What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-09 compared with 2022-11-07 · 128 added, 241 removed, 150 unchanged (71% of the section changed)

16 unchanged sentences

● 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.

We are a diversified natural resource company operating in the United States 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 located in strategic producing regions across the United States.

We began coal mining operations in 1971 and, since then, have grown through acquisitions and internal development in strategic producing regions to become the largest coal producer in the eastern United States.

Our mining operations are located near many of the major eastern utility generating plants and on major coal hauling railroads in the eastern United States.

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

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

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 intend to pursue strategic investments that leverage our core competencies and relationships with electric utilities, industrial customers, and federal and state governments.

We are currently the largest coal producer in the eastern United States with seven operating underground mining complexes near many of the major eastern utility generating plants and on major coal hauling railroads in Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia, as well as a coal-loading terminal in Indiana.

Two of our mines have loading facilities located on the banks of the Ohio River.

As is customary in the coal industry, we have entered into long-term coal supply agreements with many of our customers.

In addition to our mining operations, in 2007, Alliance Resource Properties began acquiring control of coal mineral interests and leasing the coal mineral reserves and resources to our mining operations.

In 2014, we began acquiring oil & gas mineral interests in premier oil & gas producing regions across the United States.

In addition to our mining operations, Alliance Resource Properties owns or leases substantially all of our measured, indicated and inferred coal mineral resources and the majority of our proved and probable coal mineral reserves in the Illinois and Appalachia Basins that are (a) leased to our internal mining complexes or (b) near other internal and external coal mining operations.

We currently own oil & gas mineral interests in approximately 65,000 net royalty acres in premier oil & gas producing regions of the United States, primarily in the Permian (Delaware and Midland), Anadarko (SCOOP/STACK), and Williston (Bakken) basins providing us with diversified exposure to industry-leading operators consistent with our general strategy to grow our oil & gas mineral interest business.

We have invested in energy and infrastructure opportunities including our investments in Francis, Infinitum, and NGP ETP IV, which are in the businesses of, respectively, electric vehicle charging stations, electric motor manufacturing, and private equity investments in renewable energy, the electrification of our economy or the efficient use of energy.

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 (the "Acquisition Agreement").

On February 22, 2023, we acquired mineral interests in 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.

Craft (the "JC Resources Acquisition").

For more information about the Acquisition Agreement and the JC Resources Acquisition, please read "Item 1.

Financial Statements (Unaudited)—Note 2 – Acquisitions"

of this Quarterly Report on Form 10-Q.

We have four reportable segments, Illinois Basin Coal Operations, Appalachia Coal Operations, Oil & Gas Royalties and Coal Royalties.

2 unchanged sentences

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

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

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

Our ownership in these basins includes approximately 57,000 net royalty acres, which provides us with diversified exposure to industry leading operators consistent with our general strategy to grow our oil & gas mineral interest business.

We market our oil & gas mineral interests for lease to operators in those regions and generate royalty income from the leasing and development of those mineral interests.

Our Oil & Gas Royalties reportable segment includes 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.

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

● Illinois Basin Coal Operations reportable segment includes (a) the Gibson County Coal mining complex, (b) the 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 ("Mt.

Vernon") 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.

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

● Oil & Gas Royalties reportable segment includes oil & gas mineral interests held by AR Midland, LP and AllDale I & II and includes Alliance Minerals' equity interests in both AllDale III and Cavalier Minerals.

Vernon coal-loading terminal on the Ohio River in Indiana, Mid-America Carbonates, LLC ("MAC") and other support services, and our non-operating mining complexes.

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

● Oil & Gas Royalties reportable segment includes oil & gas mineral interests held by AR Midland and AllDale I & II and includes Alliance Minerals' equity method investment in AllDale III.

Please read "Item 1.

1 unchanged sentence

of this Quarterly Report on Form 10-Q for more information on AllDale III.

● 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.

● Coal Royalties reportable segment includes coal mineral reserves and resources owned or leased by Alliance Resource Properties.

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

● Other, Corporate and Elimination includes marketing and administrative activities, Matrix Design Group, LLC and its subsidiaries ("Matrix Design"), Alliance Design Group, LLC ("Alliance Design") (collectively, Matrix Design and Alliance Design referred to as the "Matrix Group"), our investments in Francis Renewable Energy, LLC ("Francis"), Infinitum Electric, Inc.

("Infinitum") and NGP ETP IV, L.P.

("NGP ETP IV"), Wildcat Insurance, LLC ("Wildcat Insurance"), which assists the ARLP Partnership with its insurance requirements, AROP Funding, LLC ("AROP Funding") and Alliance Resource Finance Corporation ("Alliance Finance"), 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, Wildcat Insurance, LLC, which assists the ARLP Partnership with its insurance requirements, AROP Funding, LLC and Alliance Resource Finance Corporation 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.

3 unchanged sentences

of this Quarterly Report on Form 10-Q for more information on our investments in Francis, Infinitum and NGP ETP IV as well as AROP Funding and Alliance Finance.

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Total revenues for the three months ended September 30, 2022 ("2022 Quarter") increased 51.3% to a record $628.4 million compared to $415.4 million for the three months ended September 30, 2021 (the "2021 Quarter") as a result of significantly higher coal sales and oil & gas royalties revenues.

Coal sales increased $188.3 million to $550.6 million in the 2022 Quarter on the strength of record coal sales prices, which rose 40.5% to $59.94 per ton sold compared to $42.65 per ton sold in the 2021 Quarter, and increased coal sales volumes, which were higher by 8.1% compared to the 2021 Quarter.

Total operating expenses increased to $450.3 million in the 2022 Quarter, compared to $348.7 million in the 2021 Quarter, due primarily to increased coal sales volumes and ongoing inflationary cost pressures.

Net income attributable to ARLP for the 2022 Quarter increased 186.0% to $164.6 million, or $1.25 per basic and diluted limited partner unit, compared to $57.5 million, or $0.44 per basic and diluted limited partner unit, for the 2021 Quarter.

Three Months Ended September 30,

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Three Months Ended March 31,

(in thousands)

8 unchanged sentences

Coal Royalties - Intercompany royalties

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

(2) Coal - Segment Adjusted EBITDA Expense is defined as consolidated Segment Adjusted EBITDA Expense excluding expenses of our Oil & Gas Royalties segment and is adjusted for intercompany transactions with our Coal Royalties segment.

(1) Recast for the JC Resources Acquisition.

For more information, please read "Item 1.

Financial Statements (Unaudited)—Note 1 – Organization and Presentation"

of this Quarterly Report on Form 10-Q.

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

(3) During the three months ended March 31, 2023 ("2023 Quarter"), we redefined Coal - Segment Adjusted EBITDA Expense to reflect the activity of Alliance Coal, which is the holding company for our coal mining operations.

We have retrospectively adjusted Coal - Segment Adjusted EBITDA Expense in the three months ended March 31, 2022 ("2022 Quarter") to be on the same basis.

(4) Average sales price per BOE is defined as oil & gas royalty revenues excluding lease bonus revenue divided by total BOE sold.

Coal sales increased $188.3 million or 52.0% to $550.6 million for the 2022 Quarter from $362.3 million for the 2021 Quarter.

The increase was attributable to a price variance of $158.8 million due to higher average coal sales prices and a volume variance of $29.5 million resulting from increased tons sold.

Improved price realizations and strong coal demand in both the domestic and export markets during the 2022 Quarter drove coal sales prices higher by 40.5% in the 2022 Quarter to $59.94 per ton sold, compared to $42.65 per ton sold during the 2021 Quarter.

Coal sales volumes increased by 8.1% to 9.2 million tons sold compared to 8.5 million tons sold in the 2021 Quarter, due to favorable market conditions.

Total Revenues .

Total revenues for the 2023 Quarter increased 43.0% to $662.9 million compared to $463.4 million for the 2022 Quarter as a result of significantly higher coal sales.

Coal sales increased 49.0% to $578.8 million in the 2023 Quarter from $388.4 million in the 2022 Quarter due to $175.8 million in higher price realizations in both domestic and export markets, which reflects a 43.6% increase to $68.34 per ton sold compared to $47.58 per ton sold in the 2022 Quarter, and $14.6 million in increased coal sales volumes, reflecting a 3.8% increase compared to the 2022 Quarter.

Total operating expenses .

Total operating expenses increased to $455.6 million in the 2023 Quarter, compared to $374.2 million in the 2022 Quarter, due primarily to increased coal sales volumes and inflationary pressures on certain expense items.

Net income attributable to ARLP .

Increased revenues and lower income tax expense, partially offset by higher total operating expenses, led net income attributable to ARLP for the 2023 Quarter to $191.2 million, or $1.45 per basic and diluted limited partner unit, compared to $38.1 million, or $0.28 per basic and diluted limited partner unit, for the 2022 Quarter.

Coal - Segment Adjusted EBITDA Expense .

2 unchanged sentences

● Labor and benefit expenses per ton produced, excluding workers' compensation, increased 26.5% to $11.88 per ton in the 2023 Quarter from $9.39 per ton in the 2022 Quarter.

The increase of $1.60 per ton was primarily due to higher labor costs at several mines.

● Workers' compensation expenses per ton produced increased to $0.52 per ton in the 2022 Quarter from $(0.07) per ton in the 2021 Quarter.

The increase of $0.59 per ton produced resulted primarily from refunds received in the 2021 Quarter on assessments paid to the state of Kentucky in prior years.

The increase of $2.49 per ton was primarily due to higher incentive benefits and direct labor costs at several mines.

● Material and supplies expenses per ton produced increased 12.6% to $13.99 per ton in the 2023 Quarter from $12.42 per ton in the 2022 Quarter.

The increase of $3.28 per ton produced primarily reflects inflationary cost pressures, including increases of $0.55 per ton for various preparation plant expenses, $0.53 per ton for roof support, $0.43 per ton for contract labor used in the mining process, $0.39 per ton in longwall subsidence expense, $0.32 per ton for ventilation related expenses, $0.28 per ton for power and fuel and $0.22 per ton for outside expenses used in the mining process.

The increase of $1.57 per ton produced primarily reflects increases of $0.48 per ton for ventilation related expenses, $0.33 per ton for power and fuel, $0.25 per ton for various preparation plant expenses, $0.24 per ton in longwall subsidence expense and $0.20 per ton for safety related materials and supplies, partially offset by a decrease of $0.29 per ton for roof support.

● Maintenance expenses per ton produced increased 37.9% to $4.44 per ton in the 2023 Quarter from $3.22 per ton in the 2022 Quarter.

The increase of $1.22 per ton produced was primarily as a result of inflationary cost pressures.

● Production taxes and royalty expenses per ton incurred as a percentage of coal sales prices and volumes increased $0.60 per produced ton sold in the 2022 Quarter compared to the 2021 Quarter primarily as a result of higher price realizations, partially offset by a decrease in the federal black lung excise tax, effective January 1, 2022.

Segment Adjusted EBITDA Expense increases above were partially offset by the following decrease:

● We had no sales of outside coal purchases in the 2022 Quarter compared to $6.1 million in the 2021 Quarter.

Thus, costs per ton in the 2022 Quarter benefited as our cost of outside coal purchases are generally higher on a per ton basis than our produced coal.

Oil & gas royalties.

Oil & gas royalty revenues increased to $35.3 million in the 2022 Quarter compared to $20.1 million for the 2021 Quarter.

The increase of $15.2 million was primarily due to significantly higher volumes and sales price realizations per BOE in the 2022 Quarter.

● Production taxes and royalty expenses per ton incurred as a percentage of coal sales prices and volumes increased $1.80 per produced ton sold in the 2023 Quarter compared to the 2022 Quarter primarily as a result of higher price realizations, increased excise taxes per ton resulting from a reduced mix of export shipments and higher federal black lung excise tax rates, which had temporarily decreased from January 1, 2022 to September 30, 2022, partially offset by a favorable mix of tons sold mined in states without severance taxes.

Other revenues .

Other revenues principally comprised Matrix Design sales, Mt.

Vernon transloading revenues, oil & gas lease bonus revenues and other miscellaneous sales and revenue activities.

Other revenues increased to $19.4 million in the 2023 Quarter from $12.3 million in the 2022 Quarter.

The increase of $7.1 million was primarily due to increased sales of mining technology products by our Matrix Design subsidiary.

Income tax expense.

Income tax expense increased to $6.6 million for the 2022 Quarter compared to $0.2 million for the 2021 Quarter as a result of Alliance Minerals' election to be treated as a taxable entity for federal and state income tax purposes beginning in 2022.

Please read "Item 1.

Financial Statements (Unaudited)—Note 8 – Income Taxes"

of this Quarterly Report on Form 10-Q.

Transportation revenues and expenses .

Transportation revenues and expenses were $28.5 million and $22.0 million for the 2022 and 2021 Quarters, respectively.

The increase of $6.5 million was primarily attributable to increased average third-party transportation rates in the 2022 Quarter and increased coal shipments for which we arrange third-party transportation.

Transportation revenues are recognized when title to the coal passes to the customer and recognized in an amount equal to the corresponding transportation expenses.

Income tax expense decreased to $4.2 million for the 2023 Quarter compared to $42.7 million for the 2022 Quarter as a result of Alliance Minerals' election during the 2022 Quarter to be treated as a taxable

entity for federal and state income tax purposes.

We recognized a one-time non-cash income tax charge of $37.3 million during the 2022 Quarter related to this election.

Segment Adjusted EBITDA.

Our 2023 Quarter Segment Adjusted EBITDA increased $118.7 million to $291.9 million from the 2022 Quarter Segment Adjusted EBITDA of $173.2 million.

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

Three Months Ended

September 30,

Increase (Decrease)

33 unchanged sentences

Intercompany coal royalties

(1) Recast for the JC Resources Acquisition.

For more information, please read "Item 1.

Financial Statements (Unaudited)—Note 1 – Organization and Presentation"

of this Quarterly Report on Form 10-Q.

(2) Percentage change not meaningful.

(3) Other, Corporate and Elimination includes the elimination of intercompany coal royalty revenues and expenses between our Coal Royalties Segment and our Coal Operations Segments in addition to the expenses for the other miscellaneous activities included in this category.

(2) For definitions of Segment Adjusted EBITDA and Segment Adjusted EBITDA Expense and related reconciliations to their respective comparable GAAP financial measures, please see below under "—Reconciliation of non-GAAP

'Segment Adjusted EBITDA' to GAAP 'net income' and reconciliation of non-GAAP 'Segment Adjusted EBITDA Expense' to GAAP 'Operating Expenses.'"

(4) For definitions of Segment Adjusted EBITDA and Segment Adjusted EBITDA Expense and related reconciliations to their respective comparable GAAP financial measures, please see below under "—Reconciliation of GAAP 'net income' to non-GAAP 'Segment Adjusted EBITDA' and reconciliation of GAAP 'Operating Expenses' to non-GAAP 'Segment Adjusted EBITDA Expense.'"

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

4 unchanged sentences

Coal sales price per ton sold in the 2023 Quarter increased by 26.1% compared to the 2022 Quarter reflecting improved price realizations in both the domestic and export markets.

Coal sales volumes were higher by 6.2% compared to the 2021 Quarter as a result of higher domestic sales volumes.

Tons sold were higher by 5.2% compared to the 2022 Quarter as a result of increased sales volumes from the Gibson South and River View mines.

Segment Adjusted EBITDA Expense increased 16.6% to $207.1 million in the 2023 Quarter from $177.6 million in the 2022 Quarter primarily as a result of increased sales volumes and higher expenses per ton.

Segment Adjusted EBITDA Expense per ton increased $5.88 per ton sold to $31.91 from $26.03 per ton sold in the 2021 Quarter primarily as a result of ongoing inflationary pressures on numerous expense items, including labor-related expenses and supply and maintenance costs as well as increased sales-related expenses due to higher price realizations.

An extended longwall move at our Hamilton mine during the 2022 Quarter also contributed to higher per ton expenses compared to the 2021 Quarter.

Segment Adjusted EBITDA Expense per ton increased $3.26 per ton sold to $33.45 from $30.19 per ton sold in the 2022 Quarter primarily as a result of inflationary pressures on certain expense items, most notably labor-related expenses, maintenance costs and increased sales-related expenses due to higher price realizations.

Appalachia Coal Operations – Segment Adjusted EBITDA increased 128.1% to $116.6 million for the 2023 Quarter from $51.1 million in the 2022 Quarter.

The increase of $49.3 million was primarily attributable to higher coal sales, which increased 63.4% to $236.3 million in the 2022 Quarter from $144.6 million in the 2021 Quarter, due to increased prices and volumes.

Coal sales prices increased by 45.7% compared to the 2021 Quarter primarily due to substantially higher export price realizations and increased domestic pricing at all mines in the region.

Coal sales volumes increased 12.1% compared to the 2021 Quarter as a result of higher domestic sales volumes from our Tunnel Ridge longwall operation and increased export shipments from our MC Mining operation.

Segment Adjusted EBITDA Expense increased 45.9% to $134.7 million in the 2022 Quarter from $92.3 million in the 2021 Quarter due to increased sales volumes and per ton expenses.

Segment Adjusted EBITDA Expense per ton increased $10.14 per ton sold to $43.78 compared to $33.64 per ton sold in the 2021 Quarter, as a result of inflationary pressures on numerous expense items, including labor-related expenses and supply and maintenance costs as well as increased sales-related expenses due to higher price realizations.

Adverse mining conditions and preparation plant maintenance at MC Mining as well as a longwall move at our Tunnel Ridge mine during the 2022 Quarter also contributed to higher per ton expenses compared to the 2021 Quarter.

Oil & Gas Royalties – Segment Adjusted EBITDA increased to a record $35.8 million for the 2022 Quarter from $19.1 million in the 2021 Quarter.

The increase of $16.7 million was primarily due to significantly higher volumes and sales price realizations per BOE.

Coal Royalties – Segment Adjusted EBITDA increased 21.4% to a record $11.2 million for the 2022 Quarter from $9.2 million in the 2021 Quarter.

The increase of $2.0 million was a result of increased royalty tons sold and higher average royalty rates per ton.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Total revenues increased 55.6% to $1.71 billion for the nine months ended September 30, 2022 (the "2022 Period"), compared to $1.10 billion for the nine months ended September 30, 2021 (the "2021 Period"), primarily due to substantial increases in prices and volumes from coal operations and royalties and oil & gas royalties.

Total operating expenses increased to $1.26 billion in the 2022 Period, compared to $938.4 million in the 2021 Period, due primarily to increased coal sales volumes and ongoing inflationary cost pressures.

Higher revenues, partially offset by increased total operating expenses and income tax expense, led to significantly higher net income attributable to ARLP, which rose 187.1% to $362.7 million for the 2022 Period, or $2.76 per basic and diluted limited partner unit, compared to $126.3 million, or $0.97 per basic and diluted limited partner unit, for the 2021 Period.

Nine Months Ended September 30,

(in thousands)

(per ton / per BOE sold)

Coal - Tons sold

Coal - Tons produced

Coal - Coal sales

Coal - Segment Adjusted EBITDA Expense (1) (2)

Oil & Gas Royalties - BOE sold

Oil & Gas Royalties - Royalties (3)

Coal Royalties - Tons sold

Coal Royalties - Intercompany royalties

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

(3) Average sales price per BOE is defined as oil & gas royalty revenues excluding lease bonus revenue divided by total BOE sold.

Coal sales increased $495.0 million or 50.7% to $1.47 billion for the 2022 Period from $975.7 million for the 2021 Period.

The increase was attributable to a price variance of $363.9 million due to higher average coal sales prices and a volume variance of $131.1 million resulting from increased tons sold.

Coal sales price realizations increased by 32.9% in the 2022 Period to $55.96 per ton sold, compared to $42.12 per ton sold during the 2021 Period, due to favorable market conditions.

Improved coal demand in both the domestic and export markets during the 2022 Period drove coal sales volumes higher by 13.4% to 26.3 million tons sold compared to 23.2 million tons sold in the 2021 Period.

