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Item 7. Management’s Discussion and Analysis

2024-02-23 compared with 2023-02-24 · 231 added, 256 removed, 257 unchanged (65% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the historical financial statements and notes thereto included in "Item 8.

Financial Statements and Supplementary Data"

where you can find more detailed information in "Note 1 – Organization and Presentation"

and "Note 2 – Summary of Significant Accounting Policies"

regarding the basis of presentation supporting the following financial information.

The following discussion of our financial condition and results of operations should be read in conjunction with the historical financial statements and notes thereto included in "Item 8.

Financial Statements and Supplementary Data" where you can find more detailed information in "Note 1 – Organization and Presentation" and "Note 2 – Summary of Significant Accounting Policies" regarding the basis of presentation supporting the following financial information.

Executive Overview

We are 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 located in strategic producing regions across the United States.

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 provider 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 second largest coal producer in the eastern United States with seven operating underground mining complexes in Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia, as well as a coal-loading terminal in Indiana.

In addition to our mining operations, Alliance Resource Properties owns or leases coal mineral reserves and resources 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.

The oil & gas mineral interests we own are in premier oil & gas producing regions of the United States, primarily in the Permian (Delaware and Midland), Anadarko (SCOOP/STACK) and Williston (Bakken) basins.

Our investments in energy and infrastructure consist of a variety of businesses such as electric vehicle charging stations and electric motors, in addition to private equity investments in renewable energy, the electrification of our economy or the efficient use of energy.

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.

Our River View and Tunnel Ridge mines and Mt.

Vernon transloading facility are located on the Ohio River.

As of December 31, 2022, we had approximately 580.7 million tons of proven and probable coal mineral reserves and 1.17 billion tons of measured, indicated and inferred coal mineral resources in Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia.

Substantially, all of our measured, indicated and inferred coal mineral resources and 464.8 million tons of these coal mineral reserves are owned or leased by Alliance Resource Properties, our land holding company.

We believe we control adequate reserves to implement our currently contemplated mining plans.

Please see "Item 1.

Business—Coal Mining Operations"

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

We currently own minerals interests in approximately 61,400 net royalty acres which provide us with diversified exposure to industry-leading operators consistent with our general strategy to grow our oil & gas mineral interest business.

We market our mineral interests for lease to operators and generate royalty income from leasing and development of those mineral interests.

As of December 31, 2022, we had 20,596 MBOE of proved oil & gas reserves.

On September 9, 2022, we acquired approximately 394 oil & gas net royalty acres in the Delaware Basin from Belvedere.

On October 26, 2022, we acquired approximately 3,928 oil & gas net royalty acres in the Midland and Delaware Basins from Jase.

See "Item 8.

Financial Statements and Supplementary Data—Note 3 – Acquisitions"

for more information about the Belvedere and Jase Acquisitions.

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.

On February 22, 2023, we acquired approximately 2,682 oil & gas net royalty acres in the Delaware Basin from JC Resources, a related-party entity owned by Mr.

We have invested $66.1 million in the advancement of energy and related infrastructure opportunities including Francis, Infinitum, and NGP ETP IV, and as of December 31, 2022 have a remaining commitment of $20.9 million to

See "Item 8.

Financial Statements and Supplementary Data – Note 14 – Investments"

for additional information on Francis, Infinitum and NGP ETP IV.

Our results of operations could be impacted by variability in coal sales prices in addition to prices for items that are used in coal production such as steel, electricity and other supplies, unforeseen geologic conditions or mining and processing equipment failures and unexpected maintenance problems, by the availability or reliability of transportation for coal shipments and by other supply chain shortage issues or disruptions.

Moreover, the mining regulatory environment in which we operate has grown increasingly stringent as a result of federal and state legislative and regulatory initiatives.

Additionally, our results of operations could be impacted by our ability to obtain and renew permits necessary for our operations, secure or acquire coal mineral reserves and resources, or find replacement buyers for coal under contracts with comparable terms to existing contracts.

As outlined in "Item 1.

Business—Environmental, Health, and Safety Regulations", a variety of measures taken by regulatory agencies in the United States and abroad in response to the perceived threat from climate change attributed to GHG emissions could substantially increase compliance costs for us and our customers and reduce demand for fossil fuels including coal which could materially and adversely impact our results of operations.

We are dependent on third-party operators for the exploration, development and production of our oil & gas mineral interests;

therefore, the success and timing of drilling and development of our oil & gas mineral interests depend on a number of factors outside our control.

Some of those factors include the operators' capital costs for drilling, development and production activities, the operators' ability to access capital, the operators' selection of counterparties for the marketing and sale of production and oil & gas prices in general, among others.

The operations on the properties in which we hold oil & gas mineral interests are also subject to various governmental laws and regulations.

Compliance with these laws and regulations could be burdensome or expensive for these operators and could result in the operators incurring significant liabilities, either of which could delay production and may ultimately impact the operators' ability and willingness to develop the properties in which we hold oil & gas mineral interests.

For additional information regarding some of the risks and uncertainties that affect our business and the industries in which we operate, see "Item 1A.

Risk Factors".

Our principal expenses related to the production of coal are labor and benefits, equipment, materials and supplies, maintenance, royalties and excise taxes in addition to the capital required to maintain our current levels of production.

We employ a totally union-free workforce.

Many of the benefits of our union-free workforce are related to higher productivity and are not necessarily reflected in our direct costs.

In addition, transportation costs, which are mostly borne by our customers, may be substantial and are often the determining factor in a coal consumer's contracting decision.

The principal expenses related to our oil & gas minerals interests business are production and ad valorem taxes.

For our coal royalty interests business, the principal expenses are royalty expenses and production and ad valorem taxes.

Our primary business strategy is to create sustainable, capital-efficient growth in available cash to maximize unitholder returns by:

● expanding our operations by adding and developing mines and coal mineral reserves and resources in existing, adjacent or neighboring properties;

● extending the lives of our current mining operations through the acquisition and development of coal mineral reserves and resources using our existing infrastructure;

● continuing to make productivity improvements to remain a low-cost producer in each region in which we operate;

● strengthening our position with existing and future customers by offering a broad range of coal qualities, transportation alternatives and customized services;

● developing strategic relationships to take advantage of opportunities within the coal and oil & gas industries and in other industries inside and outside of the Maser Limited Partnership sector;

● continuing to make investments in oil & gas mineral interests and coal royalty interests in various geographic locations within producing basins in the continental United States;

● continuing to identify and make strategic investments in the advancement of energy and related infrastructure opportunities to leverage our core competencies.

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 also have loading facilities located on the Ohio River.

In addition to our mining operations, Alliance Resource Properties owns or leases substantially all of our coal mineral resources and the majority of our coal mineral reserves in the Illinois and Appalachia Basins that are (a) leased to our internal mining complexes or (b) near our coal mining operations but not yet leased.

We currently own minerals interests in approximately 67,700 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, NGP ET IV, and Ascend which are in the businesses of, respectively, electric vehicle charging stations, electric motor manufacturing, private equity investments in renewable energy, the electrification of our economy or the efficient use of energy, and the manufacturing and recycling of sustainable, engineered battery materials for electric vehicles.

Please see "Item 1.

Business and Item 2.

Properties" in our Annual Report on Form 10-K for the year ended December 31, 2023 for a more detailed discussion of our various businesses.

As of December 31, 2023, we had four reportable segments:

Illinois Basin Coal Operations, Appalachia Coal Operations, Oil & Gas Royalties and Coal Royalties.

We also have an "all other"

category referred to as Other, Corporate and Elimination.

Our two Coal Operations reportable segments correspond to major coal producing regions in the eastern United States with similar economic characteristics including coal quality, geology, coal marketing opportunities, mining

and transportation methods and regulatory issues.

We also have an "all other" category referred to as Other, Corporate and Elimination.

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

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.

● The 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.

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

● The Illinois Basin Coal Operations reportable segment includes (a) the Gibson 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 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.

Vernon coal-loading terminal in Indiana which operates on the Ohio River, MAC and other support services, and our idled or closed 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 mining complex.

● The 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.

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

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

● Other, Corporate and Elimination includes marketing and administrative activities, the Matrix Group, our investments in Francis, Infinitum and NGP ETP IV (see "Item 8.

Financial Statements and Supplementary Data—Note 14 – Investments"), Wildcat Insurance, which assists the ARLP Partnership with its insurance requirements, AROP Funding, LLC and Alliance Resource Finance Corporation (both discussed in "Item 8.

Financial Statements and Supplementary Data—Note 8 – Long-Term Debt") and other miscellaneous activities.

● The Oil & Gas Royalties reportable segment includes oil & gas mineral interests held by Alliance Minerals as well as our equity interests in AllDale III.

● The Coal Royalties reportable segment includes substantially all of our coal mineral resources and the majority of our coal mineral reserves owned or leased by Alliance Resource Properties.

Approximately 60% of the coal sold by our coal operations' mines was leased from our Coal Royalties entities.

● Other, Corporate and Elimination includes marketing and administrative activities, the Matrix Group , our investments in Francis, Infinitum, NGP ET IV and Ascend, Wildcat Insurance, which assists the ARLP Partnership with its insurance requirements, AROP Funding and Alliance Resource Finance Corporation (both discussed in "Item 8.

Financial Statements and Supplementary Data – 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.

Oil & Gas Acquisitions

During 2023, through the JC Resources and Skyland Acquisitions and other ground game acquisitions, we acquired approximately 6,443 oil & gas net royalty acres in the Delaware, Anadarko and Williston basins.

These acquisitions enhanced our ownership position in these basins and furthered our business strategy to grow our Oil & Gas Royalties segment through accretive acquisitions.

Financial Statements and Supplementary Data – Note 3 – Acquisitions" for more information.

Growth Investments and Opportunities

During 2023, we invested $49.6 million in Infinitum and Ascend.

This brings our total investment in Francis, Infinitum, NGP ET IV and Ascend to $119.1 million with a remaining commitment of $18.4 million to NGP ET IV.

Financial Statements and Supplementary Data – Note 12 – Equity Investments" for additional information on Francis, Infinitum, NGP ET IV and Ascend.

Risks and Uncertainties

We face a variety of risks and uncertainties that management considers in the operation and planning of our businesses, which could affect our financial position and results of operations.

For additional information regarding our risks and uncertainties that affect our business and the industries in which we operate, see "Item 1A.

Risk Factors".

Business Strategy

Our primary business strategy is to create sustainable, capital-efficient growth in available cash to maximize unitholder returns by:

● expanding our coal operations by adding and developing mines and coal mineral reserves and resources in existing, adjacent or neighboring properties;

● extending the lives of our current mining operations through the acquisition and development of coal mineral reserves and resources using our existing infrastructure;

● continuing to make productivity improvements to remain a low-cost coal producer in each region in which we operate;

● strengthening our position with existing and future customers by offering a broad range of coal qualities, transportation alternatives and customized services;

● developing strategic relationships to take advantage of opportunities within the coal and oil & gas industries and in other industries inside and outside of the Master Limited Partnership sector;

● continuing to make investments in oil & gas mineral interests in various geographic locations within producing basins in the continental United States;

● strengthen and expand our technology company, Matrix Group, as we continue to develop and market industrial, mining and technology products and services worldwide;

● continuing to identify and make strategic investments in the advancement of energy and related infrastructure opportunities to leverage our core competencies and build platforms for future lines of business with long-term growth and cash flow generation.

How We Evaluate Our Performance

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Primary measurements include the following:

(1) raw and saleable tons produced per unit shift;

(1) coal sales price per ton;

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and (8) Segment Adjusted EBITDA.

Raw and Saleable Tons Produced per Unit Shift.

We review raw and saleable tons produced per unit shift as part of our operational analysis to measure the productivity of our operating segments, which is significantly influenced by mining conditions and the efficiency of our preparation plants.

Our discussion of mining conditions and preparation plant costs are found below under "— Analysis of Historical Results of Operations "

and therefore provides implicit analysis of raw and saleable tons produced per unit shift.

Coal Sales Price per Ton

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EBITDA is used as a supplemental financial measure by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others.

We believe that the presentation of EBITDA provides useful information to investors regarding our performance and results of operations because EBITDA, when used in conjunction with related Generally Accepted Accounting Principles ("GAAP") financial measures, (i) provides additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provides investors with the financial analytical framework upon which we base financial, operational, compensation and planning decisions and (iii) presents a measurement that investors, rating agencies and debt holders have indicated is useful in assessing us and our results of operations.

We believe that the presentation of EBITDA provides useful information to investors regarding our performance and results of operations because EBITDA, when used in conjunction with related GAAP financial measures, (i) provides additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provides investors with the financial analytical framework upon which we base financial, operational, compensation and planning decisions and (iii) presents a measurement that investors, rating agencies and debt holders have indicated is useful in assessing us and our results of operations.

Segment Adjusted EBITDA

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

Analysis of Historical Results of Operations

2022 Compared with 2021

Total revenues increased 53.3% to a record $2.41 billion in 2022 compared to $1.57 billion in 2021 primarily due to substantial increases in prices and volumes from coal operations and royalties and oil & gas royalties.

Total operating expenses increased to $1.75 billion in 2022 compared to $1.35 billion in 2021 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 224.0% to a record $577.2 million for 2022, or $4.39 per basic and diluted limited partner unit, compared to $178.2 million, or $1.36 per basic and diluted limited partner unit, for 2021.

Year Ended December 31,

Analysis of Historical Results of Operations – 2023 Compared with 2022

Consolidated Information

Total Revenues

Total revenues increased 6.1% to a record $2.57 billion in 2023 compared to $2.42 billion in 2022 primarily due to higher coal sales revenues.

Total operating expenses

Total operating expenses increased to $1.89 billion in 2023 compared to $1.72 billion in 2022 due primarily to the sale of higher cost purchased coal and increased per ton costs on certain expense items discussed in more detail below.

Net income attributable to ARLP

Increased revenues and lower income tax expense more than offset higher total operating expenses in 2023, resulting in record net income attributable to ARLP of $630.1 million, or $4.81 per basic and diluted limited partner unit for 2023, compared to $586.2 million, or $4.39 per basic and diluted limited partner unit, for 2022.

Coal sales increased $108.0 million or 5.1% to $2.21 billion for 2023 from $2.10 billion for 2022.

The increase reflects the benefit of higher average coal sales prices, which contributed $175.7 million in additional coal sales, partially offset by lower tons sold, which reduced coal sales by $67.7 million.

Higher price realizations in domestic markets drove coal sales prices higher by 8.6% in 2023 to $64.17 per ton sold, compared to $59.07 per ton sold during 2022.

Coal - Segment Adjusted EBITDA Expense

Beginning in 2023, 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 prior periods to be on the same basis.

Segment Adjusted EBITDA Expense for our coal operations increased 8.8% to $1.39 billion, as a result of higher per ton costs.

On a per ton basis, Segment Adjusted EBITDA Expense for our coal operations increased 12.4% to $40.38 per ton sold in 2023 compared to $35.91 per ton in 2022, primarily due to certain cost increases, which are discussed below by category:

● Labor and benefit expenses per ton produced, excluding workers' compensation, increased 14.6% to $12.20 per ton in 2023 from $10.65 per ton in 2022.

The increase of $1.55 per ton was primarily due to higher incentive benefits and direct labor costs at several mines.

● Material and supplies expenses per ton produced increased 2.6% to $14.02 per ton in 2023 from $13.67 per ton in 2022.

The increase of $0.35 per ton produced primarily reflects increases of $0.13 per ton for safety related materials and supplies, $0.11 per ton for various preparation plant expenses and $0.09 per ton for ventilation related expenses , partially offset by a decrease of $0.12 per ton for environmental and reclamation expenses other than longwall subsidence.

● Maintenance expenses per ton produced increased 27.6% to $4.62 per ton in 2023 from $3.62 per ton in 2022.

The increase of $1.00 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 $0.64 per produced ton sold in 2023 compared to 2022 primarily as a result of higher price realizations and higher federal black lung excise tax as a result of the tax rate increasing effective October 1, 2022, partially offset by a favorable mix of tons sold mined in states without severance taxes.

● Outside coal purchases increased $36.0 million in 2023 as a result of increased sales from purchased coal to meet contractual commitments at our Mettiki longwall operation which experienced challenging geological conditions that delayed development of a new district.

Purchased coal generally costs more on a per ton basis than our produced coal.

For a definition of Segment Adjusted EBITDA Expense and related reconciliation to its comparable GAAP financial measure, please see below under "—Reconciliation of Non-GAAP Financial Measures."

Oil & gas royalties

Oil & gas royalty revenues decreased to $137.8 million in 2023 compared to $151.1 million for 2022.

The decrease of $13.3 million was primarily due to lower average sales price per BOE, which decreased by 29.4%, partially offset by higher BOE volumes.

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 $76.5 million in 2023 from $52.8 million in 2022.

The increase of $23.7 million was primarily due to increased sales of mining technology products by our Matrix Design subsidiary.

Income tax expense

Income tax expense decreased to $8.3 million for 2023 compared to $54.0 million for 2022 primarily as a result of our recognition of a one-time non-cash income tax charge of $37.3 million during 2022 in connection with the Tax Election.

Transportation revenues and expenses

Transportation revenues and expenses were $142.3 million and $113.9 million for 2023 and 2022, respectively.

The increase of $28.4 million was primarily attributable to increased average third-party transportation rates in 2023 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 2023 Segment Adjusted EBITDA decreased $20.4 million, or 2.0%, to $1.01 billion from 2022 Segment Adjusted EBITDA of $1.03 billion primarily as a result of higher operating expenses and outside coal purchases, partially offset by increased revenues.

For a definition of Segment Adjusted EBITDA and related reconciliation to its comparable GAAP financial measure, please see below under "—Reconciliation of Non-GAAP Financial Measures."

Segment Information

Year Ended December 31,

Increase (Decrease)

(in thousands)

(per ton/BOE sold)

Segment Adjusted EBITDA

Illinois Basin Coal Operations

Appalachia Coal Operations

Oil & Gas Royalties

Coal Royalties

Other, Corporate and Elimination (2)

Total Segment Adjusted EBITDA (3)

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 its comparable GAAP financial measure, please see below under "—Reconciliation of GAAP 'Operating Expenses' to non-GAAP 'Segment Adjusted EBITDA Expense.'"

(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.

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

Coal 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 (2)

Total Segment Adjusted EBITDA Expense (3)

Oil & Gas Royalties

Volume - BOE (4)

Oil & gas royalties

Coal Royalties

Volume - Tons sold (5)

Intercompany coal royalties

(1) Recast for the JC Resources Acquisition.

For more information, please read "Item 8.

Financial Statements and Supplementary Data— Note 1 – Organization and Presentation."

(2) 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.

(3) 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 Financial Measures."

(4) BOE for natural gas is calculated on a 6:1 basis (6,000 cubic feet of natural gas to one barrel).

(5) Represents tons sold by our coal operations segments associated with coal reserves leased from our Coal Royalties Segment.

Illinois Basin Coal Operations – Segment Adjusted EBITDA increased 22.2% to $514.1 million in 2023 from $420.7 million in 2022.

The increase of $93.4 million was primarily attributable to higher coal sales, which increased 11.9% to $1.36 billion in 2023 from $1.22 billion in 2022, partially offset by increased operating expenses.

The increase in coal sales reflects higher coal sales price per ton, which increased by 9.1% compared to 2022 reflecting increased domestic prices, and increased tons sold, which rose 2.5% in 2023 as a result of increased sales volumes at the Warrior, Hamilton and Gibson South mines.

Segment Adjusted EBITDA Expense increased 6.8% to $861.3 million in 2023 from $806.1 million in 2022 primarily as a result of increased sales volumes and higher operating expenses per ton.

Segment Adjusted EBITDA Expense per ton increased 4.2% or $1.41 per ton sold to $34.84 from $33.43 per ton sold in 2022 primarily as a result of inflationary pressures on numerous expense items, including labor-related expenses and maintenance costs, and increased sales-related expenses due to higher price realizations, partially offset by lower expenses at our Hamilton mine, that experienced an unexpected outage during 2022.

Appalachia Coal Operations – Segment Adjusted EBITDA decreased 22.4% to $330.7 million for 2023 from $426.2 million in 2022.

The decrease of $95.5 million was primarily attributable to increased operating expenses and lower coal sales volumes.

Coal sales volumes decreased 15.3% compared to 2022 as a result of lower production across the region due to lock outages, customer plant maintenance, reduced operating units at MC Mining, challenging geologic conditions that delayed development of a new district at our Mettiki longwall operation and increased longwall move days at our Tunnel Ridge mine.

Coal sales prices increased by 13.2% compared to 2022 primarily due to increased domestic price realizations in the region.

Segment Adjusted EBITDA Expense increased 11.3% to $516.5 million in 2023 from $464.0 million in 2022 due to higher per ton operating expenses, partially offset by lower volumes.

Segment Adjusted EBITDA Expense per ton increased 31.5% to $53.15 compared to $40.42 per ton sold in 2022, as a result of lower volumes previously discussed, purchased coal and inflationary pressures on certain expense items, most notably labor-related expenses and materials and maintenance costs, and increased sales-related expenses due to higher price realizations.

Oil & Gas Royalties – Segment Adjusted EBITDA decreased to $121.5 million for 2023 from $143.2 million in 2022.

The decrease of $21.7 million was primarily due to lower average sales price per BOE, which decreased 29.4% to $44.37 per BOE, partially offset by increased volumes in 2023, which increased by 29.1%.

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

Coal Royalties – Segment Adjusted EBITDA increased 6.1% to $41.2 million for 2023 from $38.8 million in 2022.

The $2.4 million increase was a result of higher average royalty rates per ton, partially offset by reduced royalty tons sold.

Analysis of Historical Results of Operations – 2022 Compared with 2021

Consolidated Information

Total Revenues

Total revenues increased 53.2% to a record $2.42 billion in 2022 compared to $1.58 billion in 2021 primarily due to substantial increases in prices and volumes from coal operations and royalties and oil & gas royalties.

Total operating expenses

Total operating expenses increased to $1.75 billion in 2022 compared to $1.36 billion in 2021 due primarily to increased coal sales volumes and ongoing inflationary cost pressures.

Net income attributable to ARLP

Higher revenues, partially offset by increased total operating expenses and income tax expense, led to significantly higher net income attributable to ARLP, which rose 220.7% to a record $586.2 million for 2022, or $4.39 per basic and diluted limited partner unit, compared to $182.8 million, or $1.36 per basic and diluted limited partner unit, for 2021.

Coal sales increased $715.3 million or 51.6% to $2.10 billion for 2022 from $1.39 billion for 2021.

The increase was attributable to a price variance of $572.6 million due to higher average coal sales prices and a volume variance

of $142.7 million resulting from increased tons sold.

Coal sales price realizations increased by 37.4% in 2022 to a record $59.07 per ton sold, compared to $42.98 per ton sold during 2021, due to favorable market conditions.

The increase was attributable to a price variance of $572.6 million due to higher average coal sales prices and a volume variance of $142.7 million resulting from increased tons sold.

Coal sales price realizations increased by 37.4% in 2022 to $59.07 per ton sold, compared to $42.98 per ton sold during 2021, due to favorable market conditions.

Improved coal demand in both the domestic and export markets during 2022 drove coal sales volumes higher by 10.3% to 35.6 million tons sold compared to 32.3 million tons sold in 2021.

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We recognized a one-time non-cash income tax charge of $37.3 million and income tax expense of $17.5 million during 2022 related to Alliance Minerals.

Please read "Item 8.

Financial Statements and Supplementary Data—Note 9 – Income Taxes."

Please read "Item 8.

Financial Statements and Supplementary Data—Note 7 – Income Taxes."

Transportation revenues and expenses

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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 Segment Adjusted EBITDA increased $475.2 million, or 85.2%, to $1.03 billion from 2021 Segment Adjusted EBITDA of $557.4 million primarily as a result of increased revenues, partially offset by higher operating expenses.

Segment Information

Our 2022 Segment Adjusted EBITDA increased $471.3 million, or 85.8%, to $1.02 billion from 2021 Segment Adjusted EBITDA of $549.3 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:

Year Ended December 31,

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Intercompany coal royalties

(1) Recast for the JC Resources Acquisition.

For more information, please read "Item 8.

Financial Statements and Supplementary Data— Note 1 – Organization and Presentation."

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

(4) BOE for natural gas 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 associated with coal mineral reserves leased from our Coal Royalties Segment.

(5) Represents tons sold by our coal operations segments associated with coal reserves leased from our Coal Royalties Segment.

Illinois Basin Coal Operations – Segment Adjusted EBITDA increased 58.6% to $420.7 million in 2022 from $265.3 million in 2021.

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Segment Adjusted EBITDA Expense increased 31.4% to $806.1 million in 2022 from $613.3 million in 2021 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 $33.43 from $27.55 per ton sold in 2021 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 and lost production due to an unexpected outage caused by a thermal event which lasted approximately four weeks in addition to increased longwall move days at our Hamilton mine during 2022.

Segment Adjusted EBITDA Expense per ton increased 21.3% or $5.88 per ton sold to $33.43 from $27.55 per ton sold in 2021 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 and lost production due to an unexpected outage caused by a thermal event which lasted approximately four weeks in addition to increased longwall move days at our Hamilton mine during 2022.

There were no injuries and no damages to equipment as a result of the thermal event at Hamilton, and mining operations returned to normal production levels in December 2022.

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The increase of $5.6 million was a result of increased royalty tons sold and higher average royalty rates per ton.

2021 Compared with 2020

For discussion and analysis of 2021 compared to 2020, please refer to "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations"

of our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 25, 2022 and amended on August 26, 2022, and is incorporated by reference herein.

Reconciliation of GAAP "net income"

to non-GAAP "Segment Adjusted EBITDA"

and reconciliation of GAAP "Operating Expenses"

to non-GAAP "Segment Adjusted EBITDA Expense"

Reconciliation of Non-GAAP Financial Measures

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.

Segment Adjusted EBITDA is a key component of consolidated EBITDA, which is used as a supplemental financial measure by management and by external users of our financial statements such as investors, commercial banks, research analysts and others.

We believe that the presentation of EBITDA provides useful information to investors regarding our performance and results of operations because EBITDA, when used in conjunction with related GAAP financial measures, (i) provides additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provides investors with the financial analytical framework upon which we base financial, operational, compensation

and planning decisions and (iii) presents a measurement that investors, rating agencies and debt holders have indicated is useful in assessing us and our results of operations.

We believe that the presentation of EBITDA provides useful information to investors regarding our performance and results of operations because EBITDA, when used in conjunction with related GAAP financial measures, (i) provides additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provides investors with the financial analytical framework upon which we base financial, operational, compensation and planning decisions and (iii) presents a measurement that investors, rating agencies and debt holders have indicated is useful in assessing us and our results of operations.

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.

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Consistent with our business strategy, from time to time we engage in discussions with potential sellers regarding our possible acquisitions of certain assets and/or companies of the sellers.

For more information on acquisitions, please read "Item 8.

Financial Statements and Supplementary Data—Note 1 – Organization and Presentation,"

"—Note 3 – Acquisitions"

and "—Note 26 – Subsequent Events"

of this Annual Report on Form 10-K.

For more information on acquisitions, please read "Item 8.

Financial Statements and Supplementary Data—Note 1 – Organization and Presentation" and "—Note 3 – Acquisitions" of this Annual Report on Form 10-K.

Liquidity and Capital Resources

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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.

Please see "Item 1A.

Risk Factors."

Oil & Gas Acquisitions — During 2022, through the Belvedere and Jase Acquisitions, we acquired approximately 4,322 oil & gas net royalty acres in the Permian Basin for an aggregate purchase price of $92.6 million.

Please see "Item 1A.

Risk Factors."

Oil & Gas Acquisitions

During 2023, through the JC Resources and Skyland Acquisitions and other ground game acquisitions we acquired approximately 6,443 oil & gas net royalty acres in the Anadarko, Williston and Delaware Basins for an aggregate purchase price of $110.9 million.

We funded these acquisitions with cash on hand.

We plan to fund our commitment with cash on hand or cash generated from operations.

On February 22, 2023, we acquired approximately 2,682 oil & gas net royalty acres in the Delaware Basin from JC Resources, a related-party entity owned by Mr.

Craft, for $72.3 million, which was funded with cash on hand.

For additional information about acquisitions of oil & gas assets and the collaborative agreement, please see "Business — Oil & Gas Acquisitions."

New Venture Investments — During 2022, we made strategic investments in attractive opportunities that support the advancement of energy and related infrastructure, including investments of $20 million in Francis, $42 million in Infinitum and, as of December 31, 2022, $4.1 million (of a $25 million commitment) in NGP ETP IV.

For additional information about our energy and infrastructure investments, please see "Business — New Venture Investments."

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.

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 December 31, 2022, we had purchased units for a total of $93.5 million under the program.

During the year ended December 31, 2022, we did not repurchase and retire any units.

For additional information about our acquisitions of oil & gas assets, please see "Business — Oil & Gas Acquisitions."

Growth Investments and Opportunities

During 2023, we invested $49.6 million in Infinitum and Ascend with cash on hand.

These investments are aligned with our strategy of furthering the development of energy and related infrastructure and investing in attractive opportunities that leverage our core competencies and build platforms for future lines of business with long-term growth and cash flow generation.

Also, as of December 31, 2023, we have funded $6.6 million of a $25 million commitment in NGP ET IV with cash on hand.

For additional information about our energy and infrastructure investments, please see "Business — Growth Investments and Opportunities."

Unit Repurchase Program

In January 2023, the Board of Directors authorized a $93.5 million increase to the unit repurchase program.

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

Please read "Item 5.

Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities"

for more information on the unit repurchase program.

Revolving Credit Facility — On January 13, 2023, Alliance Coal 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").

As a result, we were authorized to repurchase up to a total of $100.0 million of ARLP's limited partner common units.

During the year ended December 31, 2023, we repurchased and retired 929,842 units at an average price of $20.90 for an aggregate purchase price of $19.4 million, leaving $80.6 million authorized.

Please read "Item 5.

Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities" for more information on the unit repurchase program.

Revolving Credit Facility

On January 13, 2023, Alliance Coal entered into 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, and for a term loan in an aggregate principal amount of $75 million.

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 ("Replaced Credit Facility"), which included a sublimit of $125 million for the issuance of letters of credit and a sublimit of $15.0 million for swingline borrowings, extended to the Intermediate Partnership under its Fifth Amended and Restated Credit Agreement, dated as of March 9, 2020 that would have expired on March 9, 2024.

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").

Interest is payable quarterly, with principal of the Term Loan due in quarterly installments equal to 6.25% of the original principal amount beginning with the quarter ending June 30, 2023 and the balance payable at maturity.

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 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 "Item 8.

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

Mine Development Project — In 2022, we began development of River View's Mine No.

2 and continued in 2023.

We currently anticipate deploying capital of approximately $42.0 million in 2023 and $24.0 million in 2024 to complete the project.

We expect to fund the project with cash from operations or borrowings under our credit facilities.

For additional information on the Credit Agreement, please see "Item 8.

Financial Statements and Supplementary Data—Note 6 – Long-Term Debt".

Securitization Facility

In January 2024, we extended the term of our Securitization Facility to January 2025 and increased the borrowing availability under the facility to $90.0 million.

For additional information on the Securitization Facility please read "Item 8.

Financial Statements and Supplementary Data—Note 6 – Long-Term Debt".

Mine Development Project

In 2022, we began development of the Henderson County mine which continued through 2023 and into 2024.

We have deployed capital of $69.3 million through 2023 and currently anticipate deploying capital of approximately $36.5 million in 2024 to complete the project.

We have funded our capital expenditures and expect to fund our remaining capital expenditures for the project with cash from operations or borrowings under our credit facilities.

We anticipate the new mine will enable us to access an additional 109.5 million clean recoverable tons of coal.

Cash provided by operating activities was $830.6 million for 2023 compared to $802.3 million for 2022.

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 primarily related to trade receivables.

The increase in cash provided by operating activities was primarily due to increases in net income adjusted for non-cash items and favorable working capital changes primarily related to trade receivables.

These increases were partially offset by unfavorable working capital changes primarily related to inventories, as well as miscellaneous other changes.

Net cash used in investing activities was $559.7 million for 2023 compared to $403.3 million for 2022.

The increase in cash used in investing activities was primarily attributable to an increase in capital expenditures, purchases of equity securities, payments for the Belvedere and Jase Acquisitions in 2022 and contributions to equity method investments, partially offset by payments for the Boulders Acquisition in 2021.

See "Item 8.

Financial Statements and Supplementary Data—Note 3 – Acquisitions"

for more information on the Boulders, Belvedere and Jase Acquisitions.

The increase in cash used in investing activities was primarily attributable to increases in capital expenditures, acquisitions of oil & gas reserves including the JC Resources and Skyland Acquisitions, and changes in accounts payable and accrued liabilities.

These increases were partially offset by payments for the Belvedere and Jase Acquisitions, and contributions to equity method investments in 2022.

Financial Statements and Supplementary Data—Note 3 – Acquisitions" for more information on the Belvedere, Jase, JC Resources and Skyland Acquisitions.

Net cash used in financing activities was $507.1 million for 2023 compared to $225.4 million for 2022.

The decrease in cash used in financing activities was primarily attributable to reduced net borrowings and payments on equipment financings, and on the revolving credit and securitization facilities, mostly offset by increased distributions to partners.

The increase in cash used in financing activities was primarily attributable to increased cash distributions paid to unitholders, increased net payments on long-term debt, purchases of units under our unit repurchase program, debt issuance costs, and payments for purchase of units and tax withholdings related to settlements under deferred compensation plans.

Cash Requirements

We currently estimate our 2024 annual cash requirements, including capital expenditures, scheduled payments on long-term debt, lease obligations, asset retirement obligation costs and workers' compensation and pneumoconiosis, to be in a range of $728.0 million to $778.0 million.

Management anticipates having sufficient cash flow to meet 2023 cash requirements with our December 31, 2022 cash and cash equivalents of $296.0 million and cash flows from operations, or borrowings under revolving credit and securitization facilities if necessary.

Management anticipates having sufficient cash flow to meet 2024 cash requirements with our December 31, 2023 cash and cash equivalents of $59.8 million and cash flows from operations, or borrowings under revolving credit and securitization facilities or other sources of financing that we expect to have available if necessary.

We currently project average estimated annual maintenance capital expenditures over the next five years of approximately $7.76 per ton produced.

For additional information on our future cash requirements other than capital expenditures, please see "Item 8.

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

"—Note 10 – Leases,"

"—Note 17 – Employee Benefit Plans,"

"—Note 20 – Asset Retirement Obligations,"

"—Note 21 – Accrued Workers' Compensation and Pneumoconiosis Benefits"

and "—Note 23 – Commitments and Contingencies."

We will continue to have significant cash requirements over the long term, which may require us to incur debt or seek additional equity capital.

For additional information on our future cash requirements other than capital expenditures, please see "Item 8.

Financial Statements and Supplementary Data—Note 6 – Long-Term Debt," "—Note 8 – Leases," "—Note 15 – Employee Benefit Plans," "—Note 18 – Asset Retirement Obligations," "—Note 19 – Accrued Workers' Compensation and Pneumoconiosis Benefits" and "—Note 21 – Commitments and Contingencies." We will

continue to have significant cash requirements over the long term, which may require us to incur debt or seek additional equity capital.

The availability and cost of additional capital will depend upon prevailing market conditions, the market price of our common units and several other factors over which we have limited control, as well as our financial condition and results of operations.

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Letters of credit

Effective December 1, 2022, we renewed our property and casualty insurance program through October 1, 2023.

Effective October 1, 2023, we renewed our property and casualty insurance program through September 30, 2024.

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

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The maximum limit in the commercial property program is $100.0 million per occurrence, excluding a $1.5 million deductible for property damage, a 75 or 90 day waiting period for underground business interruption depending on the mining complex and an additional $25.0 million overall aggregate deductible.

We retained a 7.25% participating interest in our current 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.

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Debt Obligations

See "Item 8.

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

for a discussion of our debt obligations.

Financial Statements and Supplementary Data—Note 6 – Long-Term Debt" for a discussion of our debt obligations.

Critical Accounting Policies and Estimates

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We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances.

We discuss these estimates and judgments with the audit committee of the Board of Directors ("Audit Committee") periodically.

We discuss these estimates and judgments with the Audit Committee periodically.

Actual results may differ from these estimates.

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The following critical accounting policies are materially impacted by judgments, assumptions and estimates used in the preparation of our consolidated financial statements:

Business Combinations and Goodwill

Business Combinations

We account for business acquisitions using the purchase method of accounting.

See "Item 8.

Financial Statements and Supplementary Data—Note 3 – Acquisitions"

for more information on the Belvedere and Jase Acquisitions.

Financial Statements and Supplementary Data—Note 3 – Acquisitions" for more information on the Belvedere, Jase and Skyland Acquisitions.

Assets acquired and liabilities assumed are recorded at their estimated fair values at the acquisition date.

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The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

For the Belvedere and Jase Acquisitions, we determined a fair value for the acquired mineral interests using an income approach consisting of discounted cash flow models.

For the Belvedere, Jase and Skyland Acquisitions, we determined a fair value for the acquired mineral interests using an income approach consisting of discounted cash flow models.

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

The only indefinite-lived intangible that the Partnership currently has is goodwill.

Goodwill is not amortized, but subject to annual reviews for impairment at the reporting unit level.

Goodwill is assessed for impairment more frequently if events or changes in circumstances indicate that it is more likely than not that goodwill is impaired.

The reporting unit or units used to evaluate and measure goodwill for impairment are determined primarily from the manner in which the business is managed or operated.

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

The Partnership computes the fair value of its reporting units primarily using the income approach (discounted cash flow analysis).

The computations require management to make significant estimates.

Critical estimates are used as part of these evaluations include, among other things, the discount rate applied to future earnings reflecting a weighted average cost of capital rate, and projected coal price assumptions.

Our estimate of the forward coal sales price curve and future sales volumes are critical assumptions used in our discounted cash flow analysis.

A discounted cash flow analysis requires us to make various judgmental assumptions about sales, operating margins, capital expenditures, working capital and commodity sales prices.

Assumptions about sales, operating margins, capital expenditures and commodity sales prices are based on our budgets, business plans, economic projections, and anticipated future cash flows.

In determining the fair value of our reporting units, we are required to make significant judgments and estimates regarding the impact of anticipated economic factors on our business.

The forecast assumptions used in our assessments make certain assumptions about future pricing, volumes and expected maintenance capital expenditures.

Assumptions are also made for a "normalized"

perpetual growth rate for periods beyond the long range financial forecast period.

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

Our consolidated goodwill included $132.0 million recorded in conjunction with our acquisition of the Hamilton mine on July 31, 2015.

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

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

We estimated the fair value of Hamilton using a discounted cash flow model.

The assumptions used in the discounted cash flow model considered market conditions at the time of the assessment and our estimate of the mine's performance in future years based on the information available to us.

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

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

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

During the first quarter of 2020, we also performed tests on our goodwill balance associated with MAC using a discounted cash flow model and concluded no impairment was necessary.

There were no impairments of goodwill during 2022 or 2021.

Our estimates of fair value are sensitive to changes in variables, certain of which relate to broader macroeconomic conditions outside our control.

As a result, actual performance in the near and longer-term could be different from these expectations and assumptions.

This could be caused by events such as strategic decisions made in response to economic and competitive conditions and the impact of economic factors, such as over production in coal and low prices of natural gas or elevated energy prices due to geopolitical impacts such as Russia's invasion of Ukraine.

In addition, some of the inherent estimates and assumptions used in determining fair value of the reporting units are outside the control of management, including interest rates, cost of capital and our credit ratings.

While we believe we have made reasonable estimates and assumptions to calculate the fair value of the reporting units and other intangible assets, it is possible a material change could occur.

See "Item 8.

Financial Statements and Supplementary Data—Note 5 – Goodwill Impairment."

Oil & Gas Reserve Values

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

See "Item 8.

Financial Statements and Supplementary Data—Note 21 – Accrued Workers' Compensation and Pneumoconiosis Benefits"

for additional discussion.

Financial Statements and Supplementary Data—Note 19 – Accrued Workers' Compensation and Pneumoconiosis Benefits" for additional discussion.

We had accrued liabilities for workers' compensation of $48.0 million and $49.5 million for these costs at December 31, 2023 and 2022, respectively.

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

Our receivables for traumatic injury claims under this policy as of December 31, 2022 and 2021 are $4.1 million and $5.7 million, respectively.

Coal mining companies are subject to Federal Coal Mine Health and Safety Act of 1969, as amended, and various state statutes for the payment of medical and disability benefits to eligible recipients related to coal worker's pneumoconiosis, or black lung.

Our receivables for traumatic injury claims under this policy as of December 31, 2023 and 2022 were $4.1 million.

Coal mining companies are subject to FMSHA and various state statutes for the payment of medical and disability benefits to eligible recipients related to coal worker's pneumoconiosis, or black lung.

We provide for these claims through self-insurance programs.

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A one-percentage-point reduction in the discount rate would have increased the expense recognized for the year ended December 31, 2023 by approximately $1.4 million.

Under the service cost method used to estimate our pneumoconiosis benefits liability, actuarial gains or losses attributable to changes in actuarial assumptions, such as the discount rate, are amortized over the remaining service period of active miners.

Under the service cost method used to

estimate our pneumoconiosis benefits liability, actuarial gains or losses attributable to changes in actuarial assumptions, such as the discount rate, are amortized over the remaining service period of active miners.

The discount rate for workers' compensation and pneumoconiosis is derived by applying the Financial Times Stock Exchange Pension Discount Curve to the projected liability payout.

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We review all actuarial assumptions periodically for reasonableness and consistency and update such factors when underlying assumptions, such as discount rates, change or when sustained changes in our historical experiences indicate a shift in our trend assumptions are warranted.

Impairment of Long-Lived Assets

In addition to oil & gas reserves discussed above in the Oil & Gas Reserve Values section, we review the carrying value of long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount may not be recoverable based on estimated undiscounted future cash flows.

Long-lived assets and certain intangibles are not reviewed for impairment unless an impairment indicator is noted.

Several examples of impairment indicators include:

● A significant decrease in the market price of a long-lived asset;

● A significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition;

● A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action of assessment by a regulator;

● An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset;

● A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset;

● A current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

The term more likely that not refers to a level of likelihood that is more than 50 percent.

The above factors are not all inclusive, and management must continually evaluate whether other factors are present that would indicate a long-lived asset may be impaired.

If there is an indication that the carrying amount of an asset may not be recovered, we compare our estimate of undiscounted future cash flows attributable to the asset to the carrying value of the asset.

Individual assets are grouped for impairment review purposes based on the lowest level for which there is identifiable cash flows that are largely independent of the cash flows of other groups of assets, generally on a by-mine basis.

Assumptions about sales, operating margins, capital expenditures and sales prices are based on our budgets, business plans, economic projections, and anticipated future cash flows.

If the carrying value of an asset exceeds the future undiscounted cash flows expected from the asset, t he amount of impairment is measured by the difference between the carrying value and the fair value of the asset.

The fair value of impaired assets is typically determined based on various factors, including the present values of expected future cash flows using a risk adjusted discount rate, the marketability of coal properties and the estimated fair value of assets that could be sold or used at other operations.

We recorded an asset impairment of $25.0 million in 2020.

See "Item 8.

Financial Statements and Supplementary Data—Note 4 – Long-Lived Asset Impairments".

Asset Retirement Obligations

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Accrued liabilities of $150.4 million and $149.8 million for these costs are recorded at December 31, 2023 and 2022, respectively.

See "Item 8.

Financial Statements and Supplementary Data—Note 20 – Asset Retirement Obligations"

for additional information.

Financial Statements and Supplementary Data—Note 18 – Asset Retirement Obligations" for additional information.

The liability for asset retirement and closing procedures is sensitive to changes in cost estimates, estimated mine lives and timing of post-mine reclamation activities.

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Depreciation is generally determined on a units-of-production basis and accretion is generally recognized over the life of the producing assets.

On at least an annual basis, we review our entire asset retirement obligation liability and make necessary adjustments for permit changes approved by state authorities, changes in the timing of reclamation activities, and revisions to cost

estimates and productivity assumptions, to reflect current experience.

Adjustments to the liability associated with these assumptions resulted in a decrease of $1.5 million for the year ended December 31, 2023.

Adjustments to the liability associated with these assumptions resulted in an increase of $17.4 million for the year ended December 31, 2022.

There were no material adjustments to the liability associated with these assumptions for the year ended December 31, 2021.

While the precise amount of these future costs cannot be determined with certainty, we have estimated the costs and timing of future asset retirement obligations escalated for inflation, then discounted and recorded at the present value of those estimates.

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Shelf Registration Statement

In February 2022, we filed with the SEC a universal shelf registration statement which allowed us to issue from time to time an indeterminate amount of debt or equity securities ("2022 Registration Statement").

As of February 24, 2023, we had not utilized any amounts available under the 2022 Registration Statement.

In February 2022, we filed with the SEC a universal shelf registration statement which allows us to issue from time to time an indeterminate amount of debt or equity securities.

As of February 23, 2024, we had not issued any debt or equity under the 2022 Registration Statement.

Related – Party Transactions

See "Item 8.

Financial Statements and Supplementary Data—Note 22 – Related-Party Transactions"

for a discussion of our related-party transactions.

Financial Statements and Supplementary Data—Note 20 – Related-Party Transactions" for a discussion of our related-party transactions.

Accruals of Other Liabilities

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Thus, from time to time, our results of operations may be significantly affected by changes to these liabilities.

Please see "Item 8.

Financial Statements and Supplementary Data—Note 20 – Asset Retirement Obligations"

and "—Note 21 – Accrued Workers' Compensation and Pneumoconiosis Benefits."

Any future inflationary or deflationary pressures could adversely affect the results of our operations.

For example, during 2022 our results were significantly impacted by price increases affecting many of the components of our operating expenses such as fuel, steel, maintenance expense and labor.

Please see above under "— Analysis of Historical Results of Operations"

and "Item 1A.

Risk Factors."

Please see "Item 8.

Financial Statements and Supplementary Data—Note 18 – Asset Retirement Obligations" and "—Note 19 – Accrued Workers' Compensation and Pneumoconiosis Benefits."

New Accounting Standards

See "Item 8.

Financial Statements and Supplementary Data—Note 2 – Summary of Significant Accounting Policies"

for a discussion of new accounting standards.

Financial Statements and Supplementary Data—Note 2 – Summary of Significant Accounting Policies" for a discussion of new accounting standards.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis