit can be claimed on the tax return.

In that year, the Company reclassifies the amount from a deferred tax asset to an income tax receivable.

As of December 31, 2019, the Company recorded a current income tax receivable of $33,065 for AMT Credits expected to be refunded on the 2019 tax return.

The remaining $33,065 of AMT Credits, the balance of which are expected to be refunded on the 2020 and 2021 tax returns, are recorded as a deferred tax asset.

The Internal Revenue Service (“IRS”) may issue additional guidance in the form of regulations or notices regarding certain technical issues related to the monetization of the AMT Credits.

The Company acquired the core assets of Alpha as part of the Alpha Restructuring in transactions intended to be treated as a tax-free reorganization for U.S.

Among other provisions, the TCJA repealed the corporate AMT and provided a mechanism for corporations to monetize their alternative minimum tax credits (“AMT Credits”) as a refundable credit during the 2018 through 2021 tax years.

On March 27, 2020, President Trump signed into law legislation referred to as the CARES Act.

The CARES Act modified the AMT Credits provision such that a corporate taxpayer’s remaining AMT Credits would be refunded in the 2019 tax year rather than the 2019 through 2021 tax years.

As of December 31, 2019, the Company recorded a current federal income tax receivable of $ 33,065 and a deferred tax asset of $ 33,065 in relation to its refundable AMT Credits.

During the first quarter of 2020 and following enactment of the CARES Act, the Company reclassified the $ 33,065 deferred tax asset to a current federal income tax receivable.

The Company received the $ 66,130 AMT Credit refund in the fourth quarter of 2020.

In addition, the Company received $ 2,123 related to AMT Credits claimed in prior tax years under a different Internal Revenue Code section, which were previously and erroneously subjected to the budgetary sequestration provisions.

As of December 31, 2020, the Company does not expect to receive any further benefits related to AMT Credits.

The Company acquired the core assets of Alpha Natural Resources, Inc.

as part of the Alpha Natural Resources, Inc.

bankruptcy reorganization in transactions intended to be treated as a tax-free reorganization for U.S.

federal income tax purposes.

As a result of these transactions, the Company inherited the tax basis of the core assets and the net operating loss and other carryforwards of Alpha.

On December 31, 2016, the net operating loss carryforwards and other carryforwards were reduced under Internal Revenue Code Section 108 due to the cancellation of indebtedness resulting from the Alpha Restructuring.

Due to the change in ownership, the net operating loss and other carryforwards inherited in the Alpha Restructuring are subjected to significant limitations on their use in future years.

Due to the Company’s formation through acquisition of certain core coal assets as part of the Alpha Restructuring, the Company does not have a long history of operating results.

As a result of these transactions, the Company inherited the tax basis of the core assets and the net operating loss and other carryforwards of Alpha Natural Resources, Inc.

bankruptcy reorganization.

Due to the change in ownership, the net operating loss and other carryforwards inherited in the Alpha Natural Resources, Inc.

bankruptcy reorganization are subjected to significant limitations on their use in future years.

Due to the Company’s formation through acquisition of certain core coal assets as part of the Alpha Natural Resources, Inc.

bankruptcy reorganization, the Company does not have a long history of operating results.

Additionally, significant ownership change limitations limit the ability of the Company to utilize its net operating loss and other carryforwards in future years.

12 unchanged sentences

A full valuation allowance is recorded against the capital loss carryforwards.

The Company also has disallowed interest deduction carryforwards of $102,394 , which can be carried forward indefinitely and used to reduce taxable income subject to a 30% of adjusted earnings limitation.

No amount of unrecognized tax benefits would affect the Company’s effective tax rate if recognized as of December 31, 2019.

The Company believes that it is reasonably possible that a decrease in unrecognized tax benefits of $20,788 may be necessary during the next twelve months, as a result of the issuance of final regulatory guidance from the IRS.

The Company’s policy is to classify interest and penalties related to uncertain tax positions as part of income tax expense.

As of December 31, 2019 and 2018 , the Company had no accrued interest and penalties.

The following reconciliation illustrates the Company’s liability for uncertain tax positions:

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

During the third quarter of the year ended December 31, 2020, the Company recorded a decrease in unrecognized tax benefits of approximately $ 20,788 as a result of the issuance of final regulatory guidance from the IRS.

The decrease in unrecognized tax benefits did not impact the Company’s effective tax rate for the year ended December 31, 2020.

The Company’s policy is to classify interest and penalties related to uncertain tax positions as part of income tax expense.

As of December 31, 2020 and 2019, the Company had no accrued interest and penalties.

The following reconciliation illustrates the Company’s liability for uncertain tax positions:

Year Ended December 31,

2 unchanged sentences

Additions for tax positions of current year — 15,048

Reductions for tax positions of prior years ( 20,788 ) —

Unrecognized tax benefits - end of period $ — $ 20,788

As of December 31, 2019 , tax years 2016 - 2019, which include the impact of net operating loss and other carryforwards and tax basis acquired from Alpha, remain open to federal and state examination.

As of December 31, 2020, tax years 2016 - 2020, which include the impact of net operating loss and other carryforwards and tax basis acquired from Alpha Natural Resources, Inc., remain open to federal and state examination.

The IRS initiated a corporate income tax examination during the third quarter of 2020 for the Company’s 2016 tax year and related net operating loss carryback.

This examination was open and in progress as of December 31, 2020.

(20) Employee Benefit Plans

The Company provides several types of benefits for its employees, including defined benefit and defined contribution pension plans, workers’ compensation and black lung benefits, and postemployment life insurance.

The Company does not participate in any multi-employer plans.

The components of net periodic (benefit) expense other than the service cost component for pension, black lung, and postretirement life insurance benefits are included in the line item miscellaneous loss, net, in the Consolidated Statements of Operations.

Company Administered Defined Benefit Pension Plans

In connection with the Merger, the Company assumed three qualified non-contributory defined benefit pension plans, which cover certain salaried and non-union hourly employees.

The qualified non-contributory defined benefit pension plans are collectively referred to as the “Pension Plans.” Benefits are frozen under these plans.

Participants accrued benefits either based on certain formulas, the participant’s compensation prior to retirement, or plan specified amounts for each year of service with the Company.

Benefits are frozen under these plans.

The qualified non-contributory defined benefit pension plans are collectively referred to as the “Pension Plans.”

Effective October 1, 2019, two of the qualified non-contributory defined benefit pension plans were amended to offer certain eligible participants the option to elect to receive lump sum benefits as of December 1, 2019, which resulted in a partial plan settlement and the accelerated recognition of a portion of the accumulated other comprehensive loss during the three months ended December 31, 2019.

Refer to the disclosures below for further information on the partial plan settlement.

One of the Company’s frozen qualified non-contributory defined benefit pension plans utilizes a cash balance formula for certain of its participants.

The cash balance formula provides guaranteed rates of interest on accumulated balances of either 6 % (for balances accumulated prior to 2004) and 4 % (on balances accumulated thereafter).

Refer to the disclosures below for further information on the partial plan settlements.

Annual funding contributions to the Pension Plans are made as recommended by consulting actuaries based upon the ERISA funding standards.

Plan assets consist of equity and fixed income funds, private equity funds and a guaranteed insurance contract.

Plan assets consist of equity securities, fixed income funds, commingled short-term funds, private equity funds, and a guaranteed insurance contract.

The following tables set forth the plans’ accumulated benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2020 and 2019.

For the year ended December 31, 2018, the change in benefit obligations and change in fair value of plan assets only represents activity related to the post-Merger period.

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

4 unchanged sentences

Accumulated benefit obligation at beginning of period:

$ 674,439 $ 675,482

Interest cost 18,730 26,564

Actuarial loss (1)

72,822 91,287

Benefits paid ( 30,916 ) ( 31,371 )

Acquisition — 1,910

Settlement ( 11,627 ) ( 89,433 )

Accumulated benefit obligation at end of period $ 723,448 $ 674,439

4 unchanged sentences

Benefits paid ( 30,916 ) ( 31,371 )

Settlement ( 11,627 ) ( 89,433 )

Fair value of plan assets at end of period $ 504,777 $ 470,353

1 unchanged sentence

Accrued benefit cost at end of period (2)

(1) For the year ended December 31, 2019, interest cost includes $22 of measurement-period adjustments recorded during the period.

Refer to Note 3 for further details on measurement-period adjustments.

$ ( 218,671 ) $ ( 204,086 )

(1) For the years ended December 31, 2020 and December 31, 2019, the actuarial loss was primarily attributed to the decrease in the weighted-average discount rate actuarial assumption used in determining the benefit obligations.

(2) Amounts are classified as long-term on the Consolidated Balance Sheets as there are sufficient plan assets to make expected benefit payments to plan participants in the succeeding twelve months.

1 unchanged sentence

Net actuarial loss $ 88,583 $ 46,568

The following table details the components of net periodic benefit cost (credit):

The following table details the components of net periodic benefit (credit) cost:

Year Ended December 31,

3 unchanged sentences

Settlement 1,636 6,224

Net periodic benefit cost (credit)

(1) For the year ended December 31, 2019, interest cost includes $22 of measurement-period adjustments recorded during the period.

Refer to Note 3 for further details on measurement-period adjustments.

(2) For the year ended December 31, 2019, the settlement is recorded within miscellaneous (loss) income, net, within the Consolidated Statements of Operations.

Net periodic benefit (credit) cost $ ( 4,686 ) $ 5,543

Other changes in plan assets and benefit obligations recognized in other comprehensive loss are as follows:

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31,

Actuarial loss (1)

$ 45,663 $ 30,514

Amortization of net actuarial loss ( 2,012 ) ( 797 )

Settlement ( 1,636 ) ( 6,224 )

Total recognized in other comprehensive loss $ 42,015 $ 23,493

(1) For the year ended December 31, 2019, the balance includes ($1,686) of measurement-period adjustments recorded during the period.

Refer to Note 3 for further details on measurement-period adjustments.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The following table presents information applicable to plans with accumulated benefit obligations in excess of plan assets:

16 unchanged sentences

The target allocation for 2021 and the actual asset allocation as reported at December 31, 2020 are as follows:

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Target Allocation Percentages 2020

Percentage of Plan Assets 2019

Target Allocation Percentages 2021 Percentage of Plan Assets 2020

Equity securities 60.0 % 47.0 %

Fixed income funds 40.0 % 50.0 %

Other — % 3.0 %

Total 100.0 % 100.0 %

The asset allocation targets have been set with the expectation that the Pension Plans’ assets will fund the expected liabilities within an appropriate level of risk.

In determining the appropriate target asset allocations, the Benefits Committee considers the demographics of the Pension Plans’ participants, the funding status of each plan, the Company’s contribution philosophy, the Company’s business and financial profile, and other associated risk factors.

The Pension Plans’ assets are periodically rebalanced among the major asset categories to maintain the asset allocation within a specified range of the target allocation percentage.

The Pension Plans’ assets are periodically rebalanced among the major asset categories to maintain the asset allocation within a specified range of the target

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

allocation percentage.

In September 2020, the target allocation was adjusted by the Company’s Benefits Committee to transition to 60.0 % equity securities and 40.0 % fixed income funds in approximate 2.0 % increments over a 10 -month period.

The Company expects to contribute $ 25,541 to the Pension Plans in 2021.

The following represents expected future pension benefit payments for the next ten years:

2021 $ 31,178

2026-2030 162,622

The fair values of the Company’s Pension Plans’ assets as of December 31, 2020, by asset category are as follows:

Asset Category

Quoted Market Prices in Active Market for Identical Assets (Level 1)

Significant Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Asset Category Total Quoted Market Prices in Active Market for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Equity securities:

Multi-asset fund (1)

$ 236,405 $ — $ 236,405 $ —

Fixed income funds:

Bond fund (2)

253,218 — 253,218 —

Commingled short-term fund (3)

1,405 — 1,405 —

Other types of investments:

Guaranteed insurance contract 11,454 — — 11,454

Total $ 502,482 $ — $ 491,028 $ 11,454

Receivable (4)

7 unchanged sentences

(4) Receivable for investments sold at December 31, 2020, which approximates fair value.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

(5) In accordance with Accounting Standards Update 2015-07, investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy.

1 unchanged sentence

Changes in Level 3 plan assets for the period ended December 31, 2020 were as follows:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

6 unchanged sentences

The fair values of the Company’s Pension Plans’ assets as of December 31, 2019, by asset category are as follows:

Asset Category

Quoted Market Prices in Active Market for Identical Assets (Level 1)

Significant Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Asset Category Total Quoted Market Prices in Active Market for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Equity securities:

Multi-asset fund (1)

$ 182,782 $ — $ 182,782 $ —

Fixed income funds:

Bond fund (2)

272,239 — 272,239 —

Commingled short-term fund (3)

1,572 — 1,572 —

Other types of investments:

Guaranteed insurance contract 11,155 — — 11,155

Total $ 467,748 $ — $ 456,593 $ 11,155

Receivable (4)

10 unchanged sentences

Changes in Level 3 plan assets for the period ended December 31, 2019 were as follows:

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

1 unchanged sentence

Beginning balance, December 31, 2018 $ 10,886

Acquisition —

Actual return on plan assets:

3 unchanged sentences

The following is a description of the valuation methodologies used for assets measured at fair value:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Level 1 Plan Assets:

9 unchanged sentences

The Company is required by federal and state statutes to provide benefits to employees for awards related to workers’ compensation and black lung.

The Company’s subsidiaries utilize high-deductible third-party insurance for worker’s compensation and black lung obligations with the exception of certain subsidiaries in which the Company is a qualified self-insurer for workers’ compensation and/or black lung related obligations.

The Company’s subsidiaries that are self-insured for black lung benefits may fund benefit payments through a Section 501(c) (21) tax-exempt trust fund.

Pursuant to the Merger Agreement, the Company assumed a reinsurance contract with a third party.

In 2017, the Alpha Companies made a lump sum payment in exchange for a reinsurance company’s agreement to administer and pay certain future workers’ compensation and state black lung obligations in the state of Kentucky.

In 2017, the Merger Companies made a lump sum payment in exchange for a reinsurance company’s agreement to administer and pay certain future workers’ compensation and state black lung obligations in the state of Kentucky.

Pursuant to the Merger Agreement, the Company assumed the estimated liability for these future claims.

7 unchanged sentences

At December 31, 2019, the Company had $ 136,540 of workers’ compensation liability, including a current portion of $ 11,317 recorded in accrued expenses and other current liabilities, offset by $ 2,375 and $ 52,757 of expected insurance receivable recorded in prepaid expenses and other current assets and other non-current assets, respectively, in the Consolidated Balance Sheets.

CONTURA ENERGY, INC.

For the Company’s subsidiaries that are insured with a high-deductible insurance plan for workers’ compensation and black lung claims, the insurance premium expense for the years ended December 31, 2020 and 2019 was $ 7,000 and $ 10,684 , respectively.

Workers’ compensation expense for high-deductible insurance plans for the years ended December 31, 2020 and 2019 was $ 1,275 and $ 2,333 , respectively.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

For the Company’s subsidiaries that are insured with a high-deductible insurance plan for workers’ compensation and black lung claims, the insurance premium expense for the years ended December 31, 2019 , 2018 , and 2017 was $13,851 , $5,868 , and $4,948 , respectively.

Workers’ compensation expense for high-deductible insurance plans for the years ended December 31, 2019 , 2018 , and 2017 was $6,665 , $7,953 , and $9,366 , respectively.

The divestiture of the Company’s former NAPP operations during the fourth quarter of 2020 (refer to Note 3) resulted in a partial plan settlement of $ 8,290 and the accelerated recognition of a portion of the accumulated other comprehensive loss of $ 1,563 during the three months ended December 31, 2020.

Refer to the disclosures below for further information on the partial plan settlement.

As a result of the strategic actions impacting certain mines during the three months ended June 30, 2020 (refer to Note 8), black lung obligations were revalued for curtailment and remeasured with an updated discount rate as of May 31, 2020, which resulted in an increase in the liability for black lung obligations of approximately $ 7,400 with the offset to accumulated other comprehensive loss and a slight increase in net periodic expense to be recognized subsequent to the remeasurement date.

Refer to the disclosures below for further information.

The following tables set forth the accumulated black lung benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2020 and 2019:

5 unchanged sentences

Actuarial loss (1)

14,736 11,166

Benefits paid ( 7,166 ) ( 6,543 )

Acquisition — 16,829

Curtailment gain ( 163 ) —

Settlement ( 8,290 ) —

Accumulated benefit obligation at end of period $ 127,506 $ 122,788

10 unchanged sentences

Discontinued operations (3)

( 1,825 ) ( 9,092 )

Total accrued benefit cost at end of period $ ( 124,786 ) $ ( 120,128 )

(1) For the year ended December 31, 2019, service cost and interest cost include $61 and $120 , respectively, of measurement-period adjustments recorded during the period.

Refer to Note 3 for further details on measurement-period adjustments.

(2) Assets of the plan are held in a Section 501(c)(21) tax-exempt trust fund and consist primarily of government debt securities.

All assets are classified as Level 1 and valued based on quoted market prices.

(3) The discontinued operations consisted of activity related to the Company’s former NAPP operations.

Refer to Note 3 .

The table below presents amounts recognized in the Balance Sheets:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Current liabilities $ 6,784 $ 7,409

Current liabilities - discontinued operations 26 63

Long-term liabilities 116,177 103,627

Long-term liabilities - discontinued operations 1,799 9,029

$ 124,786 $ 120,128

Gross amounts related to the black lung obligations recognized in accumulated other comprehensive loss consisted of the following as of December 31, 2020 and 2019:

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Net actuarial loss $ 24,042 $ 12,980

4 unchanged sentences

Expected return on plan assets ( 54 ) ( 65 )

Amortization of net actuarial loss (gain)

Amortization of net actuarial loss 1,942 216

Settlement 1,563 —

Net periodic benefit cost $ 9,052 $ 6,682

3 unchanged sentences

Total net periodic benefit cost $ 9,052 $ 6,682

(1) For the year ended December 31, 2019, service cost and interest cost include $61 and $120 , respectively, of measurement-period adjustments recorded during the period.

Refer to Note 3 for further details on measurement-period adjustments.

(1) The discontinued operations consisted of activity related to the Company’s former NAPP operations.

Refer to Note 3.

Other changes in the black lung plan assets and benefit obligations recognized in other comprehensive loss are as follows:

1 unchanged sentence

Actuarial loss (1)

Amortization of net actuarial (loss) gain

$ 14,567 $ 11,512

Amortization of net actuarial loss ( 1,942 ) ( 216 )

Settlement ( 1,563 ) —

Total recognized in other comprehensive loss $ 11,062 $ 11,296

(1) For the year ended December 31, 2019, the balance includes $344 of measurement-period adjustments recorded during the period.

Refer to Note 3 for further details on measurement-period adjustments.

The weighted-average assumptions related to black lung obligations used to determine the benefit obligation as of December 31, 2020 and 2019 were as follows:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Discount rate 2.75 % 3.47 %

3 unchanged sentences

The weighted-average assumptions related to black lung obligations used to determine net periodic benefit cost were as follows:

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31,

8 unchanged sentences

Year ending December 31:

Life Insurance Benefits

As part of the Alpha Restructuring and the Retiree Committee Settlement Agreement, the Company assumed the liability for life insurance benefits for certain disabled and non-union retired employees.

2026-2030 20,004

Postretirement Life Insurance Benefits

As part of the Alpha Natural Resources, Inc.

bankruptcy reorganization process and the Retiree Committee Settlement Agreement, the Company assumed the liability for life insurance benefits for certain disabled and non-union retired employees.

Provisions are made for estimated benefits and adjustments to the probable ultimate liabilities are made annually based on an actuarial study prepared by independent actuaries.

These obligations are included in the Consolidated Balance Sheet as accrued expenses and other current liabilities and other non-current liabilities.

The following tables set forth the accumulated life insurance benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2019 and 2018 :

CONTURA ENERGY, INC.

The following tables set forth the accumulated postretirement life insurance benefit obligations, fair value of plan assets and funded status for the years ended December 31, 2020 and 2019:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

4 unchanged sentences

Interest cost 337 426

Actuarial loss (gain)

Actuarial loss 420 1,002

Benefits paid ( 463 ) ( 455 )

2 unchanged sentences

Benefits paid (1)

( 463 ) ( 455 )

Employer contributions (1)

5 unchanged sentences

Long-term liabilities 12,007 11,622

$ 12,635 $ 12,341

(1) Amount is comprised of premium payments to commercial life insurance provider.

Gross amounts related to the life insurance benefit obligations recognized in accumulated other comprehensive income consisted of the following as of December 31, 2019 and 2018 :

Gross amounts related to the postretirement life insurance benefit obligations recognized in accumulated other comprehensive income consisted of the following as of December 31, 2020 and 2019:

Net actuarial gain $ ( 390 ) $ ( 872 )

Accumulated other comprehensive income

The following table details the components of the net periodic benefit cost for life insurance benefit obligations:

The following table details the components of the net periodic benefit cost for postretirement life insurance benefit obligations:

Interest cost $ 337 $ 426

Amortization of net actuarial gain ( 48 ) ( 105 )

Settlement ( 14 ) —

Net periodic benefit cost $ 275 $ 321

Other changes in the life insurance plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows:

Actuarial loss (gain)

Other changes in the postretirement life insurance plan assets and benefit obligations recognized in other comprehensive income are as follows:

Actuarial loss $ 420 $ 1,002

Amortization of net actuarial gain 48 105

Total recognized in other comprehensive income (loss)

The weighted-average assumptions related to life insurance benefit obligations used to determine the benefit obligation as of December 31, 2019 and 2018 was as follows:

CONTURA ENERGY, INC.

Settlement 14 —

Total recognized in other comprehensive income $ 482 $ 1,107

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

The weighted-average assumptions related to postretirement life insurance benefit obligations used to determine the benefit obligation as of December 31, 2020 and 2019 was as follows:

Discount rate 2.43 % 3.22 %

The weighted-average assumptions related to life insurance benefit obligations used to determine net periodic benefit cost were as follows:

The weighted-average assumptions related to postretirement life insurance benefit obligations used to determine net periodic benefit cost were as follows:

Year Ended December 31,

1 unchanged sentence

Discount rate for interest cost 2.83 % 3.9 %

Estimated future cash payments related to life insurance benefit obligations for the next 10 years ending after December 31, 2019 are as follows:

Estimated future cash payments related to postretirement life insurance benefit obligations for the next 10 years ending after December 31, 2020 are as follows:

Year ending December 31:

2026-2030 2,941

Defined Contribution and Profit-Sharing Plans

2 unchanged sentences

The Company’s total contributions to these plans for the years ended December 31, 2020 and 2019 were $ 3,613 and $ 22,102 , respectively.

During the second quarter of 2020, the Company’s matching contributions under the Contura Energy 401(k) Retirement Savings Plan were suspended due to current market conditions.

Self-insured Medical Plan

6 unchanged sentences

Pursuant to the Merger Agreement, the Company assumed the ANR Inc.

2017 Equity Incentive Plan (the “ANR EIP”), which had underlying ANR shares that were converted to 89,766 Contura shares.

The ANR EIP is no t authorized for additional issuance of awards of shares of common stock, and as of December 31, 2019 , there were no shares of common stock available for grant under the ANR EIP.

As of December 31, 2019, the Company had four types of stock-based awards outstanding:

time-based restricted stock, time-based restricted stock units, performance-based restricted stock units, and stock options.

Stock-based compensation expense totaled $12,397 , $13,354 , and $20,372 for the years ended December 31, 2019, 2018, and 2017, respectively.

For the years ended December 31, 2019, 2018, and 2017, approximately 76% , 90% , and 94% , respectively, of stock-based compensation expense was reported as selling, general and administrative expenses, and the remainder was recorded as cost of coal sales.

CONTURA ENERGY, INC.

2017 Equity Incentive Plan (the “ANR EIP”), which had underlying ANR shares that were converted to 89,766 Contura Energy, Inc.

The ANR EIP is no t authorized for additional issuance of

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

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(Amounts in thousands except share and per share data)

awards of shares of common stock, and as of December 31, 2020, there were no shares of common stock available for grant under the ANR EIP.

As of December 31, 2020, the Company had four types of stock-based awards outstanding:

time-based restricted stock units, performance-based restricted stock units, stock options, and performance-based cash awards.

Stock-based compensation expense totaled $ 5,540 and $ 12,397 for the years ended December 31, 2020 and 2019, respectively.

For the years ended December 31, 2020 and 2019, approximately 83 % and 76 %, respectively, of stock-based compensation expense was reported as selling, general and administrative expenses, and the remainder was recorded as cost of coal sales.

The Company is authorized to repurchase common shares from employees (upon the election by the employee) to satisfy the employees’ statutory tax withholdings upon the vesting of stock grants.

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During the year ended December 31, 2019, the Company repurchased 118,935 shares of its common stock issued pursuant to awards under the MIP, LTIP and ANR EIP for a total purchase amount of $ 5,159 , or $ 43.37 average price paid per share.

The Company did not repurchase any common shares from employees to satisfy the employees’ statutory tax withholdings upon vesting of stock grants during the year ended December 31, 2017.

On September 15, 2017, the Company repurchased 309,310 shares of its common stock issued pursuant to awards under the MIP for a total purchase amount of $17,445 , or $56.40 per share.

2020 Awards Granted

During the year ended December 31, 2020, the Company granted certain key employees and non-employee directors 402,620 time-based restricted stock units under the MIP and LTIP with a weighted average grant date fair value of $ 6.17 based on the Company’s closing stock price at the trading day before the date of the grant.

The awards granted to key employees will vest ratably over a three-year period from date of grant in accordance with the vesting schedule, subject to the participant’s continuous service with the Company through each applicable vesting date.

The awards granted to non-employee directors will vest on the first to occur of (i) April 30, 2021, (ii) the director’s separation from service due to the director’s death or physical or mental incapacity to perform his or her usual duties, such condition likely to remain continuously and permanently, as determined by the Company, (iii) a change in control, and (iv) the director's service as a member of the board of directors is terminated as of a date that is after October 31, 2021 but prior to May 1, 2022 for any reason other than removal for cause.

Upon vesting and settlement of time-based restricted stock units, the Company issues authorized and unissued shares of the Company’s common stock to the recipient.

Additionally, during the year ended December 31, 2020, the Company granted the Chief Executive Officer (“CEO”) 302,795 performance-based restricted stock units granted under the LTIP which represent the number of shares of common stock that may be issued based on the achievement of targeted performance levels related to pre-established relative total shareholder return goals and annually determined operational goals over a three year period.

This award was scheduled to cliff vest on the third anniversary of the date of the grant, subject to the participant’s continuous service with the Company through the applicable vesting date and the satisfaction of the performance criteria.

These performance-based restricted stock units had the potential to be earned from 0 % to 200 % of target depending on actual results.

Upon vesting of these awards, the Company would issue authorized and previously unissued shares of the Company’s common stock to the recipient.

The 151,398 operational performance-based restricted stock units were valued based on the Company’s closing stock price at the trading day before the date of the grant and had a weighted average grant date fair value of $ 6.36 .

For the awards with operational performance conditions, the Company reassessed at each reporting date whether achievement of each of the performance conditions was probable and adjusted the accrual of stock-based compensation expense as needed.

The 151,397 relative total shareholder return performance-based restricted stock units were valued relative to the stock price performance of a comparator

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

group and had a weighted average grant date fair value of $ 8.53 based on a Monte Carlo simulation.

The Monte Carlo simulation incorporated the assumptions as presented in the following table:

Relative performance-based restricted stock units

Start price (1)

Valuation date stock price (2)

Expected volatility (3)

Risk-free interest rate (4)

Expected dividend yield (5)

(1) The start price for the Company represented the average closing stock price over the twenty trading days ending on December 31, 2019, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date.

(2) The valuation date stock price represented the closing price on the grant date.

(3) The expected volatility assumption was based on the historical volatility of the price of the Company’s stock.

(4) The annual risk-free interest rate equaled the yield on the semi-annual zero coupon U.S.

Treasury rates converted to continuously compounded rates that had a term equal to the length of the remaining performance measurement period as of the valuation date.

(5) The expected dividend yield represented the investments return to a share of the Company’s stock that is not available to the holder of the performance-based restricted stock unit.

During the first quarter of 2021, the 302,795 performance-based restricted stock units granted under the LTIP were voluntarily forfeited by the CEO in conjunction with an amendment to his employment agreement and the shares were allocated back to the LTIP for future issuance.

The amendment also included an amendment to the participant’s time-based restricted stock granted under the MIP, such that the ratable vesting initially scheduled to occur on the second and third anniversaries of the award shall instead both occur on the second anniversary of the award.

Additionally, the Company granted certain key employees performance-based cash incentive awards granted under the LTIP with a target award amount of $ 2,755 .

The cash to be awarded is based on the achievement of pre-established relative total shareholder return goals over a three-year period.

These awards are scheduled to cliff vest on the third anniversary of the date of the grant, subject to the participant’s continuous service with the Company through the applicable vesting date and the satisfaction of the performance criteria.

These awards have the potential to be distributed from 0 % to 200 % of target depending on actual performance.

Upon vesting of these awards, the Company issues cash to the recipient.

These awards are classified as a liability, and the Company reassesses at each reporting date the fair value of the award and adjusts the accruals of stock-based compensation expense as appropriate based on a Monte Carlo simulation.

As of December 31, 2020, the liability for these awards totaled $ 643 .

The performance-based cash incentive awards were valued relative to the stock price performance of a comparator group and had a weighted average grant date fair value as a percent of target dollar value of 82.45 % based on a Monte Carlo simulation.

The Monte Carlo simulation incorporates the assumptions as presented in the following table:

Performance-based cash incentive awards

Start price (1)

Valuation date stock price (2)

Expected volatility (3)

Risk-free interest rate (4)

Expected dividend yield (5)

(1) The start price for the Company represents the average closing stock price over the twenty trading days ending on December 31, 2019, assuming dividends distributed during this period were reinvested in additional shares of the Company’s stock on the ex-dividend date.

(2) The valuation date stock price represents the closing price at each reporting date.

(3) The expected volatility assumption is based on the historical volatility of the price of the Company’s stock.

(4) The annual risk-free interest rate equals the yield on the semi-annual zero coupon U.S.

Treasury rates converted to continuously compounded rates that have a term equal to the length of the remaining performance measurement period as of the valuation date.

(5) The expected dividend yield represents the investments return to a share of the Company’s stock that is not available to the holder of the performance-based restricted stock unit.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

2019 Awards Granted

During the year ended December 31, 2019, the Company granted certain key employees and non-employee directors 79,474 time-based restricted stock units under the LTIP with a weighted average grant date fair value of $ 49.47 based on the Company’s closing stock price at the trading day before the date of the grant.

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(5) The expected dividend yield represents the investments return to a share of the Company’s stock that is not available to the holder of an absolute performance-based restricted stock unit.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Absolute performance-based restricted stock units

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(3) The expected dividend yield represents the investments return to a share of the Company’s stock that is not available to the holder of an absolute performance-based restricted stock unit.

2018 Awards Granted

During the year ended December 31, 2018, the Company granted certain key employees 18,063 time-based cash restricted stock units under the MIP with a weighted average grant date fair value of $65.00 based on the Company’s closing stock price at the date of grant.

These awards vested on the first anniversary of the date of the grant.

As of the grant date of the awards, the Company did not have sufficient authorized and unissued common shares to settle these awards and the awards were expected to be settled with cash, unless shares became available for issuance under the MIP on the applicable vesting date.

Therefore, these awards were classified as a liability.

On the applicable vesting date, shares were available for issuance and the awards vested as equity awards.

The Company’s liability for all outstanding liability awards totaled $0 and $1,058 as of December 31, 2019 and December 31, 2018 , respectively.

Additionally, during the year ended December 31, 2018, the Company granted certain key employees and non-employee directors 180,156 time-based restricted stock units under the MIP and LTIP based on the Company’s closing stock price at the trading day before the date of the grant for the key employee awards and the Company’s closing stock price at the date of grant for the non-employee director awards.

Additionally, during the year ended December 31, 2018, the Company assumed ANR EIP awards of 89,766 time-based restricted stock units granted to certain key employees based on the Company’s stock price at the Merger date.

These awards have a weighted average grant date fair value of $74.73 .

The awards granted to key employees will vest ratably over a two-year period or a four-year period from date of grant in accordance with the vesting schedule, subject to the participant’s continuous service with the Company through each applicable vesting date.

The awards granted to non-employee directors will vest on the first to occur of (i) the day before the one-year anniversary of the date of grant, (ii) the director’s separation from service (as defined in Section 409A) due to the directors’ death or disability, (iii) a change in control, and (iv) the date immediately prior to an Initial Public Offering (“IPO”), contingent upon the consummation of the IPO, subject in each case to the director’s continuous service with the Company through such date.

Upon vesting and settlement of time-based restricted stock units, the Company issues authorized and unissued shares of the Company’s common stock to the recipient.

2017 Awards Granted

During the year ended December 31, 2017, the Company granted 437,450 shares of restricted stock under the MIP with a weighted average grant date fair value of $65.55 based on the Company’s closing stock price at the date of grant.

Additionally, during the year ended December 31, 2017, the Company granted 129,520 non-qualified stock options under the MIP to certain of its officers and key employees with a weighted average grant date fair value of $37.44 with a 10 -year expiration from the date of grant.

These awards vest ratably over a three-year period or, in the event of a change in control, will fully vest, subject in each case to the recipient’s continued employment through such date.

The non-qualified stock options have a grant date fair value based on a Black-Scholes pricing model.

The Black-Scholes pricing model incorporates the assumptions as presented in the following table:

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

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(Amounts in thousands except share and per share data)

Exercise price

Expected term (1)

Annual risk-free interest rate (2)

Annualized volatility (3)

The expected term represents the period of time that awards granted are expected to be outstanding.

The annual risk-free interest rate is based on the U.S.

Constant Maturity Curve with a term equal to the award’s expected term on date of grant.

The annualized volatility is calculated by observing volatilities for comparable companies with adjustments for the Company’s size and leverage.

Additionally, during the year ended December 31, 2017, the Company granted 5,504 time-based restricted stock units under the MIP to its non-employee directors with weighted average grant date fair value of $73.37 .

Additionally, during the year ended December 31, 2017, the Company awarded certain of its non-employee directors 6,700 time-based cash restricted stock units under the MIP with a weighted grant date fair value of $62.55 .

As of the grant date of the time-based cash restricted stock units, the Company did not have sufficient authorized and unissued common shares to settle these awards and the awards were expected to be settled with cash, unless shares became available for issuance under the MIP.

Therefore, these awards were classified as a liability.

On the applicable vesting date, shares were available for issuance and the awards vested as equity awards.

The grant date fair value of both of these awards were based on the Company’s closing stock price at the date of grant and will vest on the first to occur of (i) the stated anniversary of the date of grant, (ii) the director’s separation from service (as defined in Section 409A of the Internal Revenue Code) due to the directors’ death or disability, and (iii) a change in control, subject in each case to the director’s continuous service with the Company through such date.

Upon settlement of time-based restricted stock units, the Company issues authorized and unissued shares of the Company’s common stock to the recipient.

In connection with the Company’s declaration and payment of the Special Dividend and pursuant to the terms of the MIP, dividend equivalent payments of approximately $7,949 in the aggregate (including the amounts payable with respect to each share underlying outstanding stock option awards and restricted stock unit awards and outstanding restricted stock awards under the MIP) were paid to plan participants.

The dividend equivalent payments were made on July 11, 2017, which accelerated stock-based compensation expense by $5,113 and reduced the Company’s additional paid-in capital by $7,949 .

Restricted Stock

Restricted stock activity for the year ended December 31, 2020 is summarized in the following table:

Number of Shares

Weighted-Average Grant Date Fair Value

Restricted stock activity:

Number of Shares Weighted-Average Grant Date Fair Value

Non-vested shares outstanding at December 31, 2019 23,598 $ 65.55

Granted — $ —

Vested ( 23,598 ) $ 65.55

Forfeited or Expired — $ —

Non-vested shares outstanding at December 31, 2020 — $ —

As of December 31, 2019 , there was $81 of unrecognized compensation cost related to non-vested time-based restricted stock units which is expected to be recognized as expense during the first quarter of 2020.

As of December 31, 2020, there was no unrecognized compensation cost related to non-vested restricted stock units.

Restricted Stock Units

Time-Based Restricted Stock Units

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Time-based restricted stock unit activity for the year ended December 31, 2020 is summarized in the following table:

Number of Shares

Weighted-Average Grant Date Fair Value

Time-based restricted stock unit activity:

Number of Shares Weighted-Average Grant Date Fair Value

Non-vested shares outstanding at December 31, 2019 158,082 $ 64.84

Forfeited or Expired

Granted 402,620 $ 6.17

( 149,829 ) $ 45.22

Forfeited or Cancelled ( 43,320 ) $ 21.10

Non-vested shares outstanding at December 31, 2020 367,553 $ 13.72

1 unchanged sentence

As of December 31, 2020, there was $ 1,707 of unrecognized compensation cost related to non-vested time-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 1.30 years.

Time-based cash restricted stock unit activity for the year ended December 31, 2019 is summarized in the following table:

Number of Shares

Weighted-Average Fair Value (1)

Non-vested shares outstanding at December 31, 2018

Forfeited or Expired

Non-vested shares outstanding at December 31, 2019

(1) Pursuant to the award agreement, shares were available for issuance on the applicable vesting date and these shares were ultimately settled in equity.

As of December 31, 2019 , there was $0 of unrecognized compensation cost related to non-vested time-based cash restricted stock units.

Performance-Based Restricted Stock Units

Relative performance-based restricted stock unit activity for the year ended December 31, 2020 is summarized in the following table:

Number of Shares

Weighted-Average Fair Value

Relative performance-based restricted stock unit activity:

Number of Shares Weighted-Average Grant Date Fair Value

Non-vested shares outstanding at December 31, 2019 31,599 $ 65.70

Forfeited or Expired

Granted 151,397 $ 8.53

( 3,864 ) $ 65.70

Forfeited ( 4,929 ) $ 65.70

Non-vested shares outstanding at December 31, 2020 174,203 $ 16.01

1 unchanged sentence

Until the performance criteria is satisfied, these shares will remain unsettled.

As of December 31, 2019 , there was $1,459 of unrecognized compensation cost related to non-vested performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 2.11 years.

CONTURA ENERGY, INC.

As of December 31, 2020, there was $ 1,471 of unrecognized compensation cost related to non-vested relative performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 1.75 years.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

2 unchanged sentences

Absolute performance-based restricted stock unit activity for the year ended December 31, 2020 is summarized in the following table:

Number of Shares

Weighted-Average Fair Value

Absolute performance-based restricted stock unit activity:

Number of Shares Weighted-Average Grant Date Fair Value

Non-vested shares outstanding at December 31, 2019 10,549 $ 50.60

Forfeited or Expired

Granted — $ —

( 1,290 ) $ 50.60

Forfeited ( 1,645 ) $ 50.60

Non-vested shares outstanding at December 31, 2020 7,614 $ 50.60

1 unchanged sentence

Until the performance criteria is satisfied, these shares will remain unsettled.

As of December 31, 2019 , there was $375 of unrecognized compensation cost related to non-vested performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 2.11 years.

As of December 31, 2020, there was $ 142 of unrecognized compensation cost related to non-vested absolute performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 1.11 years.

Operational performance-based restricted stock unit activity for the year ended December 31, 2020 is summarized in the following table:

Operational performance-based restricted stock unit activity:

Number of Shares Weighted-Average Fair Value

Non-vested shares outstanding at December 31, 2019 — $ —

Granted 151,398 $ 6.36

Forfeited — $ —

Non-vested shares outstanding at December 31, 2020 151,398 $ 6.36

As of December 31, 2020, there was $ 260 of unrecognized compensation cost related to non-vested operational performance-based restricted stock units which is expected to be recognized as expense over a weighted-average period of 2.13 years.

Stock Options

Fixed Price Stock Options

Fixed price option activity for the year ended December 31, 2019 is summarized in the following table:

Number of Shares

Weighted-Average Exercise Price Per Share

Weighted-Average Remaining Contractual Term (Years)

Aggregate Intrinsic Value (1)

30-Day Volume-Weighted Average Price (“VWAP”) Stock Options

30-day VWAP stock option activity for the year ended December 31, 2020 is summarized in the following table:

Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (1)

Outstanding at December 31, 2019 51,359 $ 63.45 7.15 $ ( 2,794 )

Exercisable at December 31, 2019 44,356 $ 63.03 7.15 $ ( 2,394 )

Granted — $ —

Exercised — $ — $ —

Forfeited or Expired ( 28,134 ) $ 66.13

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During the year ended December 31, 2019, the aggregate intrinsic value of options exercised was $ 6,305 .

No options were exercised during the year ended December 31, 2017.

As of December 31, 2019 , there was no unrecognized compensation cost related to the fixed price stock options.

30-Day Volume-Weighted Average Price (“VWAP”) Stock Options

30-day VWAP stock option activity for the year ended December 31, 2019 is summarized in the following table:

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

Number of Shares

Weighted-Average Exercise Price Per Share

Weighted-Average Remaining Contractual Term (Years)

Aggregate Intrinsic Value (1)

Outstanding at December 31, 2018

Exercisable at December 31, 2018

Forfeited or Expired

Outstanding at December 31, 2019

Exercisable at December 31, 2019

(1) The aggregate intrinsic value of outstanding and exercisable options is calculated as the difference between the exercise price and the Company’s stock price at each reporting period end.

The aggregate intrinsic value of exercised options is calculated as the difference between the exercise price and the Company’s stock price on the exercise date.

As of December 31, 2020, there was $ 0 of unrecognized compensation cost related to the 30-day VWAP stock options.

Fixed Price Stock Options

As December 31, 2020 and 2019, there were no fixed price stock options outstanding or exercisable.

During the year ended December 31, 2019, the aggregate intrinsic value of options exercised was $ 6,879 .

No options were exercised during the year ended December 31, 2017.

As of December 31, 2019 , there was $12 of unrecognized compensation cost related to the 30-day VWAP stock options which is expected to be recognized as expense during the first quarter of 2020.

As of December 31, 2020, there was no unrecognized compensation cost related to the fixed price stock options.

Performance-Based Cash Incentive Awards

Performance-based cash incentive award activity for the year ended December 31, 2020 is summarized in the following table:

Performance-based cash incentive award activity:

Target Dollar Value Weighted-Average Fair Value as a % of Target Dollar Value

Non-vested awards outstanding at December 31, 2019 $ — — %

Granted 2,755 82.45 %

( 42 ) 100.00 %

Forfeited ( 507 ) 70.70 %

Non-vested awards outstanding at December 31, 2020 $ 2,206 94.21 %

(1) Vested awards were paid at target dollar value due to the employment criteria being satisfied during the period.

As of December 31, 2020, there was $ 1,447 of unrecognized compensation cost related to non-vested performance-based cash incentive awards which is expected to be recognized as expense over a weighted-average period of 2.13 years.

(22) Related Party Transactions

There were no material related party transactions for the year ended December 31, 2020.

On June 14, 2019, the Company entered into a Credit Agreement which provides for the Term Loan Credit Facility as provided by a group of existing shareholders as of the agreement date.

Refer to Note 15 for additional disclosures.

On July 19, 2019, in connection with Blackjewel’s bankruptcy filing, the U.S.

Bankruptcy Court approved debtor-in-possession (“DIP”) financing of $2,900 with DIP lenders, Highbridge Capital Management, LLC and Whitebox Advisors LLC, which are existing shareholders of the Company.

On July 19, 2019, in association with the Blackjewel Chapter 11 bankruptcy filing, the U.S.

Bankruptcy Court approved debtor-in-possession (“DIP”) financing of $ 2,900 with DIP lenders, Highbridge Capital Management, LLC and Whitebox Advisors LLC, shareholders of the Company.

The Company entered into an arrangement on July 19, 2019 to purchase the obligations under the DIP financing at the request of the lenders thereunder pursuant to certain terms and conditions.

Refer to Note 4 for further developments.

On September 12, 2019, the Company entered into a common stock repurchase agreement with Whitebox Multi-Strategy Partners, L.P., Whitebox Asymmetric Partners, L.P., Whitebox Credit Partners, L.P.

and Whitebox Institutional Partners, L.P., which are existing shareholders of the Company.

On September 12, 2019, the Company entered into a common stock repurchase agreement with Whitebox, shareholders of the Company.

Refer to Note 13 for additional disclosures.

There were no other material related party transactions for the years ended December 31, 2019 , 2018 or 2017.

There were no other material related party transactions for the year ended December 31, 2019.

(23) Commitments and Contingencies

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If a loss contingency is not probable or reasonably estimable, disclosure of the loss contingency is made in the Consolidated Financial Statements when it is at least reasonably possible that a loss may be incurred and that the loss could be material.

(b) Commitments and Contingencies

CONTURA ENERGY, INC.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

(b) Commitments and Contingencies

The Company leases coal mining and other equipment under long-term financing and operating leases with varying terms.

Refer to Note 12 for further information on leases.

In addition, the Company leases mineral interests and surface rights from land-owners under various terms and royalty rates.

In addition, the Company leases mineral interests and surface rights from landowners under various terms and royalty rates.

Coal royalty expense was $ 67,992 and $ 91,879 for the years ended December 31, 2020 and 2019, respectively.

1 unchanged sentence

Other Commitments

The Company has obligations under certain coal purchase agreements that contain minimum quantities to be purchased in 2020 totaling an estimated $47,865 , which includes an estimated $3,677 related to contractually committed variable priced tons from vendors with historical performance resulting in less than 20% of the committed tonnage being delivered.

The Company has obligations under certain coal transportation agreements that contain minimum quantities to be shipped in 2020 totaling $6,582 .

The Company has obligations under certain coal purchase agreements that contain minimum quantities to be purchased in 2021 totaling an estimated $ 44,707 .

The Company has obligations under certain coal transportation agreements that contain minimum quantities to be shipped during contract periods from 2020 through 2022 with estimated obligations based on remaining tons to be shipped totaling $ 29 and $ 338 in 2021 and 2022, respectively.

The Company also has obligations under certain equipment purchase agreements that contain minimum quantities to be purchased in 2021 and 2023 totaling $ 5,008 and $ 170 , respectively.

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When a loss related to such matters is considered probable and can reasonably be estimated, the Company records a liability.

Per terms of the Back-to-Back Coal Supply Agreements, the Company is required to purchase and sell 1,337 tons of coal in 2020 totaling $13,878 .

For the year ended December 31, 2019 , the Company purchased and sold 929 tons, totaling $9,941 under the Back-to-Back Coal Supply Agreements.

For the year ended December 31, 2018 , the Company purchased and sold 5,719 tons, totaling $62,093 under the Back-to-Back Coal Supply Agreements.

For the year ended December 31, 2017, the Company purchased and sold 2,000 tons, totaling $21,707 under the Back-to-Back Coal Supply Agreements.

In October 2018, the State of Wyoming Department of Revenue invoiced Blackjewel for approximately $7,800 in severance taxes owed by Blackjewel in connection with the Wyoming properties it previously acquired from the Company.

In connection with this invoice, the Department purported to assert liens over Contura Coal West, LLC, one of the Company’s subsidiaries.

In connection with Blackjewel’s bankruptcy filing and the subsequent closing of the Eagle Specialty Materials Transaction (refer to Note 4 ), the State of Wyoming Department of Revenue also released the Company of any outstanding claims related to state tax obligations arising from or related to the Belle Ayr and Eagle Butte mines for any period through and including the closing date of the transaction.

Refer to Note 27 for the subsequent event related to the new authorization process for self-insured coal mine operators being implemented by the U.S.

Department of Labor (Division of Coal Mine Workers’ Compensation).

Refer to Note 3 for disclosures on the Cumberland and PRB Back-to-Back Coal Supply Agreements.

Future Federal Income Tax Refunds

As of December 31, 2019 , the Company has recorded $33,065 of federal income tax receivable and $33,065 of federal deferred tax asset related to AMT Credits.

In addition, the Company has recorded a non-current federal income tax receivable of $64,160 related to an NOL carryback claim.

As of December 31, 2020, the Company has recorded $ 64,160 of current federal income tax receivable and associated interest receivable of $ 5,213 related to a net operating loss (“NOL”) carryback claim.

Because the federal government was a creditor in the Alpha Natural Resources, Inc.

(“Predecessor Alpha”) bankruptcy proceedings, it is possible that the federal government could withhold some or all of the tax refund attributable to the NOL carryback claim and the refundable AMT Credits and assert a right to setoff the tax refund and refundable credits against its prepetition bankruptcy claims.

bankruptcy proceedings, it is possible that the federal government could withhold some or all of the tax refund attributable to the NOL carryback claim and assert a right to set off the tax refund and associated interest receivable against its prepetition bankruptcy claims.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

In the normal course of business, the Company is a party to certain guarantees and financial instruments with off-balance sheet risk, such as bank letters of credit, performance or surety bonds, and other guarantees and indemnities related to the obligations of affiliated entities which are not reflected in the Company’s Consolidated Balance Sheets.

However, the underlying liabilities that they secure, such as asset retirement obligations, workers’ compensation liabilities, and royalty obligations, are reflected in the Company’s Consolidated Balance Sheets.

The Company is required to provide financial assurance in order to perform the post-mining reclamation required by its mining permits, pay its federal production royalties, pay workers’ compensation claims under workers’ compensation laws in various states, pay federal black lung benefits, and perform certain other obligations.

The Company is required to provide financial assurance in order to perform the post-mining reclamation required by its mining permits, pay workers’ compensation claims under workers’ compensation laws in various states, pay federal black lung benefits, and perform certain other obligations.

In order to provide the required financial assurance, the Company generally uses surety bonds for post-mining reclamation and workers’ compensation obligations.

The Company can also use bank letters of credit to collateralize certain obligations.

As of December 31, 2019 , the Company had outstanding surety bonds with a total face amount of $343,695 to secure various obligations and commitments.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

As of December 31, 2020, the Company had $ 123,108 in letters of credit outstanding under the Amended and Restated Asset-Based Revolving Credit Agreement.

Additionally, as of December 31, 2020, the Company had $ 14,242 in letters of credit outstanding under the Amended and Restated Letter of Credit Agreement dated November 9, 2018 between ANR, Inc.

and Citibank, N.A.

and $ 613 in letters of credit outstanding under the Credit and Security Agreement dated June 30, 2017, and related amendments, between ANR, Inc.

and First Tennessee Bank National Association.

As of December 31, 2020, the Company had outstanding surety bonds with a total face amount of $ 351,596 to secure various obligations and commitments, including $ 134,162 attributable to discontinued operations.

To secure the Company’s reclamation-related obligations, the Company currently has $ 56,311 of collateral supporting these obligations.

Amounts included in restricted cash represent cash deposits that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral in the amounts of $38,944 , $12,706 , $67,868 , and $3,006 as of December 31, 2019 for securing the Company’s obligations under certain worker’s compensation, black lung, reclamation-related obligations, and financial guarantees and other, respectively, which have been written on the Company’s behalf.

Additionally, the Company has $12,363 of short-term restricted cash held in escrow related to the Company’s contingent revenue obligation.

Refer to Note 16 for further information regarding the contingent revenue obligation.

The Company’s restricted cash is primarily invested in interest bearing accounts.

This restricted cash is classified as both short-term and long-term on the Company’s Consolidated Balance Sheets.

Amounts included in restricted investments consist of certificates of deposit, mutual funds, and U.S.

treasury bills that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral in the amounts of $3,100 and $18,786 as of December 31, 2019 for securing the Company’s obligations under certain worker’s compensation and reclamation-related obligations, respectively, which have been written on the Company’s behalf.

These restricted investments are classified as long-term on the Company’s Consolidated Balance Sheets.

Deposits represent cash deposits held at third parties as required by certain agreements entered into by the Company to provide cash collateral.

At December 31, 2019 , the Company had cash collateral in the form of deposits in the amounts of $8,887 and $1,836 to secure the Company’s obligations under reclamation-related obligations and various other operating agreements, respectively.

These deposits are classified as both short-term and long-term on the Company’s Consolidated Balance Sheets.

The Company meets frequently with its surety providers and has discussions with certain providers regarding the extent of and the terms of their participation in the program.

3 unchanged sentences

These failures could result from a variety of factors including lack of availability, higher cost or unfavorable market terms of new surety bonds, and the exercise by third-party surety bond issuers of their right to refuse to renew the surety.

Letters of Credit

As of December 31, 2019 , the Company had $99,876 in letters of credit outstanding under the Amended and Restated Asset-Based Revolving Credit Agreement.

Additionally, as of December 31, 2019 , the Company had $33,399 in letters of credit outstanding under the Amended and Restated Letter of Credit Agreement dated November 9, 2018 between ANR, Inc.

and Citibank, N.A.

and $613 in letters of credit outstanding under the Credit and Security Agreement dated June 30, 2017, and related amendments, between ANR, Inc.

and First Tennessee Bank National Association.

CONTURA ENERGY, INC.

Amounts included in restricted cash represent cash deposits primarily invested in interest bearing accounts that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral to secure the following obligations which have been written on the Company’s behalf:

December 31, 2020 December 31, 2019

Workers’ compensation and black lung obligations $ 69,725 $ 51,650

Reclamation-related obligations 8,445 67,868

Financial payments and other performance obligations 17,863 3,006

Contingent revenue obligation escrow 9,311 12,363

Total restricted cash 105,344 134,887

Less current portion (1)

( 9,311 ) ( 12,363 )

Restricted cash, net of current portion $ 96,033 $ 122,524

(1) Included within prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets.

Restricted investments consist of FDIC insured certificates of deposit, mutual funds, and U.S.

treasury bills that are restricted as to withdrawal as required by certain agreements entered into by the Company and provide collateral to secure the following obligations which have been written on the Company’s behalf:

December 31, 2020 December 31, 2019

Workers’ compensation obligations $ 51 $ 613

Reclamation-related obligations 22,233 18,786

Financial payments and other performance obligations 1,484 —

Total restricted investments (1), (2)

$ 23,768 $ 19,399

(1) Included within other non-current assets on the Company’s Consolidated Balance Sheets.

(2) As of December 31, 2020 and 2019, respectively, $ 22,498 and $ 11,021 are classified as trading securities and $ 1,270 and $ 8,378 are classified as held-to-maturity securities.

Deposits represent cash deposits held at third parties as required by certain agreements entered into by the Company to provide cash collateral to secure the following obligations which have been written on the Company’s behalf:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Amounts in thousands except share and per share data)

December 31, 2020 December 31, 2019

Reclamation-related obligations $ 25,633 $ 8,887

Financial payments and other performance obligations 1,596 —

Other operating agreements 1,018 1,423

Total deposits (1)

$ 28,247 $ 10,310

(1) Included within prepaid expenses and other current assets and other non-current assets on the Company’s Consolidated Balance Sheets.

DCMWC Reauthorization Process

In July 2019, the U.S.

Department of Labor (Division of Coal Mine Workers’ Compensation or “DCMWC”) began implementing a new authorization process for all self-insured coal mine operators.

As requested by the DCMWC, the Company filed an application and supporting documentation for reauthorization to self-insure certain of its black lung obligations in October 2019.

As a result of this application, the DCMWC notified the Company in a letter dated February 21, 2020 that the Company was reauthorized to self-insure certain of its black lung obligations for a period of one-year from February 21, 2020.

The DCMWC reauthorization is contingent, however, upon the Company’s providing collateral of $ 65,700 to secure certain of its black lung obligations.

This proposed collateral requirement is an increase from the approximate $ 2,600 in collateral that the Company currently provides to secure these self-insured black lung obligations.

The reauthorization process provided the Company with the right to appeal the security determination in writing within 30 days of the date of the notification, which appeal period the DCMWC agreed to extend to May 22, 2020.

The Company exercised this right of appeal in connection with the substantial increase in the amount of required collateral.

If the Company’s appeal is unsuccessful, the Company may be required to provide additional letters of credit to receive the self-insurance reauthorization from the DCMWC or alternatively insure these black lung obligations through a third party provider that would likely also require the Company to provide collateral.

Either of these outcomes could potentially reduce the Company’s liquidity.

(d) Legal Proceedings

10 unchanged sentences

(24) Concentration of Credit Risk and Major Customers

The Company markets its coal principally to electric utilities in the United States and international and domestic steel producers.

Credit is extended based on an evaluation of the customer’s financial condition and collateral is generally not required.

Credit losses are provided for in the Financial Statements and were minimal for the years ended December 31, 2019 , 2018 and 2017 .

Top customers as a percentage of total revenue and met and thermal coal as % of coal sales volume were as follows:

The Company markets produced, processed, and purchased coal to customers in the United States and in international markets, primarily India, Brazil, Turkey, the Netherlands, and Italy.

The following table presents additional information on our total revenues and top customers:

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31,

2 unchanged sentences

Top 10 customers as % of total revenue 63 % 59 %

Number of customers exceeding 10% of total revenue 2 2

Number of customers exceeding 10% of total trade accounts receivable, net 3 3

Domestic revenue as % of coal revenue 36 % 39 %

Export revenue as % of coal revenue 64 % 61 %

Countries with export revenue exceeding 10% of total revenue India, Brazil India

Met coal as % of coal sales volume 80 % 74 %

Thermal coal as % of coal sales volume 20 % 26 %

(1) Revenues from the top customer are included in the CAPP - Met, CAPP - Thermal, and NAPP segments for the year ended December 31, 2019, the CAPP - Met and NAPP segments for the year ended December 31, 2018, and the CAPP - Met segment for the year ended December 31, 2017.

(2) In addition to the top customer, the Company had another customer with total revenues of 10% of total revenues included in the CAPP - Met and CAPP - Thermal segments for the year ended December 31, 2019 and another customer with total revenues of 13% of total revenues included in the CAPP - Met and NAPP segments for the year ended December 31, 2018.

Additionally, one of the Company’s customers had an outstanding balance in excess of 10% of the total accounts receivable balance as of December 31, 2019 , and two of the Company’s customers had outstanding balances each in excess of 10% of the total accounts receivable balance as of December 31, 2018 .

The Company sold 2,327 tons of coal purchased from third parties, excluding tons sold related to the Back-to-Back Coal Supply Agreements, for the year ended December 31, 2019 , representing approximately 10% of total coal sales volume during such period.

The Company sold 5,968 tons of coal purchased from third parties, excluding tons sold related to the Back-to-Back Coal Supply Agreements, for the year ended December 31, 2018 , representing approximately 34% of total coal sales volume during such period.

The Company purchased 3,993 tons of this coal from Alpha during the year ended December 31, 2018 .

The Company sold 4,998 tons of coal purchased from third parties for the year ended December 31, 2017, excluding tons sold related to the Back-to-Back Coal Supply Agreements, representing approximately 32% of total coal sales volume during such period.

The Company purchased 4,189 tons of this coal from Alpha during the year ended December 31, 2017.

(25) Segment Information

The Company extracts, processes and markets met and thermal coal from surface and deep mines for sale to steel and coke producers, industrial customers, and electric utilities.

The Company conducts mining operations only in the United States with

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

mines in Central and Northern Appalachia.

As of December 31, 2019 , the Company has three reportable segments:

The Company extracts, processes and markets met and thermal coal from deep and surface mines for sale to steel and coke producers, industrial customers, and electric utilities, The Company conducts mining operations only in the United States with mines in Central Appalachia.

As of December 31, 2020, the Company has two reportable segments:

Met and CAPP - Thermal.

Met consists of five active mines and two preparation plants in Virginia, seventeen active mines and five preparation plants in West Virginia, as well as expenses associated with certain idled/closed mines.

CAPP - Thermal consists of one active mine and one preparation plant in West Virginia, as well as expenses associated with certain idled/closed mines.

Prior to the fourth quarter of 2020, the Company had three reportable segments:

CAPP - Met, CAPP - Thermal, and NAPP.

CAPP - Met consists of seven active mines and two preparation plants in Virginia, sixteen active mines and five preparation plants in West Virginia, as well as expenses associated with certain idled/closed mines.

CAPP - Thermal consists of five active mines and two preparation plants in West Virginia, as well as expenses associated with certain idled/closed mines.

NAPP consists of one active mine in Pennsylvania and one preparation plant, as well as expenses associated with one closed mine.

Prior to the third quarter of 2019, the Company had four reportable segments:

CAPP - Met, CAPP - Thermal, NAPP, and Trading and Logistics.

As a result of the changes in key operating personnel during the third quarter of 2019 including changes to the Company’s Chief Operating Decision Maker (“CODM”), the Company was required to re-evaluate its previous conclusions with respect to its segment reporting during the period.

As a result of the divestiture of the Cumberland mining operations (refer to Note 3), the Company re-evaluated its previous conclusions with respect to its segment reporting during the period.

To conform to the current period reportable segments presentation, the prior periods have been restated to reflect the change in reportable segments.

Prior to the Merger, the Company had three reportable segments:

CAPP, NAPP, and Trading and Logistics.

In addition to the three reportable segments, the All Other category includes general corporate overhead and corporate assets and liabilities, idled and closed mine costs, and the elimination of certain intercompany activity.

In addition to the two reportable segments, the All Other category includes general corporate overhead and corporate assets and liabilities, idle and closed mine costs, and the elimination of certain intercompany activity.

The operating results of these reportable segments are regularly reviewed by the “CODM,” who is the Chief Executive Officer of the Company.

1 unchanged sentence

Year Ended December 31, 2020

CAPP - Thermal

Total revenues

Depreciation, depletion, and amortization

Amortization of acquired intangibles, net

Adjusted EBITDA

Capital expenditures

Segment operating results and capital expenditures from continuing operations for the year ended December 31, 2018 were as follows:

Year Ended December 31, 2018

CAPP - Thermal

Met CAPP - Thermal All Other Consolidated

Total revenues $ 1,264,496 $ 149,037 $ 2,654 $ 1,416,187

3 unchanged sentences

Capital expenditures $ 111,745 $ 7,106 $ 728 $ 119,579

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Segment operating results and capital expenditures from continuing operations for the year ended December 31, 2019 were as follows:

Year Ended December 31, 2019

CAPP - Thermal

Met CAPP - Thermal All Other Consolidated

Total revenues $ 1,711,260 $ 286,486 $ 3,534 $ 2,001,280

3 unchanged sentences

Capital expenditures $ 140,250 $ 17,545 $ 2,652 $ 160,447

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The following table presents a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA for the year ended December 31, 2019 :

The following table presents a reconciliation of net loss from continuing operations to Adjusted EBITDA for the year ended December 31, 2020:

Year Ended December 31, 2020

CAPP - Thermal

Net income (loss) from continuing operations

Met CAPP - Thermal All Other Consolidated

Net loss from continuing operations $ ( 77,519 ) $ ( 52,520 ) $ ( 111,431 ) $ ( 241,470 )

Interest expense ( 2,014 ) 6 76,536 74,528

2 unchanged sentences

Depreciation, depletion and amortization 124,060 20,453 ( 4,628 ) 139,885

Merger-related costs

Non-cash stock compensation expense 289 8 4,600 4,897

1 unchanged sentence

Accretion on asset retirement obligations 14,214 9,285 3,005 26,504

Loss on modification and extinguishment of debt

Asset impairment (1)

Goodwill impairment (2)

Cost impact of coal inventory fair value adjustment (3)

Gain on assets acquired in an exchange transaction (4)

Asset impairment and restructuring (1)

46,317 36,719 842 83,878

Management restructuring costs (2)

501 5 435 941

Loss on partial settlement of benefit obligations 1,607 ( 328 ) 1,687 2,966

1 unchanged sentence

Adjusted EBITDA $ 120,281 $ 9,853 $ ( 46,732 ) $ 83,402

(1) Asset impairment for the year ended December 31, 2019 includes a long-lived asset impairment of $60,169 related to asset groups recorded within the CAPP - Met and CAPP - Thermal reporting segments and an asset impairment of $6,155 primarily related to the write-off of prepaid purchased coal as a result of Blackjewel’s Chapter 11 bankruptcy filing on July 1, 2019.

Refer to Note 2 and Note 4 for further information.

(2) The goodwill impairment testing as of December 31, 2019 resulted in a goodwill impairment of $124,353 to write down the full carrying value of goodwill.

(1) Asset impairment and restructuring for the year ended December 31, 2020 includes long-lived asset impairments of $ 80,954 and restructuring expense of $ 2,924 .

Refer to Note 8 for further information.

(3) The cost impact of the coal inventory fair value adjustment as a result of the Alpha Merger was completed during the three months ended June 30, 2019.

(4) During the year ended December 31, 2019 , the Company entered into an exchange transaction which primarily included the release of the PRB overriding royalty interest owed to the Company in exchange for met coal reserves which resulted in a gain of $9,083 .

(5) Management restructuring costs are related to severance expense associated with senior management changes in the year ended December 31, 2019.

CONTURA ENERGY, INC.

(2) Management restructuring costs are related to severance expense associated with senior management changes during the three months ended March 31, 2020.

ALPHA METALLURGICAL RESOURCES, INC.

AND SUBSIDIARIES

3 unchanged sentences

Year Ended December 31, 2019

CAPP - Thermal

Met CAPP - Thermal All Other Consolidated

Net income (loss) from continuing operations $ 7,944 $ ( 97,398 ) $ ( 130,164 ) $ ( 219,618 )

4 unchanged sentences

Merger-related costs — — 1,090 1,090

Management restructuring costs (1)

Non-cash stock compensation expense 1,494 71 10,783 12,348

Mark-to-market adjustment - acquisition-related obligations — — ( 3,564 ) ( 3,564 )

Gain on settlement of acquisition-related obligations

Gain on sale of disposal group (2)

Accretion on asset retirement obligations 9,599 10,929 3,337 23,865

Loss on modification and extinguishment of debt — — 26,459 26,459

Asset impairment (1)

15,034 50,993 297 66,324

Goodwill impairment (2)

124,353 — — 124,353

Cost impact of coal inventory fair value adjustment (3)

Amortization of acquired intangibles, net

Adjusted EBITDA

(1) Management restructuring costs are related to severance expense associated with senior management changes in the year ended December 31, 2018 .

(2) The Company recorded a gain on disposal of assets of $16,386 within other (income) expense within the Consolidated Statements of Operations.

(3) The cost impact of the coal inventory fair value adjustment as a result of the Alpha Merger was completed during the three months ended June 30, 2019.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

The following table presents a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA for the year ended December 31, 2017 :

Year Ended December 31, 2017

CAPP - Thermal

Net income (loss) from continuing operations

Interest expense

Interest income

Income tax benefit

Depreciation, depletion and amortization

Non-cash stock compensation expense

Mark-to-market adjustment - acquisition-related obligations

Gain on settlement of acquisition-related obligations

Secondary offering costs

Loss on modification and extinguishment of debt

Bargain purchase gain

Accretion on asset retirement obligations

4,751 3,458 — 8,209

Gain on assets acquired in an exchange transaction (4)

( 9,083 ) — — ( 9,083 )

Management restructuring costs (5)

— — 7,720 7,720

Loss on partial settlement of benefit obligations ( 1 ) — 6,447 6,446

Amortization of acquired intangibles, net 10,389 ( 13,578 ) — ( 3,189 )

Expenses related to the dividend

Adjusted EBITDA $ 316,006 $ 11,981 $ ( 63,883 ) $ 264,104

No asset information has been provided for these reportable segments as the CODM does not regularly review asset information by reportable segment.

The Company markets produced, processed and purchased coal to customers in the United States and in international markets, primarily India, Brazil, Turkey, the Netherlands, and France.

Export coal revenues were the following:

Year Ended December 31,

Total coal revenues (1)

Export coal revenues (1) (2)

Export coal revenues as % of total coal revenues (1)

(1) Amounts include freight and handling revenues.

(2) The amounts for the year ended December 31, 2019 include $288,344 of export coal revenues from external customers in India, recorded within the CAPP - Met, CAPP - Thermal, and NAPP segments.

The amounts for the year ended December 31, 2018 include $420,919 and $285,120 of export coal revenues from external customers in India and Brazil, respectively, recorded within the CAPP - Met, CAPP - Thermal, and NAPP segments.

The amounts for the year ended December 31, 2017 include $356,673 of export coal revenues, including freight and handling revenues, from external customers in India, recorded within the CAPP - Met and NAPP segments.

Revenue is tracked within the Company’s accounting records based on the product destination.

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

( 26 ) Quarterly Financial Information (Unaudited)

Year Ended December 31, 2019

First Quarter (1)

Second Quarter (2)

Third Quarter (2)

Fourth Quarter (3)

Total revenues

Net income (loss) from continuing operations

Net (loss) income from discontinued operations

Net income (loss)

Weighted average shares - basic

Weighted average shares - diluted

Basic income (loss) per share:

Income (loss) from continuing operations

(Loss) income from discontinued operations

Net income (loss)

Diluted income (loss) per share:

Income (loss) from continuing operations

(Loss) income from discontinued operations

Net income (loss)

(1) Net income from continuing operations in the first quarter of 2019 includes a gain on assets acquired in an exchange transaction of $9,083 within other income within the Company’s Statements of Operations.

Refer to Note 25 .

(2) Net income from continuing operations in the second quarter and third quarter of 2019 include asset impairment of $5,826 and $32 , respectively.

Refer to Note 2 .

Net income from continuing operations in the second quarter of 2019 includes a loss on modification and extinguishment of debt of $26,459 .

Refer to Note 15 .

(3) Net loss from continuing operations in the fourth quarter of 2019 includes asset impairment of $60,466 and goodwill impairment of $124,353 .

Refer to Note 2 .

CONTURA ENERGY, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands except share and per share data)

Year Ended December 31, 2018

First Quarter

Second Quarter (2)

Third Quarter

Fourth Quarter (3)

Total revenues

Net income from continuing operations (1)

Net (loss) income from discontinued operations

Weighted average shares - basic

Weighted average shares - diluted

Basic income (loss) per share:

Income from continuing operations

(Loss) income from discontinued operations

Diluted (loss) income per share:

Income from continuing operations

(Loss) income from discontinued operations

(1) Net income from continuing operations includes merger-related costs of $460 , $3,423 , $1,181 , and $46,736 for each of the four quarters of 2018, respectively.

(2) Net income from continuing operations in the second quarter of 2018 includes a gain on sale of a disposal group of ($16,386) within other (income) expense within the Company’s Statements of Operations.

Refer to Note 2 for further information.

(3) Net income from continuing operations in the fourth quarter of 2018 includes an income tax benefit of $165,496 .

(1) Asset impairment for the year ended December 31, 2019 includes a long-lived asset impairment of $ 60,169 related to asset groups recorded within the Met and CAPP - Thermal reporting segments and an asset impairment of $ 6,155 primarily related to the write-off of prepaid purchased coal as a result of Blackjewel’s Chapter 11 bankruptcy filing on July 1, 2019.

Refer to Note 8 for further information.

Additionally, net income from continuing operations in the fourth quarter of 2018 included a loss on modification and extinguishment of debt of ($12,042) .

(2) The goodwill impairment testing as of December 31, 2019 resulted in a goodwill impairment of $ 124,353 to write down the full carrying value of goodwill.

Refer to Note 2 for further information.

( 27 ) Subsequent Events

In July 2019, the U.S.

Department of Labor (Division of Coal Mine Workers’ Compensation or “DCMWC”) began implementing a new authorization process for all self-insured coal mine operators.

As requested by the DCMWC, the Company filed in October 2019 an application and supporting documentation for reauthorization to self-insure certain of its black lung obligations.

As a result of this application, the DCMWC notified the Company in a letter dated February 21, 2020 and received on February 24, 2020, that the Company was reauthorized to self-insure certain of its black lung obligations for a period of one-year from February 21, 2020.

The DCMWC reauthorization is contingent, however, upon the Company’s providing collateral of $65,700 to secure certain of its black lung obligations.

This proposed collateral requirement is an increase from the approximate $2,600 in collateral that the Company currently provides to secure these self-insured black lung obligations.

The Company plans to exercise this right of appeal in connection with the substantial increase in the amount of required collateral.

Either of these outcomes could potentially reduce the Company’s liquidity.

(3) The cost impact of the coal inventory fair value adjustment as a result of the Merger was completed during the three months ended June 30, 2019.

(4) During the year ended December 31, 2019, the Company entered into an exchange transaction which primarily included the release of the PRB overriding royalty interest owed to the Company in exchange for met coal reserves which resulted in a gain of $ 9,083 .

(5) Management restructuring costs are related to severance expense associated with senior management changes in the year ended December 31, 2019.

No asset information has been provided for these reportable segments as the CODM does not regularly review asset information by reportable segment.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data