What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-25 compared with 2021-02-23 · 314 added, 346 removed, 1299 unchanged (34% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm-Grant Thornton LLP (PCAOB ID Number 248 )

Report of Independent Registered Public Accounting Firm-Ernst & Young LLP (PCAOB ID Number 42 )

Consolidated Balance Sheets

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Report of Independent Registered Public Accounting Firm

The Board of Directors of Alliance Resource Management GP, LLC

Board of Directors of Alliance Resource Management GP, LLC and

Unitholders of Alliance Resource Partners, L.P.

Opinion on the Financial Statements

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

(a Delaware limited partnership) and subsidiaries (the "Partnership") as of December 31, 2021, the related consolidated statements of operations, comprehensive income (loss), cash flows and partners’ capital for the year ended December 31, 2021, and the related notes and financial statement schedule included under Item 15(a)(2) (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2021 and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Partnership’s internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"), and our report dated February 25, 2022 expressed an unqualified opinion.

Basis for Opinion

These financial statements are the responsibility of the Partnership’s management.

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

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

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

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

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

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

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

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

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

Critical Audit Matter

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

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

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

Valuation of workers’ compensation and pneumoconiosis benefits

As described further in Note 20 to the financial statements, the Partnership provides income replacement and medical treatment for work-related traumatic injury claims and compensation to survivors of workers who suffer employment-related deaths.

The Partnership is also liable to pay benefits for black lung disease (or pneumoconiosis) to eligible employees and former employees and their dependents.

As of December 31, 2021, the Partnership’s aggregate workers’ compensation and pneumoconiosis benefits obligations were approximately $165 million.

We identified valuation of workers’ compensation and pneumoconiosis benefits as a critical audit matter.

The principal considerations for assessing the valuation of workers’ compensation and pneumoconiosis benefits as a critical audit matter are the high level of estimation uncertainty related to determining the frequency and severity of these types of claims, as well as the inherent subjectivity in management’s judgment in estimating eligible benefits and the total cost to settle or dispose of these claims.

Workers’ compensation and pneumoconiosis benefits obligations are determined using actuarial projection methods and numerous assumptions including claim development patterns, costs, and mortality.

The estimates rely on the assumption that historical claim patterns are an accurate representation for future claims.

Our audit procedures related to the valuation of workers’ compensation and pneumoconiosis benefits included the following, among others.

● We tested the design and operating effectiveness of controls relating to the workers’ compensation and pneumoconiosis benefits process including testing controls over management’s review of actuarial specialists' liability calculations and the completeness and accuracy of the underlying data.

● We tested management’s process for determining the worker’s compensation and pneumoconiosis benefit accrual, including evaluating the reasonableness of the methods and significant assumptions used in the calculations with the assistance of actuarial specialists.

● We tested the claims data used in the actuarial calculations by inspecting source documents to test key attributes of the claims data.

● We compared claim development patterns and cost assumptions used in the actuarial calculations for consistency with historical experience and current trends.

● We compared the mortality tables used in the actuarial calculations to publicly available information.

/s/ GRANT THORNTON LLP

We have served as the Partnership’s auditor since 2021.

Tulsa, Oklahoma

February 25, 2022

Report of Independent Registered Public Accounting Firm

To the Board of Directors of Alliance Resource Management GP, LLC

and the Partners of Alliance Resource Partners, L.P.

Opinion on the Financial Statements

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

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.

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

and subsidiaries (the Partnership) as of December 31, 2020, the related consolidated statements of operations, comprehensive income (loss), cash flows and partners’ capital for each of the two 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 the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 23, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

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Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits.

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

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

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

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

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 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

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.

Workers' compensation laws also compensate survivors of workers who suffer employment-related deaths.

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, 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 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 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.

We compared the claim development pattern and cost assumptions used by management for consistency with historical experience and current trends.

We also developed independent ranges and compared those ranges to management’s best estimate.

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.

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

We have served as the Partnership’s auditor since 2011.

We served as the Partnership’s auditor from 2011 to 2021.

Tulsa, Oklahoma

February 23, 2021

February 23, 2021, except for Note 24, as to which the date is February 25, 2022

ALLIANCE RESOURCE PARTNERS, L.P.

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Total liabilities

COMMITMENTS AND CONTINGENCIES - (Note 22)

PARTNERS' CAPITAL:

ARLP Partners' Capital:

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

Limited Partners - Common Unitholders 127,195,219 units outstanding

Accumulated other comprehensive loss

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Depreciation, depletion and amortization

Settlement gain

Asset impairments

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NET INCOME (LOSS) ATTRIBUTABLE TO ARLP

GENERAL PARTNER

LIMITED PARTNERS

EARNINGS PER LIMITED PARTNER UNIT - BASIC AND DILUTED

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Amortization of prior service cost (1)

Net actuarial loss

Net actuarial gain (loss)

Amortization of net actuarial loss (1)

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Pneumoconiosis benefits

Net actuarial gain (loss)

Net actuarial loss

Amortization of net actuarial loss (gain) (1)

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Capital expenditures

Decrease in accounts payable and accrued liabilities

Change in accounts payable and accrued liabilities

Proceeds from sale of property, plant and equipment

Contributions to equity method investments

Distributions received from investments in excess of cumulative earnings

Payments for acquisitions of businesses, net of cash acquired

Oil & gas reserve acquisition

Cash received from redemption of equity securities

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Payments under revolving credit facilities

Borrowings from line of credit

Payment on line of credit

Payments on finance lease obligations

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Payments for purchases of units under unit repurchase program

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

Payments for purchase of units and tax withholdings related to settlements under deferred compensation plans

Cash settlement of grants under deferred compensation plan

Cash contributions by General Partner

Cash contribution by affiliated entity

Cash obtained in Simplification Transactions

Distributions paid to Partners

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Limited Partners'

General Partners’

Comprehensive

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Total Partners'

Capital (Deficit)

Income (Loss)

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Settlement of deferred compensation plans

Issuance of units to Owners of SGP in Simplification Transactions

Issuance of units to SGP related to Exchange Transaction

Simplification Transactions fees

Contribution of units and cash by affiliated entity

Purchase of units under unit repurchase program

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Distributions on deferred common unit-based compensation

General Partner contribution

Distributions from consolidated company to noncontrolling interest

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Balance at December 31, 2019

Comprehensive income:

Comprehensive income (loss):

Net income (loss)

Actuarially determined long-term liability adjustments

Total comprehensive income

Total comprehensive loss

Settlement of deferred compensation plans

Purchase of units under unit repurchase program

( 1,776,564 )

Common unit-based compensation

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Balance at December 31, 2020

Comprehensive income (loss):

Net income (loss)

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive loss

Total comprehensive income

Settlement of deferred compensation plans

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

● References to "SGP"

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"

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● References to "Alliance Coal"

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

mean Alliance Coal, LLC, the holding company for our coal mining operations.

● 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"

mean Alliance Holdings GP, L.P., individually and not on a consolidated basis as the parent company of MGP prior to the Simplification Transactions discussed below and as a wholly owned subsidiary of ARLP subsequent to the Simplification Transactions.

mean Alliance Minerals, LLC, the holding company for our oil and gas minerals interests.

● References to "Alliance Resource Properties"

mean Alliance Resource Properties, LLC, the land holding company for certain of our coal mineral interests, including the subsidiaries of Alliance Resource Properties, LLC.

ARLP is a Delaware limited partnership listed on the NASDAQ Global Select Market under the ticker symbol "ARLP."

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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.

Alliance GP, LLC ("AGP"), which is indirectly wholly owned by Mr.

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 Simplification Transactions in 2018.

Partnership Simplification

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,

all of the issued and outstanding AHGP common units would be canceled and converted into the right to receive the ARLP common units held by AHGP and its subsidiaries,

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 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.

On May 31, 2018, ARLP, AHGP and the other parties to the Simplification Agreement completed the transactions contemplated by the Simplification Agreement.

As part of the Simplification Transactions, (i) each AHGP common unit that was issued and outstanding at the effective time of the Simplification Transactions was canceled and converted into the right to receive a portion of the ARLP common units held by AHGP and its subsidiaries, and (ii) SGP became the sole limited partner in AHGP.

Each outstanding AHGP common unit, other than certain AHGP common units held by the Owners of SGP, converted into the right to receive approximately 1.4782 ARLP common units held by AHGP and its subsidiaries.

The remaining AHGP common units held by the Owners of SGP were canceled and converted into the right to receive 29,188,997 ARLP common units which equaled (i) the product of the number of certain AHGP common units held by the Owners of SGP multiplied by 1.4782 , minus (ii) 1,322,388 ARLP common units.

In addition, ARLP issued 1,322,388 ARLP common units to the Owners of SGP in exchange for causing SGP to contribute to ARLP its remaining limited partner interest in AHGP, which included AHGP's indirect ownership of a 1.0001 % general partner interest in the Intermediate Partnership and a 0.001 % managing member interest in Alliance Coal, resulting in an overall exchange ratio to the Owners of SGP equal to that of the other AHGP unitholders.

Upon the issuance of ARLP common units to the Owners of SGP in exchange for the limited partner interest in AHGP, ARLP became a) the sole limited partner of AHGP and b) through AHGP, the indirect owner of a 1.0001 % general partner interest in the Intermediate Partnership and a 0.001 % managing member interest in Alliance Coal.

Craft, is the direct owner of MGP.

AllDale I & II Acquisition

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As a result of the AllDale Acquisition and our previous investments held through Cavalier Minerals, we acquired control of approximately 43,000 net royalty acres in premier oil & gas resource plays.

The AllDale Acquisition provides us with diversified exposure to industry leading operators and is consistent with our general business strategy to grow our Minerals segment.

See Note 3 – Acquisitions for more information.

The AllDale Acquisition provides us with diversified exposure to industry leading operators.

Wing Acquisition

On August 2, 2019, our subsidiary AR Midland, LP ("AR Midland") acquired from Wing Resources LLC and Wing Resources II LLC (collectively, "Wing") approximately 9,000 net royalty acres in the Midland Basin, with exposure to more than 400,000 gross acres (the "Wing Acquisition").

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.

Following the Wing Acquisition, we hold approximately 55,700 net royalty acres in premier oil & gas basins including our investment in AllDale Minerals III, LP ("AllDale III").

The Wing Acquisition enhances our ownership position in the Permian Basin and expands our exposure to industry leading operators.

Boulders Acquisition

On October 13, 2021, AR Midland acquired approximately 1,480 oil & gas net royalty acres in the Delaware Basin from Boulders Royalty Corp.

("Boulders") for a purchase price of $ 31.0 million (the "Boulders Acquisition").

This acquisition also enhanced our ownership position in the Permian Basin

These acquisitions furthered our business strategy to grow our Oil & Gas Royalties segment through accretive acquisitions.

See Note 3 – Acquisitions for more information.

We now hold approximately 57,000 net royalty acres in premier oil & gas resource plays including our investment in AllDale Minerals III, LP ("AllDale III").

The consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of December 31, 2021 and 2020, and results of our operations, comprehensive income, cash flows and changes in partners' capital for each of the three years in the period ended December 31, 2021.

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Consolidation —The consolidated financial statements present the consolidated financial position, results of operations and cash flows of ARLP, the Intermediate Partnership, Alliance Coal and other directly and indirectly wholly- and majority-owned subsidiaries of ARLP.

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.

All intercompany transactions and accounts have been eliminated.

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:

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Fair value measurements assume that the transaction occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability (the market for which the reporting entity would be able to maximize the amount received or minimize the amount paid).

Valuation techniques used in our fair value measurements are based upon observable and unobservable inputs.

techniques used in our fair value measurements are based upon observable and unobservable inputs.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our own market assumptions.

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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 29 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.

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 29 years , limited by the remaining estimated life of each

Depreciable lives for buildings, office equipment and improvements range from 1 to 29 years .

Gains or losses arising from retirements are included in operating expenses.

Depletion of coal mineral rights is provided on the basis of tonnage mined in relation to estimated recoverable tonnage, which equals estimated proven and probable reserves.

Therefore, our coal mineral rights are depleted based on only proven and probable reserves.

Depletion of coal mineral rights is provided on the basis of tonnage mined in relation to estimated recoverable tonnage, which equals estimated proven and probable coal mineral reserves.

Therefore, our coal mineral rights are depleted based on only proven and probable coal mineral reserves.

See Oil & Gas Reserve Quantities and Carrying Amounts below for a discussion of our accounting policies for oil & gas properties.

Mine Development Costs —Mine development costs are capitalized until production, other than production incidental to the mine development process, commences and are amortized on a units of production method based on the estimated proven and probable reserves.

Mine development costs represent costs incurred in establishing access to mineral reserves and include costs associated with sinking or driving shafts and underground drifts, permanent excavations, roads and tunnels.

Mine development costs represent costs incurred in establishing access to coal mineral reserves and include costs associated with sinking or driving shafts and underground drifts, permanent excavations, roads and tunnels.

The end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete.

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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.

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 .

Our leases have approximate lease terms of 1 to 29 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.

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Proved reserves are quantities of oil & gas that can be estimated with reasonable certainty to be recoverable in the future from a given date forward, from known reservoirs, under existing economic conditions, operating methods, and government regulations.

Proved developed resources are the quantities expected to be recovered through our operators' existing wells with existing equipment, infrastructure and operating methods.

We evaluate impairment of our mineral interests in proved properties whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Proved developed

resources are the quantities expected to be recovered through our operators' existing wells with existing equipment, infrastructure and operating methods.

We evaluate impairment of our oil & gas mineral interests in proved properties whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

This evaluation is performed on a depletable group basis.

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The factors used to determine fair value include estimates of proved reserves, future commodity prices, timing of future production, future expenditures, and a risk-adjusted discount rate.

Our mineral interests in unproved properties are also assessed for impairment periodically on a depletable group basis when facts and circumstances indicate that the carrying value may not be recoverable.

Impairment of individual unproved properties whose acquisition costs are relatively significant are assessed on a property-by-property basis, and an impairment loss is recognized to the extent the carrying value exceeds the estimated recoverable value for the property.

Our oil & gas mineral interests in unproved properties are also assessed for impairment periodically but at least annually when facts and circumstances indicate that the unproved property will not be transferred to proved properties.

Impairment of individual unproved properties whose acquisition costs are relatively significant are assessed on a property-by-property basis, and an impairment loss is recognized if we determine that the unproved property will not be transferred to proved properties.

Impairment of unproved properties whose acquisition costs are not individually significant are assessed on a group basis.

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.

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

Upon the sale or retirement of an aggregation of interests which make up less than a complete depletable group, the proceeds are credited to accumulated depreciation, depletion and amortization, unless doing so would significantly alter the depreciation, depletion and amortization rate of the depletable group, in which case a gain or loss would be recorded.

Intangibles —Intangibles subject to amortization include contracts with covenants not to compete, customer contracts acquired from other parties and mining permits.

Intangibles —Intangibles subject to amortization include customer contracts acquired from other parties and mining permits.

Intangibles other than customer contracts are amortized on a straight-line basis over their useful life.

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(in thousands)

Non-compete agreements

Customer contracts and other

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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, 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.

AllDale III and AllDale I & II are collectively referred to as the "AllDale Partnerships."

See Note 13 – Investments for further discussion of our equity method investment in AllDale III and Note 3 – Acquisitions for discussion of the AllDale Acquisition.

We hold an equity method investment in AllDale III through our subsidiary, Alliance Minerals.

See Note 13 – Investments for further discussion of our equity method investment in AllDale III.

We review our investments for impairment whenever events or changes in circumstances indicate a loss in the value of the investment may be other-than-temporary.

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Payments for coal shipments are typically due within two to four weeks of performance.

We typically do not have material contract assets that are stated separately from trade receivables as our performance obligations are satisfied as control of the goods or services passes to the customer thereby granting us an unconditional right to receive consideration.

We typically do not have material contract assets that are stated separately from trade receivables as our performance obligations are satisfied as control of the goods or

services passes to the customer thereby granting us an unconditional right to receive consideration.

Contract liabilities relate to consideration received in advance of the satisfaction of our performance obligations.

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Oil & Gas Revenue Recognition —Oil & gas royalty revenues are recognized at the point in time when control of the product is transferred to the purchaser by the lessee and collectability of the sales price is reasonably assured.

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.

Oil & gas are priced on the delivery date based upon prevailing market prices 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.

We also periodically earn revenue from lease bonuses.

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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 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.

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.

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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.

Certain awards may also contain a minimum-value guarantee payable in ARLP common units or cash that would be paid regardless of whether or not the awards vest, as long as service requirements are met.

Annual grant levels, vesting provisions and minimum-value guarantees 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.

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 newly-issued 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.

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Compensation expense is fully recognized on the grant date for quarterly distributions credited to SERP accounts and Directors' Deferred Compensation Plan awards.

The corresponding liability is classified as equity and included in limited partners' capital in the consolidated financial statements (See Note 17 – Compensation Plans).

The corresponding liability is classified as equity and included in limited partners' capital in the consolidated financial statements (See Note 17 – Common Unit-Based Compensation Plans).

Income Taxes —We are not a taxable entity for federal or state income tax purposes;

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

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").

ASU 2016-13 changes the impairment model for most financial assets and certain other instruments to require the use of a new forward-looking "expected loss"

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

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.

New Accounting Standards Issued and Not Yet Adopted —In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance ("ASU 2021-10").

ASU 2021-10 increases the transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements.

ASU 2021-10 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted.

The adoption of ASU 2021-10 will not have a material impact on our consolidated financial statements.

ACQUISITION S

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As a result of the AllDale Acquisition and our previous investments held through Cavalier Minerals, we acquired control of approximately 43,000 net royalty acres strategically positioned primarily in the core of the Permian (Delaware and Midland), Anadarko (SCOOP/STACK) and Williston (Bakken) Basins.

The AllDale Acquisition provides us with diversified exposure to industry leading operators and is consistent with our general business strategy to grow our Minerals segment.

Because the underlying mineral interests held by AllDale I & II include royalty interests in both producing properties and unproved properties, we have determined that the AllDale Acquisition should be accounted for as a business combination and the underlying assets and liabilities of AllDale I & II should be recorded at their AllDale Acquisition Date fair value on our consolidated balance sheet.

The AllDale Acquisition provides us with diversified exposure to industry leading operators and is consistent with our general business strategy to grow our Oil & Gas Royalties segment.

Because the underlying mineral interests held by AllDale I & II include royalty interests in both developed properties and undeveloped properties, we have determined that the AllDale Acquisition should be accounted for as a business combination and the underlying assets and liabilities of AllDale I & II should be recorded at their AllDale Acquisition Date fair value on our consolidated balance sheet.

The final total fair value of the cash paid in the AllDale Acquisition and our previous investments were as follows:

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(in thousands)

The following represents our actual and pro forma consolidated revenues and net income for the year ended December 31, 2018.

Pro forma revenues and net income assumes AllDale I & II had been included in our consolidated results since January 1, 2018.

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 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)

Total revenues

On August 2, 2019 (the "Wing Acquisition Date"), our subsidiary, AR Midland acquired from Wing approximately 9,000 net royalty acres in the Midland Basin, with exposure to more than 400,000 gross acres, for a cash purchase price of $ 144.9 million.

On August 2, 2019 (the "Wing Acquisition Date"), our subsidiary, AR Midland acquired from Wing approximately 9,000 net royalty acres in the Midland Basin for a cash purchase price of $ 144.9 million.

The purchase price was funded with cash on hand and borrowings under our Revolving Credit Facility discussed in Note 8 – Long-Term Debt.

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.

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 Oil & Gas Royalties segment.

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.

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

Because the mineral interests acquired in the Wing Acquisition include royalty interests in both developed properties and undeveloped 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.

The following table summarizes our final fair value allocation of assets acquired as of the Wing Acquisition Date:

(in thousands)

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(in thousands)

The following represents our actual and pro forma consolidated revenues and net income for the years ended December 31, 2019 and 2018.

The following represents our actual and pro forma consolidated revenues and net income for the year ended December 31, 2019.

Pro forma revenues and net income assumes the mineral interests acquired in the Wing Acquisition had been included in our consolidated results since January 1, 2019.

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Total revenues

On October 13, 2021, AR Midland acquired approximately 1,480 oil & gas net royalty acres in the Delaware Basin from Boulders for a purchase price of $ 31.0 million.

This acquisition gives us increased exposure to a prolific area of the Delaware Basin and is within close proximity to reserves acquired in the AllDale and Wing Acquisitions.

The acreage is mostly undeveloped.

Because more than 90% of the mineral interests acquired in the Boulders Acquisition represent undeveloped properties, including proved undeveloped, we have determined that the Boulders Acquisition should be accounted for as an asset acquisition.

We have allocated the purchase price to the acquired reserves as follows:

(in thousands)

Mineral interests in proved properties

Mineral interests in unproved properties

LONG-LIVED ASSET IMPAIRMENT S

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.

During the year ended December 31, 2020, we recorded $ 23.5 million of non-cash asset impairment charges in our Illinois Basin Coal Operations 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 mineral resources as a result of weakened coal market conditions including the impact of the COVID-19 pandemic.

During the same period, we also recorded an asset impairment charge of $ 1.5 million in our Coal Royalties segment due to a decrease in the fair value of greenfield coal mineral resources held by Alliance Resource Properties near our coal mining operations in the Illinois Basin.

See Note 24 – Segment Information for more information about our segments.

During the year ended December 31, 2019, we recorded asset impairment charges in our Illinois Basin Coal Operations segment and our Coal Royalties segment of $ 7.5 million and $ 7.7 million, respectively, 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 Illinois Basin.

We adjusted the carrying value of assets associated with the Dotiki mine, including coal mineral reserves and resources held at Alliance Resource Properties, from $ 35.9 million to their fair value of $ 25.8 million and accrued $ 5.1 million with respect to scheduled payments to WKY CoalPlay, LLC ("WKY CoalPlay") for leased coal mineral reserves and resources from which we may not receive future economic benefit.

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

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.

The fair values of the impaired assets were determined using a market approach, which represents Level 3 fair value measurements under the fair value hierarchy.

The fair value analysis used assumptions regarding the marketability of certain mining and coal mineral reserve and resource assets near our Illinois Basin coal mining operations.

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.

During the first quarter of 2020, we considered whether an interim test of our consolidated goodwill of $ 136.4 million was necessary.

Our consolidated goodwill included $ 132.0 million recorded in our Illinois Basin Coal Operations segment in conjunction with our acquisition of the Hamilton County Coal, LLC ("Hamilton") mine on July 31, 2015.

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 our Hamilton mine and (c) our actual performance during the quarter.

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

We estimated the fair value of Hamilton 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;

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 were 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.

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

Accordingly, we recognized an impairment charge of $ 132.0 million consisting of the total carrying amount of goodwill associated with Hamilton.

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.

During the first quarter of 2020, we also performed an interim test on our remaining goodwill balances not associated with Hamilton and concluded no impairment was necessary for our other reporting units.

Inventories consist of the following :

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Oil & gas mineral interests

Buildings, office equipment and improvements

Construction and mine development in progress

Buildings, office equipment, improvements and other miscellaneous equipment

Construction, mine development and other projects in progress

Mine development costs

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Total property, plant and equipment, net

(1) Oil & gas mineral interests acquired in the AllDale and Wing Acquisitions.

See Note 3 – Acquisitions for more information.

At December 31, 2020 and 2019, land and coal mineral rights above include $ 37.5 million and $ 40.1 million, respectively, of carrying value associated with coal reserves attributable to properties where we or a third party to which we lease reserves are not currently engaged in mining operations or leasing to third parties, and therefore, the coal reserves are not currently being depleted.

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

Depreciation, depletion and amortization expense related to property, plant and equipment was $ 256.9 million, $ 297.0 million and $ 312.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.

At December 31, 2021 and 2020, land and coal mineral rights above include $ 37.4 million and $ 37.5 million, respectively, of carrying value associated with coal mineral reserves and resources attributable to properties where we or a third party to which we lease coal mineral reserves and resources are not currently engaged in mining operations or leasing to third parties, and therefore, the coal mineral reserves are not currently being depleted.

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

At December 31, 2021 and 2020, our oil & gas mineral interests noted in the table above includes the carrying value of our unproved oil & gas mineral interests totaling $ 355.1 million and $ 340.5 million, respectively.

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

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.

During 2021, we did not incur material mine development costs.

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

5 at our MC Mining complex.

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We believe that the carrying value of the past development costs will be recovered.

For information regarding long-lived asset impairments please see Note 4 – Long-Lived Asset Impairments.

See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for property, plant and equipment.

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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.

The Credit Agreement provides for a $ 459.5 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 March 9, 2024.

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.

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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").

In January 2021, we reduced the borrowing availability under the facility to $ 60.0 million.

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 $ 60.0 million secured by the trade receivables.

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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.

In January 2022, we extended the term of the Securitization Facility to January 2023.

The Securitization Facility was previously scheduled to mature in January 2022.

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

At December 31, 2021, we had no outstanding balance under the Securitization Facility.

May 2019 Equipment Financing.

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The carrying amounts for cash equivalents, accounts receivable, accounts payable, accrued and other liabilities, due from affiliates and due to affiliates approximate fair value due to the short maturity of those instruments.

The estimated fair value of our long-term debt, including current maturities, is based on interest rates that we believe are currently available to us in active markets for issuance of debt with similar terms and remaining maturities (See Note 8 – Long-Term Debt).

8 – Long-Term Debt).

The fair value of debt, which is based upon these interest rates, is classified as a Level 2 measurement under the fair value hierarchy.

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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.

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 2019 through 2021:

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Fourth Quarter

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

On May 31, 2018, as part of the Simplification Transactions discussed in Note 1 – Organization and Presentation, ARLP issued 1,322,388 ARLP common units to the Owners of SGP in exchange for causing SGP to contribute to ARLP all of SGP's limited partner interests in AHGP, which included AHGP's indirect ownership of a 1.0001 % general partner interest in the Intermediate Partnership and a 0.001 % managing member interest in Alliance Coal.

The Simplification Transactions are accounted for prospectively as an exchange of equity interests between entities under common control.

Since ARLP and AHGP were under common control both before and after the Simplification Transactions, no fair value adjustment was made to the assets or liabilities of AHGP and its subsidiaries and no gain or loss was recognized on our consolidated financial statements.

On January 28, 2022, we declared a quarterly distribution of $ 0.25 per unit, totaling approximately $ 31.8 million, on all our common units outstanding, which was paid on February 14, 2022, to all unitholders of record on February 7, 2022.

Unit Repurchase Program

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

In May 2018, the board of directors of our managing general partner ("Board of Directors") approved the establishment of a unit repurchase program authorizing us to repurchase and retire up to $ 100 million of ARLP common units.

The program has no time limit and we may repurchase units from time to time in the open market or in other privately negotiated transactions.

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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 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.

The noncontrolling interest in our consolidated balance sheets represents Bluegrass Minerals' ownership interest in Cavalier Minerals.

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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 % 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.

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Bluegrass Minerals' equity ownership of Cavalier Minerals is accounted for as noncontrolling ownership interest in our consolidated balance sheets.

In addition, earnings attributable to Bluegrass Minerals are recognized as noncontrolling interest in our consolidated statements of income.

In addition, earnings attributable to Bluegrass Minerals are recognized as noncontrolling interest in our consolidated statements of operations.

In February 2017, Alliance Minerals committed to directly invest $ 30.0 million in AllDale III which was created for similar investment purposes as AllDale I & II.

Alliance Minerals completed funding of this commitment in 2018.

Alliance Minerals' limited partner interest in AllDale III at December 31, 2020 was 13.9 %.

Alliance Minerals' limited partner interest in AllDale III is 13.9 %.

The AllDale III Partnership Agreement includes a 25 % profits interest for the general partner, subject to a return hurdle equal to the greater of 125 % of cumulative capital contributions and a 10 % internal rate of return, and following an 80/20 "catch-up"

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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 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 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.

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Beginning balance

Contributions

Equity method investment income

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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.

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The gain is included in the Equity securities income line item.

We no longer hold any ownership interests in Kodiak.

We no longer hold any

ownership interests in Kodiak.

Prior to the redemption, we accounted for our ownership interests in Kodiak as equity securities without readily determinable fair values.

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The following table illustrates the disaggregation of our revenues by type, including a reconciliation to our segment presentation as presented in Note 24 – Segment Information.

Coal Operations

Corporate and

(in thousands)

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Oil & gas royalties

Coal royalties

Transportation revenues

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Oil & gas royalties

Coal royalties

Transportation revenues

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Year Ended December 31, 2019

Oil & gas royalties

Coal royalties

Transportation revenues

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(in thousands)

Illinois Basin coal revenues

Appalachia coal revenues

Illinois Basin Coal Operations coal revenues

Appalachia Coal Operations coal revenues

Total coal revenues (1)

(1) Coal revenues generally consists of consolidated revenues excluding our Minerals segment.

(1) Coal revenues generally consists of consolidated revenues excluding our Oil & Gas Royalties segment as well as intercompany revenues from our Coal Royalties segment.

EARNINGS PER LIMITED PARTNER UNIT

We utilize the two-class method in calculating basic and diluted earnings per limited partner unit ("EPU").

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

Net income attributable to ARLP is allocated to limited partners and participating securities under deferred compensation plans, which include rights to nonforfeitable distributions or distribution equivalents.

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.

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

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.

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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

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Earnings per limited partner unit - basic and diluted (1)

(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.

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

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Interest cost

Actuarial loss

Actuarial loss (gain)

Benefits paid

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Expected return on plan assets

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 actuarial gain component of the change in benefit obligations in 2021 was primarily attributable to an increase in the discount rate compared to December 31, 2020.

The actuarial loss component of the change in benefit obligations in 2020 was primarily attributable to a decrease in the discount rate compared to December 31, 2019, 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:

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Other changes in plan assets and benefit obligation recognized in accumulated other comprehensive loss:

Net actuarial loss

Net actuarial gain (loss)

Reversal of amortization item:

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(in thousands)

We expect to contribute $ 6.5 million to the Pension Plan in 2021.

The Compensation Committee has appointed an investment manager with full investment authority with respect to Pension Plan investments subject to investment guidelines and compliance with ERISA or other applicable laws.

As a result of certain pension plan contribution relief provided by the American Rescue Plan Act enacted in March 2021, we do no t expect to make contributions to the Pension Plan during 2022.

The investment manager employs a series of asset allocation strategy phases to glide the portfolio risk commensurate with both plan characteristics and market conditions.

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The total portfolio allocation will be adjusted as the funded ratio of the Pension Plan changes and market conditions warrant.

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

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

Total account performance is reviewed at least annually, using

a dynamic benchmark approach to track investment performance.

General asset allocation guidelines at December 31, 2021 are as follows:

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

recommended by Mr.

Annual grant levels, vesting provisions and minimum-value guarantees of restricted units for designated participants are recommended by Mr.

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

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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.

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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 and 2018, we issued 596,650 and 191,858 , respectively, unrestricted common units to LTIP participants.

Non-vested grants at December 31, 2021

(1) During the year ended December 31, 2019, we issued 596,650 unrestricted common units to LTIP participants.

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

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(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.

(5) In April 2021, we granted 921,430 restricted units and 896,760 restricted units that have minimum-value guarantees of $ 2.53 per unit and $ 3.79 per unit, respectively, regardless of whether or not the awards vest.

For the years ended December 31, 2021, 2020 and 2019, our LTIP expense for grants of restricted units was $ 5.4 million, $ 8.1 million and $ 10.4 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.

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.

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That expense is expected to be recognized over a weighted-average period of 1.6 years.

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.

On January 26, 2022, the Compensation Committee authorized additional grants of 694,919 restricted units, of which 687,719 units were granted.

These restricted units have minimum-value guarantees of either $ 9.62 or $ 6.41 per unit, regardless of whether or not the awards vest.

Supplemental Executive Retirement Plan and Directors' Deferred Compensation Plan

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Phantom units outstanding as of December 31, 2021

(1) During the years ended December 31, 2019 and 2018, we issued ARLP common units of 115,484 and 7,181 , respectively, to participants under the SERP and Directors' Deferred Compensation Plan .

(1) During the years ended December 31, 2021 and 2019, we issued ARLP common units that we purchased on the open market of 102,962 and 115,484 , respectively, to participants under the SERP and Directors' Deferred Compensation Plan .

Units issued in 2021 were net of units settled in cash to satisfy tax withholding obligations.

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Ending balance

For the year ended December 31, 2021, the allocation of liability associated with acquisition, mine development and change in assumptions was immaterial.

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.

The impact of discounting our estimated cash flows resulted in reducing the accrual for asset retirement obligations by $ 98.3 million and $ 102.1 million at December 31, 2021 and 2020, respectively.

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The discount rate used to calculate the estimated present value of future obligations for workers' compensation was 2.41 % and 1.95 % at December 31, 2021 and 2020, respectively.

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.

The valuation loss in 2021 was primarily attributable to unfavorable changes in claims development partially offset by an increase in the discount rate used to calculate the estimated present value of future obligations.

The 2020 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.

As of December 31, 2021 and 2020, we had $ 100.4 million and $ 95.2 million, respectively, in surety bonds and letters of credit outstanding to secure workers' compensation obligations.

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Interest cost

Actuarial (gain) loss

Actuarial loss

Benefits and expenses paid

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(in thousands)

Net actuarial gain (loss)

Net actuarial loss

Reversal of amortization item:

Net actuarial (gain) loss

Net actuarial loss (gain)

Total recognized in accumulated other comprehensive loss

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Net actuarial loss

The actuarial loss component of the change in benefit obligations in 2021 was primarily attributable to unfavorable assumption changes regarding future medical and legal expense levels.

These components were offset in part by a) an increase in the discount rate used to calculate the estimated present value of the future obligations and b) favorable black lung claims experience and other demographic changes in the at-risk population.

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.

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

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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.

Line of Credit

On February 19, 2021, we entered into a line of credit arrangement (the "Line of Credit") with a related party for $ 5.0 million.

This Line of Credit was amended on November 4, 2021 to increase the total available under the Line of Credit to $ 5.5 million.

The Line of Credit had a maturity date of February 28, 2023 and accrued interest at an annual rate of 3.5 % payable quarterly.

During the year ended December 31, 2021 we received proceeds and made payments under the Line of Credit of $ 5.3 million.

On November 10, 2021 we terminated the Line of Credit.

Affiliate Coal Lease Agreements

The following table summarizes advanced royalties outstanding and related payments and recoupments under our affiliate coal lease agreements:

SGP/Craft Foundations

Craft Foundations

December 2014

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As of December 31, 2021

SGP/Craft Foundations — In January 2005, we acquired Tunnel Ridge from ARH.

In connection with this acquisition, we assumed a coal lease with SGP.

Craft Foundations — In January 2005, we acquired Tunnel Ridge from ARH.

In connection with this acquisition, we assumed a coal lease with Alliance Resource GP, LLC, an entity indirectly wholly owned by Mr.

Craft and Kathleen S.

Craft until it was dissolved in December 2020.

In December 2018, the property subject to the lease was transferred to the Joseph W.

Craft III Foundation and the Kathleen S.

Craft Foundation, which each hold an undivided one - half interest (the "Craft Foundations").

Under the terms of the lease, Tunnel Ridge is required to pay an annual minimum royalty of $ 3.0 million.

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Tunnel Ridge incurred $ 5.8 million, $ 6.1 million and $ 7.2 million in earned royalties in 2021, 2020 and 2019 respectively.

As of January 1, 2019 the property subject to this lease is owned by the Joseph W.

Craft III Foundation and the Kathleen S.

Craft Foundation, an undivided one -half interest each (the "Craft Foundations").

WKY CoalPlay — In February 2015, WKY CoalPlay entered into a coal lease agreement with Alliance Resource Properties, LLC ("Alliance Resource Properties") regarding coal reserves located in Henderson and Union Counties, Kentucky.

The lease has an initial term of 20 years and provides for earned royalty payments to WKY CoalPlay of 4.0 % of the coal sales price and annual minimum royalty payments of $ 2.1 million.

WKY CoalPlay — In February 2015, WKY CoalPlay entered into a coal lease agreement with Alliance Resource Properties regarding coal mineral resources located in Henderson and Union Counties, Kentucky.

The lease has an initial term of 20 years and provides for earned royalty payments to WKY CoalPlay of 4.0 % of the coal sales price and annual

minimum royalty payments of $ 2.1 million.

All annual minimum royalty payments are recoupable from future earned royalties.

Alliance Resource Properties also was granted an option to acquire the leased reserves at any time during a three-year period beginning in February 2018 for a purchase price that would provide WKY CoalPlay a 7.0 % internal rate of return on its investment in these reserves taking into account payments previously made under the lease (See Note 12 – Variable Interest Entities).

Alliance Resource Properties also was granted an option to acquire the leased mineral reserves and resources at any time during a three-year period beginning in February 2018 for a purchase price that would provide WKY CoalPlay a 7.0 % internal rate of return on its investment in these coal mineral reserves and resources taking into account payments previously made under the lease.

These options expired in February 2021.

In December 2014, WKY CoalPlay's subsidiaries, Towhead Coal Reserves, LLC and Henderson Coal Reserves, LLC entered into coal lease agreements with Alliance Resource Properties.

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

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.

Each agreement granted Alliance Resource Properties an option to acquire the leased coal mineral reserves and resources 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 coal mineral reserves and resources taking into account payments previously made under the leases.

These options expired in December 2020.

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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 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.

The agreement grants Alliance Resource Properties an option to acquire the leased coal mineral resources 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 coal mineral resources 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 2021 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.

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

We also have noncancelable coal reserve leases as discussed in Note 21 – Related-Party Transactions and noncancelable leases with a third party for equipment under finance lease obligations.

For information regarding future minimum lease payments see Note 9 – Leases.

We also have noncancelable coal mineral reserve and resource leases as discussed in Note 21 – Related-Party Transactions.

Contractual Commitments — In connection with planned capital projects, we have contractual commitments of approximately $ 85.7 million at December 31, 2021.

As of December 31, 2021, 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 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.

Various lawsuits, claims and regulatory proceedings incidental to our business are pending against the ARLP Partnership.

General Litigation — We are party to litigation that has been initiated against certain of our subsidiaries in which the plaintiffs allege violations of the Fair Labor Standards Act and Kentucky Wage and Hour Act due to an alleged failure to compensate for time "donning"

and "doffing"

equipment and to account for certain bonuses in the calculation of overtime rates and pay.

The plaintiffs seek class or collective action certification.

Because the litigation of these matters is in the early stages, we cannot reasonably estimate a range of potential exposure at this time.

We believe the plaintiffs’ claims are without merit and our ultimate exposure, if any, will not be material to our results of operations or financial position and we intend to defend the litigation vigorously.

However, if our current belief that the claims are without merit is not upheld, it is reasonably possible that the ultimate resolution of these matters could result in a potential loss that may be material to our results of operations.

We also have various other lawsuits, claims and regulatory proceedings incidental to our business that are pending against the ARLP Partnership.

We record an accrual for a potential loss related to these matters when, in management's opinion, such loss is probable and reasonably estimable.

Based on known facts and circumstances, we believe the ultimate outcome of these outstanding lawsuits, claims and regulatory proceedings will not have a material adverse effect on our financial condition, results of operations or liquidity.

However, if the results of these matters were different from management's current opinion and in amounts greater than our accruals, then they could have a material adverse effect.

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

Based on known facts and circumstances, we believe the ultimate outcome of these outstanding lawsuits, claims and regulatory proceedings will not have a material adverse effect on our

financial condition, results of operations or liquidity.

However, if the results of these matters are different from management's current expectations and in amounts greater than our accruals, such matters could have a material adverse effect on our business and operations.

Other —Effective December 1, 2021, we renewed our annual property and casualty insurance program.

Our property insurance was procured from our wholly owned captive insurance company, Wildcat Insurance, LLC ("Wildcat Insurance").

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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.

The international coal market has been a 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.

During the years ended December 31, 2021, 2020 and 2019, export tons represented approximately 12.5 %, 3.3 % and 17.9 % of tons sold, respectively.

We use the end-usage point as the basis for attributing tons to individual countries.

Because title to our export shipments typically transfers to our brokerage customers at a point that does not necessarily reflect the end-usage point, we attribute export tons to the country with the end-usage point, if known.

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Trade accounts receivable from major customers totaled approximately $ 10.8 million and $ 32.0 million at December 31, 2021 and 2020, 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 2022 for Customer C and Customer D and 2020 for Customer A.

Our credit loss experience has historically been insignificant.

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

The coal supply agreements with Customer A expires in 2024.

SEGMENT INFORMATION

We operate in the United States as a diversified natural resource company that generates income from the production and marketing of coal to major domestic and international utilities and industrial users as well as income from oil & gas mineral interests.

We aggregate multiple operating segments into three reportable segments, Illinois Basin, Appalachia, and Minerals.

We operate in the United States as a diversified natural resource company that generates operating and royalty income from the production and marketing of coal to major domestic and international utilities and industrial users as well as royalty income from oil & gas mineral interests.

We aggregate multiple operating segments into four reportable segments, Illinois Basin Coal Operations, Appalachia Coal Operations, Oil & Gas Royalties and Coal Royalties.

We also have an "all other"

category referred to as Other and Corporate.

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, 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.

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.

category referred to as Other, Corporate and Elimination.

Our two coal operations 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 operations reportable 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.

Our Oil & Gas Royalties reportable segment includes our oil & gas mineral interests which are located primarily in the Permian (Delaware and Midland), Anadarko (SCOOP/STACK) and Williston (Bakken) basins.

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

Our Coal Royalties reportable segment includes coal mineral reserves and resources owned or leased by Alliance Resource Properties, which are either (a) leased to our mining complexes or (b) near our coal mining operations but not yet leased.

Beginning in the first quarter of 2021, we began to strategically view and manage our coal royalty activities separately from our coal operations since acquiring and managing a variety of royalty producing assets involve similar attributes.

As a result, we restructured our reportable segments to better reflect this strategic view in how we manage our business and allocate resources.

Prior periods have been recast to include Alliance Resource Properties within our new Coal Royalties reportable segment with offsetting recast adjustments primarily to our coal operations reportable segments and to a lesser extent, our Other, Corporate and Elimination category.

Eliminations reported in Other, Corporate and Elimination were also recast to reflect intercompany royalty revenues and offsetting intercompany royalty expense resulting from our new Coal Royalties reportable segment.

The Illinois Basin Coal Operations reportable segment includes currently operating mining complexes (a) the 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 Coal Operations reportable segment also includes our 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.

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

The Illinois Basin Coal Operations 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, which ceased production in December 2016, (d) the Hopkins County Coal, LLC mining complex, which ceased production in April 2016, and (e) Sebree Mining, LLC's mining complex, which ceased production in November 2015.

The Appalachia Coal Operations 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 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.

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

Other and Corporate includes marketing and administrative activities, Matrix Design Group, LLC and its subsidiaries ("Matrix Design"), Alliance Design Group, LLC ("Alliance Design") (collectively, Matrix Design and Alliance Design referred to as the "Matrix Group"), Alliance Coal's coal brokerage activity and Alliance Minerals' prior equity investment in Kodiak.

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

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.

The Oil & Gas Royalties 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.

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

Coal Royalties reportable segment includes coal mineral reserves and resources owned or leased by Alliance Resource Properties that are (a) leased to certain of our mining complexes in both the Illinois Basin Coal Operations and Appalachia Coal Operations reportable segments or (b) located near our operations and external mining operations.

Approximately two thirds of the coal sold by our Coal Operations' mines is leased from our Coal Royalties entities.

Other, Corporate and Elimination includes marketing and administrative activities, Matrix Design Group, LLC and its subsidiaries ("Matrix Design"), Alliance Design Group, LLC ("Alliance Design") (collectively, Matrix Design and Alliance Design referred to as the "Matrix Group"), Pontiki Coal, LLC's workers' compensation and pneumoconiosis liabilities, Wildcat Insurance, which assists the ARLP Partnership with its insurance requirements, AROP Funding and Alliance Finance (both discussed in Note 8 – Long-Term Debt) and other miscellaneous activities.

The eliminations included in Other, Corporate and Elimination primarily represent the intercompany coal royalty transactions described above between our Coal Royalties reportable segment and our coal operations' mines.

Reportable segment results are presented below.

Coal Operations

Corporate and

(in thousands)

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Capital expenditures (4)

(1) The elimination column represents the elimination of intercompany transactions and is primarily comprised of sales from the Matrix Group to our mining operations, coal sales and purchases between operations within different segments, sales of receivables to AROP Funding, financing between segments and insurance premiums paid to Wildcat Insurance.

(2) Revenues included in the Other and Corporate column are primarily attributable to the outside and affiliate revenues at the Matrix Group and coal brokerage activities.

In additions, Other and Corporate includes affiliate revenues for administrative and Wildcat Insurance services.

(1) Revenues included in the Other, Corporate and Elimination column are attributable to intercompany eliminations, which are primarily the coal royalties intercompany eliminations, outside revenues at the Matrix Group and other outside miscellaneous sales and revenue activities.

(2) Segment Adjusted EBITDA Expense includes operating expenses, coal purchases and other income.

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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, asset and goodwill impairments and acquisition gain.

(3) Segment Adjusted EBITDA is defined as net income (loss) attributable to ARLP before net interest expense, income taxes, depreciation, depletion and amortization, general and administrative expense, 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.

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Depreciation, depletion and amortization

Settlement gain

Asset impairments

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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).

(4) Capital Expenditures shown exclude the AllDale Acquisition on January 3, 2019, the Wing Acquisition on August 2, 2019 and Boulders Acquisition on October 13, 2021 (Note 3 – Acquisitions) .

SUBSEQUENT EVENTS

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

Other than the events described in Notes 8, 11 and 17, there were no subsequent events.

SUPPLEMENTAL OIL & GAS RESERVE INFORMATION (UNAUDITED)

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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

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Costs incurred in oil & gas property acquisitions are presented below:

Year Ended December 31,

(in thousands)

Acquisition costs of properties

Property acquisition costs for 2021 are related to the Boulders 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 regarding 2019 acquisition activity.

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

Oil & Gas Capitalized Costs

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Our Share of an Equity Method Investee

Entity's Share of Equity Method Investee

Our Share of an Equity Method Investee

Proved properties

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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.

(1) The change in total capitalized cost in 2021 reflects the acquisition of proved and unproved properties in the Boulders Acquisition.

See Note 3 – Acquisitions of our consolidated financial statements for more information about the Boulders Acquisition.

Results of Operations from Oil & Gas Activities

The following schedule sets forth the revenues and expenses related to our oil & gas mineral interests.

It does not include any interest costs or general and administrative costs, and therefore, is not necessarily indicative of the contribution to the results of our Minerals segment.

It does not include any interest costs or general and administrative costs, and therefore, is not necessarily indicative of the contribution to the results of our Oil & Gas Royalties segment.

Year Ended December 31,

(in thousands)

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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.

Purchases of minerals in place

Revisions of previous estimates

Extensions and discoveries

As of December 31, 2021 (1)

(1) Proved reserves of approximately 1,285 MBOE, 972 MBOE and 1,208 MBOE were attributable to noncontrolling interests, as of December 31, 2021, 2020 and 2019, respectively.

Natural Gas Liquids

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As of December 31, 2020

Sales of minerals in place

Revisions of previous estimates

Extensions and discoveries

As of December 31, 2021

Total consolidated and equity interests in reserves at December 31, 2021

1 unchanged sentence

Net proved developed reserves as of December 31, 2020

Net proved developed reserves as of December 31, 2021

Net proved undeveloped reserves as of December 31, 2019

Net proved undeveloped reserves as of December 31, 2020

Net proved undeveloped reserves as of December 31, 2021

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

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Notable changes in proved reserves during the year ended December 31, 2019, 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.

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

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

● Net change due to extensions and discoveries:

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

Notable changes in proved reserves during the year ended December 31, 2021, included:

● 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 2021, a net addition of 1,181 MBOE occurred primarily from the completion of 843 new wells on our acreage and from the addition of 474 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.

Standardized Measure of Discounted Future Net Cash Flows

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Our Share of an Equity Method Investee

Entity's Share of Equity Method Investee

Our Share of an Equity Method Investee

Future cash inflows

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Total standardized measure (1)

(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.

(1) Includes standardized discounted future net cash flows of approximately $17.9 million, $5.2 million and $12.5 million attributable to noncontrolling interests in the ARLP Partnership's consolidated subsidiaries as of December 31, 2021, 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:

7 unchanged sentences

Our Share of an Equity Method Investee

Entity's Share of Equity Method Investee

Our Share of an Equity Method Investee

Standardized measure, beginning of year

9 unchanged sentences

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.

For 2021, this was a major component of the overall reserves value change from 2020 due to the surge in global energy demand during the recovery from the economic downturn related to the COVID-19 pandemic during 2020.

For 2020, net changes in prices and production costs were major components of the overall reserves value change from 2019 due mainly to the COVID-19 pandemic 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.

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PARTNERS' CAPITAL:

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

Limited Partners - Common Unitholders 127,195,219 units outstanding

TOTAL LIABILITIES AND PARTNERS' CAPITAL

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NET INCOME (LOSS) ATTRIBUTABLE TO ARLP

GENERAL PARTNER

LIMITED PARTNERS

EARNINGS PER LIMITED PARTNER UNIT - BASIC AND DILUTED

23 unchanged sentences

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.

The duration of these guarantees varies.

The maximum undiscounted potential future payment obligation for our guarantees of certain coal supply agreements as of December 31, 2021 is approximately $ 146.7 million as a result of elevated market prices.

These guarantees provide for compensation to customers based on additional cost to the customer to replace any contracted tons that our subsidiaries fail to deliver.

We do not expect to make any payments under these guarantees.

CASH DISTRIBUTIONS RECEIVED

2 unchanged sentences

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