Coal - Segment Adjusted EBITDA Expense .

Segment Adjusted EBITDA Expense for our coal operations increased 39.0% to $928.2 million, as a result of higher coal sales volumes and inflationary cost pressures.

On a per ton basis, Segment Adjusted EBITDA Expense for our coal operations increased 22.6% to $35.32 per ton sold in the 2022 Period compared to $28.82 per ton in the 2021 Period, primarily due to certain cost increases, which are discussed below by category:

● Labor and benefit expenses per ton produced, excluding workers' compensation, increased 11.5% to $10.39 per ton in the 2022 Period from $9.32 per ton in the 2021 Period.

The increase of $1.07 per ton was primarily due to higher labor costs at several mines.

● Material and supplies expenses per ton produced increased 37.1% to $13.50 per ton in the 2022 Period from $9.85 per ton in the 2021 Period.

The increase of $3.65 per ton produced primarily reflects inflationary cost pressures including increases of $1.39 per ton for roof support, $0.46 per ton for contract labor used in the mining process, $0.40 per ton for power and fuel, $0.39 per ton for various preparation plant expenses and $0.29 per ton for ventilation related expenses.

● Maintenance expenses per ton produced increased 29.9% to $3.48 per ton in the 2022 Period from $2.68 per ton in the 2021 Period.

The increase of $0.80 per ton produced was primarily as a result of inflationary cost pressures.

● Production taxes and royalty expenses per ton incurred as a percentage of coal sales prices and volumes increased $0.46 per produced ton sold in the 2022 Period compared to the 2021 Period primarily as a result of higher price realizations, partially offset by a decrease in the federal black lung excise tax, effective January 1, 2022, a favorable mix of tons sold mined in states with severance taxes and decreased excise taxes per ton resulting from a greater mix of export shipments .

Oil & gas royalties.

Oil & gas royalty revenues increased to $102.2 million in the 2022 Period compared to $51.2 million for the 2021 Period.

The increase of $51.0 million was primarily due to significantly higher sales price realizations per BOE and increased volumes in the 2022 Period.

Other revenues .

Other revenues principally comprised Matrix Design sales, Mt.

Vernon transloading revenues and other miscellaneous sales and revenue activities.

Other revenues increased to $39.6 million in the 2022 Period from $24.4 million in the 2021 Period.

The increase of $15.2 million was primarily due to increased sales of mining technology products by our Matrix Design subsidiary and increased coal volumes shipped through our Mt.

Vernon transloading facility.

General and administrative.

General and administrative expenses for the 2022 Period increased to $62.4 million compared to $51.7 million in the 2021 Period.

The increase of $10.7 million was primarily due to higher incentive compensation expenses.

Income tax expense.

Income tax expense increased to $55.6 million for the 2022 Period compared to $0.2 million for the 2021 Period as a result of Alliance Minerals' election during the 2022 Period to be treated as a taxable entity for federal and state income tax purposes.

We recognized a one-time non-cash income tax charge of $37.3 million and a current income tax expense of $17.4 million during the 2022 Period related to Alliance Minerals.

Please read "Item 1.

Financial Statements (Unaudited)—Note 8 – Income Taxes"

of this Quarterly Report on Form 10-Q.

Transportation revenues and expenses .

Transportation revenues and expenses were $93.3 million and $45.2 million for the 2022 and 2021 Periods, respectively.

The increase of $48.1 million was primarily attributable to increased average third-party transportation rates in the 2022 Period and increased coal shipments for which we arrange third-party transportation.

Transportation revenues are recognized when title to the coal passes to the customer and recognized in an amount equal to the corresponding transportation expenses.

Segment Adjusted EBITDA.

Our 2022 Period Segment Adjusted EBITDA increased $308.2 million to $708.7 million from the 2021 Period Segment Adjusted EBITDA of $400.5 million.

Nine Months Ended

September 30,

Increase (Decrease)

(in thousands)

Segment Adjusted EBITDA

Illinois Basin Coal Operations

Appalachia Coal Operations

Oil & Gas Royalties

Coal Royalties

Other, Corporate and Elimination (1)

Total Segment Adjusted EBITDA (2)

Coal - Tons sold

Illinois Basin Coal Operations

Appalachia Coal Operations

Total tons sold

Illinois Basin Coal Operations

Appalachia Coal Operations

Total coal sales

Other revenues

Illinois Basin Coal Operations

Appalachia Coal Operations

Oil & Gas Royalties

Other, Corporate and Elimination

Total other revenues

Segment Adjusted EBITDA Expense

Illinois Basin Coal Operations

Appalachia Coal Operations

Oil & Gas Royalties

Coal Royalties

Other, Corporate and Elimination (1)

Total Segment Adjusted EBITDA Expense (2)

Oil & Gas Royalties

Volume - BOE (3)

Oil & gas royalties

Coal Royalties

Volume - Tons sold (4)

Intercompany coal royalties

(1) Other, Corporate and Elimination includes the elimination of intercompany coal royalty revenues and expenses between our Coal Royalties Segment and our Coal Operations Segments in addition to the expenses for the other miscellaneous activities included in this category.

'Segment Adjusted EBITDA' to GAAP 'net income' and reconciliation of non-GAAP 'Segment Adjusted EBITDA Expense' to GAAP 'Operating Expenses.'"

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

(4) Represents tons sold by our Coal Operations Segments that were produced from coal reserves leased from our Coal Royalties Segment.

Illinois Basin Coal Operations – Segment Adjusted EBITDA increased to $296.3 million in the 2022 Period from $197.6 million in the 2021 Period.

The increase of $98.7 million was primarily attributable to higher coal sales, which increased 40.6% to $858.6 million in the 2022 Period from $610.4 million in the 2021 Period, partially offset by increased operating expenses.

The increase in coal sales reflects higher coal sales price per ton, which increased by 25.7% compared to the 2021 Period due to increased domestic prices and significantly higher export prices and increased tons sold, which rose 11.8% in the 2022 Period as a result of increased sales volumes across all mines in the region.

Segment Adjusted EBITDA Expense increased 36.5% to $567.3 million in the 2022 Period from $415.4 million in the 2021 Period primarily as a result of increased sales volumes and higher expenses per ton.

Segment Adjusted EBITDA Expense per ton increased $5.76 per ton sold to $31.83 from $26.07 per ton sold in the 2021 Period primarily as a result of inflationary pressures on numerous expense items, including labor-related expenses and supply and maintenance costs, increased sales-related expenses due to higher price realizations, reduced recoveries across the region, a non-cash contingent accrual related to our purchase of the Hamilton mine and increased longwall move days at our Hamilton mine during the 2022 Period.

Appalachia Coal Operations – Segment Adjusted EBITDA increased 120.5% to $277.5 million for the 2022 Period from $125.9 million in the 2021 Period.

The increase of $151.6 million was primarily attributable to higher coal sales, which increased 67.6% to $612.2 million in the 2022 Period from $365.3 million in the 2021 Period, due to increased prices and volumes.

Coal sales prices increased by 43.3% compared to the 2021 Period primarily due to substantially higher export price realizations and increased domestic pricing in the region.

Coal sales volumes increased 16.9% compared to the 2021 Period as a result of higher sales volumes from our Tunnel Ridge and MC Mining operations.

Segment Adjusted EBITDA Expense increased 39.6% to $335.8 million in the 2022 Period from $240.5 million in the 2021 Period due to increased sales volumes and per ton expenses.

Segment Adjusted EBITDA Expense per ton increased 19.4% to $39.70 compared to $33.25 per ton sold in the 2021 Period, as a result of inflationary pressures on numerous expense items, including labor-related expenses and supply and maintenance costs, increased sales-related expenses due to higher price realizations, reduced recoveries at our Mettiki and MC Mining operations and increased longwall move days at our Tunnel Ridge mine during the 2022 Period.

Oil & Gas Royalties – Segment Adjusted EBITDA increased to $98.9 million for the 2022 Period from $46.4 million in the 2021 Period.

The increase of $52.5 million was primarily due to significantly higher sales price realizations, which increased 54.5% to $65.70 per BOE, and increased volumes in the 2022 Period.

Coal Royalties – Segment Adjusted EBITDA increased 31.8% to $30.6 million for the 2022 Period from $23.3 million in the 2021 Period.

The increase of $7.3 million was a result of increased royalty tons sold and higher average royalty rates per ton.

Reconciliation of non-GAAP "Segment Adjusted EBITDA"

to GAAP "net income"

and reconciliation of non-GAAP "Segment Adjusted EBITDA Expense"

to GAAP "Operating Expenses"

The increase of $65.5 million was primarily attributable to higher coal sales, which increased 79.9% to $241.9 million in the 2023 Quarter from $134.5 million in the 2022 Quarter, due to substantially higher coal sales prices.

Coal sales prices increased by 80.0% compared to the 2022 Quarter primarily due to improved price realizations in both the domestic and export markets.

Segment Adjusted EBITDA Expense increased 50.3% to $125.8 million in the 2023 Quarter from $83.7 million in the 2022 Quarter due to higher per ton expenses.

Segment Adjusted EBITDA Expense per ton increased $18.48 per ton sold to $55.20 compared to $36.72 per ton sold in the 2022 Quarter, as a result of increased longwall move days at the Tunnel Ridge mine, reduced recoveries at the MC Mining and Mettiki operations and inflationary pressures on certain expense items, most notably labor-related expenses, materials and maintenance costs and increased sales-related expenses due to higher price realizations.

Oil & Gas Royalties – Segment Adjusted EBITDA decreased slightly to $30.0 million in the 2023 Quarter compared to $30.8 million in the 2022 Quarter primarily due to lower average sales price per BOE, partially offset by higher BOE sold.

Higher BOE volumes during the 2023 Quarter resulted from increased drilling and completion activities on our properties and additional volumes from oil & gas mineral interest acquisitions.

Coal Royalties – Segment Adjusted EBITDA decreased 2.2% to $10.1 million for the 2023 Quarter compared to $10.3 million for the 2022 Quarter as a result of fewer royalty tons sold and increased selling expenses, partially offset by higher average royalty rates per ton received from our mining subsidiaries.

Reconciliation of GAAP "net income"

to non-GAAP "Segment Adjusted EBITDA"

and reconciliation of GAAP "Operating Expenses"

to non-GAAP "Segment Adjusted EBITDA Expense"

Segment Adjusted EBITDA (a non-GAAP financial measure) 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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Segment Adjusted EBITDA is also used as a supplemental financial measure by our management for reasons similar to those stated in the previous explanation of EBITDA.

In addition, the exclusion of corporate general and administrative expenses from consolidated Segment Adjusted EBITDA allows management 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.

The following is a reconciliation of consolidated Segment Adjusted EBITDA to net income, the most comparable GAAP financial measure:

In addition, the exclusion of corporate general and administrative expenses from consolidated Segment Adjusted EBITDA allows management 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.

The following is a reconciliation of net income, the most comparable GAAP financial measure, to consolidated Segment Adjusted EBITDA:

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

Segment Adjusted EBITDA Expense (a non-GAAP financial measure) includes operating expenses, coal purchases and other income (expense).

Consolidated Segment Adjusted EBITDA

Segment Adjusted EBITDA Expense (a non-GAAP financial measure) includes operating expenses, coal purchases, if applicable, and other expense (income).

Transportation expenses are excluded as these expenses are passed through to our customers and, consequently, we do not realize any gain or loss on transportation revenues.

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The exclusion of corporate general and administrative expenses from Segment Adjusted EBITDA Expense allows management to focus solely on the evaluation of segment operating performance as it primarily relates to our operating expenses.

The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to operating expense, the most comparable GAAP financial measure:

The following is a reconciliation of operating expenses, the most comparable GAAP financial measure, to consolidated Segment Adjusted EBITDA Expense:

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

Liquidity and Capital Resources

We have historically satisfied our working capital requirements and funded our capital expenditures, investments, contractual obligations and debt service obligations with cash generated from operations, cash provided by the issuance of debt or equity, borrowings under the Revolving Credit Facility and Securitization Facility and other financing transactions.

We believe that existing cash balances, future cash flows from operations and investments, borrowings under credit facilities and cash provided from the issuance of debt or equity will be sufficient to meet our working capital requirements, capital expenditures and additional investments, debt payments, contractual obligations, commitments and any distribution payments.

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

Based on our recent operating cash flow results, current cash position, current unitholder distributions, anticipated future cash flows and sources of financing that we expect to have available, we anticipate remaining in compliance with the covenants of the Credit Agreement and expect to have sufficient liquidity to fund our operations and growth strategies.

We have historically satisfied our working capital requirements and funded our capital expenditures, investments, contractual obligations and debt service obligations with cash generated from operations, cash provided by the issuance of debt or equity, borrowings under credit and securitization facilities and other financing transactions.

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

Based on our recent operating cash flow results, current cash position, anticipated future cash flows and sources of financing that we expect to have available, we anticipate being in compliance with the covenants of the Credit Agreement and expect to have sufficient liquidity to fund our operations and growth strategies.

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

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in our Annual Report on Form 10-K for the year ended December 31, 2022.

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

Oil & Gas Acquisitions — As of March 31, 2023, we have purchased mineral interests for $2.8 million with cash on hand under our $35.0 million Acquisition Agreement.

Future acquisitions under the Acquisition Agreement are expected to be funded with cash on hand or cash generated from operations.

On February 22, 2023, we closed on the JC Resources Acquisition for $72.3 million, which was funded with cash on hand.

Please read "Item 1.

Financial Statements (Unaudited) – Note 2 – Acquisitions"

of this Quarterly Report on Form 10-Q for additional information about the Acquisition Agreement and the JC Resources Acquisition.

Credit Facility — 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 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.

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.

For additional information on the Credit Agreement, please see "

Financial Statements (Unaudited) – Note 6 – Long-Term Debt."

Accounts Receivable Securitization — In January 2023, we extended the term of our $60.0 million accounts receivable securitization facility (the "Securitization Facility") from January 2023 to January 2024.

For additional information on the Securitization Facility, please see "Item 1.

Financial Statements (Unaudited) – Note 6 – Long-Term Debt."

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

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.

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.

Since inception through September 30, 2022, we have purchased units for a total of $93.5 million under the program.

During the nine months ended September 30, 2022, we did not repurchase and retire any units.

During the three months ended March 31, 2023, we repurchased and retired 860,060 units at an average price of $21.17 for an aggregate purchase price of $18.2 million.

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

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Unregistered Sales of Equity Securities and Use of Proceeds"

of this Quarterly Report on Form 10-Q for more information on unit repurchase program.

We currently have an effective universal shelf Registration Statement on Form S-3 that provides for the registration and sale of an unspecified amount of our equity or debt securities.

of this Quarterly Report on Form 10-Q for more information on the unit repurchase program.

Repurchase of Senior Notes — During the 2023 Quarter, we repurchased $26.6 million of our 7.5% senior notes due 2025.

At March 31, 2023, the aggregate principal amount of our outstanding 7.5% senior notes due 2025 was $373.4 million.

We expect to continue such purchases on an opportunistic basis.

Shelf Registration Statement — We currently have an effective universal shelf Registration Statement on Form S-3 that provides for the registration and sale of an unspecified amount of our equity or debt securities.

We may over time, and subject to market conditions, in one or more offerings, offer and sell any of the securities described in the prospectus.

Cash provided by operating activities was $548.6 million for the 2022 Period compared to $311.0 million for the 2021 Period.

The increase in cash provided by operating activities was primarily due to an increase in net income adjusted for non-cash items, partially offset by unfavorable working capital changes related to trade receivables and inventories compared to the 2021 Period.

Net cash used in investing activities was $247.5 million for the 2022 Period compared to $80.4 million for the 2021 Period.

The increase in cash used in investing activities was primarily attributable to an increase in capital expenditures, contributions to equity method investments, the purchase of equity securities in Infinitum and the acquisition of oil & gas mineral interests in the Belvedere Acquisition during the 2022 Period.

Cash provided by operating activities was $223.3 million for the 2023 Quarter compared to $90.6 million for the 2022 Quarter.

The increase in cash provided by operating activities was primarily due to an increase in net income adjusted for non-cash items and favorable working capital changes related primarily to trade receivables, prepaid expenses and accrued taxes other than income taxes.

These increases were partially offset by unfavorable working capital changes related primarily to other receivables, accounts payable and miscellaneous other changes compared to the 2022 Quarter.

Net cash used in investing activities was $148.7 million for the 2023 Quarter compared to $45.5 million for the 2022 Quarter.

The increase in cash used in investing activities was primarily attributable to an increase in capital expenditures and the acquisition of oil & gas reserves under the JC Resources Acquisition and Acquisition Agreement.

Please read "Item 1.

Financial Statements (Unaudited) - Note 3 – Acquisition"

of this Quarterly Report on Form 10-Q for additional information about the Belvedere Acquisition.

Net cash used in financing activities was $145.0 million for the 2022 Period compared to $181.5 million for the 2021 Period.

The decrease in cash used in financing activities was primarily attributable to reduced borrowings and payments on the Revolving Credit Facility and the Securitization Facility, partially offset by increased cash distributions paid to unitholders compared to the 2021 Period.

Financial Statements (Unaudited) - Note 2 – Acquisitions"

of this Quarterly Report on Form 10-Q for additional information about the JC Resources Acquisition and the Acquisition Agreement.

Net cash used in financing activities was $99.3 million for the 2023 Quarter compared to $39.3 million for the 2022 Quarter.

The increase in cash used in financing activities was primarily attributable to increased cash distributions paid to unitholders, the repurchase of senior notes during the 2023 Quarter, debt issuance costs and the purchase of units under the unit repurchase program.

These increases were partially offset by increased long-term borrowings.

Cash Requirements

Management anticipates having sufficient cash flow to meet 2022 cash requirements, including capital expenditures, scheduled payments on long-term debt, lease obligations, asset retirement obligation costs and workers' compensation and pneumoconiosis costs, with our September 30, 2022 cash and cash equivalents of $278.5 million and cash flows from operations, or borrowings under our Revolving Credit Facility and Securitization Facility if necessary.

Management anticipates having sufficient cash flow to meet 2023 cash requirements, including capital expenditures, scheduled payments on long-term debt, lease obligations, asset retirement obligation costs and workers' compensation and pneumoconiosis costs, with our March 31, 2023 cash and cash equivalents of $271.3 million and cash flows from operations, or borrowings under our Revolving Credit Facility and Securitization Facility if necessary.

We currently project average estimated annual maintenance capital expenditures over the next five years of approximately $7.05 per ton produced.

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

On September 30, 2022, we had $5.0 million in letters of credit outstanding under this agreement.

On March 31, 2023, we had $5.0 million in letters of credit outstanding under this agreement.

Related-Party Transactions

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Craft III Foundation and The Kathleen S.

Craft Foundation, 2) the use of aircraft, and 3) providing administrative services with respect to certain oil & gas mineral interests Mr.

Craft acquired in 2019.

We also have related-party transactions with (a) WKY CoalPlay, LLC ("WKY CoalPlay") regarding four mineral leases, and (b) with our equity interest in AllDale III.

For more information regarding AllDale III, please read "Item 1.

Craft Foundation, (2) the use of aircraft, and (3) the purchase of oil & gas mineral interests from JC Resources LP, an entity owned by Mr.

Please read "Item 1.

Financial Statements (Unaudited) – Note 2 – Acquisitions"

of this Quarterly Report on Form 10-Q for more information on the purchase of oil & gas mineral interests.

We also have related-party transactions with (a) WKY CoalPlay, LLC regarding three mineral leases, and (b) with entities in which we hold equity investments.

For more information regarding our investments, please read "Item 1.

Financial Statements (Unaudited) — Note 9 – Investments"

3 unchanged sentences

for additional information concerning related-party transactions.

New Accounting Standards

See "Item 1.

Financial Statements (Unaudited)—Note 2 – New Accounting Standards"

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

Other Information

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

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

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

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

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

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

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

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis