What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-11-05 compared with 2020-08-06 · 156 added, 135 removed, 348 unchanged (46% of the section changed)

39 unchanged sentences

The Appalachia reportable segment also includes the Penn Ridge assets, which are primarily coal mineral interests.

● Minerals reportable segment includes oil & gas mineral interests held by AR Midland and AllDale I & II and includes Alliance Minerals' equity interests in both AllDale Minerals III, LP ("AllDale III") (Note 11 – Investments) and Cavalier Minerals.

● Minerals reportable segment includes oil & gas mineral interests held by AR Midland, LP ("AR Midland") and AllDale I & II and includes Alliance Minerals' equity interests in both AllDale Minerals III, LP ("AllDale III") (Note 11 – Investments) and Cavalier Minerals.

AR Midland acquired its mineral interest in the Wing Acquisition (Note 3 – Acquisition).

5 unchanged sentences

In February 2019, Kodiak redeemed our equity investment (see Note 11 – Investments).

In addition, Other and Corporate includes certain Alliance Resource Properties' land and coal mineral interest activities, Pontiki Coal, LLC's workers' compensation and pneumoconiosis liabilities, Wildcat Insurance, which assists the ARLP Partnership with its insurance requirements, and AROP Funding and Alliance Finance (both discussed in Note 9 – Long-Term Debt).

In addition, Other and Corporate includes certain Alliance Resource Properties, LLC's land and coal mineral interest activities, Pontiki Coal, LLC's workers' compensation and pneumoconiosis liabilities, Wildcat Insurance, LLC ("Wildcat Insurance"), which assists the ARLP Partnership with its insurance requirements, and AROP Funding and Alliance Finance (both discussed in Note 9 – Long-Term Debt).

Please read "Item 1.

2 unchanged sentences

of this Quarterly Report on Form 10-Q for more information on AROP Funding and Kodiak redemption, respectively.

Market Developments and Our Response for the Six Months Ended June 30, 2020

We began the year anticipating our results for the six months ended June 30, 2020 (the "2020 Period") would be negatively impacted by challenging coal market conditions primarily due to low natural gas prices and the overhang of coal supply caused by the collapse of thermal coal export prices during the second half of 2019.

As the year progressed, mild weather conditions and deteriorating natural gas prices placed increased pressure on the performance of our coal operations.

Market Developments and Our Response for the Nine Months Ended September 30, 2020

We began the year anticipating our results for the nine months ended September 30, 2020 (the "2020 Period") would be negatively impacted by challenging coal market conditions primarily due to low natural gas prices and the overhang of coal supply caused by the collapse of thermal coal export prices during the second half of 2019.

During the first half of the year, mild weather conditions and deteriorating natural gas prices placed increased pressure on the performance of our coal operations.

Also, our Minerals segment results were impacted by natural gas prices remaining low and the collapse in oil prices following actions by the Organization of Petroleum Exporting Countries and Russia.

These trends accelerated substantially with unprecedented demand destruction across all energy markets due to the disruptions to global economies in response to the COVID-19 pandemic.

For the 2020 Period coal-fired generation in the eastern U.S.

declined 33% compared to the same time period in 2019.

Demand for oil and natural gas also fell precipitously, driving commodity prices lower and leading operators to curtail production.

In response to these market conditions, we halted production at all of our mining complexes in the Illinois Basin at the end of March and our MC Mining complex in East Kentucky in early April.

These trends accelerated substantially during the first half of the year with unprecedented demand destruction across all energy markets due to the disruptions to global economies in response to the COVID-19 pandemic.

In response to these challenges, we halted production at all of our mining complexes in the Illinois Basin at the end of March and our MC Mining complex in East Kentucky in early April.

With an objective of reducing coal production to match existing contracted sales commitments for 2020, we planned to curtail production at these operations as long as it was possible to meet customer obligations from existing coal inventories.

Throughout the second quarter of 2020 we monitored coal inventories at each location and worked closely with customers to determine when it would be necessary to resume coal production.

Consistent with this plan, underground production operations resumed in May at the River View and Warrior mines in the Illinois Basin and subsequently at each of the remaining mining complexes – Gibson and Hamilton in the Illinois Basin and MC Mining in Appalachia.

Throughout the quarter ended June 30, 2020 (the "Sequential Quarter") we monitored coal inventories at each location and worked closely with customers to determine when it would be necessary to resume coal production.

Underground production operations resumed in the Sequential Quarter at each of our mining complexes.

All of our seven mining complexes are now producing coal.

However, several mines are running at less than capacity due to a limited spot market in the U.S.

However, several mines will continue to run at less than capacity due to a limited spot market in the U.S.

and a seaborne market that continues to be sub-economic for U.S.

Also in response to these market conditions, we have undertaken numerous efforts to optimize cash flows, reduce working capital requirements and strictly control capital expenditures and expenses.

In addition, the Board of Directors of ARLP's general partner (the "Board") decided to suspend the cash distribution to unitholders for the first, second and third quarters of 2020.

Also in response to these market conditions, we have continuously undertaken numerous efforts to optimize cash flows, reduce working capital requirements and strictly control capital expenditures and expenses.

In addition, the Board of Directors of ARLP's general partner (the "Board") suspended cash distributions to unitholders beginning with the quarter ended March 31, 2020 ("First Quarter").

During the quarter ended September 30, 2020 (the "2020 Quarter"), improved economic activity, increased coal demand and recovering oil & gas production volumes and prices positively impacted our performance.

Stronger commodity prices led oil & gas operators to bring previously shut-in wells back online and slowly resume drilling and completion activity positively impacting our Minerals segment.

Impact of the COVID-19 Pandemic

In the 2020 Period, a variety of measures in the U.S.

and abroad in response to the COVID-19 pandemic resulted in an unprecedented reduction in demand for energy.

These measures have included travel restrictions, gathering bans and stay-at-home orders.

All of our operations have been classified as essential in the states in which we operate.

Therefore, to protect our employees during the COVID-19 pandemic, we have implemented numerous health and safety protocols designed to contain and mitigate the risk of infection from COVID-19.

The safety of our employees, their families and communities as well as customers, vendors and suppliers visiting our locations will remain a priority for us.

and abroad in response to the COVID-19 pandemic resulted in a reduction in the global demand for energy.

These measures included travel restrictions, gathering bans and stay-at-home orders.

All of our operations are classified as essential in the states in which we operate.

Therefore, to protect our employees during the COVID-19 pandemic, we implemented numerous health and safety protocols designed to contain

and mitigate the risk of infection from COVID-19.

We will continually evaluate the need for further safeguards as the pandemic continues.

As discussed above, we curtailed coal production during the 2020 Period in response to demand destruction caused by the COVID-19 pandemic, including the temporary cessation of production at various operations in both the Illinois Basin and Appalachian regions.

As discussed above, we curtailed coal production during the 2020 Period in response to global energy demand destruction caused by the COVID-19 pandemic, including the temporary cessation of production at various operations in both the Illinois Basin and Appalachian regions.

Due to the ongoing and unforeseen impacts of the COVID-19 pandemic, on April 15, 2020, 116 employees of the Gibson County mining complex and 78 employees of the Hamilton mining complex were notified that their employment would be terminated permanently on April 26, 2020.

3 unchanged sentences

The cost reductions are discussed in more detail below.

● The Board has suspended the cash distribution to unitholders for the first, second and third quarters of 2020.

● We have also withdrawn our initial 2020 operating and financial guidance provided on January 27, 2020, which did not reflect the impact of the COVID-19 pandemic.

● The Board has suspended the cash distribution to unitholders beginning with the First Quarter.

● In March 2020, we withdrew our initial 2020 operating and financial guidance provided on January 27, 2020, which did not reflect the impact of the COVID-19 pandemic.

● On March 9, 2020, we strengthened our liquidity by entering into a $537.75 million (reducing to $459.5 million on May 23, 2021) revolving credit facility with a termination date of March 9, 2024, replacing the $494.75 million revolving credit facility that was set to expire on May 23, 2021.

The loan under the revolving credit facility is guaranteed by certain of our direct and indirect subsidiaries and substantially all of their assets, with the exception of our oil and gas subsidiaries and their assets.

● We have further enhanced our liquidity by reducing our total debt by $100.4 million during the 2020 Quarter.

We are continuing to monitor and may take further actions to minimize any adverse impact caused by the COVID-19 pandemic.

The trend of our earnings has been impacted by the significant decrease in global energy demand caused by the COVID-19 pandemic as well as already weak coal market conditions and declining oil prices resulting from actions of major oil producing countries.

The following comparisons between the three months ended June 30, 2020 (the "2020 Quarter") and the three months ended March 31, 2020 (the "Sequential Quarter") reflect the impacts of these trends.

The 2020 Quarter Compared to the Sequential Quarter

Illinois Basin

Increase (Decrease)

Tons Produced

Segment Adjusted EBITDA

Segment Adjusted EBITDA Expense

Beginning in the First Quarter, the trend of our earnings was impacted by the significant decrease in global energy demand caused by the COVID-19 pandemic, as well as already weak coal market conditions and declining oil prices resulting from actions of major oil producing countries.

These impacts continued and were more fully realized in the Sequential Quarter, as production was curtailed at a majority of our mines and oil & gas commodity prices declined.

Later in the Sequential Quarter, we were able to bring our coal production back online at all of our mines.

Financial and operating results for the 2020 Quarter have improved due to increased demand for coal and oil & gas compared to the Sequential Quarter.

The following comparisons between the 2020 Quarter, the Sequential Quarter, and the First Quarter reflect the trend of earnings during the 2020 Period.

(1) For a definition of Segment Adjusted EBITDA and related reconciliation to comparable GAAP financial measures, please see below under "—Reconciliation of non-GAAP "Segment Adjusted EBITDA"

to GAAP "net income (loss)."

(2) For a definition of Segment Adjusted EBITDA Expense and related reconciliation to comparable generally accepted accounting principles ("GAAP") financial measures, please see below under "—Reconciliation of non-GAAP "Segment Adjusted EBITDA Expense"

to GAAP "Operating Expenses."

(3) Barrels of oil equivalent ("BOE") is calculated on a 6:1 basis (6,000 cubic feet of natural gas to one barrel).

Please see our discussion in "Part I - Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations"

in our Form 10-Q for the quarterly period ended March 31, 2020 for more information with respect to the results of the Sequential Quarter.

Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019

We reported a net loss attributable to ARLP of $46.7 million for the 2020 Quarter compared to net income attributable to ARLP of $58.2 million for the three months ended June 30, 2019 ("2019 Quarter").

The decrease of $104.9 million was primarily due to our decision to temporarily cease coal production at five of our seven mining complexes at

the beginning of the 2020 Quarter in response to the impacts of the COVID-19 pandemic and coal market deterioration.

Production days were cut in half compared to the first quarter of 2020 as we gradually resumed production at reduced levels during the 2020 Quarter.

The ongoing effects of the COVID-19 pandemic significantly impacted our results for the 2020 Quarter with total revenues decreasing to $255.2 million compared to $517.1 million for the 2019 Quarter.

Operating expenses of $187.2 million for the 2020 Quarter were also significantly lower compared to $314.3 million in the 2019 Quarter.

Three Months Ended June 30,

in our Forms 10-Q for the quarterly periods ended June 30, 2020 and March 31, 2020 for more information with respect to the results of the Sequential Quarter and the First Quarter, respectively.

Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

We reported net income attributable to ARLP of $27.2 million for the 2020 Quarter compared to $39.1 million for the three months ended September 30, 2019 ("2019 Quarter").

The decrease of $11.9 million was primarily due to lower revenues, partially offset by reduced total operating expenses reflecting in part a $15.2 million impairment charge in the 2019 Quarter discussed below.

Total revenues decreased to $355.7 million in the 2020 Quarter compared to $464.7 million for the 2019 Quarter due to reduced coal sales volumes and prices as a result of weak coal markets amid reduced global energy demand during the COVID-19 pandemic.

Operating expenses of $216.0 million for the 2020 Quarter were also lower compared to $278.3 million in the 2019 Quarter.

Three Months Ended September 30,

(in thousands)

6 unchanged sentences

Coal sales decreased $84.2 million or 20.1% to $335.8 million for the 2020 Quarter from $420.0 million for the 2019 Quarter.

The decrease was attributable to a volume variance of $227.1 million resulting from decreased tons sold, minimally offset by a positive price variance of $2.1 million due to higher average coal sales prices.

Coal sales volumes declined 49.2% to 5.2 million tons primarily due to weak coal demand caused in large part by the COVID-19 pandemic.

Coal sales price realizations increased 0.9% in the 2020 Quarter to $45.56 per ton sold, compared to $45.16 per ton sold during the 2019 Quarter primarily due to an increased sales mix of higher-priced Appalachia sales tons in the 2020 Quarter.

The decrease was attributable to a volume variance of $72.9 million resulting from decreased tons sold and a price variance of $11.3 million due to lower average coal sales prices.

Tons sold declined to 7.7 million tons in the 2020 Quarter compared to 9.3 million tons in the 2019 Quarter primarily reflecting reduced sales of export

Coal sales price realizations also fell by 3.3% in the 2020 Quarter to $43.59 per ton sold, compared to $45.06 per ton sold during the 2019 Quarter due to lower priced thermal and metallurgical markets compared to the 2019 Quarter.

Oil & gas royalties .

Our mineral interests contributed royalty revenues of $9.7 million in the 2020 Quarter compared to $14.0 million for the 2019 Quarter.

The decrease in royalty revenues is primarily due to lower oil & gas sales price realizations resulting from reduced demand amid the COVID-19 pandemic.

Partially offsetting lower prices, royalty revenues benefited from higher volumes as a result of the Wing Acquisition in August 2019 as well as continued drilling and development activity on our mineral interests.

The decrease in royalty revenues is primarily due to lower oil & gas sales price realizations resulting from reduced global energy demand amid the COVID-19 pandemic.

Partially offsetting lower prices, royalty revenues benefited from higher volumes as a result of the Wing Acquisition in August 2019.

Please read "Item 1.

2 unchanged sentences

Coal - Segment Adjusted EBITDA Expense .

Segment Adjusted EBITDA Expense, excluding our Minerals segment, decreased 41.3% to $186.4 million, primarily as a result of reduced coal sales volumes reflecting our decision to temporarily idle production at certain mines during the 2020 Quarter.

On a per ton basis, Segment Adjusted EBITDA Expense, excluding our Minerals segment, increased 15.6% in the 2020 Quarter to $35.95 per ton, compared to $31.11 per ton in the 2019 Quarter, primarily due to the per ton cost impact of lower coal volumes and a greater mix of coal volumes from our higher cost Appalachian production.

Our costs per ton were further impacted by increased inventory charges and other cost variances discussed below by category:

● Labor and benefit expenses per ton produced, excluding workers' compensation, increased 25.4% to $12.33 per ton in the 2020 Quarter from $9.83 per ton in the 2019 Quarter.

The increase of $2.50 per ton was primarily due to curtailed production and volume mix discussed above.

● Workers' compensation expenses per ton produced increased to $1.33 per ton in the 2020 Quarter from $0.82 per ton in the 2019 Quarter.

The increase of $0.51 per ton produced resulted primarily from curtailed production, partially offset by reduced mid-year actuarial workers' compensation accrual adjustments in the 2020 Quarter compared to the 2019 Quarter.

Please read "Part I - Item 1.

Financial Statements (Unaudited) — Note 15 – Workers' Compensation and Pneumoconiosis"

of this Quarterly Report on Form 10-Q for more information on the workers' compensation accrual adjustments.

● Material and supplies expenses per ton produced increased 1.1% to $11.36 per ton in the 2020 Quarter from $11.24 per ton in the 2019 Quarter.

The increase of $0.12 per ton produced resulted primarily from related increases of $0.87 per ton for power and fuel used in the mining process, $0.63 per ton for outside expenses and $0.39 per ton for environmental and reclamation expenses, partially offset by decreases of $1.18 per ton for roof support and $0.55 per ton for contract labor used in the mining process.

● Production taxes and royalty expenses per ton incurred as a percentage of coal sales prices and volumes increased $0.97 per produced ton sold in the 2020 Quarter compared to the 2019 Quarter primarily as a result of a $0.60 per ton government-imposed increase in the federal black lung excise tax, effective January 1, 2020 and an unfavorable state production mix, partially offset by reduced excise taxes resulting from decreased export shipments.

Segment Adjusted EBITDA Expense increases per ton above were partially offset by the following decreases:

Segment Adjusted EBITDA Expense, excluding our Minerals segment, decreased 24.7% to $215.9 million, as a result of reduced tons sold and lower expense per ton.

On a per ton basis, Segment Adjusted EBITDA Expense, excluding our Minerals segment, decreased 8.8% in the 2020 Quarter to $28.03 per ton sold, compared to $30.75 per ton in the 2019 Quarter, primarily due to ongoing expense control initiatives at all operations, a favorable sales mix from our lower cost mines, improved recovery percentages from certain mines and lower inventory costs, particularly at our Appalachian mines.

In addition, other cost decreases are discussed by category below:

● Material and supplies expenses per ton produced decreased 10.3% to $9.58 per ton in the 2020 Quarter from $10.68 per ton in the 2019 Quarter.

The decrease of $1.10 per ton produced resulted primarily from related decreases of $0.33 per ton for contract labor used in the mining process, $0.29 per ton for roof support and $0.28 per ton for outside expenses, partially offset by an increase of $0.24 per ton in longwall subsidence expense .

● Maintenance expenses per ton produced decreased 23.2% to $2.81 per ton in the 2020 Quarter from $3.66 per ton in the 2019 Quarter.

The decrease of $0.45 per ton produced was primarily due to reduced maintenance requirements as a result of curtailed production discussed above.

The decrease of $0.85 per ton produced was primarily due to reduced maintenance requirements as a result of curtailed production.

● Operating expenses benefited from a $4.0 million decrease associated with the commencement of a sales-type lease in the 2020 Quarter for certain properties at our Pattiki mining complex, which ceased production in 2016 and where reclamation activities are ongoing.

● We had no sales of outside coal purchases in the 2020 Quarter compared to $10.6 million in the 2019 Quarter.

Thus, costs per ton in the 2020 Quarter benefited as our cost of outside coal purchases are generally higher on a per ton basis than our produced coal.

Segment Adjusted EBITDA Expense decreases per ton above were partially offset by the following increases:

● Labor and benefit expenses per ton produced, excluding workers' compensation, increased 4.7% to $10.39 per ton in the 2020 Quarter from $9.92 per ton in the 2019 Quarter.

The increase of $0.47 per ton was primarily due to reduced production and resulting higher fixed costs per ton.

● Production taxes and royalty expenses per ton incurred as a percentage of coal sales prices and volumes increased $0.86 per produced ton sold in the 2020 Quarter compared to the 2019 Quarter primarily as a result of a $0.60 per ton government-imposed increase in the federal black lung excise tax, effective January 1, 2020 and an unfavorable state production mix increasing severance taxes per ton, in addition to increased excise taxes per ton resulting from a greater mix of domestic vs.

export shipments.

Other revenues .

Other revenues were principally comprised of Mt.

Vernon transloading revenues in our Illinois Basin segment, oil & gas lease bonuses in our Minerals segment and Matrix Design sales in our Other & Corporate segment, in addition to revenues not specific to any particular segment such as contract buy-out revenues and other outside services.

Vernon transloading revenues in our Illinois Basin segment, oil & gas lease bonuses in our Minerals segment and Matrix Design sales in Other & Corporate, in addition to revenues not specific to any particular segment such as contract buy-out revenues and other outside services.

Other revenues decreased to $4.0 million in the 2020 Quarter from $10.7 million in the 2019 Quarter.

The decrease of $5.8 million was primarily due to reduced sales of mining technology products by Matrix Design and lower volumes at our Mt.

The decrease of $6.7 million was primarily due to reduced sales of mining technology products by our Matrix Design subsidiary and lower volumes at our Mt.

Vernon transloading facility.

3 unchanged sentences

Depreciation, depletion and amortization.

Depreciation, depletion and amortization expense increased to $83.6 million for the 2020 Quarter compared to $76.9 million for 2019 Quarter primarily as a result of charges related to increased sales from coal inventory and increased oil & gas production from our Minerals segment.

Depreciation, depletion and amortization expense increased to $80.2 million for the 2020 Quarter compared to $72.3 million for the 2019 Quarter primarily as a result of charges related to increased sales from coal inventory.

Asset impairment.

During the 2019 Quarter, we ceased coal production at our Dotiki mine to focus on maximizing production at our lower-cost mines in the Illinois Basin.

Consequently, we recorded a non-cash asset impairment charge of $15.2 million in the 2019 Quarter.

Please read "Item 1.

Financial Statements (Unaudited) - Note 4 – Long-Lived Asset Impairments"

of this Quarterly Report on Form 10-Q.

Transportation revenues and expenses .

6 unchanged sentences

Three Months Ended

September 30,

Increase (Decrease)

32 unchanged sentences

The decrease of $6.2 million was primarily attributable to lower coal sales, which decreased 19.5% to $206.4 million in the 2020 Quarter from $256.3 million in the 2019 Quarter, partially offset by reduced operating expenses.

The decrease of $167.8 million in coal sales primarily reflects reduced coal sales volumes, which decreased 55.7% compared to the 2019 Quarter caused by weak coal demand resulting in large part by the COVID-19 pandemic and coal market deterioration.

The weak coal demand also resulted in our curtailment of production in the region, including temporary cessation of coal production at our River View, Gibson, Hamilton and Warrior mining complexes.

Segment Adjusted EBITDA Expense decreased 47.9% to $108.5 million in the 2020 Quarter from $208.3 million in the 2019 Quarter primarily as a result of reduced coal sales volumes.

Segment Adjusted EBITDA Expense per ton increased $4.85 per ton sold to $32.38 from $27.53 per ton sold in the 2019 Quarter, primarily due to reduced coal sales and production volumes, increased coal inventory charges and higher excise and severance taxes in addition to certain cost increases described above under "–Coal - Segment Adjusted EBITDA Expense."

The decrease of $49.9 million in coal sales primarily reflects reduced tons sold, which decreased 20.4% compared to the 2019 Quarter due to the impacts of the COVID-19 pandemic and reduced export shipments.

Segment Adjusted EBITDA Expense decreased 28.1% to $125.0 million in the 2020 Quarter from $173.8 million in the 2019 Quarter primarily as a result of reduced tons sold and decreased per ton costs.

Segment Adjusted EBITDA Expense per ton decreased $2.57 per ton sold to $23.95 from $26.52 per ton sold in the 2019 Quarter primarily as a result of reduced maintenance expenses per ton as well as lower materials and supplies expenses per ton across the region.

Both decreases reflect a greater mix of sales from lower cost River View production, the elimination of high cost Dotiki production beginning late in the 2019 Quarter and improved recovery percentages at Gibson, partially offset by reduced total coal production volumes from the region.

See also certain cost variances described above under "–Coal - Segment Adjusted EBITDA Expense."

Appalachia – Segment Adjusted EBITDA decreased 21.4% to $43.4 million for the 2020 Quarter from $55.2 million in the 2019 Quarter.

The decrease of $23.3 million was primarily attributable to lower coal sales, which decreased 35.3% to $102.1 million in the 2020 Quarter from $158.0 million in the 2019 Quarter.

The decrease of $55.9 million in coal sales reflects lower coal sales volumes and price realizations.

Sales volumes decreased 30.7% in the 2020 Quarter compared to the 2019 Quarter due to curtailed production in the region as a result of weak coal market conditions caused in large part by the COVID-19 pandemic.

Coal sales price per ton sold in the 2020 Quarter decreased 6.7% compared to the 2019 Quarter primarily due to lower metallurgical coal sales prices.

Segment Adjusted EBITDA Expense decreased 29.6% to $74.0 million in the 2020 Quarter from $105.1 million in the 2019 Quarter due to reduced coal sales volumes.

Segment Adjusted EBITDA Expense per ton increased $0.60 per ton sold to $40.28 compared to $39.68 per ton sold in the 2019 Quarter, as a result of reduced volumes in the region, an increased sales mix of higher-cost Mettiki tonnage, higher excise and severance taxes and increased inventory charges, partially offset by reduced sales of higher cost outside coal purchases.

The decrease of $11.8 million was primarily attributable to lower coal sales, which decreased 20.3% to $129.4 million in the 2020 Quarter from $162.3 million in the 2019 Quarter, partially offset by reduced operating expenses.

The decrease of $32.9 million in coal sales reflects lower tons sold and price realizations.

Tons sold decreased 10.3% in the 2020 Quarter compared to the 2019 Quarter due to the impacts of the COVID-19 pandemic and coal market deterioration, particularly with regards to the international shipments.

Coal sales price per ton sold in the 2020 Quarter decreased 11.1% compared to the 2019 Quarter primarily due to weak market conditions and the absence of higher priced metallurgical coal sales in the 2020 Quarter.

Segment Adjusted EBITDA Expense decreased 19.9% to $86.4 million in the 2020 Quarter from $108.0 million in the 2019 Quarter due to reduced tons sold and decreased per ton costs.

Segment Adjusted EBITDA Expense per ton decreased $4.21 per ton sold to $34.82 compared to $39.03 per ton sold in the 2019 Quarter, as a result of improved recoveries at our Mettiki and Tunnel Ridge mines, lower maintenance expenses across the region, lower inventory costs and the absence of higher cost purchased tons sold.

See also certain cost variances described above under "–Coal - Segment Adjusted EBITDA Expense."

Minerals – Segment Adjusted EBITDA decreased to $8.9 million for the 2020 Quarter from $12.2 million in the 2019 Quarter.

The decrease of $4.2 million primarily resulted from lower sales price realizations per BOE due to reduced demand amid the COVID-19 pandemic, partially offset by higher volumes, which increased 16.4% compared to the 2019 Quarter primarily as a result of production from the additional mineral interests acquired in the Wing Acquisition in August 2019 as well as continued drilling and development activity on our mineral interests.

Other and Corporate – Segment Adjusted EBITDA decreased by $5.8 million to $0.8 million in the 2020 Quarter compared to $6.6 million in the 2019 Quarter.

The decrease was primarily attributable to reduced coal brokerage activity and mining technology product sales from Matrix Group.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

We reported a net loss attributable to ARLP of $191.4 million for the 2020 Period compared to net income attributable to ARLP of $334.5 million for the six months ended June 30, 2019 ("2019 Period").

The net income decrease of $525.9 million was primarily due to a $437.7 million decline in total revenues, non-cash asset and goodwill impairment charges of $157.0 million recorded in the 2020 Period, a net gain of $170.0 million related to the 2019 AllDale Acquisition and the redemption of our preferred interest in Kodiak in the 2019 Period.

The decrease of $3.3 million was primarily due to lower sales price realizations per BOE resulting from reduced demand amid the COVID-19 pandemic, partially offset by higher volumes, which increased 8.1% compared to the 2019 Quarter primarily as a result of production from the additional mineral interests acquired in the Wing Acquisition.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

We reported a net loss attributable to ARLP of $164.2 million for the 2020 Period compared to net income attributable to ARLP of $373.6 million for the nine months ended September 30, 2019 ("2019 Period").

The decrease of $537.8 million was primarily due to a $546.8 million decline in total revenues, a non-cash goodwill impairment charge of $132.0 million recorded in the 2020 Period, a net gain of $170.0 million related to the 2019 AllDale Acquisition and the elimination of equity securities income due to the redemption of our preferred interest in Kodiak in the 2019 Period.

These net income reductions were partially offset by lower operating expenses and transportation expenses of $637.5 million and $16.7 million, respectively, for the 2020 Period compared to $895.3 million and $82.9 million, respectively, in the 2019 Period.

Total revenues decreased 36.2% to $961.6 million for the 2020 Period compared to $1.51 billion for the 2019 Period primarily due to lower coal sales and transportation revenues resulting from weak market conditions and disruptions caused by the COVID-19 pandemic.

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

5 unchanged sentences

(2) Coal - Segment Adjusted EBITDA Expense is defined as consolidated Segment Adjusted EBITDA Expense excluding our Minerals segment.

Coal sales decreased $386.4 million or 41.2% to $550.9 million for the 2020 Period from $937.3 million for the 2019 Period.

Coal sales decreased $470.6 million or 34.7% to $886.7 million for the 2020 Period from $1.36 billion for the 2019 Period.

The decrease was attributable to a volume variance of $441.8 million resulting from decreased tons sold and a price variance of $28.8 million due to lower average coal sales prices.

Tons sold declined 39.4% to 12.4 million tons in the 2020 Period due to reduced volumes across all of our mining operations resulting from demand destruction for coal-powered electricity caused primarily by the COVID-19 pandemic and low natural gas prices, in addition to lower volumes resulting from a seaborne market that continues to be sub-economic for U.S.

Primarily due to reduced shipments of thermal and metallurgical coal to international markets, coal sales price realizations declined 2.9% in the 2020 Period to $44.30 per ton sold, compared to $45.64 per ton sold during the 2019 Period.

As a result of temporarily idling production at certain mines during the 2020 Period, coal production volumes fell to 12.3 million tons, a reduction of 42.2% compared to the 2019 Period.

Tons sold declined 32.5% to 20.1 million tons in the 2020 Period primarily due to reduced shipments to international markets, which also caused coal sales price realizations to decline 3.1% in the 2020 Period to $44.03 per ton sold, compared to $45.46 per ton sold during the 2019 Period.

As a result of temporarily idling production at certain mines in response to weak market conditions during the 2020 Period, coal production volumes fell to 19.5 million tons, a reduction of 37.8% compared to the 2019 Period.

Oil & gas royalties .

Oil & gas royalty revenues decreased slightly to $22.0 million in the 2020 Period compared to $22.3 million for the 2019 Period.

The decrease was primarily due to lower average prices partially offset by higher volumes resulting from the Wing Acquisition in August 2019 as well as continued drilling and development activity on our mineral interests.

Oil & gas royalty revenues decreased to $31.7 million in the 2020 Period compared to $36.3 million for the 2019 Period.

The decrease was primarily due to lower average product prices, partially offset by higher volumes resulting from the Wing Acquisition in August 2019, and continued drilling and development of our mineral interests.

Coal - Segment Adjusted EBITDA Expense .

Segment Adjusted EBITDA Expense, excluding our Minerals segment, decreased 32.1% to $420.2 million, primarily as a result of reduced coal sales volumes.

Segment Adjusted EBITDA Expense, excluding our Minerals segment, decreased 29.7% to $636.1 million, primarily as a result of reduced tons sold.

Segment Adjusted EBITDA Expense per ton increased 4.2% in the 2020 Period to $31.59 per ton, compared to $30.33 per ton in the 2019 Period.

The increase was attributed primarily to the per ton cost impact of lower coal volumes and an increased sales mix of higher-cost Appalachia region sales tons in addition to other cost increases which are discussed below by category:

The increase is attributed primarily to the per ton cost impact of lower coal volumes in addition to other cost increases which are discussed below by category:

● Labor and benefit expenses per ton produced, excluding workers' compensation, increased 15.6% to $11.02 per ton in the 2020 Period from $9.53 per ton in the 2019 Period.

The increase of $2.03 per ton was primarily due to curtailed production and the regional sales mix discussed above.

● Workers' compensation expenses per ton produced increased to $0.74 per ton in the 2020 Period from $0.55 per ton in the 2019 Period.

The increase of $0.19 per ton produced resulted from curtailed production, partially offset by the impact of comparative mid-year actuarial workers' compensation accrual adjustments in the 2020 Period compared to the 2019 Period.

Please read "Part I - Item 1.

Financial Statements (Unaudited)—Note 15 – Workers' Compensation and Pneumoconiosis"

of this Quarterly Report on Form 10-Q for more information on the workers' compensation accrual adjustments.

● Production taxes and royalty expenses per ton incurred as a percentage of coal sales prices and volumes increased $0.64 per produced ton sold in the 2020 Period compared to the 2019 Period primarily as a result of a $0.60 per ton government-imposed increase in the federal black lung excise tax, effective January 1, 2020 and an unfavorable state production mix partially offset by reduced excise taxes resulting from decreased export shipments.

The increase of $1.49 per ton was primarily due to curtailed production.

● Production taxes and royalty expenses per ton incurred as a percentage of coal sales prices and volumes increased $0.71 per produced ton sold in the 2020 Period compared to the 2019 Period primarily as a result of a $0.60 per ton government-imposed increase in the federal black lung excise tax, effective January 1, 2020 and an unfavorable state production mix increasing severance taxes per ton, in addition to increased excise taxes per ton resulting from a greater mix of domestic vs.

export shipments.

Segment Adjusted EBITDA Expense increases per ton above were partially offset by the following decreases:

● Material and supplies expenses per ton produced decreased 4.1% to $10.53 per ton in the 2020 Period from $10.98 per ton in the 2019 Period.

The decrease of $0.45 per ton produced resulted primarily from related decreases of $0.52 per ton for roof support and $0.36 per ton for contract labor used in the mining process, partially offset by increases of $0.27 per ton for power and fuel used in the mining process and $0.16 per ton for outside expenses .

In addition, material and supplies expenses per ton produced benefited from a greater mix of production from our lower cost per ton mines, River View and Tunnel Ridge.

● Maintenance expenses per ton produced decreased 8.8% to $3.23 per ton in the 2020 Period from $3.54 per ton in the 2019 Period.

The decrease of $0.31 per ton produced was primarily due to reduced maintenance requirements as a result of curtailed production.

● We had no sales of outside coal purchases in the 2020 Period compared to $15.9 million in the 2019 Period.

Thus, costs per ton in the 2020 Period benefited as our cost of outside coal purchases are generally higher on a per ton basis than our produced coal.

General and administrative.

General and administrative expenses for the 2020 Period decreased to $41.1 million compared to $55.2 million in the 2019 Period.

The decrease of $10.0 million was primarily due to lower incentive compensation expenses, including the reversal of cumulative previously recognized expense for restricted units in our

LTIP granted in 2019 that are no longer considered probable for vesting at the end of 2021.

The decrease of $14.1 million was primarily due to lower incentive compensation expenses, including the reversal of cumulative previously recognized expense for restricted units in our LTIP granted in 2019 that are no longer considered probable for vesting at the end of 2021.

Please read "Item 1.

2 unchanged sentences

Depreciation, depletion and amortization .

Depreciation, depletion and amortization expense increased to $157.5 million for the 2020 Period compared to $148.1 million for 2019 Period primarily as a result of higher coal inventory charges and increased oil & gas production from our Minerals segment.

Depreciation, depletion and amortization expense increased to $237.7 million for the 2020 Period compared to $220.4 million for 2019 Period primarily due to charges related to increased sales from coal inventory and increased oil & gas production from our Minerals segment in the 2020 Period.

Asset impairments.

During the 2020 Period, we recorded $25.0 million of non-cash asset impairment charges due to sealing our idled Gibson North mine, resulting in its permanent closure, and a decrease in the fair value of certain mining equipment and greenfield coal reserves as a result of weakened coal market conditions.

During the 2019 Period, we recorded an asset impairment charge of $15.2 million due to the cessation of production at our Dotiki mine.

Please read "Item 1.

19 unchanged sentences

Segment Adjusted EBITDA, tons sold, coal sales, other revenues, oil & gas royalties, BOE volume and Segment Adjusted EBITDA Expense by segment are as follows:

Six Months Ended

Nine Months Ended

September 30,

Increase (Decrease)

32 unchanged sentences

The decrease of $148.8 million was primarily attributable to lower coal sales, which decreased 38.4% to $539.6 million in the 2020 Period from $875.5 million in the 2019 Period, partially offset by reduced operating expenses.

The decrease of $286.0 million in coal sales primarily reflects reduced coal sales volumes, which decreased 46.2% compared to the 2019 Period due to curtailed production across all of our mining operations in the region as a result of weak coal market conditions amid the COVID-19 pandemic.

Segment Adjusted EBITDA Expense decreased 36.3% to $258.5 million in the 2020 Period from $405.7 million in the 2019 Period primarily as a result of reduced coal sales volumes.

Segment Adjusted EBITDA Expense per ton increased $4.13 per ton sold to $30.75 from $26.62 per ton sold in the 2019 Period, primarily due to reduced coal volumes and certain cost increases described above under "–Coal - Segment Adjusted EBITDA Expense."

The decrease of $335.9 million in coal sales primarily reflects reduced tons sold, which decreased 37.5% compared to the 2019 Period due to curtailed production across all of our mining operations in the region as a result of weak coal market conditions, particularly international markets, amid the COVID-19 pandemic.

Segment Adjusted EBITDA Expense decreased 33.8% to $383.5 million in the 2020 Period from $579.5 million in the 2019 Period primarily as a result of reduced tons sold.

Segment Adjusted EBITDA Expense per ton increased $1.56 per ton sold to $28.15 from $26.59 per ton sold in the 2019 Period, primarily due to reduced coal volumes and related increased fixed costs per ton, in addition to certain cost increases described above under "–Coal - Segment Adjusted EBITDA Expense."

Appalachia – Segment Adjusted EBITDA decreased 27.6% to $121.4 million for the 2020 Period from $167.6 million in the 2019 Period.

The decrease of $34.3 million was primarily attributable to lower coal sales, which decreased 31.0% to $217.7 million in the 2020 Period from $315.4 million in the 2019 Period.

The decrease of $97.7 million in coal sales reflects lower coal sales volumes and price realizations.

Sales volumes decreased 23.9% in the 2020 Period compared to the 2019 Period due to curtailed production in the region as a result of weak coal market conditions amid the COVID-19 pandemic.

Coal sales price per ton sold in the 2020 Period decreased 9.3% compared to the 2019 Period primarily due to reduced metallurgical coal sales volumes and price realizations at our Mettiki mine.

Segment Adjusted EBITDA Expense decreased 25.0% to $153.7 million in the 2020 Period from $204.9 million in the 2019 Period due to reduced coal sales volumes.

Segment Adjusted EBITDA Expense per ton decreased $0.56 per ton sold to $38.12 compared to $38.68 per ton sold in the 2019 Period, as a result of fewer longwall move days at both our Tunnel Ridge and Mettiki mines and reduced roof support and contract labor expenses per ton, partially offset by curtailed production in the region, particularly from the temporary cessation of operations at our MC Mining mine during the 2020 Period, and an increased sales mix of higher-cost Mettiki tonnage.

The decrease of $46.2 million was primarily attributable to lower coal sales, which decreased 27.3% to $347.1 million in the 2020 Period from $477.7 million in the 2019 Period, partially offset by reduced operating expenses.

The decrease of $130.6 million in coal sales reflects lower tons sold and price realizations.

Sales volumes decreased 19.2% in the 2020 Period compared to the 2019 Period due to curtailed production in the region as a result of weak coal market conditions, particularly international markets, amid the COVID-19 pandemic.

Coal sales price per ton sold in the 2020 Period decreased 10.1% compared to the 2019 Period primarily due to reduced metallurgical tons sold and price realizations at our Mettiki mine.

Segment Adjusted EBITDA Expense decreased 23.3% to $240.1 million in the 2020 Period from $312.9 million in the 2019 Period due to reduced tons sold and decreased per ton costs.

Segment Adjusted EBITDA Expense per ton decreased $1.94 per ton sold to $36.86 compared to $38.80 per ton sold in the 2019 Period, as a result of fewer longwall move days at both our Tunnel Ridge and Mettiki mines, reduced roof support and contract labor expenses per ton and the absence of higher cost purchased tons sold in the 2020 Period, partially offset by curtailed production in the region during the 2020 Period increasing fixed costs per ton, and an increased sales mix of higher-cost Mettiki tonnage.

See also certain cost variances described above under "–Coal - Segment Adjusted EBITDA Expense."

Minerals – Segment Adjusted EBITDA increased slightly to $20.6 million for the 2020 Period from $20.2 million in the 2019 Period reflecting increased production volumes from the additional mineral interests acquired in the Wing Acquisition in August 2019 and from continued drilling and development activities, partially offset by reduced average sales price per BOE due to reduced demand amid the COVID-19 pandemic.

Minerals – Segment Adjusted EBITDA decreased to $29.5 million for the 2020 Period from $32.4 million in the 2019 Period reflecting reduced average sales price per BOE due to reduced demand amid the COVID-19 pandemic, partially offset by production volumes from the additional mineral interests acquired in the Wing Acquisition in August 2019 and from continued drilling and development activities.

Other and Corporate – Segment Adjusted EBITDA decreased by $23.5 million to $4.7 million in the 2020 Period compared to $28.2 million in the 2019 Period.

11 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

6 unchanged sentences

Acquisition gain

Income tax (expense) benefit

Income tax expense

Acquisition gain attributable to noncontrolling interest

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

7 unchanged sentences

Nevertheless, our ability to satisfy our working capital requirements, to fund planned capital expenditures, to service our debt obligations or to pay distributions will depend upon our future operating performance and access to and cost of financing sources, which will be affected by prevailing economic conditions generally, and in both the coal and oil & gas industries specifically, as well as other financial and business factors, some of which are beyond our control, including the COVID-19 pandemic.

Based on our recent operating cash flow results, current cash position, anticipated future cash flows and sources of financing that we expect to have available, we anticipate remaining in compliance with the covenants of the Credit Agreement and do not expect any constraints to our liquidity.

However, to the extent operating cash flow or access to and cost of financing sources are materially different than expected, future covenant compliance or liquidity may be adversely affected.

4 unchanged sentences

in our Form 10-Q for the quarterly period ended March 31, 2020.

In responding to weak market conditions, lower commodity prices, and the lockdown initiated in the first quarter of 2020 to certain areas of the global economy due to the COVID-19 pandemic, the Partnership took numerous actions to optimize cash flows and preserve liquidity by reducing capital expenditures, working capital, costs and expenses, including adjusting its corporate support structure to better align with current operating levels.

In responding to weak market conditions, lower commodity prices, and the lockdown initiated in the First Quarter to certain areas of the global economy due to the COVID-19 pandemic, the Partnership took numerous actions to optimize cash flows and preserve liquidity by reducing capital expenditures, working capital, costs and expenses, including adjusting its corporate support structure to better align with current operating levels.

We have also utilized certain provisions of the Coronavirus Aid Relief and Economic Security Act of 2020 which modestly increased our short-term liquidity.

Additional actions to enhance our liquidity include our Board's decisions to suspend the cash distributions to unitholders for the Quarters ending March 31, 2020, June 30, 2020 and September 30, 2020.

Additional actions to enhance our liquidity include our Board's decisions to suspend the cash distributions beginning with the First Quarter.

We have also strengthened our liquidity by entering into a $537.75 million (reducing to $459.5 million on May 23, 2021) revolving credit facility with a termination date of March 9, 2024, replacing the $494.75 million revolving credit facility that was set to expire on May 23, 2021.

In addition, on June 5, 2020 we entered into a $14.7 million equipment financing arrangement which provides for forty-eight monthly payments with an implicit interest rate of 6.1%, maturing on June 5, 2024.

We have further enhanced our liquidity by reducing our total debt by $117.5 million in the 2020 Period.

In May 2018, the Board approved the establishment of a unit repurchase program authorizing us to repurchase up to $100 million of ARLP common units.

1 unchanged sentence

The unit repurchase program authorization does not obligate us to repurchase any dollar amount or number of units.

Since inception through June 30, 2020, we have purchased units for a total of $93.5 million under the program.

During the six months ended June 30, 2020, we did not repurchase and retire any units.

Since inception through September 30, 2020, we have purchased units for a total of $93.5 million under the program.

During the nine months ended September 30, 2020, we did not repurchase and retire any units.

The timing of any future unit repurchases and the ultimate number of units to be purchased will depend on a number of factors, including business and market conditions, our future financial performance, and other capital priorities.

4 unchanged sentences

In 2018, we began development of MC Mining's Excel Mine No.

5 which continued through 2019 and into 2020.

We currently anticipate deploying capital of approximately $3.0 million to $5.0 million in 2020 to complete the project which we expect to fund with cash from operations or borrowings under our credit facilities.

We anticipate the new mine will enable us to access an additional 15 million tons of coal reserves with an expected mine life of approximately 12 years assuming recent levels of production at MC Mining's Excel Mine No.

4 continue at the new mine.

We expect the development plan for the new Excel Mine No.

5 will provide a seamless transition from the current MC Mining operation as we anticipate its reserves depleting later in 2020.

5 Mine") which continued through 2019 and into 2020.

In July 2020, the No.

5 Mine began production.

We expect the No.

5 Mine will enable us to access an additional 15 million tons of coal reserves with an expected mine life of approximately 12 years assuming production levels similar to MC Mining's former Excel Mine No.

Cash provided by operating activities was $291.8 million for the 2020 Period compared to $408.4 million for the 2019 Period.

The decrease in cash provided by operating activities was primarily due to a decrease in net income adjusted for non-cash items and unfavorable working capital changes primarily related to accounts payable.

These decreases were partially offset primarily by a favorable working capital change related to trade receivables and inventories.

The decrease in cash provided by operating activities was primarily due to a net loss in the 2020 Period as

compared to net income in the 2019 Period adjusted for changes from certain non-cash items discussed above such as an acquisition gain and impairments.

The decrease in net income was partially offset by a favorable working capital change primarily related to trade receivables and inventories and other favorable comparisons.

Net cash used in investing activities was $108.9 million for the 2020 Period compared to $423.6 million for the 2019 Period.

The decrease in cash used in investing activities was primarily attributable to the AllDale Acquisition during 2019 Period and decreased capital expenditures for mine infrastructure and equipment at various mines during the 2020 Period.

This comparative decrease was partially offset by cash received from the redemption of our Kodiak equity securities in the 2019 Period.

The decrease in cash used in investing activities was primarily attributable to the AllDale and Wing Acquisitions during 2019 Period and decreased capital expenditures for mine infrastructure and equipment at various mines during the 2020 Period.

The decreased net cash used compared to the 2019 Period was partially offset by cash received from the redemption of our Kodiak equity securities in the 2019 Period.

Net cash used in financing activities was $185.2 million for the 2020 Period compared to $197.2 million for the 2019 Period.

The decrease in cash used in financing activities was primarily attributable to decreases in overall net payments on the securitization and revolving credit facilities and a decrease in distributions paid to partners in the 2020 Period.

The decrease in cash used in financing activities was primarily attributable to reduction in distributions paid to partners in the 2020 Period, partially offset by lower net proceeds from borrowings under the revolving credit facility.

Capital Expenditures

4 unchanged sentences

Our anticipated total capital expenditures, including maintenance capital expenditures, for 2020 are estimated in a range of $125.0 million to $130.0 million.

Management anticipates funding remaining 2020 capital requirements with cash and cash equivalents ($35.1 million as of June 30, 2020), cash flows from operations and investments, borrowings under revolving credit and securitization facilities and cash provided from the issuance of debt or equity.

Management anticipates funding remaining 2020 capital requirements with cash and cash equivalents ($34.1 million as of September 30, 2020), cash flows from operations and investments, borrowings under revolving credit and securitization facilities and cash provided from the issuance of debt or equity.

We will continue to have significant capital requirements over the long term, which may require us to incur debt or seek additional equity capital.

9 unchanged sentences

Borrowings under the Revolving Credit Facility bear interest, at our option, at either (i) the Base Rate at the greater of three benchmarks or (ii) a Eurodollar Rate, plus margins for (i) or (ii), as applicable, that fluctuate depending upon the ratio of Consolidated Debt to Consolidated Cash Flow (each as defined in the Credit Agreement).

The Eurodollar Rate, with applicable margin, under the Revolving Credit Facility was 3.03% as of June 30, 2020.

At June 30, 2020, we had $9.3 million of letters of credit outstanding with $263.5 million available for borrowing under the Revolving Credit Facility.

The Eurodollar Rate, with applicable margin, under the Revolving Credit Facility was 3.01% as of September 30, 2020.

At September 30, 2020, we had $21.8 million of letters of credit outstanding with $381.0 million available for borrowing under the Revolving Credit Facility.

We incur an annual commitment fee of 0.35% on the undrawn portion of the Revolving Credit Facility.

4 unchanged sentences

The Credit Agreement requires the Intermediate Partnership to maintain (a) a debt to cash flow ratio of not more than 2.5 to 1.0, (b) a cash flow to interest expense ratio of not less than 3.0 to 1.0 and (c) a first lien debt to cash flow ratio of not more than 1.5 to 1.0, in each case, during the four most recently ended fiscal quarters.

The debt to cash flow ratio, cash flow to interest expense ratio and first lien debt to cash flow ratio were 1.82 to 1.0, 8.63 to 1.0 and 0.88 to 1.0, respectively, for the trailing twelve months ended June 30, 2020.

We remain in compliance with the covenants of the Credit Agreement as of June 30, 2020 and expect to remain in compliance with such covenants for the balance of the year, provided economic conditions do not deteriorate substantially.

The debt to cash flow ratio, cash flow to interest expense ratio and first lien debt to cash flow ratio were 1.69 to 1.0, 8.22 to 1.0 and 0.69 to 1.0, respectively, for the trailing twelve months ended September 30, 2020.

We remain in compliance with the covenants of the Credit Agreement as of September 30, 2020 and expect to remain in compliance with such covenants for the balance of the year, provided economic conditions do not deteriorate substantially.

Senior Notes.

11 unchanged sentences

In October 2019, we extended the term of the Securitization Facility to January 2021.

At June 30, 2020, we had a $38.9 million outstanding balance under the Securitization Facility.

At September 30, 2020, we had a $72.2 million outstanding balance under the Securitization Facility.

May 2019 Equipment Financing .

11 unchanged sentences

We also have an agreement with a bank to provide additional letters of credit in an amount of $5.0 million to maintain surety bonds to secure certain asset retirement obligations and our obligations for workers' compensation benefits.

At June 30, 2020, we had $5.0 million in letters of credit outstanding under this agreement.

At September 30, 2020, we had $5.0 million in letters of credit outstanding under this agreement.

Related-Party Transactions

18 unchanged sentences

of this Quarterly Report on Form 10-Q for a discussion of new accounting standards.

Other Information

Effective October 1, 2020, we renewed our annual property and casualty insurance program.

Our property insurance was procured from our wholly owned captive insurance company, Wildcat Insurance.

Wildcat Insurance charged certain of our subsidiaries for the premiums on this program and in return purchased reinsurance for the program in the standard market.

The maximum limit in the commercial property program is $100.0 million per occurrence, excluding a $1.5 million deductible for property damage, a 75 or 90 day waiting period for underground business interruption depending on the mining complex and an additional $10.0 million overall aggregate deductible.

We have elected to retain a 10% participating interest in our commercial property insurance program.

We can make no assurances that we will not experience significant insurance claims in the future that could have a material adverse effect on our business, financial condition, results of operations and ability to purchase property insurance in the future.

Also, exposures exist for which no insurance may be available and for which we have not reserved.

In addition, the insurance industry has been subject to efforts by environmental activists to restrict coverages available for fossil fuel companies.

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-Q

Item 2. Management’s Discussion and Analysis