What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2022-11-07 · 184 added, 372 removed, 423 unchanged (57% of the section changed)

4 unchanged sentences

(In thousands, except unit data)

September 30,

CURRENT ASSETS:

26 unchanged sentences

Workers' compensation and pneumoconiosis benefits

Current finance lease obligations

Current operating lease obligations

Other current liabilities

7 unchanged sentences

Asset retirement obligations

Long-term finance lease obligations

Long-term operating lease obligations

7 unchanged sentences

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

General Partner's interest

Accumulated other comprehensive loss

3 unchanged sentences

TOTAL LIABILITIES AND PARTNERS' CAPITAL

*Recast as discussed in Note 1 – Organization and Presentation.

See notes to condensed consolidated financial statements.

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Three Months Ended

Nine Months Ended

September 30,

SALES AND OPERATING REVENUES:

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Transportation expenses

Outside coal purchases

General and administrative

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INCOME FROM OPERATIONS

Interest expense (net of interest capitalized for the three and nine months ended September 30, 2022 and 2021 of $ 264 , $ 123 , $ 505 and $ 314 , respectively)

Interest expense (net of interest capitalized for the three months ended March 31, 2023 and 2022 of $ 1,407 and $ 70 , respectively)

Interest income

5 unchanged sentences

NET INCOME ATTRIBUTABLE TO ARLP

GENERAL PARTNER

LIMITED PARTNERS

EARNINGS PER LIMITED PARTNER UNIT - BASIC AND DILUTED

WEIGHTED-AVERAGE NUMBER OF UNITS OUTSTANDING – BASIC AND DILUTED

* Recast as discussed in Note 1 – Organization and Presentation.

See notes to condensed consolidated financial statements .

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

OTHER COMPREHENSIVE INCOME:

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COMPREHENSIVE INCOME ATTRIBUTABLE TO ARLP

(1) Amortization of prior service cost and net actuarial loss is included in the computation of net periodic benefit cost (see Notes 14 and 16 for additional details).

(1) Amortization of prior service cost and net actuarial loss is included in the computation of net periodic benefit cost (credit) (see Notes 13 and 15 for additional details).

* Recast as discussed in Note 1 – Organization and Presentation.

See notes to condensed consolidated financial statements.

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(In thousands)

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

2 unchanged sentences

Capital expenditures

Increase in accounts payable and accrued liabilities

Change in accounts payable and accrued liabilities

Proceeds from sale of property, plant and equipment

Contributions to equity method investments

Purchase of equity securities

Distributions received from investments in excess of cumulative earnings

Payment for acquisition of business

Escrow deposit for oil & gas reserve acquisitions

JC Resources acquisition

Oil & gas reserve acquisition

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings under securitization facility

Payments under securitization facility

Payments on equipment financings

Borrowings under revolving credit facilities

Payments under revolving credit facilities

Borrowings from line of credit

Borrowing under long-term debt

Payments on long-term debt

Payments on finance lease obligations

Payment of debt issuance costs

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

Payments for purchases of units under unit repurchase program

Payments for tax withholdings related to settlements under deferred compensation plans

Excess purchase price over the contributed basis from JC Resources acquisition

Cash retained by JC Resources in acquisition

Distributions paid to Partners

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Cash paid for interest

Cash paid for income taxes

SUPPLEMENTAL NON-CASH ACTIVITY:

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

* Recast as discussed in Note 1 – Organization and Presentation.

See notes to condensed consolidated financial statements.

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● References to "Alliance Coal"

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

mean Alliance Coal, LLC, an indirect wholly owned subsidiary of ARLP.

● References to "Alliance Minerals"

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

mean Alliance Minerals, LLC, an indirect wholly owned subsidiary of ARLP.

● References to "Alliance Resource Properties"

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

mean Alliance Resource Properties, LLC, an indirect wholly owned subsidiary of ARLP.

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

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

Change in Tax Status

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"

election (the "Tax Election"), which became effective January 1, 2022.

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 that are well below individual tax rates that would otherwise be paid by our unitholders.

For more information on the Tax Election please see Note 8 – Income Taxes.

Francis Investment

On April 5, 2022, we committed to invest up to $ 50 million in Francis Renewable Energy, LLC ("Francis") through the purchase of preferred equity interests.

As of September 30, 2022, we have elected to hold our commitment to Francis at our initial $ 20 million convertible note investment.

Francis currently is active in the installation, management and operation of metered-for-fee, public-access electric vehicle ("EV") charging stations.

Francis also develops and constructs EV charging stations for third-party customers.

Our investment in Francis furthers our business strategy to develop strategic relationships and invest in attractive opportunities in the fast-growing energy infrastructure transition.

For more information on this investment please see Note 9 – Variable Interest Entities.

Infinitum Investment

On April 29, 2022, we purchased $ 32.6 million of Series D Preferred Stock from Infinitum Electric, Inc.

("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.

The preferred stock provides for non-cumulative dividends when and if declared by Infinitum's board of directors.

Each share is convertible, at any time, at our option, into shares of common stock of Infinitum.

Our investment in Infinitum furthers our business strategy to develop strategic relationships and invest in attractive opportunities in the fast-growing energy infrastructure transition.

For more information on this investment please see Note 10 – Investments.

On November 2, 2022, we purchased an additional $ 9.4 million of Series D Preferred Stock in Infinitum.

NGP ETP IV Investment

On June 2, 2022, we committed to purchase $ 25.0 million of limited partner interests in NGP ETP IV, L.P.

("NGP ETP IV"), a private equity fund sponsored by NGP Energy Capital Management, LLC ("NGP").

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.

For more information on this investment please see Note 9 – Variable Interest Entities.

Belvedere Acquisition

On September 9, 2022, we acquired approximately 394 net oil & gas royalty acres in the Delaware Basin from Belvedere Operating, LLC ("Belvedere") for a purchase price of $ 11.4 million (the "Belvedere Acquisition").

This acquisition enhances our ownership position in the Permian Basin and furthers our business strategy to grow our Oil & Gas Royalties segment.

JC Resources Acquisition

On February 22, 2023, we acquired approximately 2,682 oil & gas net royalty acres in the Delaware Basin from JC Resources LP ("JC Resources"), an entity owned by Mr.

Craft, for $ 72.3 million, which was funded with cash on hand ("JC Resources Acquisition").

Because JC Resources is owned by Mr.

Craft, the JC Resources Acquisition is accounted for as a reorganization of entities under common control, whereby the assets and liabilities acquired from JC Resources are combined with the ARLP Partnership at their historical amounts for all periods presented.

The JC Resources Acquisition increased revenues by $ 2.6 million and income from operations, net income and comprehensive income by $ 1.4 million for the three months ended March 31, 2022.

We did not recast historical earnings per limited partner unit as pre-acquisition earnings from the JC Resources Acquisition were allocated to our general partner.

For more information on this acquisition please see Note 2 – Acquisition.

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of September 30, 2022 and December 31, 2021, the results of our operations and comprehensive income for the three and nine months ended September 30, 2022 and 2021, and cash flows for the nine months ended September 30, 2022 and 2021.

The accompanying condensed consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of March 31, 2023 and December 31, 2022 and the results of our operations, comprehensive income and cash flows for the three months ended March 31, 2023 and 2022.

All intercompany transactions and accounts have been eliminated.

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Actual results could differ from those estimates.

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

the tax effect of our activities accrues to our unitholders.

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.

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

Furthermore, each unitholder's tax accounting, which is partially dependent upon the unitholder's tax position, differs from the accounting followed in our consolidated financial statements.

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.

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.

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.

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.

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.

A valuation allowance is provided for deferred tax assets when it is more likely than not the deferred tax assets will not be realized.

NEW ACCOUNTING STANDARDS

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").

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

We adopted ASU 2021-10 on January 1, 2022.

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

On September 9, 2022 (the "Belvedere Acquisition Date"), our subsidiary, Alliance Royalty, LLC acquired approximately 394 net oil & gas royalty acres in the Delaware Basin from Belvedere for a cash purchase price of $ 11.4 million, which was funded with cash on hand.

This acquisition gives us increased exposure to a prolific area of the Delaware Basin and is within close proximity to reserves that we currently own.

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 condensed consolidated balance sheet.

The following table summarizes the fair value allocation of assets acquired as of the Belvedere Acquisition Date:

(in thousands)

Mineral interests in proved properties

Mineral interests in unproved properties

The fair value of the mineral interests was determined using an income approach consisting of a discounted cash flow model.

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

Certain assumptions used are not observable in active markets;

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

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

Three Months Ended

September 30,

(in thousands)

The following represents our pro forma revenues and net income for the three and nine months ended September 30, 2022 and 2021 as if the mineral interests acquired in the Belvedere Acquisition had been included in our consolidated results since January 1, 2021.

These amounts have been calculated after applying our accounting policies.

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Total revenues

Cash and Cash Equivalents

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

At times the ARLP Partnership maintains deposits in federally insured financial institutions in excess of stated federally insured limits.

Management monitors the credit ratings and concentration of risk with these financial institutions on a continuing basis to safeguard cash deposits.

Based on this monitoring and other diligence, including discussions with representatives of the financial institutions, we have no reason to believe that any of the financial institutions in which we have deposits in excess of stated federally insured limits are facing financial difficulties, defaults or limited liquidity situations that would cause us to be unable to access to our deposits.

ACQUISITION S

As discussed in Note 1 – Organization and Presentation, on February 22, 2023, we completed the JC Resources Acquisition, which gives us increased exposure to a prolific area of the Delaware Basin that is within close proximity to reserves that we currently own.

This acquisition was approved by the conflicts committee of MGP's board of directors, which is comprised entirely of independent directors.

Because JC Resources is under common control with us, we recorded the acquisition at JC Resources' carrying value for each period presented.

The carrying value of the mineral interests as well as related receivables and payables at February 22, 2023 was $ 65.0 million inclusive of $ 25.4 million and $ 37.8 million of mineral interests in proved and unproved properties, respectively.

Acquisition Agreement

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.

Under the agreement, the third party assists us in the identification, evaluation, and acquisition of target oil & gas mineral interests.

In exchange for these services, the third party receives a participation share, partially funded by the third party, and is paid a periodic management fee.

As of March 31, 2023, we have purchased $ 1.6 million and $ 1.2 million of oil & gas mineral interests in proved and unproved properties, respectively, pursuant to this agreement.

Management fees paid under this agreement have been immaterial.

CONTINGENCIES

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"

Certain of our subsidiaries are party to litigation 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.

The plaintiffs seek class or collective action certification.

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

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

The plaintiffs seek class and collective action certification, which we oppose, and the courts have not yet made definitive final rulings on those issues.

We have scheduled a mediation with the plaintiffs for June 12, 2023.

We do not have an estimate of the range of potential exposure;

however, we are in the process of developing such an estimate based on the facts related to these matters.

We are defending this litigation vigorously and continue to believe the plaintiffs' claims are without merit.

We believe our ultimate exposure, if any, will not be material to our results of operations or financial position;

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.

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Inventories consist of the following:

September 30,

(in thousands)

3 unchanged sentences

The following table summarizes our fair value measurements within the hierarchy not included elsewhere in these notes:

September 30, 2022

March 31, 2023

December 31, 2022

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Debt Issuance Costs

September 30,

(in thousands)

1 unchanged sentence

Securitization facility

May 2019 equipment financing

November 2019 equipment financing

3 unchanged sentences

Credit Facility.

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

The Credit Agreement provides for a $ 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.

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 the assets of the Restricted Subsidiaries.

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

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

The Eurodollar Rate, with applicable margin, under the Revolving Credit Facility was 5.49 % as of September 30, 2022.

On September 30, 2022, we had $ 44.1 million of letters of credit outstanding with $ 415.4 million available for borrowing under the Revolving Credit Facility.

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

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

The Credit Agreement contains various restrictions affecting 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.

On January 13, 2023, Alliance Coal, as borrower, entered into a Credit Agreement (the "Credit Agreement") with various financial institutions.

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").

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.

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.

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.

The Revolving Credit Facility replaces the $ 459.5 million revolving credit facility, which included a sublimit of $ 125.0 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.

We incurred debt issuance costs during the three months ended March 31, 2023 of $ 11.7 million in connection with the Credit Agreement.

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

The Revolving Credit Facility is underwritten by a syndicate of eighteen financial institutions and the obligations of the lenders are individual obligations, which means the failure of one or more lenders to be able to fund its obligation does not relieve the remaining lenders from funding their obligations.

Based on our diligence, including discussions with representatives of certain of these financial institutions, as of March 31, 2023 we have no reason to believe that the banks within our syndicate are facing financial difficulties, defaults or limited liquidity situations that would cause them to be unable to fund their obligations under the Credit Agreement.

However, should any of the banks in our syndicate experience conditions in the future that limit their ability to fund their obligations, the amount available under the Revolving Credit Facility could be reduced.

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").

The Credit Agreement also is secured by substantially all of the assets of the Subsidiary Guarantors and Alliance Coal.

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.

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.

The applicable margin for borrowings under the Credit Agreement are determined by reference to the Consolidated Debt to Consolidated Cash Flow Ratio and was 0.54 % as of March 31, 2023.

At March 31, 2023, we had $ 41.0 million of letters of credit outstanding with $ 384.0 million available for borrowing under the Revolving Credit Facility.

We incurred an annual commitment fee of 0.50 % on the undrawn portion of the Revolving Credit Facility.

We utilize the Credit

Agreement, as appropriate, for working capital requirements, capital expenditures and investments, scheduled debt payments and distribution payments.

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.

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

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

The debt to cash flow ratio, cash flow to interest expense ratio and first lien debt to cash flow ratio were 0.64 to 1.0, 17.63 to 1.0 and 0.05 to 1.0, respectively, for the trailing twelve months ended September 30, 2022.

We remained in compliance with the covenants of the Credit Agreement as of September 30, 2022 and anticipate remaining in compliance with the covenants.

In addition, restrictions apply to cash distributions by Alliance Coal to the Intermediate Partnership if such distribution would result in exceeding a minimum fixed charge coverage ratio (as determined in the Credit Agreement) or in Alliance Coal having liquidity of less than $ 200 million.

The Credit Agreement requires us to maintain (a) 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.

The debt of Alliance Coal to cash flow ratio, consolidated debt of Alliance Coal and the Intermediate Partnership to cash flow ratio, and interest coverage ratio were 0.09 to 1.0, 0.54 to 1.0 and 294.35 to 1.0, respectively, for the trailing twelve months ended March 31, 2023.

We were in compliance with the covenants of the Credit Agreement as of March 31, 2023 and anticipate remaining in compliance with the covenants.

Senior Notes.

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

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

During the three months ended March 31, 2023, we repurchased $ 26.6 million of our Senior Notes.

The gain on extinguishment of the Senior Notes is immaterial.

Accounts Receivable Securitization.

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

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

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.

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The Securitization Facility bears interest based on a short-term bank yield index.

On September 30, 2022, we had $ 9.2 million of letters of credit outstanding with $ 50.8 million available for borrowing under the Securitization Facility.

On March 31, 2023, 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.

The Securitization Facility is scheduled to mature in January 2023.

On September 30, 2022, we had no outstanding balance 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").

The May 2019 Equipment Financing contained customary terms and events of default and provided for thirty-six monthly payments with an implicit interest rate of 6.25 % .

The May 2019 Equipment Financing matured on May 1, 2022 and the equipment reverted to the Intermediate Partnership.

In January 2023, we extended the term of the Securitization Facility to January 2024.

The Securitization Facility was previously scheduled to mature in January 2023.

At March 31, 2023, we did no t have any outstanding borrowings under the Securitization Facility.

November 2019 Equipment Financing.

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Components of income tax expense are as follows:

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Income tax expense

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 nine months ended September 30, 2022.

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 nine months ended September 30, 2022.

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").

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.

The tax basis of the underlying properties of AllDale I & II did not include the Acquisition Gain.

Reconciliations of income taxes at the U.S.

federal statutory tax rate to income taxes at our effective tax rate are as follows:

Three Months Ended

Nine Months Ended

September 30,

Three Months Ended March 31,

(in thousands)

Income taxes at statutory rate

Income taxes at statutory rate on Partnership income not subject to income taxes

Increase (decrease) resulting from:

State taxes, net of federal income tax

Change in valuation allowance of deferred tax assets

Deferred taxes related to tax election

Income tax expense

The effective income tax rate for our income tax expense for the three and nine months ended September 30, 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.

The effective income tax rate for our income tax expense for the three and nine months ended September 30, 2021 is less than the federal statutory rate, primarily due to the portion of income not subject to income taxes.

Significant components of deferred tax liabilities and deferred tax assets are as follows:

September 30,

(in thousands)

Deferred tax liabilities:

Property, plant and equipment

Total deferred tax liabilities

Deferred tax assets:

Federal loss carryovers and credits

Total deferred tax assets

Less valuation allowance

Net deferred tax assets

Overall net deferred tax liabilities

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.

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.

The valuation allowance as of September 30, 2022 and 2021 serves to reduce the available deferred tax assets to amounts that will, more likely than not, be realized.

We considered all available positive and negative evidence, which incorporates available tax planning strategies and our estimate of future reversals of existing temporary differences, and have determined that a portion of our deferred tax assets relating to state losses and credits may not be realized.

On March 15, 2022, Alliance Minerals changed its U.S.

federal income tax status from a pass-through entity to a taxable entity via a "check the box"

election (the "Tax Election"), which became effective January 1, 2022.

The 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 three months ended March 31, 2022.

The effective income tax rate for our income tax expense for the three months ended March 31, 2023 is less than the federal statutory rate, primarily due to the portion of income not subject to income taxes.

The effective income tax rate for our income tax expense for the three months ended March 31, 2022 is greater than the federal statutory rate, primarily due to the effect of the Tax Election previously discussed, partially offset by the portion of income not subject to income taxes.

Our 2019 through 2022 tax years remain open to examination by tax authorities.

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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.

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

To date, there has been no profits interest distribution.

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.

All members have recovered their investment and Bluegrass Minerals began receiving its profits interest distributions in late 2022.

We hold the managing member interest in Cavalier Minerals.

Total contributions to and cumulative distributions from Cavalier Minerals are as follows:

(in thousands)

Contributions

Distributions

We have concluded that Cavalier Minerals is a variable interest entity ("VIE") which we consolidate as the primary beneficiary because we are the managing member and a substantial equity owner in Cavalier Minerals.

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provision for the general partner.

Since AllDale III is structured as a limited partnership with the limited partners (i) not having the ability to remove the general partner and (ii) not participating significantly in the operational decisions, we concluded that AllDale III is a VIE.

Since AllDale III is structured as a limited partnership with the limited partners (1) not having the ability to remove the general partner and (2) not participating significantly in the operational decisions, we concluded that AllDale III is a VIE.

We are not the primary beneficiary of AllDale III as we do not have the power to direct the activities that most significantly impact AllDale III's economic performance.

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See Note 9 – Investments for more information.

On April 5, 2022, we committed to invest up to $ 50 million in Francis through the purchase of preferred equity interests.

We funded $20 million on April 5, 2022, in the form of a convertible note with a maturity date of April 1, 2023.

As of September 30, 2022, we have elected to hold our commitment to Francis at our initial $20 million convertible note investment.

Our convertible note represents an ownership interest in Francis upon conversion.

We have determined the note more closely represents equity as opposed to debt.

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.

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.

On April 5, 2022, we invested $ 20 million in Francis Renewable Energy, LLC ("Francis"), in the form of a convertible note.

Our convertible note matured on April 1, 2023 and was converted into preferred equity interests in Francis.

Prior to conversion, we had determined the note more closely represented equity as opposed to debt.

Therefore, we accounted for the convertible note as an equity contribution even though we did not participate in Francis' earnings or losses and were not eligible to receive distributions during the term of the note.

After the conversion on April 1, 2023, we will participate in earnings and losses and be eligible to receive distributions.

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.

We account for our ownership interest in the income or loss of Francis as an equity method investment.

We record equity income or loss based on Francis' distribution structure.

After the conversion of our note to preferred equity, we will record equity income or loss based on Francis' distribution structure.

See Note 9 – Investments for more information.

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.

We funded $ 0.2 million during the nine months ended September 30, 2022.

On June 2, 2022, we committed to purchase $ 25.0 million of limited partner interests in NGP ETP IV, L.P.

("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.

As of March 31, 2023, we have funded $ 4.6 million of this commitment.

Our final ownership percentage in NGP ETP IV is not yet known.

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As discussed in Note 8 – Variable Interest Entities, we account for our ownership interest in the income or loss of AllDale III as an equity method investment.

We record equity income or loss based on AllDale III's distribution structure.

The changes in our equity method investment in AllDale III for each of the periods presented were as follows:

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

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Ending balance

As discussed in Note 9 – Variable Interest Entities, we accounted for our ownership interest in the income or loss of Francis as an equity method investment.

The changes in our equity method investment in Francis for the three and nine months ended September 30, 2022 were as follows:

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Beginning balance

Contributions

Ending balance

As discussed in Note 8 – Variable Interest Entities, we account for our ownership interest in the income or loss of Francis as an equity method investment.

As a development stage company, Francis depends on capital contributions to meet its operating and debt obligations.

We currently believe that the carrying value of our investment is recoverable;

however, if Francis is unable to raise sufficient funds to continue its operations and meet its debt obligations, it could have an adverse effect on our investment.

As discussed in Note 8 – Variable Interest Entities, we account for our ownership interest in the income or loss of NGP ETP IV as an equity method investment.

The changes in our equity method investment in NGP ETP IV for three and nine months ended September 30, 2022 were as follows:

The changes in our equity method investment in NGP ETP IV for three months ended March 31, 2023 were as follows:

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

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Contributions

Equity method investment loss

Ending balance

On April 29, 2022, we purchased $ 32.6 million of Series D Preferred Stock from Infinitum, a Texas-based startup developer and manufacturer of electric motors featuring printed circuit board stators.

The preferred stock provides for non-cumulative dividends when and if declared by Infinitum's board of directors.

We hold $ 42.0 million of Series D Preferred Stock in Infinitum Electric, Inc.

("Infinitum"), a Texas-based startup developer and manufacturer of electric motors featuring printed circuit board stators.

Our preferred stock provides for non-cumulative dividends when and if declared by Infinitum's board of directors.

Each share is convertible, at any time, at our option, into shares of common stock of Infinitum.

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Therefore, we use a measurement alternative other than fair value to account for our investment.

There have been no fair value adjustments in our investment in Infinitum subsequent to our purchase.

There have been no fair value adjustments in our investment in Infinitum subsequent to our purchases.

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.

As discussed in Note 1 – Organization and Presentation, on November 2, 2022, we purchased an additional $ 9.4 million of Series D Preferred Stock in Infinitum.

The stock was purchased at the same price per share as those shares of Series D Preferred Stock that we acquired on April 29, 2022.

PARTNERS' CAPITAL

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(in thousands)

August 13, 2021

November 12, 2021

February 14, 2022

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November 14, 2022

(1) On October 28, 2022, we declared this quarterly distribution payable on November 14, 2022 to all unitholders of record as of November 7, 2022.

February 14, 2023

May 15, 2023 (1)

(1) On April 28, 2023, we declared this quarterly distribution payable on May 15, 2023 to all unitholders of record as of May 8, 2023.

Unit Repurchase Program

In May 2018, the MGP 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.

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

No unit repurchases were made during the nine months ended September 30, 2022.

In January 2023, the board of directors of MGP authorized a $ 93.5 million increase to the unit repurchase program, which had $ 6.5 million of available capacity as of December 31, 2022.

As a result, we are authorized to repurchase up to a total of $ 100.0 million of ARLP common units.

During the first quarter of 2023, we repurchased and retired 860,060 units at an average unit price of $ 21.17 for an aggregate purchase price of $ 18.2 million.

Since inception of the unit repurchase program, we have repurchased and retired 6,320,664 units at an average unit price of $ 17.67 for an aggregate purchase price of $ 111.7 million.

The remaining authorized amount for unit repurchases under this program is $ 6.5 million.

Change in Partners' Capital

The following tables present the quarterly change in Partners' Capital for the nine months ended September 30, 2022 and 2021:

The following tables present the quarterly change in Partners' Capital for the three months ended March 31, 2023 and 2022:

Limited Partner

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Actuarially determined long-term liability adjustments

Total comprehensive income

Total comprehensive loss

Settlement of deferred compensation plans

Purchase of units under unit repurchase program

Common unit-based compensation

Distributions on deferred common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Distributions from consolidated company to affiliate noncontrolling interest

JC Resources acquisition - See Note 1

Cash retained by JC Resources in acquisition - See Note 1

Distributions to Partners

Balance at March 31, 2023

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive income

Common unit-based compensation

Distributions on deferred common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Distributions to Partners

Balance at June 30, 2022

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive income

Common unit-based compensation

Distributions on deferred common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Distributions to Partners

Balance at September 30, 2022

Limited Partner

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Common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Balance at March 31, 2021

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive loss

Common unit-based compensation

Distributions on deferred common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Distributions to Partners

Balance at June 30, 2021

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive income

Settlement of deferred compensation plans

Common unit-based compensation

Distributions on deferred common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Distributions from consolidated company to affiliate noncontrolling interest

Cash retained by JC Resources in acquisition - See Note 1

Distributions to Partners

Balance at September 30, 2021

Balance at March 31, 2022

* Recast as discussed in Note 1 – Organization and Presentation.

REVENUE FROM CONTRACTS WITH CUSTOMERS

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(in thousands)

Three Months Ended September 30, 2022

Oil & gas royalties

Coal royalties

Transportation revenues

Other revenues

Total revenues

Three Months Ended September 30, 2021

Oil & gas royalties

Coal royalties

Transportation revenues

Other revenues

Total revenues

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Oil & gas royalties

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Total revenues

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Oil & gas royalties *

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Total revenues

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 September 30, 2022 and disaggregated by segment and contract duration.

* Recast as discussed in Note 1 – Organization and Presentation.

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 March 31, 2023 and disaggregated by segment and contract duration.

(in thousands)

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

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

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

Subsequent to the JC Resources Acquisition, which is discussed in more detail in Note 1 – Organization and Presentation, net income attributable to ARLP is allocated to limited partners and participating securities with nonforfeitable distributions or distribution equivalents, while net losses attributable to ARLP are allocated only to limited partners but not to participating securities.

Prior to the JC Resources Acquisition, in addition to limited partners and participating securities allocations, amounts are also allocated to our general partner for historical earnings from the mineral interests acquired in the JC Resources Acquisition.

Our participating securities are outstanding restricted unit awards under our Long-Term Incentive Plan ("LTIP") and phantom units in notional accounts under our Supplemental Executive Retirement Plan ("SERP") and the MGP Amended and Restated Deferred Compensation Plan for Directors ("Directors' Deferred Compensation Plan").

The following is a reconciliation of net income attributable to ARLP used for calculating basic and diluted earnings per unit and the weighted-average units used in computing EPU for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended

Nine Months Ended

September 30,

(in thousands, except per unit data)

Net income attributable to ARLP

General partner's interest in net income attributable to ARLP

Limited partners' interest in net income attributable to ARLP

Distributions to participating securities

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

(1) Recast as discussed in Note 1 – Organization and Presentation.

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

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

The combined total of LTIP, SERP and Directors' Deferred Compensation Plan units of 3,754 and 3,431 for the three and nine months ended September 30, 2022, respectively, and 2,328 and 1,706 for the three and nine months ended September 30, 2021 , respectively, were considered anti-dilutive under the treasury stock method .

The combined total of LTIP, SERP and Directors' Deferred Compensation Plan units of 3,147 and 3,139 for the three months ended March 31, 2023 and 2022, respectively, were considered anti-dilutive under the treasury stock method .

WORKERS' COMPENSATION AND PNEUMOCONIOSIS

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Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Beginning balance

Accruals increase

Changes in accruals

Interest accretion

Valuation gain (1)

Ending balance

(1) Our estimate of the liability for the present value of current workers′ compensation benefits is based on our actuarial calculations.

Our actuarial calculations are based on a blend of actuarial projection methods and numerous assumptions including claims development patterns, mortality, medical costs and interest rates.

The valuation gain in 2022 is due to an increase in the discount rate from 2.41 % on December 31, 2021 to 4.22 % on June 30, 202 2 .

The valuation gain in 2021 is due to an increase in the discount rate from 1.95 % on December 31, 2020 to 2.34 % on June 30, 202 1 .

We limit our exposure to traumatic injury claims by purchasing a high deductible insurance policy that starts paying benefits after deductibles for a claim have been met.

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Our workers' compensation liability above is presented on a gross basis and does not include our expected receivables on our insurance policy.

Our receivables for traumatic injury claims under this policy as of September 30, 2022 are $ 5.7 million and are included in Other long-term assets on our condensed consolidated balance sheet.

Our receivables for traumatic injury claims under this policy as of March 31, 2023 are $ 4.1 million and are included in Other long-term assets on our condensed consolidated balance sheet.

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 pneumoconiosis, or black lung, benefits to eligible employees and former employees and their dependents.

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Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Black lung benefits:

Interest cost (1)

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Long-Term Incentive Plan

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

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

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

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

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

Craft, subject to review and approval of the compensation committee of the MGP board of directors

(the "Compensation Committee").

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

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

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

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

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

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

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

A summary of non-vested LTIP grants as of and for the nine months ended September 30, 2022 is as follows:

A summary of non-vested LTIP grants as of and for the three months ended March 31, 2023 is as follows:

Number of units

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Non-vested grants at January 1, 2023

Non-vested grants at September 30, 2022

( 1,291,330 )

Non-vested grants at March 31, 2023

(1) The restricted units granted during 2023 have certain minimum-value guarantees per unit, regardless of whether or not the awards vest.

LTIP expense for grants of restricted units was $ 2.4 million and $ 1.7 million for the three months ended September 30, 2022 and 2021, respectively, and $ 6.8 million and $ 3.8 million for the nine months ended September 30, 2022 and 2021, respectively.

The total obligation associated with LTIP grants of restricted units as of September 30, 2022 was $ 13.4 million and is included in the partners' capital Limited partners-common unitholders line item in our condensed consolidated balance sheets.

As of September 30, 2022, there was $ 14.0 million in total unrecognized compensation expense related to the non-vested LTIP restricted unit grants that are expected to vest.

(2) During the three months ended March 31, 2023, we issued 860,060 unrestricted common units to the LTIP participants.

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

LTIP expense for grants of restricted units was $ 2.3 million for each of the three months ended March 31, 2023 and 2022.

The total obligation associated with LTIP grants of restricted units as of March 31, 2023 was $ 11.5 million and is included in the partners' capital Limited partners-common unitholders line item in our condensed consolidated balance sheets.

As of March 31, 2023, there was $ 18.2 million in total unrecognized compensation expense related to the non-vested LTIP restricted unit grants that are expected to vest.

That expense is expected to be recognized over a weighted-average period of 1.3 years.

Supplemental Executive Retirement Plan and Directors' Deferred Compensation Plan

We utilize the SERP to provide deferred compensation benefits for certain officers and key employees.

All allocations made to participants under the SERP are made in the form of "phantom"

ARLP units and SERP distributions will be settled in the form of ARLP common units.

The SERP is administered by the Compensation Committee.

Our directors participate in the Directors' Deferred Compensation Plan.

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"

Distributions from the Directors' Deferred Compensation Plan will be settled in the form of ARLP common units.

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.

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 as of and for the nine months ended September 30, 2022 is as follows:

A summary of SERP and Directors' Deferred Compensation Plan activity as of and for the three months ended March 31, 2023 is as follows:

Number of units

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Phantom units outstanding as of January 1, 2023

Phantom units outstanding as of September 30, 2022

Total SERP and Directors' Deferred Compensation Plan expense was $ 0.4 million and $ 0.1 million for the three months ended September 30, 2022 and 2021, respectively, and $ 0.9 million and $ 0.3 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, the total obligation associated with the SERP and Directors' Deferred Compensation Plan was $ 14.3 million and is included in the partners' capital Limited partners-common unitholders line item in our condensed consolidated balance sheets.

Phantom units outstanding as of March 31, 2023

Total SERP and Directors' Deferred Compensation Plan expense was $ 0.6 million and $ 0.2 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, the total obligation associated with the SERP and Directors' Deferred Compensation Plan was $ 15.6 million and is included in the partners' capital Limited partners-common unitholders line item in our condensed consolidated balance sheets.

COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS

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Three Months Ended

Nine Months Ended

September 30,

(in thousands)

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Amortization of net loss

Net periodic benefit cost (1)

(1) Net periodic benefit cost for the Pension Plan is included in the Other income (expense) line item within our condensed consolidated statements of income.

As a result of certain pension plan contribution relief provided by the American Rescue Plan Act enacted in March 2021, we do not expect to make contributions to the Pension Plan during 2022.

Net periodic benefit credit (1)

(1) Net periodic benefit credit for the Pension Plan is included in the Other income (expense) line item within our condensed consolidated statements of income.

As a result of certain pension plan relief provided by the American Rescue Plan Act enacted in March 2021, we do not expect to make contributions to the Pension Plan during 2023.

SEGMENT INFORMATION

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

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

In addition, we continue to position ourselves as a reliable energy partner for the future as we pursue opportunities that support the advancement of energy and related infrastructure.

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

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

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

The operations within our Oil & Gas Royalties reportable segment primarily include receiving royalties and lease

bonuses for our oil & gas mineral interests.

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

The Illinois Basin Coal Operations reportable segment includes operating mining complexes (a) the Gibson County Coal, LLC mining complex, (b) the Warrior Coal, LLC mining complex, (c) the River View Coal, LLC mining complex and (d) the Hamilton County Coal, LLC mining complex.

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.

The segment also includes our Mt.

Vernon Transfer Terminal, LLC coal-loading terminal in Indiana which operates on the Ohio River, Mid-America Carbonates, LLC and other support services, and our non-operating Illinois Basin mining complexes.

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

Vernon Transfer Terminal, LLC ("Mt.

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.

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.

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 9 – Investments) and Cavalier Minerals.

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

Other, Corporate and Elimination includes marketing and administrative activities, Matrix Design Group, LLC, its subsidiaries, and Alliance Design Group, LLC (collectively referred to as the "Matrix Group"), our investments in Francis, Infinitum and NGP ETP IV (see Note 10 – Investments), Wildcat Insurance, LLC, which assists the ARLP Partnership with its insurance requirements, AROP Funding and Alliance Finance (both discussed in Note 7 – Long-Term Debt), Pontiki Coal, LLC's workers' compensation and pneumoconiosis liabilities and other miscellaneous activities.

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, Infinitum and NGP ETP IV (see Note 9 – Investments), Wildcat Insurance, which assists the ARLP Partnership with its insurance requirements, AROP Funding and Alliance Finance (both discussed in Note 6 – 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.

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(in thousands)

Three Months Ended September 30, 2022

Revenues - Outside

Revenues - Intercompany

Total revenues (1)

Segment Adjusted EBITDA Expense (2)

Segment Adjusted EBITDA (3)

Capital expenditures

Three Months Ended September 30, 2021

Revenues - Outside

Revenues - Intercompany

Total revenues (1)

Segment Adjusted EBITDA Expense (2)

Segment Adjusted EBITDA (3)

Capital expenditures

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Revenues - Outside

4 unchanged sentences

Capital expenditures (5)

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Revenues - Outside (1)

3 unchanged sentences

Segment Adjusted EBITDA (1) (4)

Total assets (1)

Capital expenditures (5)

(1) Recast for the JC Resources Acquisition as discussed in Note 1 – Organization and Presentation.

(2) Revenues included in the Other, Corporate and Elimination column are attributable to intercompany eliminations, which are primarily intercompany coal royalty 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.

(3) Segment Adjusted EBITDA Expense includes operating expenses, coal purchases, if applicable, 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.

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Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Segment Adjusted EBITDA Expense

Outside coal purchases

Other income (expense)

Operating expenses (excluding depreciation, depletion and amortization)

Other expense (income)

Segment Adjusted EBITDA Expense

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

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Three Months Ended

Nine Months Ended

September 30,

(in thousands)

Consolidated Segment Adjusted EBITDA

Noncontrolling interest

Net income attributable to ARLP

General and administrative

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Income tax expense

Net income attributable to ARLP

Noncontrolling interest

SUBSEQUENT EVENTS

Jase Acquisition

On October 26, 2022, we acquired approximately 3,928 oil & gas net royalty acres in the Midland and Delaware Basins from Jase Minerals, LP for a purchase price of $ 81.2 million which was funded with cash on hand.

Because the acquisition includes both developed and undeveloped properties we will account for the acquisition as a business combination.

This acquisition enhanced our ownership position in the Permian Basin.

Consolidated Segment Adjusted EBITDA

(5) Capital Expenditure shown excludes the $ 72.3 million paid for the JC Resources Acquisition and $ 2.8 million paid towards the Acquisition Agreement entered into on January 27, 2023 (See Note 2 – Acquisitions) .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements