What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-02-23 compared with 2020-02-20 · 431 added, 373 removed, 1214 unchanged (40% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Cash Flows

3 unchanged sentences

Long-Lived Asset Impairments

Goodwill Impairment

Property, Plant and Equipment

6 unchanged sentences

Employee Benefit Plans

Compensation Plans

Common Unit-Based Compensation Plans

Supplemental Cash Flow Information

6 unchanged sentences

Subsequent Events

Selected Quarterly Financial Data (Unaudited)

Supplemental Oil & Gas Reserve Information (Unaudited)

Schedule I – Condensed Financial Information of Registrant

Report of Independent Registered Public Accounting Firm

3 unchanged sentences

We have audited the accompanying consolidated balance sheets of Alliance Resource Partners, L.P.

and subsidiaries (the Partnership) as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, cash flows, and partners’ capital for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “financial statements”).

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

and subsidiaries (the Partnership) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), cash flows and partners’ capital for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership at December 31, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S.

generally accepted accounting principles.

12 unchanged sentences

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate 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 of the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Description of the Matter

Accounting for the AllDale and Wing Acquisitions

As more fully described in Note 3 to the consolidated financial statements, during 2019 the Partnership completed the acquisitions of AllDale Minerals, LP and AllDale Minerals II, LP (the “AllDale Acquisition”) (completed on January 3, 2019) and certain oil and gas mineral interests from Wing Resources LLC and Wing Resources II, LLC (the “Wing Acquisition”) (completed on August 2, 2019), for cash consideration of approximately $176.0 million and $145.0 million, respectively.

As disclosed in Note 3, both transactions were accounted for as business combinations.

Additionally, given the previous equity-method investments acquired in the AllDale Acquisition, the previously-held interests were revalued, resulting in a remeasurement gain of $177.0 million.

Auditing the Partnership’s accounting for these acquisitions was complex due to the significant estimation required by management to determine the fair value of the underlying assets, specifically the value of mineral interests in proved and unproved properties positioned in various strategic locations throughout the United States.

The Partnership determined the fair value of the underlying assets for the AllDale Acquisition using an income approach, primarily comprised of discounted cash flow models.

The Partnership determined the fair value of the underlying assets for the Wing Acquisition partially using an income approach and partially using a market approach.

The significant assumptions used in the income approach included estimated proved and unproved reserves as estimated by petroleum engineering specialists, and related reserve risk adjustment factors, discount rates, and forward commodity price information.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Partnership’s controls over its accounting for the acquisitions process.

For example, we tested controls over management’s review of the valuation models, including the identification of significant assumptions used to develop the estimate.

Our audit procedures included, among others, evaluating the significant assumptions used and testing the completeness and accuracy of the discounted cash flow models and underlying financial data used in the calculation of the fair values.

For the proved and unproved reserves assumption, we considered the professional qualifications and objectivity of the petroleum engineering specialists.

We also involved our valuation specialists to assist in our evaluation of certain significant assumptions used to determine fair value, including reserve risk adjustment factors, discount rates, and forward-looking commodity prices.

Additionally, we searched for and evaluated information that corroborates and or contradicts the Company’s assumptions and performed an independent corroborative calculation of discount rates.

(1) relate 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 consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of workers’ compensation and pneumoconiosis benefits

Description of the Matter

Valuation of workers’ compensation and black lung liabilities

As more fully described at Note 20 to the consolidated financial statements, the Partnership provides income replacement and medical treatment for work-related traumatic injury claims, as required by applicable laws.

1 unchanged sentence

Certain of the Partnership’s mine operating entities are liable under state statutes and the Federal Coal Mine Health and Safety Act of 1969, as amended, to pay benefits for black lung disease (or pneumoconiosis) to eligible employees and former employees and their dependents.

At December 31, 2019, the Partnership’s aggregate workers’ compensation and black lung liabilities were $151 million.

Auditing management’s estimate of the workers’ compensation and black lung liability was complex due to the use of a blend of actuarial projection methods and numerous assumptions including claim development patterns, costs, and mortality in the liability calculations.

At December 31, 2020, the Partnership’s aggregate workers’ compensation and pneumoconiosis benefits were $163 million.

Auditing management’s estimate of the workers’ compensation and pneumoconiosis benefits was complex due to the use of a blend of actuarial projection methods and numerous assumptions including claim development patterns, costs, and mortality in the liability calculations.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Partnership’s controls over management’s workers’ compensation and black lung liability process.

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Partnership’s controls over management’s workers’ compensation and pneumoconiosis benefits process.

For example, we tested controls over management’s review of the liability calculations and the appropriateness of the significant assumptions used, including the completeness and accuracy of the underlying data.

To test the workers’ compensation and black lung liability, our audit procedures included, among others, evaluating the methodology used, the significant actuarial assumptions described above and the underlying data used by the Partnership.

To test the workers’ compensation and pneumoconiosis benefits, our audit procedures included, among others, evaluating the methodology used, the significant actuarial assumptions described above and the underlying data used by the Partnership.

We involved our actuarial specialists to assist in evaluating management’s methodology and for testing the claim development patterns, costs and mortality assumptions.

2 unchanged sentences

To evaluate the use of mortality tables, we assessed whether the information used by management is consistent with publicly-available information.

We also tested the completeness and accuracy of the underlying data used by management, including the claims data provided to management’s actuarial specialists.

We also tested the completeness and accuracy of the underlying data used by management.

Long-lived asset recoverability analyses

Description of the Matter

As more fully described in Note 4 to the consolidated financial statements, in 2020, due to the uncertainty related to energy demand, the Partnership performed recoverability tests on its coal mining operations.

Based on the Partnership’s recoverability analyses, it is projected to recover all asset costs, excluding current year impairments which are discussed further in Note 4.

Auditing the Partnership’s coal asset recoverability analyses involved subjectivity, as management’s estimates to determine future cash flows were based on assumptions about future market and economic conditions.

Significant assumptions used in the Partnership’s future cash flows included estimates of future sales volumes, sales prices, operating margins and capital expenditures.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Partnership’s controls over its recoverability test process.

For example, we tested controls over management’s review of the significant assumptions underlying the future cash flows and of the completeness and accuracy of the data used in performance of the analysis.

To test the Partnership’s asset recoverability analyses, our audit procedures included, among others, evaluating the appropriateness of the methodology used to develop the cash flow models, as well as testing the significant assumptions used and the completeness and accuracy of the underlying data.

We evaluated management’s assumptions by comparing key inputs to current industry, market and economic trends, as well as customer contract terms and historical financial relationships.

We also performed sensitivity analyses and a retrospective comparison of forecasted cash flows to actual historical data.

/s/ Ernst & Young LLP

24 unchanged sentences

Equity method investments

Equity securities

Operating lease right-of-use assets

35 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018

12 unchanged sentences

Settlement gain

Asset impairment

Asset impairments

Goodwill impairment

Total operating expenses

INCOME FROM OPERATIONS

INCOME (LOSS) FROM OPERATIONS

Interest expense (net of interest capitalized of $ 1,325 , $ 1,211 and $ 1,306 , respectively)

3 unchanged sentences

Acquisition gain

Debt extinguishment loss

Other income (expense)

INCOME BEFORE INCOME TAXES

INCOME (LOSS) BEFORE INCOME TAXES

INCOME TAX EXPENSE (BENEFIT)

NET INCOME (LOSS)

NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

NET INCOME ATTRIBUTABLE TO ARLP

NET INCOME (LOSS) ATTRIBUTABLE TO ARLP

GENERAL PARTNER

5 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018

1 unchanged sentence

Year Ended December 31,

NET INCOME (LOSS)

OTHER COMPREHENSIVE INCOME (LOSS):

9 unchanged sentences

OTHER COMPREHENSIVE INCOME (LOSS)

COMPREHENSIVE INCOME

COMPREHENSIVE INCOME (LOSS)

Comprehensive income attributable to noncontrolling interest

COMPREHENSIVE INCOME ATTRIBUTABLE TO ARLP

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ARLP

(1) Amortization of prior service cost and actuarial gain or loss is included in the computation of net periodic benefit cost (see Notes 16 and 20 for additional details).

7 unchanged sentences

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

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

8 unchanged sentences

Asset impairment

Goodwill impairment

Acquisition gain, net

1 unchanged sentence

Valuation allowance of deferred tax assets

Debt extinguishment loss

Changes in operating assets and liabilities:

14 unchanged sentences

Capital expenditures

Change in accounts payable and accrued liabilities

Decrease in accounts payable and accrued liabilities

Proceeds from sale of property, plant and equipment

Contributions to equity method investments

Purchase of equity security

Distributions received from investments in excess of cumulative earnings

7 unchanged sentences

Payments on equipment financings

Payment on term loan

Borrowings under revolving credit facilities

Payments under revolving credit facilities

Borrowing under long-term debt

Payment on long-term debt

Payments on finance lease obligations

Payment of debt issuance costs

Payment for debt extinguishment

Payments for purchases of units under unit repurchase program

Contributions to consolidated company from affiliate noncontrolling interest

Net settlement of withholding taxes on issuance of units in deferred compensation plans

Payments for taxes related to net settlement of issuance of units in deferred compensation plans

Cash settlement of grants under deferred compensation plan

Cash contributions by General Partner

12 unchanged sentences

(In thousands, except unit data)

Limited Partner

Limited Partners'

10 unchanged sentences

Settlement of deferred compensation plans

Issuance of units to MGP in Exchange Transaction

Issuance of units to SGP in Exchange Transaction

Exchange Transaction fees

Common unit-based compensation

Distributions on deferred common unit-based compensation

General Partners contributions

Contributions to consolidated company from noncontrolling interest

Distributions from consolidated company to noncontrolling interest

Distributions to Partners

Balance at December 31, 2017

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive income

Settlement of deferred compensation plans

Issuance of units to Owners of SGP in Simplification Transactions

21 unchanged sentences

Balance at December 31, 2019

Comprehensive income (loss):

Net income (loss)

Actuarially determined long-term liability adjustments

Total comprehensive loss

Settlement of deferred compensation plans

Common unit-based compensation

Distributions on deferred common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Distributions to Partners

Balance at December 31, 2020

See notes to consolidated financial statements.

13 unchanged sentences

● References to "MGP"

mean Alliance Resource Management GP, LLC, ARLP's sole general partner and, prior to the Exchange Transaction discussed below, it was also referred to as the managing general partner to distinguish MGP from SGP.

As a result of the Exchange Transaction, SGP no longer holds any general partner interests.

mean Alliance Resource Management GP, LLC, ARLP's general partner.

● References to "Mr.

mean Joseph W.

Craft III, the Chairman, President and Chief Executive Officer of MGP.

● References to "SGP"

mean Alliance Resource GP, LLC, ARLP's special general partner prior to the Exchange Transaction discussed below.

SGP is indirectly wholly owned by Joseph W.

Craft III, the Chairman, President and Chief Executive Officer ("CEO") of MGP, and Kathleen S.

mean Alliance Resource GP, LLC.

SGP is indirectly wholly owned by Mr.

Craft and Kathleen S.

Craft, who are collectively referred to in such capacity as the "Owners of SGP."

The Owners of SGP held approximately 34.48 % of the outstanding AHGP common units prior to the Simplification Transactions discussed below.

SGP was dissolved on December 30, 2020 and is in the process of winding up its affairs.

● References to "Intermediate Partnership"

2 unchanged sentences

mean Alliance Coal, LLC, the holding company for the coal mining operations of Alliance Resource Operating Partners, L.P.

● References to "Alliance Minerals"

mean Alliance Minerals, LLC, the holding company for the oil and gas minerals interests of Alliance Resource Partners, L.P.

● References to "AHGP"

2 unchanged sentences

ARLP was formed in May 1999 and completed its initial public offering on August 19, 1999 when it acquired substantially all of the coal production and marketing assets of Alliance Resource Holdings, Inc., a Delaware corporation ("ARH"), and its subsidiaries.

We are managed by our sole general partner, MGP, a Delaware limited liability company which holds a non-economic general partner interest in ARLP.

We are managed by our general partner, MGP, a Delaware limited liability company which holds a non-economic general partner interest in ARLP.

Prior to the Simplification Transactions, MGP was a wholly owned indirect subsidiary of AHGP.

1 unchanged sentence

Craft, was the general partner of AHGP prior to the Simplification Transactions and became the direct owner of MGP as a result of the transactions.

See discussions under Partnership Simplification regarding changes in ownership of ARLP and MGP as a result of the Exchange Transaction in 2017 and Simplification Transactions in 2018.

See discussions under Partnership Simplification regarding changes in ownership of ARLP and MGP as a result of the Simplification Transactions in 2018.

Partnership Simplification

On July 28, 2017, the conflicts committee ("Conflicts Committee") of the board of directors ("Board of Directors") of MGP and AGP's board of directors approved a transaction to simplify our partnership structure.

Pursuant to that transaction, which closed on the same date, MGP contributed to ARLP all of its incentive distribution rights ("IDRs") and its 0.99 % managing general partner interest in ARLP in exchange for 56,100,000 ARLP common units and a non-economic general partner interest in ARLP.

In conjunction with this transaction and on the same economic basis as MGP, SGP also contributed to ARLP its 0.01 % general partner interests in both ARLP and the Intermediate Partnership in exchange for 28,141 ARLP common units (collectively the "Exchange Transaction").

On February 22, 2018, the Board of Directors and the board of directors of AGP approved a simplification agreement (the "Simplification Agreement"), pursuant to which, among other things, through a series of transactions (the "Simplification Transactions"):

On February 22, 2018, the board of directors ("Board of Directors") of MGP and the board of directors of AGP approved a simplification agreement (the "Simplification Agreement"), pursuant to which, among other things, through a series of transactions (the "Simplification Transactions"):

AHGP would become a wholly owned subsidiary of ARLP,

1 unchanged sentence

in exchange for a number of ARLP common units calculated pursuant to the Simplification Agreement, MGP's 1.0001 % general partner interest in our Intermediate Partnership and MGP's 0.001 % managing member interest in our subsidiary, Alliance Coal, would be contributed to us, and

MGP would remain ARLP's sole general partner and would be a wholly owned subsidiary of AGP, and thus no control, management, or governance changes with respect to our business would occur.

MGP would remain ARLP's general partner and would be a wholly owned subsidiary of AGP, and thus no control, management, or governance changes with respect to our business would occur.

The Simplification Agreement and the transactions contemplated thereby were approved by the written consent of approximately 68 % of the holders of AHGP common units outstanding as of April 25, 2018, the record date for the consent solicitation.

17 unchanged sentences

All of our intercompany transactions and accounts have been eliminated.

As a result of the AllDale Acquisition, we now control the underlying oil & gas mineral interests held by AllDale I & II.

This control over the oil & gas mineral interests held by AllDale I & II reflects a strategic change in how we manage

our business and how resources are allocated by our chief operating decision maker.

Due to this strategic change, we realigned our reportable segments in 2019 to include our oil & gas mineral interests within a new Minerals reportable segment.

In August 2019, we added the Wing Acquisition to the Minerals reportable segment.

As part of our realignment, we have also included the operations of our Mt.

Vernon Transfer Terminal, LLC ("Mt.

Vernon") and Mid-America Carbonates, LLC ("MAC") subsidiaries in the Illinois Basin reportable segment rather than Other and Corporate to better reflect our Illinois Basin related activities.

Prior periods have been recast to include our oil & gas mineral interests in the Minerals segment, and Mt.

Vernon and MAC in the Illinois Basin segment.

See Note 23 – Segment Information for further discussion of our reportable segments.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

For the periods presented prior to the Simplification Transactions, MGP's interests in both Alliance Coal and the Intermediate Partnership are reported as part of the general partner's interest in the ARLP Partnership's consolidated financial statements.

For the periods presented prior to the Exchange Transaction, MGP's managing general partner interest and IDRs in ARLP and the SGP's special general partner interests in ARLP and the Intermediate Partnership are also reported as part of the general partners' interest in the ARLP Partnership's consolidated financial statements.

All intercompany transactions and accounts have been eliminated.

See Note 10 – Partners' Capital for more information regarding MGP's previously held IDR's in ARLP.

See Note 1 – Organization and Presentation for more information regarding the Simplification Transactions and Exchange Transaction.

See Note 1 – Organization and Presentation for more information regarding the Simplification Transactions.

Variable Interest Entity ("VIE") —VIEs are primarily entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders, as a group, lack one or more of the following characteristics:

19 unchanged sentences

Fair Value Measurements —We apply fair value measurements to certain assets and liabilities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction

between market participants at the measurement date.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.

Fair value is based upon assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and risks inherent in valuation techniques and inputs to valuations.

14 unchanged sentences

Cash and Cash Equivalents —Cash and cash equivalents include cash on hand and on deposit, including highly liquid investments with maturities of three months or less.

Cash Management — The cash flows from operating activities section of our consolidated statements of cash flows reflects an adjustment for $ 14.0 million representing book overdrafts at December 31, 2017.

Cash Management —The cash flows from operating activities section of our consolidated statements of cash flows reflects immaterial adjustments representing book overdrafts.

We did not have material book overdrafts at December 31, 2020, 2019 and 2018.

7 unchanged sentences

A reporting unit is an operating segment or a component that is one level below an operating segment.

During 2020, we recognized an impairment charge of $ 132.0 million consisting of the total carrying amount of goodwill allocated to our Hamilton reporting unit.

See Note 5 – Goodwill Impairment for more information.

There were no impairments of goodwill during 2019 or 2018.

3 unchanged sentences

Exploration expenditures are charged to operating expense as incurred, including costs related to drilling and study costs incurred to convert or upgrade mineral resources to reserves.

Land, machinery and equipment under capital lease agreements are capitalized and amortized over the useful lives of the assets given that in each case, ownership transfers at the end of the lease term.

Preparation plants, processing facilities and mineral rights, assuming

current production estimates, are depreciated or depleted using the units-of-production method over a range from 1 to 28 years .

Land, machinery and equipment under finance lease agreements are capitalized and amortized over the useful lives of the assets given that in each case, ownership transfers at the end of the lease term.

Preparation plants, processing facilities and mineral rights, assuming current production estimates, are depreciated or depleted using the units-of-production method over a range from 1 to 22 years .

Mining equipment and other plant and equipment assets are depreciated principally using the straight-line method over the estimated useful lives of the assets, ranging from 1 to 22 years , limited by the remaining estimated life of each mine.

8 unchanged sentences

Coal extracted during the development phase is incidental to the mine's production capacity and is not considered to shift the mine into the production phase.

Leases —We lease buildings and equipment under operating lease agreements that provide for the payment of minimum rentals.

We also have noncancelable lease agreements with third parties for land and equipment under finance

lease obligations.

Some of our arrangements within these agreements have both lease and non-lease components, which are generally accounted for separately.

We have elected a practical expedient to account for lease and non-lease components as a single lease component for leases of buildings and office equipment.

Our leases have approximate lease terms of one year to 20 years , some of which include automatic renewals up to ten years which are likely to be exercised, and some of which include options to terminate the lease within one year .

We also hold numerous mineral reserve leases with both related parties as well as third parties, none of which are accounted for as an operating lease or as a finance lease.

We review each agreement to determine if an arrangement within the agreement contains a lease at the inception of an arrangement.

Once an arrangement is determined to contain either an operating or finance lease with a term greater than 12 months, we recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term based on the present value of lease payments over the lease term.

The lease term includes all noncancelable periods defined in the lease as well as periods covered by options to extend the lease that we are reasonably certain to exercise.

As an implicit borrowing rate cannot be determined under most of our leases, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Expenses related to leases determined to be operating leases will be recognized on a straight-line basis over the lease term including any reasonably assured renewal periods, while those determined to be finance leases will be recognized following a front-loaded expense profile in which interest and amortization are presented separately in the income statement.

The determination of whether a lease is accounted for as a finance lease or an operating lease requires management to make estimates primarily about the fair value of the asset and its estimated economic useful life.

Long-Lived Asset Impairment —We review the carrying value of long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount may not be recoverable based upon estimated undiscounted future cash flows.

18 unchanged sentences

Any amount of loss to be recognized and the amount of a valuation allowance needed to provide for impairment of those properties is determined by amortizing those properties in the aggregate on the basis of historical experience and other relevant information, such as the relative proportion of such properties on which proved reserves have been found in the past.

The carrying value of unproved properties, including unleased mineral rights, are determined based on management's

assessment of fair value using factors similar to those previously noted for proved properties, as well as geographic and geologic data.

The carrying value of unproved properties, including unleased mineral rights, are determined based on management's assessment of fair value using factors similar to those previously noted for proved properties, as well as geographic and geologic data.

Upon the sale of a complete depletable group, the book value thereof, less proceeds or salvage value, are charged to income.

24 unchanged sentences

Investments accounted for under the equity method are initially recorded at cost, and the difference between the basis of our investment and the underlying equity in the net assets of the joint venture at the investment date, if any, is amortized over the lives of the related assets that gave rise to the difference.

As of December 31, 2019, we held an equity method investment in AllDale III through our subsidiary, Alliance Minerals, LLC ("Alliance Minerals").

As of December 31, 2020 and 2019, we held an equity method investment in AllDale III through our subsidiary, Alliance Minerals.

Prior to the AllDale Acquisition, our equity method investments also included AllDale I & II, both held through Cavalier Minerals.

42 unchanged sentences

See Note 20 – Accrued Workers' Compensation and Pneumoconiosis Benefits for more information on Workers' Compensation and Pneumoconiosis Benefits.

Coal Revenue Recognition — Revenues from coal supply contracts with customers are recognized at the point in time when control of the coal passes to the customer.

Coal Revenue Recognition —Revenues from coal supply contracts with customers, which primarily relate to sales of thermal coal, are recognized at the point in time when control of the coal passes to the customer.

We have determined that each ton of coal represents a separate and distinct performance obligation.

Our coal supply contracts and other revenue contracts vary in length from short-term to long-term contracts and do not typically have significant financing components.

Our coal supply contracts and other revenue contracts vary in length from short-term to long-term sales contracts and do not typically have significant financing components.

Transportation revenues represent the fulfillment costs incurred for the services provided to customers through third-party carriers and for which we are directly reimbursed.

13 unchanged sentences

Oil & gas are priced on the delivery date based upon prevailing prices published by purchasers with certain adjustments related to oil quality and physical location.

The royalty we receive is tied to a market index, with certain adjustments based on, among other factors, whether a well connects to a gathering or transmission line, quality and heat content of the product, and prevailing supply and demand conditions.

The royalty we receive is tied to a market index, with certain adjustments based on,

among other factors, whether a well connects to a gathering or transmission line, quality and heat content of the product, and prevailing supply and demand conditions.

We also periodically earn revenue from lease bonuses.

We generate lease bonus revenue by leasing our mineral interests to exploration and production companies.

We recognize lease bonus revenue when we execute a lease of our mineral interests to exploration and production companies.

A lease agreement represents our contract with an operator, which is generally an exploration and production company.

The contract will a) generally transfer the rights to any oil or gas

discovered, b) grant us a right to a specified royalty interest from the operator, and c) require the operator to commence drilling and complete operations within a specified time period.

The contract will a) generally transfer the rights to any oil or gas discovered, b) grant us a right to a specified royalty interest from the operator, and c) require the operator to commence drilling and complete operations within a specified time period.

Control of the minerals transfers to the operator when the lease agreement is executed.

At the time we execute the lease agreement, we expect to receive the lease bonus payment within a reasonable time, though in no case more than one year, such that we do not adjust the expected amount of consideration for the effects of any significant financing component.

As a non-operator, we have limited visibility into the timing of when new wells start producing, in addition, production statements may not be received for 30 to 90 days or more after the date production is delivered.

As a non-operator, we have limited visibility into the timing of when new wells start producing.

In addition, production statements may not be received for 30 to 90 days or more after the date production is delivered.

As a result, we are required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product.

The expected sales volumes and prices from our properties are estimated and recorded within the Trade receivables line item in our consolidated balance sheets.

Generally, the difference between our estimates and the actual amounts received for oil & gas royalty revenue are recorded in the month that payment is received from the third-party purchaser unless new production information is received prior to the payment allowing us to update the estimate recorded.

Generally, the difference between our estimates and the actual amounts received for oil & gas royalty revenue are immaterial and recorded in the month that payment is received from the third-party purchaser unless new production information is received prior to the payment allowing us to update the estimate recorded.

Common Unit-Based Compensation —We have the Long-Term Incentive Plan ("LTIP") for certain employees and officers of MGP and its affiliates who perform services for us.

The LTIP awards are grants of non-vested "phantom"

or notional units, also referred to as "restricted units", which upon satisfaction of time and performance based vesting requirements, entitle the LTIP participant to receive ARLP common units.

Annual grant levels and vesting provisions for designated participants are recommended by the Chairman, President and CEO of MGP, subject to review and approval of the compensation committee of our general partner ("Compensation Committee").

Vesting of all grants outstanding is subject to the satisfaction of certain financial tests, which management currently believes is probable.

Grants issued to LTIP participants are expected to cliff vest on January 1st of the third year following issuance of the grants.

We account for forfeitures of non-vested LTIP grants as they occur.

We expect to settle the non-vested LTIP grants by delivery of ARLP common units, except for the portion of the grants that will satisfy tax withholding obligations of the LTIP participants.

As provided under the distribution equivalent rights provisions of the LTIP and the terms of the LTIP awards, all non-vested grants include contingent rights to receive quarterly distributions in cash or, at the discretion of the Compensation Committee, phantom units in lieu of cash credited to a bookkeeping account with value equal to the cash distributions we make to unitholders during the vesting period.

As part of the LTIP, unit awards of non-vested "phantom"

or notional units, also referred to as "restricted units", may be granted which upon satisfaction of time and performance based vesting requirements, entitle the LTIP participant to receive ARLP common units.

Annual grant levels and vesting provisions of restricted units for designated participants are recommended by Mr.

Craft, subject to review and approval of the compensation committee of our general partner ("Compensation Committee").

Vesting of all restricted units outstanding is subject to the satisfaction of certain financial tests.

If it is not probable that the financial tests for a particular grant of restricted units will be met, any previously expensed amounts for that grant are reversed and no future expense will be recognized for that grant.

Assuming the financial tests are expected to be met, grants of restricted units issued to LTIP participants are generally expected to cliff vest on January 1st of the third year following issuance of the grants.

We expect to settle restricted unit grants by delivery of ARLP common units, except for the portion of the grants that will satisfy employee tax withholding obligations of LTIP participants.

We account for forfeitures of non-vested LTIP restricted unit grants as they occur.

As provided under the distribution equivalent rights ("DERs") provisions of the LTIP and the terms of the LTIP restricted unit awards, all non-vested restricted units include contingent rights to receive quarterly distributions in cash or, at the discretion of the Compensation Committee, phantom units in lieu of cash credited to a bookkeeping account with value equal to the cash distributions we make to unitholders during the vesting period.

If it is not probable the financial tests for a particular grant of restricted units will be met, any previously paid DER amounts for that grant are reversed from Partners’ Capital and recorded as compensation expense and any future DERs, for that grant, if any, will be recognized as compensation expense when paid.

We utilize the Supplemental Executive Retirement Plan ("SERP") to provide deferred compensation benefits for certain officers and key employees.

13 unchanged sentences

Although publicly traded partnerships as a general rule will be taxed as corporations, we qualify for an exemption because at least 90 % of our income consists of qualifying income, as defined in Section 7704(c) of the Internal Revenue Code.

Net income for financial statement purposes may differ significantly from taxable income reportable to unitholders as a result of differences between the tax basis and financial reporting basis of assets and liabilities

and the taxable income allocation requirements under our partnership agreement.

Individual unitholders have different investment bases depending upon the timing and price of acquisition of their partnership units.

3 unchanged sentences

These income taxes are not material to our financial position or results of operations.

New Accounting Standards Issued and Adopted — In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) ("ASU 2016-02").

ASU 2016-02 requires lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet and disclose key information about lease arrangements.

Leases are now classified as either finance or operating, with the resulting classification affecting the pattern of expense recognition in the income statement.

We elected to use the modified retrospective transition method which allows a cumulative effect adjustment on the balance sheet upon adoption.

The adoption of the standard resulted in the recognition of approximately $ 25.0 million in additional net lease assets and respective lease liabilities as of January 1, 2019 .

As part of our transition there are a number of practical expedients available in the new standard.

We elected a package of practical expedients that, among other things, allows us to not reassess the lease classification of expired or existing leases.

In addition to the package of practical expedients, we also elected to use a practical expedient allowing us to use hindsight in determining the lease term for existing leases.

New Accounting Standards Issued and Not Yet Adopted — In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326):

New Accounting Standards Issued and Adopted —In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirement for Fair Value Measurement ("ASU 2018-13").

ASU 2018-13 amended the fair value measurement guidance by removing and modifying certain disclosure requirements, while also adding new disclosure requirements including the requirement to disclose the range and weighted average of significant unobservable inputs used to develop certain Level 3 measurements.

These changes are to be applied prospectively for only the most recent interim or annual period presented in the year of adoption.

We adopted ASU 2018-13 on January 1, 2020.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13").

1 unchanged sentence

model that generally will result in earlier recognition of allowances for losses.

ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

After an analysis of our historical credit losses and development of an allowance for expected credit losses on our financial assets, we have determined the adoption of the standard will not have a material impact on our consolidated financial statements.

The new standard provides for the use of a modified retrospective transition method that allows for a cumulative-effect adjustment to retained earnings upon adoption.

The new standard also requires disclosure of significantly more information related to these items.

We adopted ASU 2016-13 on January 1, 2020.

Because of the credit profile of our customers, the fact that we do not have a history of credit losses on our financial instruments and the absences of any material expected losses, the adoption of ASU 2016-13 did not have any material impact on our consolidated financial statements.

ACQUISITION S

12 unchanged sentences

The re-measurement resulted in a gain of $ 177.0 million which is recorded in the Acquisition gain line item in our consolidated statements of income.

During the third quarter of 2019, we finalized our purchase price accounting, which resulted in adjustments to our mineral interests in proved and unproved properties due to additional information received from operators of the mineral interests about reserve and production quantities and projections that represented facts and circumstances that existed as of the AllDale Acquisition Date.

In addition, we reduced our receivables by $ 1.3 million as a result of information received from operators concerning royalty payments owed to us from production that occurred prior to the AllDale Acquisition Date.

The following table summarizes the preliminary and final fair value allocation of assets acquired and liabilities assumed as of the AllDale Acquisition Date:

The following table summarizes the final fair value allocation of assets acquired and liabilities assumed as of the AllDale Acquisition Date:

(in thousands)

12 unchanged sentences

AllDale I & II's carrying value of the receivables and accounts payable represent their fair value given their short-term nature.

The amounts of revenue and earnings, exclusive of the acquisition gain, of AllDale I & II included in our consolidated statements of income since the AllDale Acquisition Date are as follows:

The amounts of revenue and earnings, exclusive of the acquisition gain, of AllDale I & II included in our consolidated statements of income from the AllDale Acquisition Date through December 31, 2019 are as follows:

(in thousands)

2 unchanged sentences

These amounts have been calculated after applying our accounting policies.

Pro forma information is not necessary for the year ended December 31, 2019 as the AllDale Acquisition occurred at the beginning of the year.

Additionally, our results have been adjusted to remove the effect of our past equity method investments in AllDale I & II.

Pro forma information is not necessary for the year ended December 31, 2019 as the AllDale Acquisition occurred at the beginning of 2019.

Additionally, our pro forma results have been adjusted to remove the effect of our past equity method investments in AllDale I & II.

(in thousands)

3 unchanged sentences

The Wing Acquisition enhances our ownership position in the Permian Basin, expands our exposure to industry leading operators and furthers our business strategy to grow our Minerals segment.

Concurrent with the Wing Acquisition, JC Resources LP, an entity owned by Joseph W.

Craft III, the Chairman, President and CEO of MGP ("Mr.

Craft"), acquired from Wing, in a separate transaction, mineral interests that we elected not to acquire.

Concurrent with the Wing Acquisition, JC Resources LP, an entity owned by Mr.

Craft, acquired from Wing, in a separate transaction, mineral interests that we elected not to acquire.

Because the mineral interests acquired in the Wing Acquisition include royalty interests in both producing properties and unproved properties, we have determined that the acquisition should be accounted for as a business combination and the underlying assets should be recorded at fair value as of the Wing Acquisition Date on our consolidated balance sheet.

We consider our fair value measurements to be preliminary as we continue to obtain additional information from operators regarding reserve and production quantities and projections for the mineral interests we acquired.

During the fourth quarter of 2019, we recorded adjustments to our mineral interests in proved and unproved properties due to additional information received from operators that represented facts and circumstances that existed as of the Wing Acquisition Date.

The following table summarizes the preliminary fair value allocation of assets acquired as of the Wing Acquisition Date incorporating measurement period adjustments made to the allocation:

During the year ended December 31, 2020, we recorded adjustments to our mineral interests in proved and unproved properties after receiving additional information regarding proved and unproved reserve quantities, production and projections as of the Wing Acquisition Date.

In addition, we increased our receivables by $ 0.3 million as a result of information received from operators concerning royalty payments owed to us from production that occurred prior to the Wing Acquisition Date.

The following table summarizes our final fair value allocation of assets acquired as of the Wing Acquisition Date incorporating measurement period adjustments made to the allocation:

As Previously

4 unchanged sentences

The fair value of the mineral interests was determined using a weighting of both income and market approaches.

Our income approach primarily comprised of a discounted cash flow model.

The assumptions used in the discounted cash flow model included estimated production, projected cash flows, forward oil & gas prices and a risk-adjusted discount rate.

Our income approach primarily comprised a discounted cash flow model.

The assumptions used in the discounted cash flow model included estimated production, projected cash flows, forward oil & gas prices and a weighted average cost of capital.

Our market approach consisted of the observation of recent acquisitions in the Permian Basin to determine a market price for similar mineral interests.

1 unchanged sentence

therefore, the fair value measurements represent Level 3 fair value measurements.

The carrying value of the receivables represent their fair value given their short-term nature.

The amounts of revenue and earnings from the mineral interests acquired in the Wing Acquisition included in our consolidated statements of income since the Wing Acquisition Date are as follows:

The carrying value of the receivables represents the fair value given the short-term nature of the receivables.

The amounts of revenue and earnings from the mineral interests acquired in the Wing Acquisition included in our consolidated statements of income from the Wing Acquisition Date through December 31, 2019 are as follows:

(in thousands)

5 unchanged sentences

LONG-LIVED ASSET IMPAIRMENT S

We ceased coal production effective August 16, 2019 at our Dotiki mine to focus on shifting production to our other lower-cost mines in our Illinois Basin segment.

Accordingly, we adjusted the carrying value of Dotiki's assets from $ 35.9 million to its fair value of $ 25.8 million and accrued scheduled payments of $ 5.1 million to WKY CoalPlay for leased reserves from which we may not receive future economic benefit.

The resulting impairment charge totaled $ 15.2 million.

During the year ended December 31, 2020, we recorded $ 25.0 million of non-cash asset impairment charges in our Illinois Basin segment due to sealing our idled Gibson North mine, resulting in its permanent closure, and a decrease in the fair value of certain mining equipment at our idled operations and greenfield coal reserves as a result of weakened coal market conditions.

During the year ended December 31, 2019, we recorded an asset impairment charge of $ 15.2 million in our Illinois Basin segment due to the cessation of coal production at our Dotiki mine, effective August 16, 2019, in an effort to focus on maximizing production at our lower-cost mines in the segment.

We adjusted the carrying value of Dotiki's assets from $ 35.9 million to its fair value of $ 25.8 million and accrued $ 5.1 million with respect to scheduled payments to WKY CoalPlay for leased coal reserves from which we may not receive future economic benefit.

See Note 12 – Variable Interest Entities for more information about WKY CoalPlay.

Previously, in the fourth quarter of 2018, we reduced Dotiki’s economic mine life which resulted in a $ 34.3 million impairment charge, and the related adjustment of Dotiki’s asset carrying value from $ 85.3 million to its fair value of $ 51.0 million.

Also in the fourth quarter of 2018, a decrease in the fair value of an option entitling us to lease certain coal reserves within the Illinois Basin Segment resulted in an impairment charge of $ 6.2 million.

The fair value of the impaired assets was determined using a combination of market and income approaches, both of which represent Level 3 fair value measurements under the fair value hierarchy.

During the year ended December 31, 2018, due to the reduction of Dotiki’s economic mine life, we recorded a $ 34.3 million impairment charge when we adjusted the carrying value of Dotiki's assets from $ 85.3 million to its fair value of $ 51.0 million.

We also had a decrease in the fair value of an option entitling us to lease certain coal reserves, which resulted in an impairment charge of $ 6.2 million.

Both of these impairment charges were incurred in our Illinois Basin segment.

The fair values of the impaired assets were determined using a combination of market and income approaches, both of which represent Level 3 fair value measurements under the fair value hierarchy.

The fair value analysis used assumptions of marketability of certain assets as well as discounted cash flows over the remaining life of the assets.

With the uncertainty related to energy demand as a result of weak electricity demand and an oversupply and lack of storage for oil and natural gas during the quarter ended March 31, 2020 (the "First Quarter"), both due in part to the COVID-19 pandemic and other market and production factors impacting both our coal mining operations and our mineral interests activities, we performed recoverability tests during the First Quarter using undiscounted cash flows based on our estimate of sales volume and prices, operating margins and capital expenditures from information available to us and

determined we would be able to recover the costs of our assets, excluding the impaired assets discussed above.

Amid cost reduction efforts, increased customer commitments for coal, a modest recovery in commodity futures prices and increased clarity into production levels by operators of our oil & gas mineral interests during the year, we determined impairment of our long-lived assets subsequent to the First Quarter was not necessary.

The cash flow estimates used in our impairment assessments, by their very nature, are dependent on conditions that could materially change in future periods based on new information.

If in future periods changes to these estimates were to materially reduce our expected cash flows, additional impairments could be necessary.

See Note 2 – Summary of Significant Accounting Policies – Long-Lived Asset Impairment for more information on our accounting policy for asset impairments.

GOODWILL IMPAIRMENT

At December 31, 2019, our consolidated balance sheet included $ 136.4 million of goodwill, of which $ 132.0 million was associated with the reporting unit representing our Hamilton County Coal, LLC ("Hamilton") mine, which is included in our Illinois Basin segment.

The goodwill associated with our Hamilton mine was recorded in conjunction with our acquisition of the Hamilton mine on July 31, 2015.

During the First Quarter, we assessed certain events and changes in circumstances, including a) adverse industry and market developments, including the impact of the COVID-19 pandemic, b) our response to these developments, including temporarily ceasing production at several mines, including Hamilton and c) our actual performance during the First Quarter.

After consideration of these events and changes in circumstances, we performed an interim test of the goodwill associated with the Hamilton reporting unit comparing Hamilton's carrying amount to its fair value.

We estimated the fair value of the Hamilton reporting unit using an income approach utilizing a discounted cash flow model.

The assumptions used in the discounted cash flow model included estimated production, forward coal prices, operating expenses, capital expenditures and a weighted average cost of capital.

Our forecasts of future cash flows considered market conditions at the time of the assessment and our estimate of the mine's performance in future years based on the information available to us.

Key assumptions used in our valuation are not observable in active markets;

therefore, the fair value measurements represent Level 3 fair value measurements.

The fair value of the Hamilton reporting unit was determined to be below its carrying amount (including goodwill) by more than the recorded balance of goodwill associated with the reporting unit.

Accordingly, we recognized an impairment charge of $ 132.0 million consisting of the total carrying amount of goodwill allocated to the Hamilton reporting unit.

This impairment charge reduced our consolidated goodwill balance to $ 4.4 million.

During the First Quarter and as part of our annual impairment evaluation on November 30, 2020, we also performed tests on ARLP's remaining goodwill balances not associated with Hamilton and concluded no impairment was necessary for our other reporting units.

Inventories consist of the following :

2 unchanged sentences

Total inventories, net

For the year ended December 31, 2020, we recorded lower of cost or net realizable value adjustments of $ 3.2 million to our coal inventories as a result of lower coal sale prices and higher cost per ton due to the impact of lower production on our fixed costs per ton in addition to the impact of challenging market conditions on our production levels.

The lower of cost or net realizable value adjustments reflect the impacts of the challenging market conditions and were primarily attributable to the Mettiki and Hamilton mining complexes.

See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for inventories.

17 unchanged sentences

We believe that the carrying value of these coal reserves will be recovered.

At December 31, 2019, our oil & gas mineral interests noted in the table above includes the carrying value of our unproved oil & gas mineral interests totaling $ 376.2 million.

At December 31, 2020 and 2019, our oil & gas mineral interests noted in the table above includes the carrying value of our unproved oil & gas mineral interests totaling $ 340.5 million and $ 376.2 million, respectively.

As discussed in Note 2 – Summary of Significant Accounting Policies, we generally do not record depletion expense for our unproved oil & gas mineral interests;

however, we do review for impairment as needed throughout the year.

During 2019, we incurred $ 13.2 million in mine development costs, primarily related to the development of our Excel #5 mine at our MC Mining complex.

During 2018, we reduced mine development costs by $ 9.9 million primarily related to the impairment of our Dotiki mine.

Regarding the mine development costs for MC Mining's Excel #5 mine, we had no incidental production during this development phase and thus no related capitalized development costs associated with incidental production.

During 2020 and 2019, we incurred $ 13.1 million and $ 13.2 million, respectively, in mine development costs, primarily related to the development of our Excel Mine No.

5 at our MC Mining complex.

All past capitalized mine development costs are associated with other mines that shifted to the production phase in past years and we are amortizing these costs accordingly.

11 unchanged sentences

November 2019 equipment financing

June 2020 equipment financing

Less current maturities

1 unchanged sentence

Credit Facility.

On January 27, 2017, our Intermediate Partnership entered into a Fourth Amended and Restated Credit Agreement (the "Credit Agreement") with various financial institutions.

The Credit Agreement provides for a $ 494.75 million revolving credit facility, including a sublimit of $ 125 million for the issuance of letters of credit and a sublimit of $ 15.0 million for swingline borrowings (the "Revolving Credit Facility"), with a termination date of May 23, 2021.

On March 9, 2020, our Intermediate Partnership entered into a Fifth Amended and Restated Credit Agreement (the "Credit Agreement") with various financial institutions.

The Credit Agreement provides for a $ 537.75 million revolving credit facility, reducing to $ 459.5 million on May 23, 2021, including a sublimit of $ 125 million for the issuance of letters of credit and a sublimit of $ 15.0 million for swingline borrowings (the "Revolving Credit Facility"), with a termination date of March 9, 2024.

The Credit Facility replaced the $ 494.75 million revolving credit facility extended to the Intermediate Partnership under its Fourth Amended and Restated Credit Agreement, dated as of January 27, 2017, by various banks and other lenders that would have expired on May 23, 2021.

Concurrently with the entry into the Credit Agreement, we reorganized the entities holding our oil & gas interests such that Alliance Royalty, LLC became a direct wholly owned subsidiary of Alliance Minerals.

We incurred debt issuance costs in 2020 of $ 6.3 million in connection with the Credit Agreement.

These debt issuance costs are deferred and amortized as a component of interest expense over the term of the Revolving Credit Facility.

The Credit Agreement is guaranteed by all of the material direct and indirect subsidiaries of our Intermediate Partnership, and is secured by substantially all of the Intermediate Partnership's assets.

Borrowings under the Revolving Credit Facility bear interest, at the option of the Intermediate Partnership, 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 Credit Agreement is guaranteed by certain of our Intermediate Partnership's material direct and indirect subsidiaries (the "Restricted Subsidiaries") and is secured by substantially all of the assets of the Restricted Subsidiaries.

The Credit Agreement is also guaranteed by Alliance Minerals but the oil and gas minerals assets of Alliance Minerals and its direct and indirect subsidiaries (collectively with Alliance Minerals, the "Unrestricted Subsidiaries") are not collateral under the Credit Agreement.

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 3.01 % as of December 31, 2020.

At December 31, 2020, we had $ 21.8 million of letters of credit outstanding with $ 428.5 million available for borrowing under the Revolving Credit Facility.

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

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

We utilize the Revolving Credit Facility, as appropriate, for working capital requirements, capital expenditures and investments, scheduled debt payments and distribution payments.

The Credit Agreement contains various restrictions affecting our Intermediate Partnership and its subsidiaries including, among other things, restrictions on incurrence of additional indebtedness and liens, sale of assets, investments, mergers and consolidations and transactions with affiliates, in each case subject to various exceptions, and the payment of cash distributions by our Intermediate Partnership if such payment would result in a certain fixed charge coverage ratio (as defined in the Credit Agreement).

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 and (b) a cash flow to interest expense ratio of not less than 3.0 to 1.0, in each case, during the four most recently ended fiscal quarters.

The debt to cash flow ratio and cash flow to interest expense ratio were 1.34 to 1.0 and 12.6 to 1.0, respectively, for the trailing twelve months ended December 31, 2019.

We remain in compliance with the covenants of the Credit Agreement as of December 31, 2019.

The Credit Agreement contains various restrictions affecting the Intermediate Partnership and its Restricted Subsidiaries including, among other things, restrictions on incurrence of additional indebtedness and liens, sale of assets, investments, mergers and consolidations and transactions with affiliates, including transactions with Unrestricted Subsidiaries.

In each case, these restrictions are subject to various exceptions.

In addition, the payment of cash distributions is restricted if such payment would result in a fixed charge coverage ratio of less than 1.0 to 1.0 (as defined in the Credit Agreement) for the four most recently ended fiscal quarters.

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 1.53 to 1.0, 8.45 to 1.0 and 0.52 to 1.0, respectively, for the trailing twelve months ended December 31, 2020.

We remained in compliance with the covenants of the Credit Agreement as of December 31, 2020 and anticipate remaining in compliance with the covenants.

Net restricted assets, as defined by the Securities and Exchange Commission, refers to the amount of our consolidated subsidiaries’ net assets for which the ability to transfer funds to ARLP in the form of cash dividends, loans, advances, or transfers is restricted.

As a result of the restrictions contained in the Credit Agreement and our current compliance ratios, the amount of our net restricted assets at December 31, 2020, was $ 240.8 million.

Senior Notes.

On April 24, 2017, the Intermediate Partnership and Alliance Resource Finance Corporation ("Alliance Finance") (as co-issuer), a wholly owned subsidiary of the Intermediate Partnership, issued an aggregate principal amount of $ 400.0 million of senior unsecured notes due 2025 ("Senior Notes") in a private placement to qualified institutional buyers.

On April 24, 2017, the Intermediate Partnership and Alliance Resource Finance Corporation (as co-issuer), a wholly owned subsidiary of the Intermediate Partnership ("Alliance Finance"), issued an aggregate principal amount of $ 400.0 million of senior unsecured notes due 2025 ("Senior Notes") in a private placement to qualified institutional buyers.

The Senior Notes have a term of eight years , maturing on May 1, 2025 (the "Term") and accrue interest at an annual rate of 7.5 %.

1 unchanged sentence

The indenture governing the Senior Notes contains customary terms, events of default and covenants relating to, among other things, the incurrence of debt, the payment of distributions or similar restricted payments, undertaking transactions with affiliates and limitations on asset sales.

At any time prior to May 1, 2020, the issuers of the Senior Notes may redeem up to 35 % of the aggregate

principal amount of the Senior Notes with the net cash proceeds of one or more equity offerings at a redemption price equal to 107.5 % of the principal amount redeemed, plus accrued and unpaid interest, if any, to the redemption date.

The issuers of the Senior Notes may also redeem all or a part of the notes at any time on or after May 1, 2020, at redemption prices set forth in the indenture governing the Senior Notes.

At any time prior to May 1, 2020, the issuers of the Senior Notes may redeem the Senior Notes at a redemption price equal to the principal amount of the Senior Notes plus a "make-whole"

premium, plus accrued and unpaid interest, if any, to the redemption date.

The net proceeds from issuance of the Senior Notes and cash on hand were used to repay previous debt obligations (including a make-whole payment of $ 8.1 million).

We incurred discount and debt issuance costs of $ 7.3 million in connection with issuance of the Senior Notes.

These costs are deferred and are currently being amortized as a component of interest expense over the Term.

The issuers of the Senior Notes may redeem all or a part of the notes at any time at redemption prices set forth in the indenture governing the Senior Notes.

Accounts Receivable Securitization .

On December 5, 2014, certain direct and indirect wholly owned subsidiaries of our Intermediate Partnership entered into a $ 100.0 million accounts receivable securitization facility ("Securitization Facility").

Under the Securitization Facility, certain subsidiaries sell trade receivables on an ongoing basis to our Intermediate Partnership, which then sells the trade receivables to AROP Funding, LLC ("AROP Funding"), a wholly owned bankruptcy-remote special purpose subsidiary of our Intermediate Partnership, which in turn borrows on a revolving basis up to $ 100.0 million secured by the trade receivables.

Under the Securitization Facility, certain subsidiaries sell certain trade receivables on an ongoing basis to our Intermediate Partnership, which then sells the trade receivables to AROP Funding, LLC ("AROP Funding"), a wholly owned bankruptcy-remote special purpose subsidiary of our Intermediate Partnership, which in turn borrows on a revolving basis up to $ 100.0 million secured by the trade receivables.

After the sale, Alliance Coal, as servicer of the assets, collects the receivables on behalf of AROP Funding.

The Securitization Facility bears interest based on a Eurodollar Rate.

In January 2019, we extended the term of the Securitization Facility to January 2020.

In October 2019, we extended the term from January 2020 to January 2021.

At December 31, 2019, we had $ 73.8 million outstanding under the Securitization Facility.

The agreement governing the Securitization Facility contains customary terms and conditions, including limitations with regards to certain customer credit ratings.

In January 2021, we extended the term of the Securitization Facility to January 2022 and reduced the borrowing availability under the facility to $ 60.0 million.

The Securitization Facility was previously scheduled to mature in January 2021.

At December 31, 2020, we had a $ 55.9 million outstanding balance under the Securitization Facility.

May 2019 Equipment Financing.

4 unchanged sentences

On November 6, 2019, the Intermediate Partnership entered into an equipment financing arrangement accounted for as debt, wherein the Intermediate Partnership received $ 53.1 million in exchange for conveying its interest in certain equipment owned indirectly by the Intermediate Partnership and entering into a master lease agreement for that equipment (the "November 2019 Equipment Financing").

The November 2019 Equipment Financing contains an implicit interest rate of 4.75 % and provides for a four year term with forty-seven monthly payments of $ 1.0 million and a balloon payment of $ 11.6 million upon maturity on November 6, 2023.

At maturity, the equipment will revert back to the Intermediate Partnership.

The November 2019 Equipment Financing contains customary terms and events of default.

The November 2019 Equipment Financing contains customary terms and events of default and an implicit interest rate of 4.75 %, providing for a four year term with forty-seven monthly payments of $ 1.0 million and a balloon payment of $ 11.6 million upon maturity on November 6, 2023.

Upon maturity, the equipment will revert back to the Intermediate Partnership.

June 2020 Equipment Financing.

On June 5, 2020, the Intermediate Partnership entered into an equipment financing arrangement accounted for as debt, wherein the Intermediate Partnership received $ 14.7 million in exchange for conveying its interest in certain equipment owned indirectly by the Intermediate Partnership and entering into a master lease agreement for that equipment (the "June 2020 Equipment Financing").

The June 2020 Equipment Financing contains customary terms and events of default and provides for forty-eight month ly payments with an implicit interest rate of 6.1 %, maturing on June 5, 2024.

Upon maturity, the equipment will revert back to the Intermediate Partnership.

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.

50 unchanged sentences

Distributions

We distribute 100 % of our available cash that is not used for unit repurchases within 45 days after the end of each quarter to unitholders of record.

Our available cash that is not used for unit repurchases may, at the discretion of our general partner, be distributed within 45 days after the end of each quarter to unitholders of record.

Available cash is generally defined in the partnership agreement as all cash and cash equivalents on hand at the end of each quarter less reserves established by MGP in its reasonable discretion for future cash requirements.

These reserves are retained to provide for the conduct of our business, the payment of debt principal and interest and to provide funds for future distributions.

Prior to the Exchange Transaction in July 2017 (See Note 1 – Organization and Presentation – Partnership Simplification), as quarterly distributions of available cash exceeded certain target distribution levels, MGP received incentive distributions based on specified increasing percentages of the available cash that exceeded the target distribution levels.

MGP was entitled to receive 15 % of the amount we distributed in excess of $ 0.1375 per unit, 25 % of the amount we distributed in excess of $ 0.15625 per unit, and 50 % of the amount we distributed in excess of $ 0.1875 per unit.

During the year ended December 31, 2017, we paid to MGP incentive distributions of $ 37.6 million.

Beginning with distributions paid in the third quarter of 2017, we no longer make distributions with respect to the IDRs.

The following table summarizes the quarterly per unit distribution paid during the respective quarter:

These reserves are retained to provide for the conduct of our business,

the payment of debt principal and interest and to provide funds for future distributions.

The following table summarizes the quarterly per unit distribution paid during each quarter of 2018 through 2020:

Year Ended December 31,

3 unchanged sentences

Fourth Quarter

On January 27, 2020, we declared a quarterly distribution of $ 0.40 per unit, totaling approximately $ 50.8 million, on all our common units outstanding , which was paid on February 14, 2020, to all unitholders of record on February 7, 2020.

Exchange Transaction

On July 28, 2017, as part of the Exchange Transaction discussed in Note 1 – Organization and Presentation – Partnership Simplification, MGP contributed to ARLP all of its IDRs and its 0.99 % managing general partner interest in ARLP in exchange for 56,100,000 ARLP common units and a non-economic general partner interest in ARLP.

The Exchange Transaction constituted an exchange of equity interests between entities under common control and not a transfer of a business.

Therefore, the exchange resulted in a reclassification, as of the date of the Exchange Transaction, of a $ 306.7 million deficit capital balance from the General Partners' interest line item to the Limited Partners - Common Unitholders line item in our consolidated balance sheets.

The reclassification amounts represented the carrying value of the exchanged interests, which included the SGP's deficit balance associated with its prior special general partner interests in ARLP and the Intermediate Partnership, partially offset, by MGP's capital balance associated with its prior managing general partner interest in ARLP.

The SGP deficit balance primarily resulted from contribution and assumption agreements associated with the formation of the ARLP Partnership in 1999 .

In response to the disruptions to the economy and the uncertainty surrounding the COVID-19 pandemic, the Board of Directors of ARLP's general partner began suspending cash distributions to unitholders with the First Quarter and has continued through the quarter ended December 31, 2020.

Simplification Transactions

6 unchanged sentences

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

As of December 31, 2019, we had repurchased and retired 5,460,639 units at an average unit price of $ 17.12 for an aggregate purchase price of $ 93.5 million.

Total units repurchased includes the repurchase and retirement of 35 units representing fractional units as part of the Simplification Transactions which are not part of the unit repurchase program.

No unit repurchases were made during the year ended December 31, 2020.

Since inception of the unit repurchase program, we have repurchased and retired 5,460,639 units at an average unit price of $ 17.12 for an aggregate purchase price of $ 93.5 million.

Affiliated Entity Contributions

An affiliated entity controlled by Mr.

Craft made capital contributions of $ 2.1 million and $ 1.0 million during the years ended December 31, 2018 and 2017, respectively, for the purpose of funding certain general and administrative expenses.

Craft made a capital contribution of $ 2.1 million during the year ended December 31, 2018 for the purpose of funding certain general and administrative expenses.

On June 29, 2018, the members of this affiliated entity contributed 467,018 ARLP common units for similar purposes.

5 unchanged sentences

On November 10, 2014, our subsidiary, Alliance Minerals, and Bluegrass Minerals entered into a limited liability company agreement (the "Cavalier Agreement") to create Cavalier Minerals, which was formed to indirectly acquire oil & gas mineral interests through its ownership in AllDale I & II.

Alliance Minerals owns a 96 % membership interest in Cavalier Minerals, and Bluegrass Minerals owns a 4 % membership interest in Cavalier Minerals and a profits interest which entitles it to receive distributions equal to 25 % of all distributions (including in liquidation) after all members have recovered their investment.

Alliance Minerals owns a 96 % member interest in Cavalier Minerals, and Bluegrass Minerals owns a 4 % member interest in Cavalier Minerals and a profits interest which entitles it to receive distributions equal to 25 % of all distributions (including in liquidation) after all members have recovered their

Distributions with respect to Bluegrass Minerals' profits interest will be offset by all distributions received by Bluegrass Minerals from the former general partners of AllDale I & II.

To date, there has been no profits interest distributions.

To date, there has been no profits interest distribution.

Bluegrass Minerals was Cavalier Minerals' managing member prior to the AllDale Acquisition (see Note 3 – Acquisitions).

17 unchanged sentences

See Note 13 – Investments for more information.

On November 17, 2014, SGP Land, LLC ("SGP Land"), a wholly owned subsidiary of SGP, and two limited liability companies ("Craft Companies") owned by irrevocable trusts established by the Chairman, President and CEO of MGP and his children entered into a limited liability company agreement to form WKY CoalPlay, LLC ("WKY CoalPlay").

CoalPlay was formed, in part, to purchase and lease coal reserves.

WKY CoalPlay is managed by an individual who is an officer and director of Alliance Resource Holdings II, Inc.

("ARH II") and trustee of the irrevocable trusts owning one of the Craft Companies.

On November 17, 2014, SGP Land, LLC ("SGP Land"), a wholly owned subsidiary of SGP, and two limited liability companies ("Craft Companies") owned by irrevocable trusts established by Mr.

Craft and his children entered into a limited liability company agreement to form WKY CoalPlay, LLC ("WKY CoalPlay").

WKY CoalPlay was formed, in part, to purchase and lease coal reserves.

WKY CoalPlay is managed by one of the Craft Companies.

In December 2014 and February 2015, we entered into various coal reserve leases with WKY CoalPlay.

See Note 21 – Related-Party Transactions for further information on our lease terms with WKY CoalPlay.

We have concluded that WKY CoalPlay is a VIE because of our ability to exercise options to acquire reserves under lease with WKY CoalPlay (Note 20 – Related-Party Transactions), which is not within the control of the equity holders and, if it occurs, could potentially limit the expected residual return to the owners of WKY CoalPlay.

We do not have any economic or governance rights related to WKY CoalPlay and our options that provide us with a variable interest in WKY CoalPlay's reserve assets do not give us any rights that constitute power to direct the primary activities that most significantly impact WKY CoalPlay's economic performance.

SGP Land has the sole ability to replace the manager of WKY CoalPlay at its discretion and therefore has power to direct the activities of WKY CoalPlay.

Consequently, we concluded that SGP Land is the primary beneficiary of WKY CoalPlay.

We concluded that WKY CoalPlay was a VIE because of our ability to exercise options to acquire reserves under lease with WKY CoalPlay (Note 21 – Related-Party Transactions), which was not within the control of the equity holders and, if it had occurred, could potentially limit the expected residual return to the owners of WKY CoalPlay.

We hold no economic or governance rights related to WKY CoalPlay and our options did not give us any rights to impact WKY CoalPlay's economic performance.

We therefore concluded that we were not the primary beneficiary of WKY CoalPlay.

These options expired in December 2020 and February 2021.

Upon the expiration of these options, WKY CoalPlay ceased to be a VIE.

See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for variable interest entities.

6 unchanged sentences

Contributions

Equity method investment income (loss)

Equity method investment income

Distributions received

Ending balance

As discussed in Note 4 – Long-Lived Asset Impairments, there was uncertainty related to energy demand in the First Quarter as a result of weak electricity demand and an oversupply and lack of storage for oil and natural gas, both due in part to the COVID-19 pandemic and other market and production factors, which could have impacted our investment in AllDale III.

As a result, as part of our First Quarter impairment assessment, we compared the fair value of our investment to its carrying value and concluded that the fair value exceeded the carrying value and no impairment in our investment was necessary.

In our subsequent impairment assessments, amid a modest recovery in commodity futures prices and increased clarity into production levels by operators during the year, we again compared the fair value of our investment to its carrying value and concluded no impairment was necessary.

To calculate the fair value of the investment we used an income approach utilizing a discounted cash flow model based on our estimate of both production, prices and expenses from information available to us.

Key assumptions used in our valuation are not observable in active markets;

therefore, the fair value measurements represent Level 3 fair value measurements.

The cash flow estimates used in our assessments, by their very nature, are dependent on conditions that could materially change in future periods based on new information.

If in future periods changes to these estimates were to materially reduce our expected cash flows, an impairment of our investment could be necessary.

On July 19, 2017, Alliance Minerals purchased $ 100 million of Series A-1 Preferred Interests from Kodiak, a privately-held company providing large-scale, high-utilization gas compression assets to customers operating primarily in the Permian Basin.

14 unchanged sentences

Year Ended December 31, 2019

Oil & gas royalties

Transportation revenues

14 unchanged sentences

Subsequent to the Simplification Transactions, net income attributable to ARLP is only allocated to limited partners and participating securities under deferred compensation plans.

Prior to the Simplification Transactions, net income attributable to ARLP was allocated to the general partners, limited partners and participating securities under deferred compensation plans in accordance with their respective partnership ownership percentages, after giving effect to any special income or expense allocations.

Prior to the Exchange Transaction, net income attributable to ARLP was also allocated to our general partner, MGP, for incentive distributions.

Please see Note 1 – Organization and Presentation for more information on the Simplification Transactions and the Exchange Transaction.

Net losses attributable to ARLP are allocated to limited partners but not to participating securities.

Prior to the Simplification Transactions, net income attributable to ARLP was allocated to our general partner, limited partners and participating securities under deferred compensation plans in accordance with their respective partnership ownership percentages.

As a result of the Simplification Transactions, MGP no longer holds economic interests in the Intermediate Partnership or Alliance Coal.

We currently do not make distributions or allocate income and losses to MGP in our calculation of EPU.

Please see Note 1 – Organization and Presentation for more information on the Simplification Transactions.

Our participating securities under deferred compensation plans include rights to nonforfeitable distributions or distribution equivalents.

Our participating securities are outstanding awards under our LTIP and phantom units in notional accounts under our SERP and the Directors' Deferred Compensation Plan.

In connection with the Exchange Transaction, ARLP amended its partnership agreement to reflect, among other things, cancellation of the IDRs and the economic general partner interest in ARLP and issuance of a non-economic general partner interest to MGP.

The IDR provisions of our partnership agreement prior to the Exchange Transaction are outlined in Note 10 – Partners' Capital.

Beginning with distributions declared for the three months ended June 30, 2017, we no longer make distributions with respect to the IDRs.

As a result of the Simplification Transactions, MGP no longer holds economic interests in the Intermediate Partnership or Alliance Coal.

We no longer make distributions or allocate income and losses to MGP in our calculation of EPU.

The following is a reconciliation of net income attributable to ARLP used for calculating basic and diluted earnings per unit and the weighted-average units used in computing EPU.

The following is a reconciliation of net income (loss) attributable to ARLP used for calculating basic and diluted earnings per unit and the weighted-average units used in computing EPU.

Year Ended December 31,

(in thousands, except per unit data)

Net income attributable to ARLP

MGP's priority distributions (1)

General partners' equity ownership (1)

General partner's special allocation of certain general and administrative expenses (2)

Limited partners' interest in net income attributable to ARLP

Net income (loss) attributable to ARLP

General partner's equity ownership (1)

Limited partners' interest in net income (loss) attributable to ARLP

Distributions to participating securities

Undistributed earnings attributable to participating securities

Net income attributable to ARLP available to limited partners

Net income (loss) attributable to ARLP available to limited partners

Weighted-average limited partner units outstanding – basic and diluted

Earnings per limited partner unit - basic and diluted (2)

(1) Amounts for 2019 and 2018 reflect the impact of the Simplification Transactions which ended net income allocations and quarterly cash distributions to MGP after May 31, 2018.

Amounts for 2017 reflect the impact of the Exchange Transaction ending distributions that would have been paid for the IDRs and a 0.99 % general partner interest in ARLP, both of which were held by MGP prior to the 2017 Exchange Transaction.

For the time period between the Exchange Transaction and the Simplification Transactions, MGP maintained a 1.0001 % general partner interest in the Intermediate Partnership and a 0.001 % managing member interest in Alliance Coal and thus received quarterly distributions and income and loss allocations during this time period.

The SGP had a nominal general partner interest prior to the Exchange Transaction.

(2) MGP made a capital contribution of $ 1.0 million during 2017 to Alliance Coal for the purpose of funding certain general and administrative expenses.

As provided under our partnership agreement, we made a special allocation to MGP of certain general and administrative expenses equal to its contribution.

Net income attributable to ARLP allocated to the limited partners was not burdened by this expense.

See Note 10 – Partners' Capital for more information regarding this contribution.

(3) Diluted EPU gives effect to all potentially dilutive common units outstanding during the period using the treasury stock method.

Diluted EPU excludes all potentially dilutive units calculated under the treasury stock method if their effect is anti-dilutive.

For the years ended December 31, 2019, 2018 and 2017, the combined total of LTIP, SERP and Directors' Deferred Compensation Plan units of 1,284,013 , 1,658,908 and 1,466,404 , respectively, were considered anti-dilutive under the treasury stock method.

On a pro forma basis, as if the Exchange Transaction and the Simplification Transactions had taken place on January 1, 2017, the reconciliation of net income attributable to ARLP to basic and diluted earnings per unit and the weighted-average units used in computing EPU are as follows:

Year Ended December 31,

(in thousands, except per unit data)

Net income attributable to ARLP

Pro forma adjustments (1)

Pro forma net income of ARLP

Distributions to participating securities

Undistributed earnings attributable to participating securities

Net income attributable to ARLP available to limited partners (2)

Weighted-average limited partner units outstanding – basic and diluted (2)

Pro forma earnings per limited partner unit - basic and diluted (3)

(1) Pro forma adjustments to net income attributable to ARLP primarily represent the elimination of administrative service revenues from AHGP and the inclusion of general and administrative expenses incurred at AHGP.

(2) Net income attributable to ARLP available to limited partners reflects net income allocations made for all periods presented based on the ownership structure subsequent to the Simplification Transactions.

Accordingly, no general partner income allocations are presented above.

Pro forma amounts above also reflect weighted average units outstanding as if the issuance of 56,128,141 ARLP common units in the Exchange Transaction and 1,322,388 ARLP common units in the Simplification Transactions applied to all periods presented.

(1) Amounts presented for periods subsequent to the first quarter of 2018 reflect the impact of the Simplification Transactions, which ended net income allocations and quarterly cash distributions to MGP after May 31, 2018.

Prior to the Simplification Transactions, MGP maintained a 1.0001 % general partner interest in the Intermediate Partnership and a 0.001 % managing member interest in Alliance Coal and thus received quarterly distributions and income and loss allocations during this time period.

(2) Diluted EPU gives effect to all potentially dilutive common units outstanding during the period using the treasury stock method.

17 unchanged sentences

Interest cost

Actuarial loss (gain)

Actuarial loss

Benefits paid

17 unchanged sentences

Expected return on plan assets

The actuarial loss component of the change in benefit obligation in 2019 was primarily attributable to a decrease in the discount rate compared to December 31, 2018, offset in part by updated mortality tables.

The actuarial gain component of the change in benefit obligation in 2018 was primarily attributable to an increase in the discount rate compared to December 31, 2017 and updated mortality tables, offset in part by decreases in expected retirements and other demographic changes.

The actuarial loss components of the change in benefit obligations in 2020 and 2019 were primarily attributable to decreases in the discount rate compared to the prior year-end, offset in part by updated mortality tables.

The expected long-term rate of return used to determine our pension liability is based on a 1.5 % active management premium in addition to an asset allocation assumption of:

3 unchanged sentences

Fixed income securities

The actual return on plan assets was 19.2 % and a loss of 6.7 % for the years ended December 31, 2019 and 2018, respectively.

The actual return on plan assets was 14.2 % and 19.2 % for the years ended December 31, 2020 and 2019, respectively.

Year Ended December 31,

6 unchanged sentences

Net periodic benefit cost (1)

(1) Nonservice components of net periodic benefit cost are included in the Other income (expense) line item within our consolidated statements of income (see Note 2 – Summary of Significant Accounting Policies ).

(1) Nonservice components of net periodic benefit cost are included in the Other income (expense) line item within our consolidated statements of income.

Year Ended December 31,

16 unchanged sentences

The target allocation includes investments in equity and fixed income commingled investment funds.

Total account performance is reviewed at least annually, using a dynamic benchmark approach to track investment performance.

account performance is reviewed at least annually, using a dynamic benchmark approach to track investment performance.

General asset allocation guidelines at December 31, 2020 are as follows:

10 unchanged sentences

Equities - Global

Equities - United States large-cap

Equities - United States small-cap

Equities - United States

Equities - United States futures

Equities - International developed markets

Equities - International developed markets futures

Equities - International emerging markets

Equities - International emerging markets futures

Fixed income - Investment grade

Fixed income - High yield

Fixed income - Emerging markets

Fixed income - Futures

(a) Cash and cash equivalents represents a Level 1 fair value measurement.

4 unchanged sentences

See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for pension benefits.

COMPENSATION PLANS

COMMON UNIT-BASED COMPENSATION PLANS

Long-Term Incentive Plan

We maintain the LTIP for certain employees and officers of MGP and its affiliates who perform services for us.

The LTIP awards are grants of non-vested "phantom"

or notional units, also referred to as "restricted units", which upon

satisfaction of time and performance-based vesting requirements, entitle the LTIP participant to receive ARLP common units.

Annual grant levels and vesting provisions for designated participants are recommended by the Chairman, President and CEO of MGP, subject to review and approval of the Compensation Committee.

Vesting of all grants outstanding is subject to the satisfaction of certain financial tests, which management currently believes is probable.

Grants issued to LTIP participants are expected to cliff vest on January 1st of the third year following issuance of the grants.

We account for forfeitures of non-vested LTIP grants as they occur.

We expect to settle the non-vested LTIP grants by delivery of ARLP common units, except for the portion of the grants that will satisfy employee tax withholding obligations of LTIP participants.

As provided under the distribution equivalent rights ("DERs") provisions of the LTIP and the terms of the LTIP awards, all non-vested grants include contingent rights to receive quarterly distributions in cash or, at the discretion of the Compensation Committee, phantom units in lieu of cash credited to a bookkeeping account with value equal to the cash distributions we make to unitholders during the vesting period.

A summary of non-vested LTIP grants is as follows:

As part of our LTIP, unit awards of non-vested "phantom"

or notional units, also referred to as "restricted units", may be granted which upon satisfaction of time and performance-based vesting requirements, entitle the LTIP participant to receive ARLP common units.

Annual grant levels and vesting provisions of restricted units for designated participants are

recommended by Mr.

Craft, subject to review and approval of the Compensation Committee.

Vesting of all restricted units outstanding is subject to the satisfaction of certain financial tests.

If it is not probable the financial tests for a particular grant of restricted units will be met, any previously expensed amounts for that grant are reversed and no future expense will be recognized for that grant.

Assuming the financial tests are met, grants of restricted units issued to LTIP participants are generally expected to cliff vest on January 1st of the third year following issuance of the grants.

We expect to settle restricted unit grants by delivery of ARLP common units, except for the portion of the grants that will satisfy employee tax withholding obligations of LTIP participants.

We account for forfeitures of non-vested LTIP restricted unit grants as they occur.

As provided under the DERs provisions of the LTIP and the terms of the LTIP restricted unit awards, all non-vested restricted units include contingent rights to receive quarterly distributions in cash or, at the discretion of the Compensation Committee, phantom units in lieu of cash credited to a bookkeeping account with value equal to the cash distributions we make to unitholders during the vesting period.

A summary of non-vested LTIP grants of restricted units is as follows:

Number of units

5 unchanged sentences

Non-vested grants at December 31, 2019

Grants canceled (4)

Non-vested grants at December 31, 2020

(1) During the years ended December 31, 2019, 2018 and 2017, we issued 596,650 , 191,858 and 222,011 , respectively, unrestricted common units to the LTIP participants.

The remaining vested units were settled in cash primarily to satisfy tax withholding obligations of the LTIP participants.

For the years ended December 31, 2019, 2018 and 2017, our LTIP expense was $ 10.4 million, $ 10.8 million and $ 11.0 million, respectively.

The total obligation associated with the LTIP as of December 31, 2019 and 2018 was $ 20.2 million and $ 20.8 million, respectively, and is included in the partners' capital Limited partners-common unitholders line item in our consolidated balance sheets.

As of December 31, 2019, there was $ 12.5 million in total unrecognized compensation expense related to the non-vested LTIP grants that are expected to vest.

(1) During the years ended December 31, 2019 and 2018, we issued 596,650 and 191,858 , respectively, unrestricted common units to LTIP participants.

The remaining vested units were settled in cash to satisfy tax withholding obligations of the LTIP participants.

(2) In December 2020, we modified the vesting requirements for certain restricted units that we granted in February 2020 which were determined to be improbable of vesting under the original vesting requirements (the "2020 Grants").

The new vesting requirements make it probable the modified restricted units will vest.

Also in December 2020, an additional 578,114 restricted units under these modified vesting requirements were granted.

The grant date fair value reflects the modification date fair value for those awards that were modified.

(3) In February 2020, we issued 279,622 unrestricted common units to LTIP participants as a result of satisfying the vesting requirements for 424,486 restricted units that were granted in 2017.

The remaining vested units were settled in cash to satisfy tax withholding obligations of the LTIP participants.

In December 2020, we accelerated the vesting requirements for 495,038 restricted units that were granted in 2018 (the "2018 Grants") and settled these restricted units in cash.

(4) In December 2020, 675,302 restricted units that were granted in 2019 (the "2019 Grants") were canceled since it was determined that the vesting requirements for these restricted units were not probable of being satisfied.

For the years ended December 31, 2020, 2019 and 2018, our LTIP expense for grants of restricted units was $ 8.1 million, $ 10.4 million and $ 10.8 million, respectively.

LTIP expense for grants of restricted units for the year ended December 31, 2020 includes the impact of the reversal of the 2019 Grants, the modification of the 2020 Grants and incremental compensation cost associated with the cash settlement of the 2018 Grants.

The cash settlement of the 2018

Grants was the first time we have settled restricted units in cash and we currently do not expect to do so again in the future.

The cash settlement of the 2018 Grants resulted in $ 5.4 million in incremental compensation cost.

The 2019 Grants were determined to be not probable of vesting therefore $ 4.8 million of cumulative previously recognized expense was reversed in 2020, offset in part by related DERs for the 2019 Grants previously recorded to equity and then expensed in 2020.

The 2020 Grants were determined to be improbable of vesting therefore the Compensation Committee modified the awards to change the vesting requirement, which made the grants probable of vesting, and granted additional restricted units under these modified vesting requirements as previously discussed.

As a result, the grant date fair value of the modified awards was changed to reflect the modification date fair value of the awards resulting in a net reduction in LTIP expense of $ 1.0 million for the year ended, December 31, 2020.

The total obligation associated with LTIP grants of restricted units as of December 31, 2020 and 2019 was $ 1.3 million and $ 20.2 million, respectively, and is included in the partners' capital Limited partners-common unitholders line item in our consolidated balance sheets.

As of December 31, 2020, there was $ 5.8 million in total unrecognized compensation expense related to the non-vested LTIP restricted unit grants that are expected to vest.

That expense is expected to be recognized over a weighted-average period of 2.0 years.

On January 22, 2020, the Compensation Committee determined that the vesting requirements for the 2017 grants of 424,486 restricted units (which was net of 50,824 forfeitures and previously settled units) had been satisfied as of January 1, 2020.

As a result of this vesting, on February 10, 2020, we issued 279,622 unrestricted common units to the LTIP participants.

The remaining units were settled in cash to satisfy tax withholding obligations of the LTIP participants.

On January 22, 2020, the Compensation Committee also authorized additional grants of 965,035 restricted units, of which 950,035 units were granted.

After consideration of the January 1, 2020 vesting and subsequent issuance of 279,622 common units, approximately 1.0 million units remain available under the LTIP for issuance in the future, assuming all grants issued in 2020, 2019 and 2018 and currently outstanding are settled with common units, without reduction for tax withholding, no future forfeitures occur and DERs continue being paid in cash versus additional phantom units.

Approximately 1.7 million units remain available under the LTIP for issuance in the future, assuming all grants currently issued and outstanding are settled with common units, without reduction for tax withholding, no future forfeitures occur and DERs are paid in cash versus additional phantom units.

Supplemental Executive Retirement Plan and Directors' Deferred Compensation Plan

28 unchanged sentences

Accounts payable for purchase of property, plant and equipment

Assets acquired by finance lease

Right-of-use assets acquired by operating lease

Market value of common units issued under deferred compensation plans before tax withholding requirements

Acquisition of businesses:

Fair value of assets assumed

Previously held equity-method investments (1)

Cash paid, net of cash acquired

Fair value of liabilities assumed

(1) Inclusive of gain of $ 177.0 million as discussed in Note 3 – Acquisitions.

ASSET RETIREMENT OBLIGATIONS

8 unchanged sentences

Ending balance

For the year ended December 31, 2020, the allocation of liability associated with acquisition, mine development and change in assumptions was a net decrease of $ 11.9 million.

This net decrease was attributable to lower cost assumptions and completion of certain reclamation obligations across all operations, permit modifications and extension of projected mine life estimates at certain mines, partially offset by acquisition of property with existing reclamation liabilities.

For the year ended December 31, 2019, the allocation of liability associated with acquisition, mine development and change in assumptions was immaterial.

For the year ended December 31, 2018, the allocation of liability associated with acquisition, mine development and change in assumptions was a net increase of $ 5.0 million.

This net increase was attributable to the expansion of refuse sites primarily at the Hamilton County Coal, LLC ("Hamilton") and Tunnel Ridge, LLC ("Tunnel Ridge") mines, partially offset by decreased cost estimates for water related treatment at the Mettiki mine and completion of certain reclamation obligations at the Hopkins County Coal mining complex.

The impact of discounting our estimated cash flows resulted in reducing the accrual for asset retirement obligations by $ 102.1 million and $ 102.9 million at December 31, 2020 and 2019, respectively.

5 unchanged sentences

current portion

Asset retirement obligations

Non-current asset retirement obligations

Federal and state laws require bonds to secure our obligations to reclaim lands used for mining and are typically renewable on a yearly basis.

11 unchanged sentences

Interest accretion

Valuation loss (gain)

Valuation loss

Ending balance

The discount rate used to calculate the estimated present value of future obligations for workers' compensation was 1.95 % and 2.81 % at December 31, 2020 and 2019, respectively.

The 2019 valuation loss was primarily attributable to a decrease in the discount rate used to calculate the estimated present value of future obligations as well as unfavorable changes in claims development.

The 2018 valuation gain was primarily attributable to an increase in the discount rate used to calculate the estimated present value of future obligations as well as favorable changes in claims development.

The valuation losses in both 2020 and 2019 were primarily attributable to a decrease in the discount rate used to calculate the estimated present value of future obligations as well as unfavorable changes in claims development in their respective years.

As of December 31, 2020 and 2019, we had $ 95.2 million and $ 90.2 million, respectively, in surety bonds and letters of credit outstanding to secure workers' compensation obligations.

22 unchanged sentences

Net actuarial loss

The actuarial loss component of the change in benefit obligations in 2020 was primarily attributable to a) a decrease in the discount rate used to calculate the estimated present value of the future obligations and b) an increase in the assumptions regarding future medical benefits and legal expenses.

These components were partially offset in part by favorable demographic changes in the at-risk population.

The actuarial loss component of the change in benefit obligations in 2019 was primarily attributable to a) a decrease in the discount rate used to calculate the estimated present value of the future obligations and b) an increase in Federal and State benefit levels.

These components were offset in part by favorable demographic changes in the at-risk population.

The actuarial gain component of the change in benefit obligations in 2018 was primarily attributable to a) an increase in the discount rate used to calculate the estimated present value of the future obligations, b) a decrease in the assumed future medical benefit and expense levels and c) demographic changes in the at-risk population.

Summarized below is information about the amounts recognized in the accompanying consolidated balance sheets for pneumoconiosis and workers' compensation benefits:

20 unchanged sentences

We have continuing related-party transactions with MGP and its affiliates.

The Board of Directors and its Conflicts Committee review our related-party transactions that involve a potential conflict of interest between our general partner or its affiliates and ARLP or its subsidiaries or any other partner of ARLP to determine that such transactions are fair and reasonable to ARLP.

The Board of Directors and its conflicts committee ("Conflicts Committee") review our related-party transactions that involve a potential conflict of interest between our general partner or its affiliates and ARLP or its subsidiaries or any other partner of ARLP to determine that such transactions are fair and reasonable to ARLP.

As a result of these reviews, the Board of Directors and the Conflicts Committee approved each of the transactions described below that had such potential conflict of interest as fair and reasonable to ARLP.

26 unchanged sentences

All annual minimum royalty payments for each agreement are recoupable from future earned royalties related to their respective agreements.

Each agreement grants Alliance Resource Properties an option to acquire the leased reserves at any time during a three-year period beginning in December 2017 for a purchase price that would provide WKY CoalPlay a 7.0 % internal rate of return on its investment in the reserves taking into account payments previously made under the leases (See Note 11 – Variable Interest Entities).

Each agreement granted Alliance Resource Properties an option to acquire the leased reserves at any time during a three-year period beginning in December 2017 for a purchase price that would provide WKY CoalPlay a 7.0 % internal rate of return on its investment in the reserves taking into account payments previously made under the leases.

These options expired in December 2020.

(See Note 12 – Variable Interest Entities).

In December 2014, WKY CoalPlay's subsidiary, Webster Coal Reserves, LLC entered into a coal lease agreement with Alliance Resource Properties.

The lease has an initial term of 7 years and provides for earned royalty payments of 4.0 % of the coal sales price and annual minimum payments of $ 2.6 million.

The agreement grants Alliance Resource Properties an option to acquire the leased reserves at any time during a three year period beginning in December 2017 for a purchase price that would provide WKY CoalPlay a 7.0 % internal rate of return on its investment in the reserves taking

into account payments previously made under the lease (See Note 11 – Variable Interest Entities).

In the third quarter of 2019 it was determined that the balance of advanced royalties and the remaining future advance royalties payable in 2020 and 2021 totaling $ 5.1 million, may not be recouped as a result of the reduction of the Dotiki’s economic mine life determined in 2018 and the subsequent ceasing of production in the third quarter of 2019.

We accrued the future advance payments and recognized the charge in Asset Impairment expense in the third quarter of 2019.

The agreement grants Alliance Resource Properties an option to acquire the leased reserves at any time during a three year period beginning in December 2017 for

a purchase price that would provide WKY CoalPlay a 7.0 % internal rate of return on its investment in the reserves taking into account payments previously made under the lease (See Note 12 – Variable Interest Entities).

In the third quarter of 2019 it was determined that the balance of advanced royalties, the advance royalty payment in 2020 and the remaining advanced royalty payment expected in 2021 totaling $ 2.6 million, may not be recouped as a result of the reduction of the Dotiki’s economic mine life determined in 2018 and the subsequent ceasing of production in the third quarter of 2019.

We accrued the expected future advance payments and recognized the charge in Asset Impairment expense in the third quarter of 2019.

See Note 4 – Long-Lived Asset Impairments for more information.

Cavalier Minerals – As discussed in Note 11 – Variable Interest Entities, through our subsidiaries, we hold a non-economic managing member interest and a 96 % non-managing member interest in Cavalier and, Bluegrass Minerals, a third party, holds a 4 % non-managing member interest and profits interest.

See Note 12 – Investments for information on payments made and distributions received by Cavalier.

Cavalier Minerals – As discussed in Note 12 – Variable Interest Entities, through our subsidiaries, we hold a non-economic managing member interest and a 96 % non-managing member interest in Cavalier Minerals and, Bluegrass Minerals, a third party, holds a 4 % non-managing member interest and a profits interest.

See Note 13 – Investments for information on payments made and distributions received by Cavalier Minerals.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

Contractual Commitments — In connection with planned capital projects, we have contractual commitments of approximately $ 21.0 million at December 31, 2020.

As of December 31, 2019, we had no commitments to purchase coal from external production sources in 2020.

As of December 31, 2020, we had no commitments to purchase coal from external production sources in 2021 and thereafter.

General Litigation — On March 9, 2018, we finalized an agreement with a customer and certain of its affiliates to settle breach of contract litigation we initiated in January 2015.

The agreement provided for a $ 93.0 million cash payment to us, execution of a new coal supply agreement with the customer, continued export transloading capacity for our Appalachian mines and the acquisition of certain coal reserves for $ 2.0 million from an affiliate of the customer.

The $ 93.0 million cash payment we received in March was the total compensation recorded in our consolidated statements of income for the agreement.

The $ 93.0 million cash payment we received was the total compensation recorded in our consolidated statements of income for the agreement.

We have paid or accrued in total, $ 13.0 million of legal fees and associated incentive compensation costs related to this settlement which resulted in a net gain of $ 80.0 million reflected in the Settlement gain line item in our consolidated statements of income.

9 unchanged sentences

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 set aside cash reserves.

In addition, environmental activists may try to hamper fossil fuel companies by other means including pressuring insurance and surety companies into restricting access to certain needed coverages.

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.

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

The international coal market has been a substantial part of our business with indirect sales to end-users in Europe, Africa, Asia, North America and South America.

Our sales into the international coal market are considered exports and

are made through brokered transactions.

Our sales into the international coal market are considered exports and are made through brokered transactions.

During the years ended December 31, 2020, 2019 and 2018, export tons represented approximately 3.3 %, 17.9 % and 27.8 % of tons sold, respectively.

8 unchanged sentences

Illinois Basin

Trade accounts receivable from these customers totaled approximately $ 26.3 million at December 31, 2019.

Trade accounts receivable from Customer A totaled approximately $ 12.8 million at December 31, 2018.

Illinois Basin

Illinois Basin/Appalachia

Trade accounts receivable from major customers totaled approximately $ 32.0 million and $ 26.3 million at December 31, 2020 and 2019, respectively.

Our bad debt experience has historically been insignificant.

Financial conditions of our customers could result in a material change to our bad debt expense in future periods.

The coal supply agreements with these customers expire in 2020 for Customer A and 2022 for Customer B.

The coal supply agreements with these customers expire in 2022 for Customer C and Customer D and 2020 for Customer A.

SEGMENT INFORMATION

4 unchanged sentences

Our two coal reportable segments correspond to major coal producing regions in the eastern United States with similar economic characteristics including coal quality, geology, coal marketing opportunities, mining and transportation methods and regulatory issues.

The two coal segments include seven mining complexes operating in Illinois, Indiana, Kentucky, Maryland and West Virginia and a coal loading terminal in Indiana on the Ohio River.

The two coal segments include seven mining complexes operating in Illinois, Indiana, Kentucky, Maryland, Pennsylvania and West Virginia and a coal loading terminal in Indiana on the Ohio River.

The Minerals reportable segment aggregates our oil & gas mineral interests which are located primarily in the Permian (Delaware and Midland), Anadarko (SCOOP/STACK) and Williston (Bakken) basins.

As discussed in Note 1 – Organization and Presentation, as a result of the AllDale Acquisition discussed in Note 3 – Acquisitions, we realigned our reportable segments in 2019 to include our oil & gas mineral interests within a new Minerals reportable segment and have recast prior periods to reflect that realignment.

The Illinois Basin reportable segment includes our operating mining complexes (a) Gibson County Coal, LLC's mining complex, which includes the Gibson North and Gibson South mines, (b) Warrior Coal, LLC's mining complex, (c) River View's mining complex and (d) the Hamilton mining complex.

The Illinois Basin reportable segment also includes our operating Mt.

Vernon coal loading terminal in Indiana on the Ohio River.

The Gibson North mine was idled in the fourth quarter of 2019 in response to market conditions.

The Illinois Basin reportable segment also includes MAC and other support services as well as non-operating mining complexes (a) Webster County Coal, LLC's Dotiki mining complex, which ceased production in August 2019, (b) White County Coal, LLC's Pattiki mining complex, (c) the Hopkins County Coal mining complex, and (d) Sebree Mining, LLC's mining complex.

The Appalachia reportable segment includes our operating mining complexes (a) the Mettiki mining complex, (b) the Tunnel Ridge mining complex and (c) the MC Mining mining complex.

The operations within our Minerals reportable segment primarily include receiving royalties and lease bonuses for our oil & gas mineral interests.

The Illinois Basin reportable segment includes currently operating mining complexes (a) Gibson County Coal, LLC's ("Gibson") mining complex, which includes the Gibson South mine, (b) the Warrior Coal, LLC ("Warrior") mining complex, (c) the River View Coal, LLC ("River View") mining complex and (d) the Hamilton mining complex.

The Illinois Basin reportable segment also includes our currently operating Mt.

Vernon Transfer Terminal, LLC ("Mt.

Vernon") coal loading terminal in Indiana on the Ohio River.

The Illinois Basin reportable segment also includes Mid-America Carbonates, LLC ("MAC") and other support services as well as non-operating mining complexes (a) Gibson North mine, which ceased production in the fourth quarter of 2019, (b) Webster County Coal, LLC's Dotiki mining complex, which ceased production in August 2019, (c) White County Coal, LLC's Pattiki mining complex, (d) the Hopkins County Coal, LLC mining complex, and (e) Sebree Mining, LLC's mining complex.

The Appalachia reportable segment includes currently operating mining complexes (a) the Mettiki mining complex, (b) the Tunnel Ridge mining complex and (c) the MC Mining, LLC ("MC Mining") mining complex.

The Mettiki mining complex includes Mettiki Coal (WV), LLC's Mountain View mine and Mettiki Coal, LLC's preparation plant.

The Appalachia reportable segment also includes the Penn Ridge reserves.

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

The 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 III (Note 13 – Investments) and Cavalier Minerals.

2 unchanged sentences

In February 2019, Kodiak redeemed our equity investment (see Note 13 – Investments).

In addition, Other and Corporate includes certain Alliance Resource Properties' land and 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 7 – 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, which assists the ARLP Partnership with its insurance requirements, and AROP Funding and Alliance Finance (both discussed in Note 8 – Long-Term Debt).

In response to the impacts of the COVID-19 pandemic, we announced on March 30, 2020 a temporary cessation of coal production at our River View, Gibson, Hamilton and Warrior mining complexes in our Illinois Basin segment and on April 9, 2020 a temporary cessation of coal production at our MC Mining complex in our Appalachia segment.

Underground production operations resumed in the second quarter of 2020 at each of our mining complexes.

All of our seven mining complexes are now producing coal.

However, several mines continue running at less than capacity due to a limited spot market in the United States and a seaborne market that continues to be sub-economic for United States production.

Due to the ongoing and unforeseen impacts of the COVID-19 pandemic, on April 26, 2020, the employment of 116 employees of Gibson and 78 employees of the Hamilton mining complexes was terminated permanently.

In addition to reduced production levels and employment adjustments, we took numerous actions in 2020 to optimize cash flows and preserve liquidity by reducing capital expenditures, working capital, costs and expenses, including adjusting our corporate support structure to better align to current operating levels.

Reportable segment results are presented below.

33 unchanged sentences

Operating expenses (excluding depreciation, depletion and amortization)

(4) Segment Adjusted EBITDA is defined as net income attributable to ARLP before net interest expense, income taxes, depreciation, depletion and amortization, general and administrative expense, settlement gain, debt extinguishment loss, asset impairment and acquisition gain.

(4) Segment Adjusted EBITDA is defined as net income attributable to ARLP before net interest expense, income taxes, depreciation, depletion and amortization, general and administrative expense, settlement gain, asset and goodwill impairments and acquisition gain.

Management therefore is able to focus solely on the evaluation of segment operating profitability as it relates to our revenues and operating expenses, which are primarily controlled by our segments.

Consolidated Segment Adjusted EBITDA is reconciled to net income as follows:

Consolidated Segment Adjusted EBITDA is reconciled to net income (loss) as follows:

Year Ended December 31,

4 unchanged sentences

Settlement gain

Asset impairment

Asset impairments

Goodwill impairment

Interest expense, net

Acquisition gain

Debt extinguishment loss

Income tax (expense) benefit

Acquisition gain attributable to noncontrolling interest

Net income attributable to ARLP

Net income (loss) attributable to ARLP

Noncontrolling interest

Net income (loss)

(5) Capital Expenditures shown exclude the AllDale Acquisition on January 3, 2019 and the Wing Acquisition on August 2, 2019 (Note 3 – Acquisitions).

SUBSEQUENT EVENTS

Other than those events described in Notes 10 and 16, there were no subsequent events.

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

A summary of our consolidated quarterly operating results is as follows:

Quarter Ended

September 30,

(in thousands, except unit and per unit data)

Income from operations

Income before income taxes

Net income attributable to ARLP

Basic and diluted net income attributable to ARLP per limited partner unit

Weighted-average number of units outstanding – basic and diluted

Quarter Ended

September 30,

(in thousands, except unit and per unit data)

Income from operations

Income before income taxes

Net income attributable to ARLP

Basic and diluted net income attributable to ARLP per limited partner unit

Weighted-average number of units outstanding – basic and diluted

(1) Our March 31, 2019 quarterly results were affected by a non-cash acquisition gain of $177.0 million reflecting the re-measurement of our equity method investments in AllDale I & II as a result of the AllDale Acquisition (Note 3 – Acquisitions).

(2) Our September 30, 2019 quarterly results were affected by $15.2 million of non-cash impairment charges due to the closure of our Dotiki mine during the quarter (Note 4 – Long-Lived Asset Impairments).

(3) Our March 31, 2018 quarterly results were affected by a settlement gain of $80.0 million reflecting cash payment received from the settlement of litigation, net of certain costs associated with the gain (Note 21 – Commitments and Contingencies).

(4) Our December 31, 2018 quarterly results were affected by $40.5 million of non-cash impairment charges comprised of a $34.3 million impairment related to the reduction of the economic mine life at our Dotiki mine and a $6.2 million impairment as a result of a decrease in the fair value of an option entitling us to lease certain coal reserves in Illinois (Note 4 – Long-Lived Asset Impairments).

Other than the event described in Note 8, there were no subsequent events.

SUPPLEMENTAL OIL & GAS RESERVE INFORMATION (UNAUDITED)

1 unchanged sentence

A company is considered to have significant oil & gas producing activities if any of its revenues, results of operations or assets from oil & gas producing activities exceed 10% of consolidated revenues, results of operations or assets for the year being measured.

As a result of the AllDale and Wing Acquisitions discussed in Note 3 – Acquisitions in our consolidated financial statements, we are considered to have significant oil & gas producing activities as of December 31, 2019.

We were not considered to have significant oil & gas producing activities in prior years when we held equity method investments in the AllDale Partnerships and therefore have not included these reserve disclosures for any prior periods.

Subsequent to our 2019 acquisitions of oil and gas mineral interests, we are considered to have significant oil & gas producing activities.

We were not considered to have significant oil & gas producing activities in periods prior to 2019 when we held equity method investments in the AllDale Partnerships and therefore have not included these reserve disclosures periods prior to 2019.

Geographical Area of Operation

5 unchanged sentences

Acquisition costs of properties

Property acquisition costs include non-cash amounts for the AllDale Acquisition.

Property acquisition costs for 2019 include non-cash amounts for the AllDale Acquisition.

In connection with the AllDale Acquisition, we marked our previously held equity method investments to a fair value of $307.3 million, resulting in a $177.0 million gain.

See Note 3 – Acquisitions in our consolidated financial statements for more information.

See Note 3 – Acquisitions in our consolidated financial statements for more information regarding 2019 acquisition activity.

Oil & Gas Capitalized Costs

3 unchanged sentences

Our Share of an Equity Method Investee

Entity's Share of Equity Method Investee

Proved properties

2 unchanged sentences

Oil & gas properties, net

(1) The change in total capitalized cost reflects sales of proved and unproved properties in 2020 of $1.1 million and measurement period adjustments associated with the Wing Acquisition of $0.3 million discussed in Note 3 – Acquisitions of our consolidated financial statements.

Results of Operations from Oil & Gas Activities

15 unchanged sentences

Oil & Gas Reserves

Proved oil & gas reserve estimates as of December 31, 2019 were prepared by Netherland, Sewell & Associates, Inc., independent petroleum engineers.

Proved oil & gas reserve estimates as of December 31, 2020 were prepared by our internal engineering team and 95% of those reserves were audited by Netherland, Sewell & Associates, Inc., independent petroleum engineers.

Proved reserves are estimated under existing economic and operating conditions based upon the 12-month unweighted average of the first-of-the-month prices.

9 unchanged sentences

As of December 31, 2019 (1)

(1) As of December 31, 2019, proved reserves of approximately 1,208 MBOE was attributable to noncontrolling interests.

Revisions of previous estimates

Extensions and discoveries

Sales of minerals in place

As of December 31, 2020 (1)

(1) Proved reserves of approximately 972 MBOE and 1,208 MBOE were attributable to noncontrolling interests, as of December 31, 2020 and 2019, respectively.

Natural Gas Liquids

2 unchanged sentences

Revisions of previous estimates

Sales of mineral interests in place

Sales of minerals in place

As of December 31, 2019

Revisions of previous estimates

Extensions and discoveries

As of December 31, 2020

Total consolidated and equity interests in reserves at December 31, 2020

Net proved developed reserves as of December 31, 2019

Net proved developed reserves as of December 31, 2020

Net proved undeveloped reserves as of December 31, 2019

Net proved undeveloped reserves as of December 31, 2020

Natural gas reserves are converted to BOE based on a 6:1 ratio:

1 unchanged sentence

Notable changes in proved reserves during the year ended December 31, 2020, included:

● Purchases of minerals in place:

The increases represent the acquisition of mineral interests in the AllDale and Wing Acquisitions.

Please see Note 3 – Acquisitions in our consolidated financial statements for more information.

● Net change due to extensions and discoveries:

The increases are a result of the addition of new properties by the operators under which we own mineral interests.

In 2020, a net addition of 2,142 MBOE occurred primarily from the completion of 655 new wells on our acreage and from the addition of 877 new proved undeveloped locations due to permitting and drilling activity.

Increases in oil & gas are also due to changes in the underlying commodity prices during the year and revisions of previous quantity estimates.

10 unchanged sentences

Material revisions to estimates of proved reserves may occur in the future;

development and

production of the reserves may not occur in the periods assumed;

development and production of the reserves may not occur in the periods assumed;

actual prices are expected to vary significantly from those used and actual costs may vary.

2 unchanged sentences

Our Share of an Equity Method Investee

Entity's Share of Equity Method Investee

Future cash inflows

3 unchanged sentences

Total standardized measure (1)

(1) Includes standardized discounted future net cash flows of approximately $12.5 million attributable to noncontrolling interests in the ARLP Partnership's consolidated subsidiaries.

The average realized product prices weighted by production over the remaining lives of the properties are $52.32 per barrel of oil, $1.83 per thousand cubic feet of natural gas and $21.95 per barrel of NGL.

(1) Includes standardized discounted future net cash flows of approximately $5.2 million and $12.5 million attributable to noncontrolling interests in the ARLP Partnership's consolidated subsidiaries as of December 31, 2020 and 2019, respectively.

The average realized product prices weighted by production over the remaining lives of the properties are presented in the table below:

For the Year Ended December 31,

Oil (per Bbl)

Natural gas (per Mcf)

NGLs (per Bbl)

Changes in the standardized measure of discounted future net cash flows related to the proved oil & gas reserves of the properties are as follows:

2 unchanged sentences

Our Share of an Equity Method Investee

Entity's Share of Equity Method Investee

Standardized measure, beginning of year

Purchases of reserves in place, less related costs

Purchases and sales of reserves in place, less related costs

Sales, net of production costs

Net changes due to extensions and discoveries

Net changes in prices and production costs

Revisions of previous quantity estimates, net of related costs

Revisions of previous quantity estimates

Accretion of discount

Changes in timing and other

Net increase (decrease) in standardized measures

Standardized measure, end of year

The standardized measure amount at the beginning of the year for the Our share of an Equity Method Investee reflects only our proportionate share of AllDale III's beginning of the year standardized measure amount.

Our previously held equity method investments in AllDale I & II, as a result of the AllDale Acquisition at the beginning of year, are now consolidated on our financial statements.

Net change in prices and production costs occur from one reporting period to another when the SEC reporting price for that period changes.

For 2020, this was a major component of the overall reserves value change from 2019 due mainly to the COVID-19 pandemic crisis and the subsequent decline in oil and gas demand.

The standardized measure amount at the beginning of 2019 for our share of an Equity Method Investee reflects only our proportionate share of AllDale III's beginning of the year standardized measure amount.

Our previously held equity method investments in AllDale I & II, as a result of the AllDale Acquisition in 2019, are now consolidated on our financial statements.

Accordingly, we reflect the activity for AllDale I & II in our consolidated standardized measure amounts and not the Equity Method amounts.

SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ALLIANCE RESOURCE PARTNERS, L.P.

AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017

CONDENSED BALANCE SHEETS (PARENT)

DECEMBER 31, 2020 AND 2019

(In thousands, except unit data)

CURRENT ASSETS:

Cash and cash equivalents

Total current assets

OTHER ASSETS:

Investments in consolidated subsidiaries

Total other assets

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:

Accrued taxes other than income taxes

Total current liabilities

Total liabilities

PARTNERS' CAPITAL:

Limited Partners - Common Unitholders 127,195,219 and 126,915,597 units outstanding, respectively

TOTAL LIABILITIES AND PARTNERS' CAPITAL

See accompanying notes.

CONDENSED STATEMENTS OF OPERATIONS (PARENT)

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018

(In thousands, except unit and per unit data)

Year Ended December 31,

General and administrative

Total operating expenses

INCOME (LOSS) FROM OPERATIONS

Interest income

Equity in earnings of consolidated subsidiaries

NET INCOME (LOSS) ATTRIBUTABLE TO ARLP

GENERAL PARTNER

LIMITED PARTNERS

EARNINGS PER LIMITED PARTNER UNIT - BASIC AND DILUTED

WEIGHTED-AVERAGE NUMBER OF UNITS OUTSTANDING – BASIC AND DILUTED

See accompanying notes.

CONDENSED STATEMENTS OF CASH FLOWS (PARENT)

FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018

(In thousands)

Allowance for doubtful accounts

Year Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

CASH FLOWS FROM FINANCING ACTIVITIES:

Distributions paid to Partners

Net cash used in financing activities

NET CHANGE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS AT END OF PERIOD

See accompanying notes.

NOTES TO FINANCIAL INFORMATION (PARENT)

BASIS OF PRESENTATION

In these parent-company-only financial statements, our investment in consolidated subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries and reduced by distributions received from subsidiaries since the date of acquisition.

These parent-company-only financial statements should be read in conjunction with our consolidated financial statements in "Item 8.

Financial Statements and Supplementary Data"

of this Annual Report on Form 10-K.

As the parent of the Intermediate Partnership, we are a guarantor of both the Credit Agreement and Senior Notes discussed in "Item 8.

Financial Statements and Supplementary Data—Note 8 – Long-Term Debt"

of this Annual Report on Form 10-K.

In addition to these guarantees, we have provided guarantees on surety indemnity agreements and financially guaranteed certain coal supply agreements.

The duration of these guarantees varies and the maximum undiscounted potential future payment obligation related to these guarantees as of December 31, 2020 is not material.

CASH DISTRIBUTIONS RECEIVED

We received distributions of $ 51.8 million, $ 278.4 million and $ 275.9 million from our consolidated subsidiaries during the years ended December 31, 2020, 2019, and 2018, respectively.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT 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