34 unchanged sentences
Opinion on the financial statements
−Removed: We have audited the accompanying consolidated balance sheet of Alliance Resource Partners, L.P.
−Removed: (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").
−Removed: 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.
−Removed: 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.
+Added: We have audited the accompanying consolidated balance sheets of Alliance Resource Partners, L.P.
+Added: (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of December 31, 2022 and 2021, 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, 2022, and the related notes and financial statement schedule included under Item 15(a)(2) (collectively referred to as the “financial statements”).
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
+Added: 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, 2022, 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 24, 2023 expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Partnership’s management.
−Removed: Our responsibility is to express an opinion on the Partnership’s financial statements based on our audit.
+Added: 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.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
+Added: We conducted our audits 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.
−Removed: 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.
+Added: Our audits 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.
−Removed: 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.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
2 unchanged sentences
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.
−Removed: Valuation of workers’ compensation and pneumoconiosis benefits
+Added: Valuation of workers’ compensation and pneumoconiosis benefit obligations
As described further in Note 21 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.
−Removed: As of December 31, 2021, the Partnership’s aggregate workers’ compensation and pneumoconiosis benefits obligations were approximately $165 million.
−Removed: We identified valuation of workers’ compensation and pneumoconiosis benefits as a critical audit matter.
−Removed: 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.
−Removed: Workers’ compensation and pneumoconiosis benefits obligations are determined using actuarial projection methods and numerous assumptions including claim development patterns, costs, and mortality.
+Added: As of December 31, 2022, the Partnership’s aggregate workers’ compensation and pneumoconiosis benefit obligations were approximately $154 million.
+Added: We identified valuation of workers’ compensation and pneumoconiosis benefit obligations as a critical audit matter.
+Added: The principal considerations for our determination that the valuation of workers’ compensation and pneumoconiosis benefit obligations is 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.
+Added: Workers’ compensation and pneumoconiosis benefit obligations are determined using actuarial projection methods and numerous assumptions including claim development
+Added: patterns, costs, and mortality.
The estimates rely on the assumption that historical claim patterns are an accurate representation for future claims.
−Removed: Our audit procedures related to the valuation of workers’ compensation and pneumoconiosis benefits included the following, among others.
−Removed: ● 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.
−Removed: ● 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.
+Added: Our audit procedures related to the valuation of workers’ compensation and pneumoconiosis benefit obligations included the following, among others.
+Added: ● We tested the design and operating effectiveness of controls relating to the workers’ compensation and pneumoconiosis benefit obligations process including testing controls over management’s review of actuarial specialists' liability calculations and the completeness and accuracy of the underlying data.
+Added: ● We tested management’s process for determining the worker’s compensation and pneumoconiosis benefit obligation accruals, 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.
10 unchanged sentences
We have audited the accompanying consolidated balance sheet of Alliance Resource Partners, L.P.
−Removed: 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").
−Removed: 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.
+Added: and subsidiaries (the Partnership) as of December 31, 2020, the related consolidated statement of operations, comprehensive income (loss), cash flows and partners’ capital for the year then ended, 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”).
+Added: 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 the year then ended, in conformity with U.S.
generally accepted accounting principles.
1 unchanged sentence
These financial statements are the responsibility of the Partnership’s management.
−Removed: Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits.
+Added: 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 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.
−Removed: We conducted our audits in accordance with the standards of the PCAOB.
+Added: 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.
−Removed: Our audits 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.
+Added: 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.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audits provide a reasonable basis for our opinion.
+Added: 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.
+Added: We believe that our audit provides a reasonable basis for our opinion.
/s/ Ernst & Young LLP
24 unchanged sentences
Equity method investments
+Added: Equity securities
Operating lease right-of-use assets
8 unchanged sentences
Workers' compensation and pneumoconiosis benefits
−Removed: Current finance lease obligations
−Removed: Current operating lease obligations
Other current liabilities
7 unchanged sentences
Asset retirement obligations
−Removed: Long-term finance lease obligations
Long-term operating lease obligations
+Added: Deferred income tax liabilities
Other liabilities
27 unchanged sentences
Depreciation, depletion and amortization
+Added: Settlement gain
Asset impairments
5 unchanged sentences
Equity method investment income
−Removed: Equity securities income
−Removed: Acquisition gain
Other income (expense)
INCOME (LOSS) BEFORE INCOME TAXES
−Removed: INCOME TAX EXPENSE (BENEFIT)
+Added: INCOME TAX EXPENSE
NET INCOME (LOSS)
18 unchanged sentences
Pneumoconiosis benefits
−Removed: Net actuarial loss
+Added: Net actuarial gain (loss)
Amortization of net actuarial loss (gain) (1)
14 unchanged sentences
Net income (loss)
−Removed: Adjustments to reconcile net income to net cash provided by operating activities:
+Added: Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization
Non-cash compensation expense
−Removed: Asset retirement obligations
−Removed: Coal inventory adjustment to market
Equity investment income
Distributions from equity method investments
−Removed: Income from equity securities paid-in-kind
−Removed: Net loss (gain) on sale of property, plant and equipment
+Added: Net gain on sale of property, plant and equipment
Asset impairment
Goodwill impairment
−Removed: Acquisition gain, net
−Removed: Cash received on redemption of equity securities in excess of investment
−Removed: Valuation allowance of deferred tax assets
+Added: Change in deferred income tax
Changes in operating assets and liabilities:
16 unchanged sentences
Proceeds from sale of property, plant and equipment
−Removed: Distributions received from investments in excess of cumulative earnings
−Removed: Payments for acquisitions of businesses, net of cash acquired
+Added: Contributions to equity method investments
+Added: Purchase of equity securities
+Added: Payments for acquisitions of businesses
Oil & gas reserve acquisition
−Removed: Cash received from redemption of equity securities
Net cash used in investing activities
9 unchanged sentences
Payments on finance lease obligations
−Removed: Payment of debt issuance costs
−Removed: Payments for purchases of units under unit repurchase program
−Removed: Payments for purchase of units and tax withholdings related to settlements under deferred compensation plans
Cash settlement of grants under deferred compensation plan
16 unchanged sentences
Balance at January 1, 2020
−Removed: Comprehensive income:
+Added: Comprehensive income (loss):
+Added: Net income (loss)
Actuarially determined long-term liability adjustments
−Removed: Total comprehensive income
+Added: Total comprehensive loss
Settlement of deferred compensation plans
−Removed: Purchase of units under unit repurchase program
−Removed: ( 1,776,564 )
Common unit-based compensation
3 unchanged sentences
Balance at December 31, 2020
−Removed: Comprehensive income (loss):
−Removed: Net income (loss)
+Added: Comprehensive income:
Actuarially determined long-term liability adjustments
−Removed: Total comprehensive loss
+Added: Total comprehensive income
Settlement of deferred compensation plans
7 unchanged sentences
Total comprehensive income
−Removed: Settlement of deferred compensation plans
Common unit-based compensation
1 unchanged sentence
Distributions from consolidated company to noncontrolling interest
+Added: Profits interest adjustment for noncontrolling interest
Distributions to Partners
22 unchanged sentences
● References to "Alliance Coal"
−Removed: mean Alliance Coal, LLC, the holding company for our coal mining operations.
+Added: mean Alliance Coal, LLC, an indirect wholly owned subsidiary.
● References to "Alliance Minerals"
−Removed: mean Alliance Minerals, LLC, the holding company for our oil and gas minerals interests.
+Added: mean Alliance Minerals, LLC, an indirect wholly owned subsidiary.
● References to "Alliance Resource Properties"
−Removed: mean Alliance Resource Properties, LLC, the land holding company for certain of our coal mineral interests, including the subsidiaries of Alliance Resource Properties, LLC.
+Added: mean Alliance Resource Properties, LLC, an indirect wholly owned subsidiary .
ARLP is a Delaware limited partnership listed on the NASDAQ Global Select Market under the ticker symbol "ARLP."
3 unchanged sentences
Craft, is the direct owner of MGP.
−Removed: AllDale I & II Acquisition
−Removed: On January 3, 2019 (the "AllDale Acquisition Date"), we acquired all of the limited partner interests not owned by Cavalier Minerals JV, LLC ("Cavalier Minerals") in AllDale Minerals LP ("AllDale I") and AllDale Minerals II, LP ("AllDale II", and collectively with AllDale I, "AllDale I & II") and the general partner interests in AllDale I & II (the "AllDale Acquisition").
−Removed: 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.
−Removed: The AllDale Acquisition provides us with diversified exposure to industry leading operators.
−Removed: Wing Acquisition
−Removed: 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 (the "Wing Acquisition").
−Removed: The Wing Acquisition enhances our ownership position in the Permian Basin and expands our exposure to industry leading operators.
−Removed: Boulders Acquisition
−Removed: On October 13, 2021, AR Midland acquired approximately 1,480 oil & gas net royalty acres in the Delaware Basin from Boulders Royalty Corp.
+Added: Oil & Gas Acquisitions
+Added: On October 13, 2021, we 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").
−Removed: This acquisition also enhanced our ownership position in the Permian Basin
−Removed: These acquisitions furthered our business strategy to grow our Oil & Gas Royalties segment through accretive acquisitions.
+Added: On September 9, 2022, we acquired approximately 394 oil & gas net royalty acres in the Delaware Basin from Belvedere Operating, LLC ("Belvedere") for a purchase price of $ 11.4 million (the "Belvedere Acquisition").
+Added: On October 26, 2022, we acquired approximately 3,928 oil & gas net royalty acres in the Midland and Delaware Basins from Jase Minerals, LP ("Jase") for a purchase price of $ 81.2 million (the "Jase Acquisition").
+Added: The Boulders, Belvedere and Jase Acquisitions enhanced our ownership position in the Permian Basin and furthered our business strategy to grow our Oil & Gas Royalties segment through accretive acquisitions.
See Note 3 – Acquisitions for more information.
−Removed: 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").
+Added: We now hold approximately 61,400 net royalty acres in premier oil & gas resource plays including previous acquisitions and our investment in AllDale Minerals III, LP ("AllDale III").
+Added: Change in Tax Status
+Added: On March 15, 2022, Alliance Minerals changed its federal income tax status from a pass-through entity to a taxable entity via a "check the box"
+Added: election (the "Tax Election"), which became effective January 1, 2022.
+Added: This election for Alliance Minerals is anticipated to reduce the total income tax burden on our oil & gas royalties, as Alliance Minerals will pay entity-level taxes at corporate tax rates which are anticipated to be favorable to our unitholders.
+Added: For more information on the Tax Election please see Note 9 – Income Taxes.
+Added: New Venture Investments
+Added: On April 5, 2022, we made a $ 20 million convertible note investment in Francis Renewable Energy, LLC ("Francis").
+Added: Francis currently is active in the installation, management and operation of metered-for-fee, public-access electric vehicle ("EV") charging stations.
+Added: Francis also develops and constructs EV charging stations for third-party customers.
+Added: Our investment in Francis furthers our business strategy to develop strategic relationships and invest in attractive opportunities.
+Added: For more information on this investment, please see Note 13 – Variable Interest Entities.
+Added: On April 29, 2022, we purchased $ 32.6 million of Series D Preferred Stock in Infinitum Electric, Inc.
+Added: ("Infinitum"), a Texas-based startup developer and manufacturer of electric motors featuring printed circuit board stators which have the potential to result in motors that are smaller, lighter, quieter, more efficient and capable of operating at a fraction of the carbon footprint of conventional electric motors.
+Added: On November 2, 2022, we purchased an additional $ 9.4 million of Series D Preferred Stock in Infinitum.
+Added: The preferred stock provides for non-cumulative dividends when and if declared by Infinitum's board of directors.
+Added: Each share is convertible, at any time, at our option, into shares of common stock of Infinitum.
+Added: Our investment in Infinitum furthers our business strategy to develop strategic relationships and invest in attractive opportunities.
+Added: For more information on this investment, please see Note 14 – Investments.
+Added: On June 2, 2022, we committed to purchase $ 25.0 million of limited partner interests in NGP ETP IV, L.P.
+Added: ("NGP ETP IV"), a private equity fund sponsored by NGP Energy Capital Management, LLC ("NGP").
+Added: NGP ETP IV focuses on investments that are part of the global transition toward a lower carbon economy by partnering with top-tier management teams and investing growth equity in companies that drive or enable the growth of renewable energy, the electrification of our economy or the efficient use of energy.
+Added: For more information on this investment, please see Note 13 – Variable Interest Entities.
The consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of December 31, 2022 and 2021, 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, 2022.
All of our intercompany transactions and accounts have been eliminated.
+Added: Certain immaterial amounts in the prior year have been reclassified to conform to the current year presentation.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 unchanged sentences
(a) direct or indirect ability to make decisions, (b) obligation to absorb expected losses or (c) right to receive expected residual returns.
−Removed: A VIE must be evaluated quantitatively and qualitatively to determine the primary beneficiary, which is the reporting entity that has (a) the power to direct activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
+Added: A VIE must be evaluated quantitatively and qualitatively to determine the primary beneficiary, which is the reporting entity that has (a) the power to direct activities of a VIE that most significantly
+Added: impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
The primary beneficiary is required to consolidate the VIE for financial reporting purposes.
17 unchanged sentences
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.
−Removed: Fair value is based upon assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and risks inherent in valuation techniques and inputs to valuations.
+Added: Fair value is based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and risks inherent in valuation techniques and inputs to valuations.
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).
−Removed: techniques used in our fair value measurements are based upon observable and unobservable inputs.
+Added: Valuation techniques used in our fair value measurements are based on observable and unobservable inputs.
Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our own market assumptions.
18 unchanged sentences
Goodwill is not amortized, but instead is evaluated for impairment periodically.
−Removed: We evaluate goodwill for impairment annually on November 30th, or more often if events or circumstances indicate that goodwill might be impaired.
+Added: We evaluate goodwill for impairment annually or more often if events or circumstances indicate that goodwill might be impaired.
The reporting unit or units used to evaluate and measure goodwill for impairment are determined primarily from the manner in which the business is managed or operated.
A reporting unit is an operating segment or a component that is one level below an operating segment.
−Removed: During 2020, we recognized an impairment charge of $ 132.0 million consisting of the total carrying amount of goodwill allocated to our Hamilton reporting unit.
+Added: During 2020, we recognized an impairment charge of $ 132.0 million consisting of the total carrying amount of goodwill allocated to our Hamilton County Coal, LLC ("Hamilton") reporting unit.
See Note 5 – Goodwill Impairment for more information.
6 unchanged sentences
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 26 years .
−Removed: 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
+Added: 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 26 years , limited by the remaining estimated life of each mine.
Depreciable lives for buildings, office equipment and improvements range from 1 to 26 years .
14 unchanged sentences
We review each agreement to determine if an arrangement within the agreement contains a lease at the inception of an arrangement.
−Removed: Once an arrangement is determined to contain either an operating or finance lease with a term greater than 12 months, we recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term based on the present value of lease payments over the lease term.
+Added: Once an arrangement is determined to contain an operating or finance lease with a term greater than 12 months, we recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term based on the present value of lease payments over the lease term.
The lease term includes all noncancelable periods defined in the lease as well as periods covered by options to extend the lease that we are reasonably certain to exercise.
2 unchanged sentences
The determination of whether a lease is accounted for as a finance lease or an operating lease requires management to make estimates primarily about the fair value of the asset and its estimated economic useful life.
−Removed: Long-Lived Asset Impairment —We review the carrying value of long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount may not be recoverable based upon estimated undiscounted future cash flows.
+Added: Long-Lived Asset Impairment —We review the carrying value of long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount may not be recoverable based on estimated undiscounted future cash flows.
To the extent the carrying amount is not recoverable, the amount of impairment is measured by the difference between the carrying value and the fair value of the asset (See Note 4 – Long-Lived Asset Impairments).
7 unchanged sentences
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.
−Removed: Proved developed
−Removed: resources are the quantities expected to be recovered through our operators' existing wells with existing equipment, infrastructure and operating methods.
+Added: 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.
27 unchanged sentences
Distributions received on those investments are recorded as income unless those distributions are considered a return on investment, in which case the historical cost is reduced.
−Removed: We accounted for our ownership interests in Kodiak Gas Services, LLC ("Kodiak") as equity securities without readily determinable fair values.
−Removed: In the first quarter of 2019, Kodiak redeemed our preferred interests and therefore Kodiak ceased to be an equity security investment.
+Added: We account for our ownership interests in Infinitum as equity securities without readily determinable fair values.
See Note 14 – Investments for further discussion of this investment.
1 unchanged sentence
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.
−Removed: We hold an equity method investment in AllDale III through our subsidiary, Alliance Minerals.
−Removed: See Note 13 – Investments for further discussion of our equity method investment in AllDale III.
+Added: In the event our ownership requires a disproportionate sharing of income or loss, we use the hypothetical liquidation at book value ("HLBV") method to determine the appropriate allocation of income or loss.
+Added: Under the HLBV method, income or loss of the investee is allocated based on hypothetical amounts that each investor would be entitled to receive if the net assets held were liquidated at book value at the end of each period, adjusted for any contributions made and distributions received during the period.
+Added: We hold equity method investments in AllDale III, Francis and NGP ETP IV.
+Added: See Note 13 – Variable Interest Entities and Note 14 – Investments for further discussion of our equity method investments.
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.
15 unchanged sentences
Accounting for asset retirement obligations also requires depreciation of the capitalized asset retirement cost and accretion of the asset retirement obligation over time.
−Removed: The depreciation is generally determined on a units-of-production basis and accretion is generally recognized over the life of the producing assets.
−Removed: As changes in estimates occur (such as mine plan revisions, changes in estimated costs or changes in timing of the performance of reclamation activities), the revisions to the obligation and asset are recognized at the appropriate credit-adjusted, risk-free interest rate.
−Removed: Federal and state laws require bonds to secure our obligations to reclaim lands used for mining and are typically renewable on a yearly basis.
+Added: Depreciation is generally determined on a units-of-production basis and accretion is generally recognized over the life of the producing assets.
+Added: As changes in estimates occur (such as mine plan revisions, changes in estimated costs or changes in anticipated timing of reclamation activities), the revisions to the obligation and asset are recognized at the appropriate credit-adjusted, risk-free interest rate.
+Added: Federal and state laws require bonds to secure our obligations to reclaim lands used for mining and are typically renewed on an annual basis.
See Note 20 – Asset Retirement Obligations for more information.
32 unchanged sentences
Payments for coal shipments are typically due within two to four weeks of performance.
−Removed: 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
−Removed: services passes to the customer thereby granting us an unconditional right to receive consideration.
+Added: 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.
1 unchanged sentence
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.
−Removed: Oil & gas are priced on the delivery date based upon prevailing market prices with certain adjustments related to oil quality and physical location.
+Added: Oil & gas are priced on the delivery date based on 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.
4 unchanged sentences
Control of the minerals transfers to the operator when the lease agreement is executed.
−Removed: At the time we execute the lease agreement, we expect to receive the lease bonus payment within a reasonable time, though in no case more than one year, such that we do not adjust the expected amount of consideration for the effects of any significant financing component.
+Added: At the time we execute the lease agreement, we expect to receive the lease bonus
+Added: payment within a reasonable time, though in no case more than one year, such that we do not adjust the expected amount of consideration for the effects of any significant financing component.
As a non-operator, we have limited visibility into the timing of when new wells start producing.
29 unchanged sentences
Income Taxes —We are not a taxable entity for federal or state income tax purposes;
−Removed: the tax effect of our activities accrues to the unitholders.
−Removed: Although publicly traded partnerships as a general rule will be taxed as corporations, we qualify for an exemption because at least 90 % of our income consists of qualifying income, as defined in Section 7704(c) of the Internal Revenue Code.
+Added: the tax effect of our activities accrues to our unitholders.
+Added: Although publicly traded partnerships as a general rule are taxed as corporations, we qualify for an exemption because at least 90 % of our income consists of qualifying income, as defined in Section 7704(c) of the Internal Revenue Code.
Net income for financial statement purposes may differ significantly from taxable income reportable to unitholders as a result of differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements under our partnership agreement.
2 unchanged sentences
Accordingly, the aggregate difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined because information regarding each unitholder's tax attributes in our partnership is not available to us.
−Removed: We have certain subsidiaries that are subject to federal and state income taxes.
−Removed: These income taxes are not material to our financial position or results of operations.
−Removed: 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):
+Added: Our subsidiary Alliance Minerals within our Oil & Gas Royalties segment and certain other subsidiaries within our Other, Corporate and Elimination category are subject to federal and state income taxes.
+Added: We use the liability method of accounting for income taxes, under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities and (ii) operating losses and tax credit carryforwards.
+Added: Deferred income tax assets and liabilities are based on enacted rates applicable to the future period when those temporary differences are expected to be recovered or settled.
+Added: The effect of a change in tax status or a change in tax rates on deferred tax assets and liabilities is recognized in the period the change in status is elected or rate change is enacted.
+Added: A valuation allowance is provided for deferred tax assets when it is more likely than not the deferred tax assets will not be realized.
+Added: New Accounting Standards Issued and 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").
1 unchanged sentence
ASU 2021-10 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted.
−Removed: The adoption of ASU 2021-10 will not have a material impact on our consolidated financial statements.
+Added: The adoption of ASU 2021-10 did not have a material impact on our consolidated financial statements.
ACQUISITION S
−Removed: AllDale I & II
−Removed: On the AllDale Acquisition Date, we acquired all of the limited partner interests not owned by Cavalier Minerals in AllDale I & II and the general partner interests in AllDale I & II for $ 176.2 million, which was funded with cash on hand and borrowings under the Revolving Credit Facility.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The final total fair value of the cash paid in the AllDale Acquisition and our previous investments were as follows:
−Removed: As of January 3, 2019
−Removed: (in thousands)
−Removed: Previously held investments
−Removed: Prior to the AllDale Acquisition Date, we accounted for our investments in AllDale I & II, held through Cavalier Minerals, as equity method investments.
−Removed: The combined fair value of our equity method investments on the AllDale Acquisition Date was $ 307.3 million.
−Removed: We re-measured our equity method investments, which had an aggregate carrying value of $ 130.3 million immediately prior to the AllDale Acquisition.
−Removed: The re-measurement resulted in a gain of $ 177.0 million which is recorded in the Acquisition gain line item in our consolidated statements of income.
−Removed: The following table summarizes the final fair value allocation of assets acquired and liabilities assumed as of the AllDale Acquisition Date:
+Added: On October 13, 2021, we acquired approximately 1,480 oil & gas net royalty acres in the Delaware Basin from Boulders for a purchase price of $ 31.0 million, which was funded with cash on hand.
+Added: This acquisition gives us increased exposure to a prolific area of the Delaware Basin and is within close proximity to reserves acquired in previous acquisitions.
+Added: The acreage acquired in the Boulders Acquisition was mostly undeveloped.
+Added: Because more than 90% of the mineral interests acquired in the acquisition represent undeveloped properties, including proved undeveloped, we have determined that the Boulders Acquisition should be accounted for as an asset acquisition.
+Added: We have allocated the purchase price to the acquired reserves as follows:
(in thousands)
−Removed: Cash and cash equivalents
Mineral interests in proved properties
Mineral interests in unproved properties
−Removed: Accounts payable
−Removed: Net assets acquired
−Removed: Our previous equity method investments in AllDale I & II were held through Cavalier Minerals.
−Removed: Bluegrass Minerals Management, LLC ("Bluegrass Minerals") continues to hold a 4 % membership interest (the "Bluegrass Interest") as well as a profits interest in Cavalier Minerals as it did before the AllDale Acquisition.
−Removed: This Bluegrass Interest represents an indirect noncontrolling interest in AllDale I & II.
−Removed: The AllDale Acquisition Date fair value of the Bluegrass Interest was $ 12.3 million.
−Removed: The fair value of our previous equity method investments, the mineral interests and the Bluegrass Interest were determined using an income approach primarily comprised of discounted cash flow models.
−Removed: The assumptions used in the discounted cash flow models include estimated production, projected cash flows, forward oil & gas prices and a risk adjusted discount rate.
−Removed: Certain assumptions used are not observable in active markets, therefore the fair value measurements represent Level 3 fair value measurements.
−Removed: AllDale I & II's carrying value of the receivables and accounts payable represent their fair value given their short-term nature.
−Removed: The amounts of revenue and earnings, exclusive of the acquisition gain, of AllDale I & II included in our consolidated statements of income from the AllDale Acquisition Date through December 31, 2019 are as follows:
−Removed: (in thousands)
−Removed: 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.
−Removed: The purchase price was funded with cash on hand and borrowings under our Revolving Credit Facility discussed in Note 8 – Long-Term Debt.
−Removed: The Wing Acquisition enhances our ownership position in the Permian Basin, expands our exposure to industry leading operators
−Removed: and furthers our business strategy to grow our Oil & Gas Royalties segment.
−Removed: Concurrent with the Wing Acquisition, JC Resources LP, an entity owned by Mr.
−Removed: Craft, acquired from Wing, in a separate transaction, mineral interests that we elected not to acquire.
−Removed: 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.
−Removed: The following table summarizes our final fair value allocation of assets acquired as of the Wing Acquisition Date:
+Added: On September 9, 2022 (the "Belvedere Acquisition Date"), we acquired approximately 394 oil & gas net royalty acres in the Delaware Basin from Belvedere for a cash purchase price of $ 11.4 million, which was funded with cash on hand.
+Added: This acquisition gives us additional exposure to a productive area of the Delaware Basin and is within close proximity to reserves that we currently own.
+Added: Because the mineral interests acquired in the Belvedere 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 Belvedere Acquisition Date on our consolidated balance sheet.
+Added: The following table summarizes the fair value allocation of assets acquired as of the Belvedere Acquisition Date:
(in thousands)
1 unchanged sentence
Mineral interests in unproved properties
−Removed: Net assets acquired
−Removed: The fair value of the mineral interests was determined using a weighting of both income and market approaches.
−Removed: Our income approach primarily comprised a discounted cash flow model.
−Removed: The assumptions used in the discounted cash flow model included estimated production, projected cash flows, forward oil & gas prices and a weighted average cost of capital.
−Removed: Our market approach consisted of the observation of recent acquisitions in the Permian Basin to determine a market price for similar mineral interests.
−Removed: Certain assumptions used in our valuation are not observable in active markets;
+Added: The fair value of the mineral interests was determined using an income approach consisting of a discounted cash flow model.
+Added: The assumptions used in the discounted cash flow model included estimated production, projected cash flows, forward oil & gas prices and risk adjusted discount rates.
+Added: Certain assumptions used are not observable in active markets;
therefore, the fair value measurements represent Level 3 fair value measurements.
−Removed: The carrying value of the receivables represents the fair value given the short-term nature of the receivables.
−Removed: The amounts of revenue and earnings from the mineral interests acquired in the Wing Acquisition included in our consolidated statements of income from the Wing Acquisition Date through December 31, 2019 are as follows:
+Added: The amounts of revenue and earnings from the mineral interests acquired in the Belvedere Acquisition included in our consolidated statements of operations since the Belvedere Acquisition Date are as follows:
(in thousands)
−Removed: The following represents our actual and pro forma consolidated revenues and net income for the year ended December 31, 2019.
−Removed: 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.
−Removed: These pro forma amounts have been calculated after applying our accounting policies.
+Added: The following represents our supplemental pro forma consolidated revenues and net income for the years ended December 31, 2022 and 2021 as if the mineral interests acquired in the Belvedere Acquisition had been included in our consolidated results since January 1, 2021.
+Added: These amounts have been calculated after applying our accounting policies.
(in thousands)
−Removed: Total revenues
−Removed: 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.
−Removed: 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.
−Removed: The acreage is mostly undeveloped.
−Removed: 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.
−Removed: We have allocated the purchase price to the acquired reserves as follows:
+Added: On October 26, 2022 (the "Jase Acquisition Date"), we acquired approximately 3,928 oil & gas net royalty acres in the Midland and Delaware Basins from Jase for a cash purchase price of $ 81.2 million which was funded with cash on hand.
+Added: This acquisition further enhanced our ownership position in the Permian Basin.
+Added: Because the mineral interests acquired in the Jase 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 Jase Acquisition Date on our consolidated balance sheet.
+Added: The following table summarizes the fair value allocation of assets acquired as of the Jase Acquisition Date:
(in thousands)
1 unchanged sentence
Mineral interests in unproved properties
+Added: Net assets acquired
+Added: The fair value of the mineral interests was determined using an income approach consisting of a discounted cash flow model.
+Added: The assumptions used in the discounted cash flow model included estimated production, projected cash flows, forward oil & gas prices and risk adjusted discount rates.
+Added: The fair value of the receivables was determined using estimated production during the period between the Jase Acquisition Date and the effective date of the agreement and observable sales prices during the period.
+Added: Certain assumptions used are not observable in active markets;
+Added: therefore, the fair value measurements represent Level 3 fair value measurements.
+Added: The amounts of revenue and earnings from the mineral interests acquired in the Jase Acquisition included in our consolidated statements of operations since the Jase Acquisition Date are as follows:
+Added: (in thousands)
+Added: The following represents our supplemental pro forma consolidated revenues and net income for the years ended December 31, 2022 and 2021 as if the mineral interests acquired in the Jase Acquisition had been included in our consolidated results since January 1, 2021.
+Added: These amounts have been calculated after applying our accounting policies.
+Added: (in thousands)
LONG-LIVED ASSET IMPAIRMENT S
2 unchanged sentences
See Note 25 – Segment Information for more information about our segments.
−Removed: 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.
−Removed: 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.
−Removed: See Note 12 – Variable Interest Entities for more information about WKY CoalPlay.
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.
3 unchanged sentences
During the first quarter of 2020, we considered whether an interim test of our consolidated goodwill of $ 136.4 million was necessary.
−Removed: 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.
+Added: Our consolidated goodwill included $ 132.0 million recorded in our Illinois Basin Coal Operations segment in conjunction with our acquisition of the 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.
2 unchanged sentences
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.
−Removed: 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
−Removed: information available to us.
+Added: 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;
2 unchanged sentences
Accordingly, we recognized an impairment charge of $ 132.0 million consisting of the total carrying amount of goodwill associated with Hamilton.
−Removed: This impairment charge reduced our consolidated goodwill balance to $ 4.4 million.
−Removed: 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 :
2 unchanged sentences
Total inventories, net
−Removed: For the year ended December 31, 2020, we recorded lower of cost or net realizable value adjustments of $ 3.2 million to our coal inventories as a result of lower coal sale prices and higher cost per ton due to the impact of lower production on our fixed costs per ton in addition to the impact of challenging market conditions on our production levels.
−Removed: The lower of cost or net realizable value adjustments reflect the impacts of the challenging market conditions and were primarily attributable to the Mettiki and Hamilton mining complexes.
See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for inventories.
19 unchanged sentences
however, we do review for impairment as needed throughout the year.
+Added: During 2022, we incurred $ 11.3 million in mine development costs, primarily related to Hamilton and River View Coal, LLC ("River View") mine.
During 2021, we did not incur material mine development costs.
−Removed: During 2020, we incurred $ 13.1 million in mine development costs, primarily related to the development of our Excel Mine No.
−Removed: 5 at our MC Mining complex.
All past capitalized mine development costs are associated with other mines that shifted to the production phase in past years and we are amortizing these costs accordingly.
6 unchanged sentences
(in thousands)
−Removed: Revolving credit facility
+Added: Replaced credit facility
Securitization facility
5 unchanged sentences
Credit Facility.
−Removed: On March 9, 2020, our Intermediate Partnership entered into a Fifth Amended and Restated Credit Agreement (the "Credit Agreement") with various financial institutions.
−Removed: 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.
−Removed: 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.
−Removed: We incurred debt issuance costs in 2020 of $ 6.3 million in connection with the Credit Agreement.
−Removed: These debt issuance costs are deferred and amortized as a component of interest expense over the term of the Revolving Credit Facility.
−Removed: The Credit Agreement is guaranteed by certain of our Intermediate Partnership's material direct and indirect subsidiaries (the "Restricted Subsidiaries") and is secured by substantially all of the assets of the Restricted Subsidiaries.
−Removed: The Credit Agreement is also guaranteed by Alliance Minerals but the oil and gas minerals assets of Alliance Minerals and its direct and indirect subsidiaries (collectively with Alliance Minerals, the "Unrestricted Subsidiaries") are not collateral under the Credit Agreement.
−Removed: Borrowings under the Revolving Credit Facility bear interest, at our option, at either (i) the Base Rate at the greater of three benchmarks or (ii) a Eurodollar Rate, plus margins for (i) or (ii), as applicable, that fluctuate depending upon the ratio of Consolidated Debt to Consolidated Cash Flow (each as defined in the Credit Agreement).
−Removed: The Eurodollar Rate, with applicable margin, under the Revolving Credit Facility was 2.45 % as of December 31, 2021.
−Removed: At December 31, 2021, we had $ 44.1 million of letters of credit outstanding with $ 415.4 million available for borrowing under the Revolving Credit Facility.
−Removed: We incur an annual commitment fee of 0.35 % on the undrawn portion of the Revolving Credit Facility.
−Removed: We utilize the Revolving Credit Facility, as appropriate, for working capital requirements, capital expenditures and investments, scheduled debt payments and distribution payments.
−Removed: The Credit Agreement contains various restrictions affecting the Intermediate Partnership and its Restricted Subsidiaries including, among other things, restrictions on incurrence of additional indebtedness and liens, sale of assets, investments, mergers and consolidations and transactions with affiliates, including transactions with Unrestricted Subsidiaries.
+Added: On January 13, 2023, Alliance Coal entered into a Credit Agreement (the "Credit Agreement") with various financial institutions.
+Added: The Credit Agreement provides for a $ 425 million revolving credit facility, which includes a sublimit of $ 15.0 million for swingline borrowings and permits the issuance of letters of credit of up to the full amount of $ 425 million (the "Revolving Credit Facility"), and for a term loan in an aggregate principal amount of $ 75 million (the "Term Loan").
+Added: The Credit Agreement matures on March 9, 2027, at which time the aggregate outstanding principal amount of all Revolving Credit Facility advances and all Term Loan advances are required to be repaid in full.
+Added: The Credit Agreement will instead mature on January 30, 2025, if on that date our Senior Notes, as discussed below, are still outstanding and Alliance Coal does not have liquidity of at least $ 200 million.
+Added: Interest is payable quarterly, with principal of the Term Loan due in quarterly installments equal to 6.25 % of the original principal amount of the Term Loan beginning with the quarter ending June 30, 2023 and the balance payable at maturity.
+Added: The Credit Facility replaces the $ 459.5 million revolving credit facility ("Replaced Credit Facility"), which included a sublimit of $ 125 million for the issuance of letters of credit and a sublimit of $ 15.0 million for swingline borrowings, extended to the Intermediate Partnership under its Fifth Amended and Restated Credit Agreement, dated as of March 9, 2020 that would have expired on March 9, 2024.
+Added: The Credit Agreement is guaranteed by ARLP and certain of its subsidiaries, including the Intermediate Partnership and most of the direct and indirect subsidiaries of Alliance Coal (the "Subsidiary Guarantors").
+Added: The Credit Agreement also is secured by substantially all of the assets of the Subsidiary Guarantors and Alliance Coal.
+Added: Borrowings under the Credit Agreement bear interest, at our option, at either (i) an adjusted term rate plus the applicable margin or (ii) the base rate plus the applicable margin.
+Added: The base rate is the highest of (i) the Overnight Bank Funding Rate plus 0.50 %, (ii) the Administrative Agent's prime rate, and (iii) the Daily Simple Secured Overnight Financing Rate plus 100 basis points.
+Added: The applicable margin for borrowings under the Credit Agreement are determined by reference to the Consolidated Debt to Consolidated Cash Flow Ratio.
+Added: Borrowings under the Replaced Credit Facility bore interest, at our option, at either (i) the base rate at the greater of three benchmarks or (ii) a Eurodollar Rate, plus margins.
+Added: The Eurodollar Rate, with applicable margin, under the Replaced Credit Facility was 6.74 % as of December 31, 2022.
+Added: At December 31, 2022, we had $ 41.1 million of letters of credit outstanding with $ 418.4 million available for borrowing under the Replaced Credit Facility.
+Added: We incurred an annual commitment fee of 0.35 % on the undrawn portion of the Replaced Credit Facility.
+Added: The Credit Agreement contains various restrictions affecting Alliance Coal and its subsidiaries, including, among other things, restrictions on incurrence of additional indebtedness and liens, sale of assets, investments, mergers and consolidations and transactions with affiliates.
In each case, these restrictions are subject to various exceptions.
−Removed: In addition, the payment of cash distributions is restricted if such payment would result in a fixed charge coverage ratio of less than 1.0 to 1.0 (as defined in the Credit Agreement) for the four most recently ended fiscal quarters.
−Removed: The Credit Agreement requires the Intermediate Partnership to maintain (a) a debt to cash flow ratio of not more than 2.5 to 1.0, (b) a cash flow to interest expense ratio of not less than 3.0 to 1.0 and (c) a first lien debt to cash flow ratio of not more than 1.5 to 1.0, in each case, during the four most recently ended fiscal quarters.
+Added: In addition, the restrictions apply to the payment of cash distributions if such payment would result in a certain fixed charge coverage ratio (as determined in the Credit Agreement) or in Alliance Coal having liquidity of less than $ 200 million.
+Added: The Credit Agreement requires us to maintain (a) debt of Alliance Coal to cash flow ratio of not more than 1.5 to 1.0, (b) a consolidated debt of Alliance Coal and the Intermediate Partnership to cash flow ratio of not more than 2.5 to 1.0 and (c) an interest coverage ratio of not less than 3.0 to 1.0, in each case, during the four most recently ended fiscal quarters.
+Added: The Replaced Credit Facility was subject to similar restrictions on the Intermediate Partnership.
+Added: The Replaced Credit Facility required the Intermediate Partnership to maintain (a) a debt to cash flow ratio of not more than 2.5 to 1.0, (b) a cash flow to interest expense ratio of not less than 3.0 to 1.0 and (c) a first lien debt to cash flow ratio of not more than 1.5 to 1.0, in each case,
+Added: during the four most recently ended fiscal quarters.
The debt to cash flow ratio, cash flow to interest expense ratio and first lien debt to cash flow ratio were 0.52 to 1.0, 21.76 to 1.0 and 0.03 to 1.0, respectively, for the trailing twelve months ended December 31, 2022.
−Removed: We remained in compliance with the covenants of the Credit Agreement as of December 31, 2021 and anticipate remaining in compliance with the covenants.
+Added: We remained in compliance with the covenants of the Replaced Credit Facility as of December 31, 2022 and anticipate remaining in compliance with the covenants of the new Credit Agreement.
+Added: We utilize the Credit Agreement, as appropriate, for working capital requirements, capital expenditures and investments, scheduled debt payments and distribution payments.
Net restricted assets, as defined by the Securities and Exchange Commission, refers to the amount of our consolidated subsidiaries' net assets for which the ability to transfer funds to ARLP in the form of cash dividends, loans, advances, or transfers is restricted.
−Removed: As a result of the restrictions contained in the Credit Agreement and our current compliance ratios, the amount of our net restricted assets at December 31, 2021 was $ 372.0 million.
+Added: As a result of the restrictions contained in the Replaced Credit Facility and its associated compliance ratios, the amount of our net restricted assets at December 31, 2022 was $ 537.3 million.
Senior Notes.
−Removed: On April 24, 2017, the Intermediate Partnership and Alliance Resource Finance Corporation (as co-issuer), a wholly owned subsidiary of the Intermediate Partnership ("Alliance Finance"), issued an aggregate principal amount of $ 400.0 million of senior unsecured notes due 2025 ("Senior Notes") in a private placement to qualified institutional buyers.
+Added: On April 24, 2017, the Intermediate Partnership and Alliance Resource Finance Corporation ("Alliance Finance") (as co-issuer), a wholly owned subsidiary of the Intermediate Partnership, issued an aggregate principal amount of $ 400.0 million of senior unsecured notes due 2025 ("Senior Notes") in a private placement to qualified institutional buyers.
The Senior Notes have a term of eight years , maturing on May 1, 2025 (the "Term") and accrue interest at an annual rate of 7.5 %.
3 unchanged sentences
Accounts Receivable Securitization .
−Removed: 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").
−Removed: In January 2021, we reduced the borrowing availability under the facility to $ 60.0 million.
+Added: Certain direct and indirect wholly owned subsidiaries of our Intermediate Partnership are party to a $ 60.0 million accounts receivable securitization facility ("Securitization Facility").
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.
After the sale, Alliance Coal, as servicer of the assets, collects the receivables on behalf of AROP Funding.
−Removed: The Securitization Facility bears interest based on a Eurodollar Rate.
+Added: The Securitization Facility bears interest based on a short-term bank yield index.
+Added: On December 31, 2022, we had $ 11.7 million of letters of credit outstanding with $ 48.3 million available for borrowing under the Securitization Facility.
The agreement governing the Securitization Facility contains customary terms and conditions, including limitations with regards to certain customer credit ratings.
1 unchanged sentence
The Securitization Facility was previously scheduled to mature in January 2023.
−Removed: At December 31, 2021, we had no outstanding balance under the Securitization Facility.
+Added: At December 31, 2022, we did no t have any outstanding borrowings under the Securitization Facility.
May 2019 Equipment Financing.
On May 17, 2019, the Intermediate Partnership entered into an equipment financing arrangement accounted for as debt, wherein the Intermediate Partnership received $ 10.0 million in exchange for conveying its interest in certain equipment owned indirectly by the Intermediate Partnership and entering into a master lease agreement for that equipment (the "May 2019 Equipment Financing").
−Removed: The May 2019 Equipment Financing contains customary terms and events of default and provides for thirty-six month ly payments with an implicit interest rate of 6.25 %, maturing on May 1, 2022.
−Removed: Upon maturity, the equipment will revert back to the Intermediate Partnership.
+Added: The May 2019 Equipment Financing contained customary terms and events of default and provided for thirty-six month ly payments with an implicit interest rate of 6.25 %.
+Added: The May 2019 Equipment Financing matured on May 1, 2022 and the equipment reverted back to the Intermediate Partnership.
November 2019 Equipment Financing.
10 unchanged sentences
(in thousands)
+Added: Components of income tax expense are as follows:
+Added: Year Ended December 31,
+Added: (in thousands)
+Added: Income tax expense
+Added: Alliance Minerals' Tax Election resulted in the recognition of an initial deferred tax liability of $ 37.3 million and a corresponding increase to income tax expense for the year ended December 31, 2022.
+Added: This increase in income tax expense reduced net income by $ 37.3 million, or approximately $ 0.29 per basic and diluted limited partner unit, for the year ended December 31, 2022.
+Added: Recognition of the initial deferred tax liability and expense is primarily the result of the $ 177.0 million non-cash acquisition gain recognized in 2019 related to the acquisition of the remaining interests in AllDale Minerals LP ("AllDale I") and AllDale Minerals II, LP ("AllDale II", and collectively with AllDale I, "AllDale I & II") (the "Acquisition Gain").
+Added: The Acquisition Gain was recognized to step up to fair value the financial reporting basis of the interests we already owned at the time of acquisition.
+Added: The tax basis of the underlying properties of AllDale I & II did not include the Acquisition Gain.
+Added: Reconciliations of income taxes at the U.S.
+Added: federal statutory tax rate to income taxes at our effective tax rate are as follows:
+Added: Year Ended December 31,
+Added: (in thousands)
+Added: Income taxes at statutory rate
+Added: Income taxes at statutory rate on Partnership income not subject to income taxes
+Added: Increase (decrease) resulting from:
+Added: State taxes, net of federal income tax
+Added: Change in valuation allowance of deferred tax assets
+Added: Deferred taxes related to tax election
+Added: Tax effect of noncontrolling interest income not subject to income taxes
+Added: Income tax expense
+Added: The effective income tax rate for our income tax expense for the year ended December 31, 2022 is less than the federal statutory rate, primarily due to the portion of income not subject to income taxes, partially offset by the effect of the Tax Election previously discussed.
+Added: The effective income tax rates for our income tax expense for the years ended December 31, 2021 and 2020 are less than the federal statutory rate, primarily due to the portion of income not subject to income taxes.
+Added: Significant components of deferred tax liabilities and deferred tax assets are as follows:
+Added: (in thousands)
+Added: Deferred tax liabilities:
+Added: Property, plant and equipment
+Added: Total deferred tax liabilities
+Added: Deferred tax assets:
+Added: Federal loss carryovers and credits
+Added: Total deferred tax assets
+Added: Less valuation allowance
+Added: Net deferred tax assets
+Added: Overall net deferred tax liabilities
+Added: The change in deferred tax liabilities for property, plant and equipment is primarily as a result of the Alliance Minerals' Tax Election and associated impact of the Acquisition Gain discussed above.
+Added: Federal loss carryovers and credits are primarily due to net operating losses and research and development credits associated with the operations of other subsidiaries that are taxable for federal income tax purposes.
+Added: Our 2019 through 2022 tax years remain open to examination by tax authorities.
+Added: We have been notified by the Internal Revenue Service that lower-tier partnership income tax returns for the tax year ended December 31, 2020 have been selected for audit.
The components of lease expense were as follows:
34 unchanged sentences
Less imputed interest
+Added: The current portion of our operating and finance lease obligations are included in Other current liabilities line item in our consolidated balance sheets.
+Added: The long-term portion of our finance lease obligation is included in the Other liabilities line item in our consolidated balance sheets.
FAIR VALUE MEASUREMENTS
5 unchanged sentences
See Note 2 – Summary of Significant Accounting Policies – Fair Value Measurements for more information regarding fair value hierarchy levels.
−Removed: 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.
−Removed: 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
−Removed: 8 – Long-Term Debt).
−Removed: The fair value of debt, which is based upon these interest rates, is classified as a Level 2 measurement under the fair value hierarchy.
+Added: The carrying amounts for cash equivalents, accounts receivable, accounts payable, accrued and other liabilities, approximate fair value due to the short maturity of those instruments.
+Added: 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).
+Added: The fair value of debt, which is based on these interest rates, is classified as a Level 2 measurement under the fair value hierarchy.
PARTNERS' CAPITAL
11 unchanged sentences
Unit Repurchase Program
−Removed: 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.
+Added: In May 2018, the board of directors of our 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.
2 unchanged sentences
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.
−Removed: The noncontrolling interest in our consolidated balance sheets represents Bluegrass Minerals' ownership interest in Cavalier Minerals.
+Added: In January 2023, the Board of Directors authorized a $ 93.5 million increase to the unit repurchase program, which had $ 6.5 million of available capacity as of December 31, 2022.
+Added: As a result, we are authorized to repurchase up to a total of $ 100.0 million of ARLP common units.
+Added: As of February 24, 2023, we have repurchased and retired 856,629 units at an average unit price of $ 21.15 for an aggregate purchase price of $ 18.1 million since we increased the amount authorized under the unit repurchase program.
+Added: The noncontrolling interest in our consolidated balance sheets represents Bluegrass Minerals Management, LLC's ("Bluegrass Minerals") ownership interest in Cavalier Minerals JV, LLC ("Cavalier Minerals").
Our accumulated other comprehensive loss consists of unrecognized actuarial gains and losses as well as unrecognized prior service costs related to our pension and pneumoconiosis benefits.
3 unchanged sentences
On November 10, 2014, our subsidiary, Alliance Minerals, and Bluegrass Minerals entered into a limited liability company agreement (the "Cavalier Agreement") to create Cavalier Minerals, which was formed to indirectly acquire oil & gas mineral interests through its ownership in AllDale I & II.
−Removed: 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 investment.
−Removed: 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.
−Removed: To date, there has been no profits interest distribution.
−Removed: Bluegrass Minerals was Cavalier Minerals' managing member prior to the AllDale Acquisition (see Note 3 – Acquisitions).
−Removed: In conjunction with the AllDale Acquisition, we became the managing member in Cavalier Minerals.
+Added: 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 recovered their investment.
+Added: Distributions with respect to Bluegrass Minerals' profits interest are offset by all distributions received by Bluegrass Minerals from the former general partners of AllDale I & II.
+Added: Bluegrass Minerals' profits interest distributions began in late 2022.
+Added: We hold the managing member interest in Cavalier Minerals.
Total contributions to and cumulative distributions from Cavalier Minerals are as follows:
15 unchanged sentences
See Note 14 – Investments for more information.
+Added: On April 5, 2022, we invested $ 20 million in Francis, in the form of a convertible note with a maturity date of April 1, 2023.
+Added: Our convertible note represents an ownership interest in Francis upon conversion.
+Added: We have determined the note more closely represents equity as opposed to debt.
+Added: Therefore, we will account for the convertible note as an equity contribution even though we will not participate in Francis' earnings or losses and will not be eligible to receive distributions until the note converts.
+Added: We have concluded that Francis is a VIE as the management structure is similar to a limited partnership with the non-managing members (i) not having the ability to remove the managing member and (ii) not participating significantly in the operational decisions.
+Added: We are not the primary beneficiary of Francis as we do not have the power to direct the activities that most significantly impact Francis's economic performance.
+Added: We account for our ownership interest in the income or loss of Francis as an equity method investment.
+Added: We record equity income or loss based on Francis' distribution structure.
+Added: See Note 14 – Investments for more information.
+Added: On June 2, 2022, we committed to purchase $ 25.0 million of limited partner interests in NGP ETP IV, a private equity fund sponsored by NGP and focused on investments that are part of the global transition toward a lower carbon economy.
+Added: We funded $ 4.1 million during the year ended December 31, 2022.
+Added: Our final ownership percentage in NGP ETP IV is not yet known.
+Added: We have concluded that NGP ETP IV is a VIE as it is structured as a limited partnership with limited partners (i) not having the ability to remove the general partner and (ii) not participating significantly in the operational decisions.
+Added: We are not the primary beneficiary of NGP ETP IV as we do not have the power to direct the activities that most significantly impact NGP ETP IV's economic performance.
+Added: We account for our ownership interest in the income or loss of NGP ETP IV as an equity method investment.
+Added: See Note 14 – Investments for more information.
See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for variable interest entities.
8 unchanged sentences
Ending balance
−Removed: 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.
−Removed: This structured investment provided us with a quarterly cash or payment-in-kind return.
−Removed: On February 8, 2019, Kodiak redeemed our preferred interest for $ 135.0 million in cash resulting in an $ 11.5 million gain due to an early redemption premium.
−Removed: The gain is included in the Equity securities income line item.
−Removed: We no longer hold any
−Removed: ownership interests in Kodiak.
−Removed: Prior to the redemption, we accounted for our ownership interests in Kodiak as equity securities without readily determinable fair values.
+Added: As discussed in Note 13 – Variable Interest Entities, we account for our ownership interest in the income or loss of Francis as an equity method investment.
+Added: The changes in our equity method investment in Francis for the year ended December 31, 2022 were as follows:
+Added: Year Ended December 31,
+Added: (in thousands)
+Added: Beginning balance
+Added: Contributions
+Added: Ending balance
+Added: As discussed in Note 13 – Variable Interest Entities, we account for our ownership interest in the income or loss of NGP ETP IV as an equity method investment.
+Added: The changes in our equity method investment in NGP ETP IV for the year ended December 31, 2022 were as follows:
+Added: Year Ended December 31,
+Added: (in thousands)
+Added: Beginning balance
+Added: Contributions
+Added: Ending balance
+Added: On April 29, 2022, we purchased $ 32.6 million of Series D Preferred Stock in Infinitum, a Texas-based startup developer and manufacturer of electric motors featuring printed circuit board stators.
+Added: On November 2, 2022, we purchased an additional $ 9.4 million of Series D Preferred Stock in Infinitum at the same price per share as those shares of Series D Preferred Stock that we acquired on April 29, 2022.
+Added: Our preferred stock provides for non-cumulative dividends when and if declared by Infinitum's board of directors.
+Added: Each share is convertible, at any time, at our option, into shares of common stock of Infinitum.
+Added: We account for our ownership interest in Infinitum as an equity investment without a readily
+Added: determinable fair value.
+Added: It is not practicable to estimate the fair value of our investment in Infinitum because of the lack of a quoted market price for our ownership interests.
+Added: Therefore, we use a measurement alternative other than fair value to account for our investment.
+Added: There have been no fair value adjustments in our investment in Infinitum subsequent to our purchases.
+Added: During the period we have not observed any price changes that have occurred to identical or similar securities sold by Infinitum that would indicate an adjustment to the fair value of our investment is warranted.
+Added: The changes in our investment in Infinitum for the year ended December 31, 2022 were as follows:
+Added: Year Ended December 31,
+Added: (in thousands)
+Added: Beginning balance
+Added: Contributions
+Added: Ending balance
See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for investments.
22 unchanged sentences
Total revenues
−Removed: The following table illustrates the amount of our transaction price for all current coal supply contracts allocated to performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2021 and disaggregated by segment and contract duration.
+Added: The following table illustrates the projected revenue for all current coal supply contracts allocated to performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2022 and disaggregated by segment and contract duration.
(in thousands)
21 unchanged sentences
EMPLOYEE BENEFIT PLANS
−Removed: Defined Contribution Plans —Eligible employees currently participate in a defined contribution profit sharing and savings plan ("PSSP") that we sponsor.
−Removed: The PSSP covers all regular full-time employees.
+Added: Defined Contribution Plans —All regular full-time employees are eligible to participate in a defined contribution profit sharing and savings plan ("PSSP") that we sponsor.
PSSP participants may elect to make voluntary contributions to this plan up to a specified amount of their compensation.
4 unchanged sentences
Participants in the Pension Plan are no longer receiving benefit accruals for service.
−Removed: Participants can participate in enhanced benefits provisions under the PSSP.
The benefit formula for the Pension Plan is a fixed-dollar unit based on years of service.
4 unchanged sentences
Interest cost
−Removed: Actuarial loss (gain)
+Added: Actuarial gain
Benefits paid
17 unchanged sentences
Expected return on plan assets
−Removed: 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.
−Removed: 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.
+Added: The actuarial gain components of the change in benefit obligations in 2022 and 2021 were primarily attributable to an increase in the discount rate compared to the prior year end.
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:
12 unchanged sentences
Net periodic benefit cost (1)
−Removed: (1) Nonservice components of net periodic benefit cost are included in the Other income (expense) line item within our consolidated statements of income.
+Added: (1) Nonservice components of net periodic benefit cost are included in the Other income (expense) line item within our consolidated statements of operations.
Year Ended December 31,
1 unchanged sentence
Other changes in plan assets and benefit obligation recognized in accumulated other comprehensive loss:
−Removed: Net actuarial gain (loss)
+Added: Net actuarial gain
Reversal of amortization item:
2 unchanged sentences
Total recognized in accumulated other comprehensive loss
−Removed: Net periodic benefit cost
+Added: Net periodic benefit cost (credit)
Total recognized in net periodic benefit cost and accumulated other comprehensive loss
6 unchanged sentences
The total portfolio allocation will be adjusted as the funded ratio of the Pension Plan changes and market conditions warrant.
−Removed: Total account performance is reviewed at least annually, using
−Removed: a dynamic benchmark approach to track investment performance.
+Added: Total account performance is reviewed at least annually, using a dynamic benchmark approach to track investment performance.
General asset allocation guidelines at December 31, 2022 are as follows:
2 unchanged sentences
Fixed income securities
−Removed: Equity securities include domestic equity securities, developed international securities, emerging markets equity securities and real estate investment trust.
+Added: Convertible securities
+Added: Equity securities include domestic equity securities, developed international equity securities, emerging markets equity securities and real estate investment trust.
Fixed income securities include domestic and international investment grade fixed income securities, high yield securities and emerging markets fixed income securities.
−Removed: Fixed income futures may also be utilized within the fixed income securities asset allocation.
+Added: Futures may also be utilized within the equity securities and fixed income securities asset allocation.
+Added: Alternatives may include individual securities, exchange traded notes, exchange traded commodities and underlying funds providing exposure to market neutral strategies, long/short strategies, direct real estate and commodities.
The following information discloses the fair values of our Pension Plan assets by asset category:
11 unchanged sentences
Fixed income - High yield
−Removed: Fixed income - Emerging markets
Fixed income - Futures
7 unchanged sentences
Long-Term Incentive Plan
−Removed: We maintain the LTIP for certain employees and officers of MGP and its affiliates who perform services for us.
−Removed: As part of our LTIP, unit awards of non-vested "phantom"
−Removed: 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.
−Removed: 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.
−Removed: Annual grant levels, vesting provisions and minimum-value guarantees of restricted units for designated participants are recommended by Mr.
−Removed: Craft, subject to review and approval of the Compensation Committee.
−Removed: Vesting of all restricted units outstanding is subject to the satisfaction of certain financial tests.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: We account for forfeitures of non-vested LTIP restricted unit grants as they occur.
−Removed: As provided under the DERs provisions of the LTIP and the terms of the LTIP restricted unit awards, all non-vested restricted units include contingent rights to receive quarterly distributions in cash or, at the discretion of the Compensation Committee, phantom units in lieu of cash credited to a bookkeeping account with value equal to the cash distributions we make to unitholders during the vesting period.
−Removed: If it is not probable the financial tests for a particular grant of restricted units will be met, any previously paid DER amounts for that grant are reversed from Partners’ Capital and recorded as compensation expense and any future DERs, for that grant, if any, will be recognized as compensation expense when paid.
A summary of non-vested LTIP grants of restricted units is as follows:
4 unchanged sentences
Non-vested grants at January 1, 2020
−Removed: Non-vested grants at December 31, 2019
Grants canceled (3)
1 unchanged sentence
Non-vested grants at December 31, 2021
−Removed: (1) During the year ended December 31, 2019, we issued 596,650 unrestricted common units to LTIP participants.
−Removed: The remaining vested units were settled in cash to satisfy tax withholding obligations of the LTIP participants.
+Added: Non-vested grants at December 31, 2022
(1) In December 2020, we modified the vesting requirements for certain restricted units that we granted in February 2020 which were determined to be improbable of vesting under the original vesting requirements (the "2020 Grants").
6 unchanged sentences
(3) 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.
−Removed: (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.
+Added: (4) The restricted units granted during 2021 and 2022 have certain minimum-value guarantees per unit, regardless of whether or not the awards vest .
For the years ended December 31, 2022, 2021 and 2020, our LTIP expense for grants of restricted units was $ 9.4 million, $ 5.4 million and $ 8.1 million, respectively.
−Removed: 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
−Removed: incremental compensation cost associated with the cash settlement of the 2018 Grants.
+Added: 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.
4 unchanged sentences
The total obligation associated with LTIP grants of restricted units as of December 31, 2022 and 2021 was $ 16.0 million and $ 6.7 million, respectively, and is included in the partners' capital Limited partners-common unitholders line item in our consolidated balance sheets.
−Removed: As of December 31, 2021, there was $ 10.8 million in total unrecognized compensation expense related to the non-vested LTIP restricted unit grants that are expected to vest.
+Added: As of December 31, 2022, there was $ 11.4 million in total unrecognized
+Added: compensation expense related to the non-vested LTIP restricted unit grants that are expected to vest.
That expense is expected to be recognized over a weighted-average period of 0.8 years.
On January 27, 2023, the Compensation Committee authorized additional grants of 462,225 restricted units, of which 447,225 units were granted.
−Removed: These restricted units have minimum-value guarantees of either $ 9.62 or $ 6.41 per unit, regardless of whether or not the awards vest.
+Added: These restricted units have certain minimum-value guarantees, regardless of whether or not the awards vest.
Supplemental Executive Retirement Plan and Directors' Deferred Compensation Plan
−Removed: We utilize the SERP to provide deferred compensation benefits for certain officers and key employees.
−Removed: All allocations made to participants under the SERP are made in the form of "phantom"
−Removed: ARLP units and SERP distributions will be settled in the form of ARLP common units.
−Removed: The SERP is administered by the Compensation Committee.
−Removed: Our directors participate in the Directors' Deferred Compensation Plan.
−Removed: Pursuant to the Directors' Deferred Compensation Plan, for amounts deferred either automatically or at the election of the director, a notional account is established and credited with notional common units of ARLP, described in the Directors' Deferred Compensation Plan as "phantom"
−Removed: Distributions from the Directors' Deferred Compensation Plan will be settled in the form of ARLP common units.
−Removed: For both the SERP and Directors' Deferred Compensation Plan, when quarterly cash distributions are made with respect to ARLP common units, an amount equal to such quarterly distribution is credited to each participant's notional account as additional phantom units.
−Removed: All grants of phantom units under the SERP and Directors' Deferred Compensation Plan vest immediately.
A summary of SERP and Directors' Deferred Compensation Plan activity is as follows:
7 unchanged sentences
Phantom units outstanding as of December 31, 2022
−Removed: (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 .
−Removed: Units issued in 2021 were net of units settled in cash to satisfy tax withholding obligations.
+Added: (1) During the year ended December 31, 2021, we purchased 102,962 ARLP common units on the open market to settle the account of a participant under the SERP.
+Added: Units purchased were net of units settled in cash to satisfy tax-withholding obligations.
Total SERP and Directors' Deferred Compensation Plan expense was $ 1.4 million, $ 0.4 million and $ 0.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.
10 unchanged sentences
ASSET RETIREMENT OBLIGATIONS
−Removed: The majority of our operations are governed by various state statutes and the Federal Surface Mining Control and Reclamation Act of 1977, which establish reclamation and mine closing standards.
−Removed: These regulations require, among other things, restoration of property in accordance with specified standards and an approved reclamation plan.
The following table presents the activity affecting the asset retirement and mine closing liability:
3 unchanged sentences
Accretion expense
−Removed: Allocation of liability associated with acquisitions, mine development and change in assumptions
+Added: Allocation of liability associated with mine development and change in assumptions
Ending balance
−Removed: For the year ended December 31, 2021, the allocation of liability associated with acquisition, mine development and change in assumptions was immaterial.
−Removed: 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.
−Removed: 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.
+Added: For the year ended December 31, 2022, the allocation of liability associated with mine development and change in assumptions increased by $ 17.4 million.
+Added: The increase was largely attributable to higher cost assumptions as well as the expansion of refuse disposal facilities at certain mines.
+Added: For the year ended December 31, 2021, the allocation of liability associated with 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 $ 110.4 million and $ 98.3 million at December 31, 2022 and 2021, respectively.
6 unchanged sentences
Non-current asset retirement obligations
−Removed: Federal and state laws require bonds to secure our obligations to reclaim lands used for mining and are typically renewable on a yearly basis.
As of December 31, 2022 and 2021, we had approximately $ 174.3 million and $ 173.9 million, respectively, in surety bonds outstanding to secure the performance of our reclamation obligations.
1 unchanged sentence
ACCRUED WORKERS' COMPENSATION AND PNEUMOCONIOSIS BENEFITS
−Removed: We provide income replacement and medical treatment for work-related traumatic injury claims as required by applicable state laws.
−Removed: Workers' compensation laws also compensate survivors of workers who suffer employment related deaths.
−Removed: Certain of our 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.
−Removed: Both pneumoconiosis and traumatic claims are covered through our self-insured programs.
The following is a reconciliation of the changes in workers' compensation liability (including current and long-term liability balances):
−Removed: (in thousands)
Beginning balance
−Removed: Accruals increase
+Added: Changes in accruals
Interest accretion
2 unchanged sentences
The discount rate used to calculate the estimated present value of future obligations for workers' compensation was 4.87 % and 2.41 % at December 31, 2022 and 2021, respectively.
−Removed: 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.
−Removed: 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.
+Added: The valuation loss in 2022 was primarily attributable to an increase in the discount rate used to calculate the estimated present value of the future obligations being partially offset by unfavorable changes in claims development.
+Added: The 2021valuation loss 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.
As of December 31, 2022 and 2021, we had $ 99.8 million and $ 100.4 million, respectively, in surety bonds and letters of credit outstanding to secure workers' compensation obligations.
7 unchanged sentences
Interest cost
−Removed: Actuarial loss
+Added: Actuarial loss (gain)
Benefits and expenses paid
3 unchanged sentences
(in thousands)
−Removed: Net actuarial loss
+Added: Net actuarial gain (loss)
Reversal of amortization item:
6 unchanged sentences
Net actuarial loss
+Added: The actuarial gain component of the change in benefit obligations in 2022 was primarily attributable to favorable assumption changes in the discount rate and demographics in the at-risk population.
+Added: These components were offset in part by a) unfavorable black lung claims experience, b) unfavorable assumption changes regarding future average medical benefits and legal expense levels, and c) unfavorable assumption changes related to Federal and State benefit levels.
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.
−Removed: 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.
−Removed: These components were partially 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:
50 unchanged sentences
Tunnel Ridge incurred $ 12.3 million, $ 5.8 million and $ 6.1 million in earned royalties in 2022, 2021 and 2020 respectively.
−Removed: 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.
−Removed: 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
−Removed: minimum royalty payments of $ 2.1 million.
+Added: Tunnel Ridge has a surface land lease with an annual payment of $ 0.2 million, payable in January of each year with the Craft Foundations.
+Added: WKY CoalPlay — In February 2015, WKY CoalPlay, LLC ("WKY CoalPlay") entered into a coal lease agreement with Alliance Resource Properties regarding coal mineral resources located in Henderson and Union Counties, Kentucky.
+Added: 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.
−Removed: 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.
−Removed: 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.
−Removed: The leases have initial terms of 20 years and provide for earned royalty payments of 4.0 % of the coal sales price to both and annual minimum royalty payments of $ 3.6 million and $ 2.5 million, respectively.
−Removed: All annual minimum royalty payments for each agreement are recoupable from future earned royalties related to their respective agreements.
−Removed: 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.
−Removed: These options expired in December 2020.
−Removed: (See Note 12 – Variable Interest Entities).
+Added: The leases have initial terms of 20 years and provide for earned royalty payments of 4.0 % of the coal sales price and annual minimum royalty payments of $ 3.6 million and $ 2.5 million, respectively.
+Added: All annual minimum royalty payments under each agreement are recoupable from future earned royalties payable under that agreement.
In December 2014, WKY CoalPlay's subsidiary, Webster Coal Reserves, LLC entered into a coal lease agreement with Alliance Resource Properties.
−Removed: 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.
−Removed: 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).
−Removed: 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.
−Removed: We accrued the expected future advance payments and recognized the charge in Asset Impairment expense in the third quarter of 2019.
−Removed: See Note 4 – Long-Lived Asset Impairments for more information.
+Added: The lease had a term of 7 years and provided for earned royalty payments of 4.0 % of the coal sales price and annual minimum royalty payments of $ 2.6 million.
+Added: This lease expired in December 2021.
Cavalier Minerals – As discussed in Note 13 – Variable Interest Entities, through our subsidiaries, we hold a non-economic managing member interest and a 96 % non-managing member interest in Cavalier Minerals and, Bluegrass Minerals, a third party, holds a 4 % non-managing member interest and a 25 % profits interest.
5 unchanged sentences
As of December 31, 2022, we had no commitments to purchase coal from external production sources in 2022 and thereafter.
−Removed: 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"
+Added: 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 state law due to alleged failure to compensate for time "donning"
and "doffing"
equipment and to account for certain bonuses in the calculation of overtime rates and pay.
−Removed: The plaintiffs seek class or collective action certification.
−Removed: Because the litigation of these matters is in the early stages, we cannot reasonably estimate a range of potential exposure at this time.
−Removed: 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.
+Added: The plaintiffs seek class and collective action certification.
+Added: We cannot reasonably estimate a range of potential exposure at this time.
+Added: 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 are defending 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.
1 unchanged sentence
We record an accrual for a potential loss related to these matters when, in management's opinion, such loss is probable and reasonably estimable.
−Removed: 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
−Removed: financial condition, results of operations or liquidity.
+Added: 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.
−Removed: Other —Effective December 1, 2021, we renewed our annual property and casualty insurance program.
+Added: Other —Effective December 1, 2022, we renewed our property and casualty insurance program through October 1, 2023.
Our property insurance was procured from our wholly owned captive insurance company, Wildcat Insurance, LLC ("Wildcat Insurance").
1 unchanged sentence
The maximum limit in the commercial property program is $ 100.0 million per occurrence, excluding a $ 1.5 million deductible for property damage, a 75 or 90 day waiting period for underground business interruption depending on the mining complex and an additional $ 25.0 million overall aggregate deductible.
−Removed: We have elected to retain a 10 % participating interest in our commercial property insurance program.
We can make no assurances that we will not experience significant insurance claims in the future that could have a material adverse effect on our business, financial condition, results of operations and ability to purchase property insurance in the future.
8 unchanged sentences
We have significant long-term coal supply agreements, some of which contain prospective price adjustment provisions designed to reflect changes in market conditions, labor and other production costs and, in the infrequent circumstance when the coal is sold other than free on board the mine, changes in transportation rates.
−Removed: Our major customers are defined as those customers from which we derive at least ten percent of our total revenues, including transportation revenues.
+Added: A major customer is defined as a customer from which we derive at least ten percent of our total revenues, including transportation revenues.
Total revenues from major customers are as follows:
4 unchanged sentences
Illinois Basin/Appalachia
+Added: Illinois Basin/Appalachia
Trade accounts receivable from major customers totaled approximately $ 63.6 million and $ 10.8 million at December 31, 2022 and 2021, respectively.
1 unchanged sentence
Financial conditions of our customers could result in a material change to our credit loss expense in future periods.
−Removed: The coal supply agreements with Customer A expires in 2024.
+Added: The coal supply agreements with Customers A, B and C expire in 2026, 2029 and 2024 respectively.
SEGMENT INFORMATION
3 unchanged sentences
category referred to as Other, Corporate and Elimination.
−Removed: Our two coal operations reportable segments correspond to major coal producing regions in the eastern United States with similar economic characteristics including
−Removed: coal quality, geology, coal marketing opportunities, mining and transportation methods and regulatory issues.
+Added: 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.
2 unchanged sentences
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.
−Removed: 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.
−Removed: As a result, we restructured our reportable segments to better reflect this strategic view in how we manage our business and allocate resources.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The Illinois Basin Coal Operations reportable segment also includes our Mt.
+Added: The Illinois Basin Coal Operations reportable segment includes (a) the Gibson County Coal, LLC's ("Gibson County Coal") mining complex, (b) the Warrior Coal, LLC ("Warrior") mining complex, (c) the River View mining complex and (d) the Hamilton mining complex.
+Added: The segment also includes our Mt.
Vernon Transfer Terminal, LLC ("Mt.
−Removed: Vernon") coal loading terminal in Indiana which currently operates on the Ohio River.
−Removed: 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.
−Removed: 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.
−Removed: The Mettiki mining complex includes Mettiki Coal (WV), LLC's Mountain View mine and Mettiki Coal, LLC's preparation plant.
−Removed: 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.
−Removed: AR Midland acquired its mineral interest in the Wing Acquisition and Boulders Acquisition (Note 3 – Acquisitions).
+Added: Vernon") coal loading terminal in Indiana which operates on the Ohio River, Mid-America Carbonates, LLC ("MAC") and other support services, and our non-operating mining complexes.
+Added: The Appalachia Coal Operations reportable segment includes (a) the Mettiki mining complex, (b) the Tunnel Ridge mining complex and (c) the MC Mining, LLC ("MC Mining") mining complex.
+Added: The Oil & Gas Royalties reportable segment includes oil & gas mineral interests held by AR Midland, LP ("AR Midland") and AllDale I & II and includes Alliance Minerals' equity interests in both AllDale III (Note 14 – Investments) and Cavalier Minerals.
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.
−Removed: 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.
+Added: Other, Corporate and Elimination includes marketing and administrative activities, Matrix Design Group, LLC, its subsidiaries, and Alliance Design Group, LLC (collectively referred to as the "Matrix Group"), our investments in Francis,
+Added: Infinitum and NGP ETP IV (see Note 14 – Investments), 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.
24 unchanged sentences
Capital expenditures
−Removed: (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.
+Added: (1) Revenues included in the Other, Corporate and Elimination column are attributable to intercompany eliminations, which are primarily intercompany coal royalties 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.
Transportation expenses are excluded as transportation revenues are recognized in an amount equal to transportation expenses when title passes to the customer.
−Removed: The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to Operating expenses (excluding depreciation, depletion and amortization) :
+Added: The following is a reconciliation of Operating expenses (excluding depreciation, depletion and amortization) , the most comparable GAAP financial measure, to consolidated Segment Adjusted EBITDA Expense:
Year Ended December 31,
(in thousands)
−Removed: Segment Adjusted EBITDA Expense
−Removed: Outside coal purchases
−Removed: Other income (expense)
Operating expenses (excluding depreciation, depletion and amortization)
+Added: Outside coal purchases
+Added: Other expense (income)
+Added: Segment Adjusted EBITDA Expense
(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.
−Removed: Consolidated Segment Adjusted EBITDA is reconciled to net income (loss) as follows:
+Added: Net income (loss) , the most comparable GAAP financial measure, is reconciled to consolidated Segment Adjusted EBITDA:
Year Ended December 31,
(in thousands)
−Removed: Consolidated Segment Adjusted EBITDA
+Added: Net income (loss)
+Added: Noncontrolling interest
+Added: Net income (loss) attributable to ARLP
General and administrative
3 unchanged sentences
Interest expense, net
−Removed: Acquisition gain
−Removed: Income tax (expense) benefit
−Removed: Acquisition gain attributable to noncontrolling interest
−Removed: Net income (loss) attributable to ARLP
−Removed: Noncontrolling interest
−Removed: Net income (loss)
−Removed: (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) .
−Removed: SUBSEQUENT EVENTS
−Removed: Other than the events described in Notes 8, 11 and 17, there were no subsequent events.
+Added: Income tax expense
+Added: Consolidated Segment Adjusted EBITDA
+Added: (4) Capital Expenditures shown exclude the Belvedere Acquisition on September 9, 2022, Jase Acquisition on October 26, 2022 and the Boulders Acquisition on October 13, 2021.
+Added: (Note 3 – Acquisitions).
+Added: SUBSEQUENT EVENT S
+Added: Acquisition Agreement
+Added: On January 27, 2023, we entered into a one-year collaborative agreement with a third party, effective January 1, 2023, committing up to $ 35.0 million for the acquisition of oil & gas mineral interests in the Midland and Delaware basins.
+Added: Under the agreement, the third party will assist us in the identification, evaluation, and acquisition of target oil & gas mineral interests.
+Added: In exchange for these services, the third party will receive a participation share, partially funded by the third party, and will be paid a periodic management fee.
+Added: On February 22, 2023, we acquired approximately 2,682 oil & gas net royalty acres in the Delaware Basin from JC Resources LP ("JC Resources"), a related-party entity owned by Mr.
+Added: Craft, for $ 72.3 million, which was funded with cash on hand.
SUPPLEMENTAL OIL & GAS RESERVE INFORMATION (UNAUDITED)
1 unchanged sentence
A company is considered to have significant oil & gas producing activities if any of its revenues, results of operations or assets from oil & gas producing activities exceed 10% of consolidated revenues, results of operations or assets for the year being measured.
−Removed: Subsequent to our 2019 acquisitions of oil and gas mineral interests, we are considered to have significant oil & gas producing activities.
Geographical Area of Operation
6 unchanged sentences
Acquisition costs of properties
+Added: Property acquisition costs for 2022 primarily include the Belvedere and Jase Acquisitions.
Property acquisition costs for 2021 are related to the Boulders Acquisition.
−Removed: Property acquisition costs for 2019 include non-cash amounts for the AllDale Acquisition.
−Removed: 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 these acquisitions.
5 unchanged sentences
Our Share of an Equity Method Investee
+Added: Our Share of an Equity Method Investee
Proved properties
2 unchanged sentences
Oil & gas properties, net
+Added: (1) The change in total capitalized cost in 2022 primarily reflects the acquisition of proved and unproved properties in the Belvedere and Jase Acquisitions.
The change in total capitalized cost in 2021 reflects the acquisition of proved and unproved properties in the Boulders Acquisition.
−Removed: See Note 3 – Acquisitions of our consolidated financial statements for more information about the Boulders Acquisition.
+Added: See Note 3 – Acquisitions of our consolidated financial statements for more information regarding these acquisitions.
Results of Operations from Oil & Gas Activities
The following schedule sets forth the revenues and expenses related to our oil & gas mineral interests.
−Removed: 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.
+Added: It does not include any interest costs or general and administrative costs, and therefore, is not necessarily indicative of the contribution of our Oil & Gas Royalties segment to our overall results.
Year Ended December 31,
5 unchanged sentences
Depreciation, depletion and amortization
+Added: Income tax expense
Total results of oil & gas activities
7 unchanged sentences
Proved oil & gas reserve estimates as of December 31, 2022 were prepared by our internal engineering team and 95% of those reserves were audited by Netherland, Sewell & Associates, Inc., independent petroleum engineers.
−Removed: Proved reserves are estimated under existing economic and operating conditions based upon the 12-month unweighted average of the first-of-the-month prices.
+Added: Proved reserves are estimated under existing economic and operating conditions based on the 12-month unweighted average of the first-of-the-month prices.
Due to the inherent uncertainties and the limited nature of reservoir data, such estimates are subject to change as additional information becomes available.
5 unchanged sentences
As of January 1, 2020
−Removed: Purchases of minerals in place
Revisions of previous estimates
+Added: Extensions and discoveries
+Added: Sales of minerals in place
As of December 31, 2020 (1)
+Added: Purchases of minerals in place
Revisions of previous estimates
Extensions and discoveries
−Removed: Sales of minerals in place
As of December 31, 2021 (1)
8 unchanged sentences
Revisions of previous estimates
−Removed: Sales of minerals in place
+Added: Extensions and discoveries
As of December 31, 2020
+Added: Sales of minerals in place
Revisions of previous estimates
15 unchanged sentences
Notable changes in proved reserves during the year ended December 31, 2020, included:
−Removed: ● Purchases of minerals in place:
−Removed: The increases represent the acquisition of mineral interests in the AllDale and Wing Acquisitions.
−Removed: Please see Note 3 – Acquisitions in our consolidated financial statements for more information.
+Added: ● Net change due to extensions and discoveries:
+Added: The increases are a result of additional development by the operators of the properties under which we own mineral interests.
+Added: In 2020, a net addition of 2,142 MBOE occurred primarily from the completion of 655 new wells on our acreage and from the addition of 877 new proved undeveloped locations due to permitting and drilling activity.
Increases in oil & gas are also due to changes in the underlying commodity prices during the year and revisions of previous quantity estimates.
1 unchanged sentence
● Net change due to extensions and discoveries:
−Removed: The increases are a result of the addition of new properties by the operators under which we own mineral interests.
+Added: The increases are a result of additional development by the operators of the properties 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.
2 unchanged sentences
● Net change due to extensions and discoveries:
−Removed: The increases are a result of the addition of new properties by the operators under which we own mineral interests.
+Added: The increases are a result of additional development by the operators of the properties under which we own mineral interests.
In 2022, a net addition of 5,647 MBOE occurred primarily from the completion of 1,119 new wells on our acreage and from the addition of 824 new proved undeveloped locations due to permitting and drilling activity.
1 unchanged sentence
Standardized Measure of Discounted Future Net Cash Flows
−Removed: In accordance with SEC and FASB requirements, future cash inflows represent expected revenues from production of period-end quantities of proved reserves based on the 12-month unweighted average of first-of-the-month commodity prices for the year ended December 31, 2021.
+Added: In accordance with United States Securities and Exchange Commission ("SEC") and FASB requirements, future cash inflows represent expected revenues from production of period-end quantities of proved reserves based on the 12-month unweighted average of first-of-the-month commodity prices for the year ended December 31, 2022.
All prices are adjusted for quality, transportation fees, energy content and regional basis differentials.
1 unchanged sentence
Future production costs are derived based on current costs assuming continuation of existing economic conditions.
−Removed: There are no future income tax expenses deducted from future production revenues in the calculation of the standardized measure because the ARLP Partnership is generally not subject to federal income taxes.
−Removed: The ARLP Partnership is subject to certain state based taxes;
−Removed: however, these amounts are not material.
−Removed: See Note 2 – Summary of Significant Accounting Policies for further discussion.
While due care was taken in preparation of the following cash flow projections, we do not represent that this data is the fair value of our oil & gas properties, or a fair estimate of the present value of cash flows to be obtained from their development and production.
9 unchanged sentences
Future production costs and severance taxes
+Added: Future income tax expense (1)
Future net cash flows (undiscounted)
1 unchanged sentence
Total standardized measure (2)
+Added: (1) On March 15, 2022, Alliance Minerals changed its Federal income tax status from a pass-through entity to a taxable entity via a "check the box"
+Added: election, which became effective January 1, 2022.
+Added: See Note 9 – Income Tax for more information.
(2) Includes standardized discounted future net cash flows of approximately $45.3 million, $17.9 million and $5.2 million attributable to noncontrolling interests in the ARLP Partnership's consolidated subsidiaries as of December 31, 2022, 2021 and 2020, respectively.
16 unchanged sentences
Revisions of previous quantity estimates
+Added: Net changes in income taxes (1)
Accretion of discount
2 unchanged sentences
Standardized measure, end of year
+Added: (1) On March 15, 2022, Alliance Minerals changed its federal income tax status from a pass-through entity to a taxable entity via a "check the box"
+Added: election, which became effective January 1, 2022.
+Added: See Note 9 – Income Tax for more information.
Net change in prices and production costs occur from one reporting period to another when the SEC reporting price for that period changes.
1 unchanged sentence
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.
−Removed: 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.
−Removed: Our previously held equity method investments in AllDale I & II, as a result of the AllDale Acquisition in 2019, are now consolidated on our financial statements.
−Removed: Accordingly, we reflect the activity for AllDale I & II in our consolidated standardized measure amounts and not the Equity Method amounts.
SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF REGISTRANT
22 unchanged sentences
Year Ended December 31,
−Removed: General and administrative
−Removed: Total operating expenses
−Removed: INCOME (LOSS) FROM OPERATIONS
Interest income
22 unchanged sentences
of this Annual Report on Form 10-K.
−Removed: As the parent of the Intermediate Partnership, we are a guarantor of both the Credit Agreement and Senior Notes discussed in "Item 8.
+Added: As the parent of the Intermediate Partnership, ARLP was a guarantor of the Replaced Credit Facility and is a guarantor of the Senior Notes discussed in "Item 8.
Financial Statements and Supplementary Data—Note 8 – Long-Term Debt"
of this Annual Report on Form 10-K.
−Removed: In addition to these guarantees, we have provided guarantees on surety indemnity agreements and financially guaranteed certain coal supply agreements.
+Added: In addition to these guarantees, ARLP has provided guarantees on surety indemnity agreements and financially guaranteed certain coal supply agreements.
The duration of these guarantees varies.
6 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.