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Item 1. Financial Statements

2024-08-07 compared with 2024-05-09 · 170 added, 86 removed, 555 unchanged (32% of the section changed)

62 unchanged sentences

Three Months Ended

Six Months Ended

SALES AND OPERATING REVENUES:

10 unchanged sentences

INCOME FROM OPERATIONS

Interest expense (net of interest capitalized for the three months ended March 31, 2024 and 2023 of $ 2,298 and $ 1,407 , respectively)

Interest expense (net of interest capitalized for the three and six months ended June 30, 2024 and 2023 of $ 2,786 , $ 1,216 , $ 5,084 and $ 2,623 , respectively)

Interest income

Equity method investment income (loss)

Equity method investment loss

Change in fair value of digital assets

Other expense

Other income (expense)

INCOME BEFORE INCOME TAXES

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Three Months Ended

Six Months Ended

OTHER COMPREHENSIVE INCOME:

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(In thousands)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

29 unchanged sentences

Cash paid for interest

Cash paid for income taxes

SUPPLEMENTAL NON-CASH ACTIVITY:

Accounts payable for purchase of property, plant and equipment

Right-of-use assets acquired by operating lease

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

8 unchanged sentences

● References to "MGP" mean Alliance Resource Management GP, LLC, ARLP's general partner.

● References to "Mr.

Craft" mean Joseph W.

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

● References to "Intermediate Partnership" mean Alliance Resource Operating Partners, L.P., the intermediate partnership of Alliance Resource Partners, L.P.

5 unchanged sentences

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of March 31, 2024 and December 31, 2023 and the results of our operations, comprehensive income and cash flows for the three months ended March 31, 2024 and 2023.

The accompanying condensed consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of June 30, 2024 and December 31, 2023, the results of our operations and comprehensive income for the three and six months ended June 30, 2024 and 2023 and cash flows for the six months ended June 30, 2024 and 2023.

All intercompany transactions and accounts have been eliminated.

Certain immaterial amounts in the prior quarter have been reclassified to conform to the current quarter presentation.

Certain immaterial amounts in the prior period have been reclassified to conform to the current period presentation.

These condensed consolidated financial statements and notes are prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and do not include all the information normally included with financial statements prepared in accordance with generally accepted accounting principles ("GAAP") of the United States.

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Beginning January 1, 2024, with our adoption of the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60) ("ASU 2023-08"), the digital assets we hold are subsequently remeasured to fair value based on the exchange quoted price as of the balance sheet date and included on our condensed consolidated balance sheets within the Digital assets line item.

The fair value of our digital assets are based on the exchange quoted price and represent a Level 1 input under the fair value hierarchy.

The activity from remeasurement of digital assets to fair value is reflected in our condensed consolidated statements of income within the Change in fair value of digital assets line item.

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On February 19, 2024, we renewed this agreement for an additional one-year term, committing up to $ 25.0 million.

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

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

During the three months ended March 31, 2024, we purchased $ 0.3 million and $ 0.1 million of oil & gas mineral interests in proved and unproved properties, respectively, pursuant to this agreement.

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

In exchange for these services, the third party receives a participation share, partially funded by the third party,

and is paid a periodic management fee.

During the six months ended June 30, 2024, we purchased $ 0.6 million and $ 1.9 million of oil & gas mineral interests in proved and unproved properties, respectively, pursuant to this agreement.

Management fees paid under this agreement have been immaterial.

Miscellaneous Acquisitions

In addition to the acquisitions under the collaborative agreement discussed above, we purchased $ 0.3 million and $ 1.2 million of oil & gas mineral interests in proved and unproved properties, respectively, during the three months ended March 31, 2024.

In addition to the acquisitions under the collaborative agreement discussed above, we purchased $ 0.6 million and $ 1.6 million of oil & gas mineral interests in proved and unproved properties, respectively, during the six months ended June 30, 2024.

CONTINGENCIES

1 unchanged sentence

In April 2024, we entered into a settlement agreement with the plaintiffs pursuant to which we agreed to settle such litigation for $ 15.3 million.

As a result of reaching this settlement, which is subject to court approval, we have accrued $ 15.3 million as of March 31, 2024.

As a result of reaching this settlement, which is subject to court approval, we have accrued $ 15.3 million as of June 30, 2024.

Our $ 15.3 million accrual is included in the Other current liabilities line item on our condensed consolidated balance sheet.

10 unchanged sentences

Total inventories, net

During the three months ended March 31, 2024, we recorded lower of cost or net realizable value adjustments of $ 7.3 million to our coal inventories.

These adjustments are a result of lower coal sale prices and higher cost per ton primarily due to a longwall move at Hamilton County Coal, LLC ("Hamilton") and ongoing development activities at the Henderson County mine at our River View Coal, LLC ("River View") mining complex.

During the six months ended June 30, 2024, we recorded lower of cost or net realizable value adjustments of $ 16.9 million to our coal inventories.

These adjustments are a result of lower coal sale prices and higher cost per ton primarily due to lower production at the Mettiki mining complex and ongoing development activities at the Henderson County mine at our River View Coal, LLC ("River View") mining complex.

Certain of our subsidiaries, primarily consisting of Matrix Design Group, LLC, its subsidiaries, and Alliance Design Group, LLC (collectively referred to as "Matrix Group"), manufacture a variety of products for our mining operations and third parties.

These products are primarily consumed internally by our mining operations with associated inventory historically presented as supplies inventory.

Recently Matrix Group has been increasing its production of

products with the intention to increase third-party sales.

Recently Matrix Group has been increasing its production of products with the intention to increase third-party sales.

We have therefore presented our manufactured goods inventories in the table above separately from our historical presentation of supplies inventory.

1 unchanged sentence

The following table sets forth our digital assets as shown on the condensed consolidated balance sheet:

March 31, 2024

June 30, 2024

Digital assets:

2 unchanged sentences

Three Months Ended

Six Months Ended

Digital assets:

1 unchanged sentence

Beginning balance

Change in fair value gains

Fair value gains (losses)

Ending balance

1 unchanged sentence

Additions are the result of awarded digital assets received from our crypto-mining activities, while dispositions are the result of sales and payments for services.

During the three months ended March 31, 2024, we had digital asset dispositions of $ 0.9 million, inclusive of realized gains of $ 0.6 million.

During the three and six months ended June 30, 2024, we had digital asset dispositions of $ 0.8 million and $ 1.7 million, respectively, inclusive of realized gains of $ 0.5 million and $ 1.1 million, respectively.

FAIR VALUE MEASUREMENTS

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

March 31, 2024

December 31, 2023

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

Carrying Value

(in thousands)

June 30, 2024

Recorded on a recurring basis:

Digital assets (1)

Additional disclosures:

Long-term debt

December 31, 2023

Additional disclosures:

Long-term debt

(1) As discussed in Note 2 – New Accounting Standards, we adopted ASU 2023-08 effective January 1, 2024.

Prior to our adoption, our digital assets were not recorded at fair value on a recurring basis.

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

The fair value of our digital assets are based on an exchange quoted price.

See Note 6 – Digital Assets for more information on our digital assets.

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

6 unchanged sentences

Revolving credit facility

8.625 % Senior notes due 2029

7.5 % Senior notes due 2025

Securitization facility

4 unchanged sentences

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 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").

On January 13, 2023, Alliance Coal, as borrower, entered into a Credit Agreement with various financial institutions which was amended on June 12, 2024 (the "Credit Agreement").

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 up to the full amount of the Credit Facility (the "Revolving Credit Facility"), and for a term loan in an aggregate principal amount of $ 75 million (the "Term Loan").

The Revolving Credit Facility also includes an incremental facility providing for an increase of $ 100.0 million at our option subject to lenders agreeing to participate in such incremental facility.

The Credit Agreement matures on March 9, 2028, at which time the aggregate outstanding principal amount of all Revolving Credit Facility advances and all Term Loan advances are required to be repaid in full.

The Credit Agreement will instead mature on January 30, 2025, if on that date our Senior Notes, as discussed below, are still outstanding and Alliance Coal does not have liquidity of at least $ 200 million.

Interest is payable quarterly, with principal on 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 is underwritten by a syndicate of eighteen financial institutions and the obligations of the lenders are individual obligations, which means the failure of one or more lenders to be able to fund its obligation does not relieve the remaining lenders from funding their obligations.

Based on our diligence, including discussions with representatives of certain of these financial institutions, as of March 31, 2024 we have no reason to believe that the banks within our syndicate are facing financial difficulties, defaults or limited liquidity situations that would cause them to be unable to fund their obligations under the Credit Agreement.

Interest is payable quarterly, with principal on the Term Loan due in quarterly installments equal to 6.25 % of the outstanding balance of the Term Loan on the Credit Agreement amendment date beginning with the quarter ended June 30, 2024.

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

Based on our diligence, including discussions with representatives of certain of these financial institutions, as of June 30, 2024 we have no reason to believe that the banks within our syndicate are facing financial difficulties, defaults or limited liquidity situations that would cause them to be unable to fund their obligations under the Credit Agreement.

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

4 unchanged sentences

The applicable margin for borrowings under the Credit Agreement are determined by reference to the Consolidated Debt to Consolidated Cash Flow Ratio.

For borrowings under the Term Loan, we elected the three-month term rate, with applicable margin, which was 8.46 % as of March 31, 2024.

At March 31, 2024, we had $ 41.0 million of letters of credit outstanding with $ 384.0 million available for borrowing under the Revolving Credit Facility.

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

For borrowings under the Term Loan, we elected the one-month term rate, with applicable margin, which was 8.7 % as of June 30, 2024.

At June 30, 2024, we had $ 41.0 million of letters

of credit outstanding with $ 384.0 million available for borrowing under the Revolving Credit Facility.

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

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

1 unchanged sentence

In each case, these restrictions are subject to various exceptions.

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

In addition, restrictions apply to cash distributions by Alliance Coal to the Intermediate Partnership if such distribution would result in exceeding the debt of Alliance Coal to cash flow ratio (as determined in the Credit Agreement) being more than 1.0 to 1.0 or in Alliance Coal having liquidity of less than $ 200 million.

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

The debt of Alliance Coal to cash flow ratio, consolidated debt of Alliance Coal and the Intermediate Partnership to cash flow ratio, and interest coverage ratio were 0.21 to 1.0 , 0.59 to 1.0 and 59.18 to 1.0 , respectively, for the trailing twelve months ended March 31, 2024.

We were in compliance with the covenants of the Credit Agreement as of March 31, 2024 and anticipate remaining in compliance with the covenants.

On April 24, 2017, the Intermediate Partnership and Alliance Resource Finance Corporation (as co-issuer), a wholly owned subsidiary of the Intermediate Partnership ("Alliance Finance"), issued an aggregate principal amount of $ 400.0 million of senior unsecured notes due 2025 ("Senior Notes") in a private placement to qualified institutional buyers.

The Senior Notes have a term of eight years , maturing on May 1, 2025 and accrue interest at an annual rate of 7.5 % .

Interest is payable semi-annually in arrears on each May 1 and November 1.

The debt of Alliance Coal to cash flow ratio, consolidated debt of Alliance Coal and the Intermediate Partnership to cash flow ratio, and interest coverage ratio were 0.16 to 1.0 , 0.78 to 1.0 and 49.06 to 1.0 , respectively, for the trailing twelve months ended June 30, 2024.

We were in compliance with the covenants of the Credit Agreement as of June 30, 2024 and anticipate remaining in compliance with the covenants.

8.625% Senior Notes due 2029

On June 12, 2024, the Intermediate Partnership and Alliance Resource Finance Corporation (as co-issuer), a wholly owned subsidiary of the Intermediate Partnership ("Alliance Finance"), issued an aggregate principal amount of $ 400.0 million of senior unsecured notes due 2029 (the "2029 Senior Notes") in a private placement to qualified institutional buyers.

The 2029 Senior Notes have a term of five years , maturing on June 15, 2029 and accrue interest at an annual rate of 8.625 % .

Interest is payable semi-annually in arrears on each June 15 and December 15.

The 2029 Senior Notes are guaranteed, jointly and severally, on a senior unsecured basis by ARLP, certain of ARLP's wholly owned oil and gas and coal royalties subsidiaries and each of ARLP's subsidiaries that guarantee obligations under the Credit Agreement.

The indenture governing the 2029 Senior Notes contains customary terms, events of default and covenants relating to, among other things, the incurrence of debt, the payment of distributions or similar restricted payments, undertaking transactions with affiliates and limitations on asset sales.

At any time prior to June 15, 2026, the issuers may redeem up to 35 % of the aggregate principal amount of the 2029 Senior Notes at a redemption price equal to 108.625 % of the principal amount redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, with an amount of cash not greater than the net proceeds from one or more equity offerings.

The issuers may also redeem all or a part of the 2029 Senior Notes at any time on or after June 15, 2026, at the redemption prices set forth in the indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

At any time prior to June 15, 2026, the issuers may redeem the 2029 Senior Notes at a redemption price equal to the principal amount plus a "make-whole" premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, if prior to June 15, 2026, a Specified Minerals Disposition (as defined in the indenture governing the 2029 Senior Notes and which involves oil and gas mineral interests) occurs, the issuers will be required to make an offer to purchase up to 40 % of the aggregate principal amount of 2029 Senior Notes then outstanding at an offer price in cash in an amount equal to 108.625 % of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase.

7.5% Senior Notes due 2025

On April 24, 2017, the Intermediate Partnership and Alliance Finance (as co-issuer) issued an aggregate principal amount of $ 400.0 million of senior unsecured notes due 2025 in a private placement to qualified institutional buyers.

The 7.5% Senior Notes due 2025 had a term of eight years , maturing on May 1, 2025 and accrued interest at an annual rate of 7.5 % .

Interest was payable semi-annually in arrears on each May 1 and November 1.

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

In June 2024, we used a portion of the net proceeds from the offering of the 2029 Senior Notes to redeem the outstanding balance of the 7.5% Senior Notes due 2025.

Accounts Receivable Securitization

3 unchanged sentences

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

On March 31, 2024, we had $ 11.7 million of letters of credit outstanding with $ 33.3 million available for borrowing under the Securitization Facility.

On June 30, 2024, we had $ 11.7 million of letters of credit outstanding with $ 78.3 million available for borrowing under the Securitization Facility.

The agreement governing the Securitization Facility contains customary terms and conditions, including limitations with regards to certain customer credit ratings.

1 unchanged sentence

On June 5, 2020, the Intermediate Partnership entered into an equipment financing arrangement accounted for as debt, wherein the Intermediate Partnership received $ 14.7 million in exchange for conveying its interest in certain equipment owned indirectly by the Intermediate Partnership and entering into a master lease agreement for that equipment (the "June 2020 Equipment Financing").

The June 2020 Equipment Financing contains customary terms and events of default and provides for forty-eight monthly payments with an implicit interest rate of 6.1 % , maturing on June 5, 2024.

Upon maturity, the equipment will revert to the Intermediate Partnership.

The June 2020 Equipment Financing contained customary terms and events of default and provided for forty-eight monthly payments with an implicit interest rate of 6.1 % .

The June 2020 Equipment Financing matured on June 5, 2024 and the equipment reverted back to the Intermediate Partnership.

February 2024 Equipment Financing

On February 28, 2024, the Intermediate Partnership entered into an equipment financing arrangement accounted for as debt, wherein the Intermediate Partnership received $ 54.6 million in exchange for conveying its interest in certain equipment owned indirectly by the Intermediate Partnership and entering into a master lease agreement for that equipment (the "February 2024 Equipment Financing").

On February 28, 2024, Alliance Coal entered into an equipment financing arrangement accounted for as debt, wherein Alliance Coal received $ 54.6 million in exchange for conveying its interest in certain equipment owned indirectly by Alliance Coal and entering into a master lease agreement for that equipment (the "February 2024 Equipment Financing").

The February 2024 Equipment Financing contains customary terms and events of default and provides for forty-eight monthly payments with an implicit interest rate of 8.29 % , maturing on February 28, 2028.

Upon maturity, the equipment will revert to the Intermediate Partnership.

Upon maturity, the equipment will revert to Alliance Coal.

Components of income tax expense are as follows:

Three Months Ended

Six Months Ended

(in thousands)

Income tax expense

The effective income tax rates for our income tax expense for the three months ended March 31, 2024 and 2023 are less than the federal statutory rate, primarily due to the portion of income not subject to income taxes.

The effective income tax rates for our income tax expense for the three and six months ended June 30, 2024 and 2023 are less than the federal statutory rate, primarily due to the portion of income not subject to income taxes.

Our 2020 through 2023 tax years remain open to examination by tax authorities, and certain lower-tier partnership income tax returns for the tax years ended December 31, 2020 and 2021 are being audited by the Internal Revenue Service.

21 unchanged sentences

Alliance Minerals' investment in AllDale III is subject to a 25 % profits interest for the general partner that is subject to a return hurdle equal to the greater of 125 % of cumulative capital contributions and a 10 % internal rate of return, and following an 80/20 "catch-up" provision for the general partner.

We have concluded that AllDale III is a VIE that we do not consolidate because we are not the primary beneficiary and AllDale III is structured as a limited partnership with the limited partners (1) not having the ability to remove the general partner and (2) not participating significantly in the operational decisions.

We have concluded that AllDale III is a VIE that we do not consolidate.

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

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

1 unchanged sentence

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

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

Our convertible note matured on April 1, 2023 and was converted into a preferred equity interest in

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

1 unchanged sentence

Subsequent to the conversion on April 1, 2023, we participate in earnings and losses and are eligible to receive distributions.

As of March 31, 2024, we held approximately 16.7 % of Francis' equity.

We have concluded that Francis is a VIE that we do not consolidate because we are not the primary beneficiary and Francis' management structure is similar to a limited partnership with the non-managing members (i) not having the ability to remove the managing member and (ii) not participating significantly in the operational decisions.

As of June 30, 2024, we held approximately 16.7 % of Francis' equity.

We have concluded that Francis is a VIE that we do not consolidate.

Francis' management structure is similar to a limited partnership with the non-managing members (i) not having the ability to remove the managing member and (ii) not participating significantly in the operational decisions.

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

3 unchanged sentences

This commitment represents a 3.6 % interest in NGP ET IV.

As of March 31, 2023, we have funded $ 7.2 million of this commitment.

We have concluded that NGP ET IV is a VIE that we do not consolidate because we are not the primary beneficiary and NGP ET IV is structured as a limited partnership with limited partners (i) not having the ability to remove the general partner and (ii) not participating significantly in the operational decisions.

As of June 30, 2024, we have funded $ 7.9 million of this commitment.

We have concluded that NGP ET IV is a VIE that we do not consolidate.

NGP ET IV is structured as a limited partnership with limited partners (i) not having the ability to remove the general partner and (ii) not participating significantly in the operational decisions.

We are not the primary beneficiary of NGP ET IV because we do not have the power to direct the activities that most significantly impact NGP ET IV's economic performance.

5 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

11 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

5 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

7 unchanged sentences

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

Each share of

Infinitum Preferred Stock is convertible, at any time, at our option, into shares of common stock of Infinitum.

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

We account for our ownership interest in Infinitum as an equity investment without a readily determinable fair value.

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February 14, 2024

May 15, 2024 (1)

(1) On April 26, 2024, we declared this quarterly distribution payable on May 15, 2024 to all unitholders of record as of May 8, 2024.

August 14, 2024 (1)

(1) On July 26, 2024, we declared this quarterly distribution payable on August 14, 2024 to all unitholders of record as of August 7, 2024.

Unit Repurchase Program

In January 2023, the board of directors of MGP authorized a $ 93.5 million increase to the unit repurchase program authorizing us to be able to repurchase up to a total of $ 100.0 million of ARLP common units from that date.

No units were repurchased during the three months ended March 31, 2024.

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

No units were repurchased during the six months ended June 30, 2024.

During the six months ended June 30, 2023, we repurchased and retired 929,842 units at an average unit price of $ 20.90 for an aggregate purchase price of $ 19.4 million.

Since inception of the unit repurchase program, we have repurchased and retired 6,390,446 units at an average unit price of $ 17.67 for an aggregate purchase price of $ 112.9 million.

Change in Partners' Capital

The following tables present the quarterly change in Partners' Capital for the three months ended March 31, 2024 and 2023:

The following tables present the quarterly change in Partners' Capital for the three and six months ended June 30, 2024 and 2023:

Limited Partner

10 unchanged sentences

Settlement of deferred compensation plans

Purchase of units under unit repurchase program

Common unit-based compensation

3 unchanged sentences

Balance at March 31, 2024

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive income

Common unit-based compensation

Distributions on deferred common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Distributions to Partners

Balance at June 30, 2024

Limited Partner

17 unchanged sentences

Balance at March 31, 2023

Comprehensive income:

Actuarially determined long-term liability adjustments

Total comprehensive income

Settlement of deferred compensation plans

Purchase of units under unit repurchase program

Common unit-based compensation

Distributions on deferred common unit-based compensation

Distributions from consolidated company to noncontrolling interest

Distributions to Partners

Balance at June 30, 2023

REVENUE FROM CONTRACTS WITH CUSTOMERS

3 unchanged sentences

(in thousands)

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Oil & gas royalties

3 unchanged sentences

Total revenues

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Oil & gas royalties

3 unchanged sentences

Total revenues

The following table illustrates the amount of our transaction price for all current coal supply contracts allocated to performance obligations that are unsatisfied or partially unsatisfied as of March 31, 2024 and disaggregated by segment and contract duration.

Six Months Ended June 30, 2024

Oil & gas royalties

Coal royalties

Transportation revenues

Other revenues

Total revenues

Six Months Ended June 30, 2023

Oil & gas royalties

Coal royalties

Transportation revenues

Other revenues

Total revenues

The following table illustrates the amount of our transaction price for all current coal supply contracts allocated to performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2024 and disaggregated by segment and contract duration.

(in thousands)

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Three Months Ended

Six Months Ended

(in thousands, except per unit data)

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

The combined total of LTIP, SERP and Directors' Deferred Compensation Plan units of 2,175 and 3,147 for the three months ended March 31, 2024 and 2023, respectively, were considered anti-dilutive under the treasury stock method .

The combined total of LTIP, SERP and Directors' Deferred Compensation Plan units of 1,726 and 1,945 for the three and six months ended June 30, 2024, respectively, and 2,577 and 2,896 for the three and six months ended June 30, 2023, respectively, were considered anti-dilutive under the treasury stock method .

WORKERS' COMPENSATION AND PNEUMOCONIOSIS

1 unchanged sentence

Three Months Ended

Six Months Ended

(in thousands)

Beginning balance

1 unchanged sentence

Interest accretion

Valuation loss (gain) (1)

Ending balance

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

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

The valuation gain in 2024 is due to an increase in the discount rate from 4.66 % on December 31, 2023 to 5.18 % on June 30, 2024.

The valuation loss in 2023 is due to adverse claims development.

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

The deductible level may vary by claim year.

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

Our receivables for traumatic injury claims under this policy as of March 31, 2024 are $ 4.1 million and are included in Other long-term assets on our condensed consolidated balance sheet.

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

Our receivables for traumatic injury claims under this policy as of June 30, 2024 are $ 4.1 million and are included in Other long-term assets on our condensed consolidated balance sheet.

Certain of our mine operating entities are liable under state statutes and the Federal Coal Mine Health and Safety Act of 1969, as amended, to pay pneumoconiosis, or black lung, benefits to eligible employees and former employees and their dependents.

1 unchanged sentence

Three Months Ended

Six Months Ended

(in thousands)

Black lung benefits:

Interest cost (1)

11 unchanged sentences

( 1,582,422 )

Non-vested grants at March 31, 2024

(1) The restricted units granted during 2024 have certain minimum-value guarantees per unit, regardless of whether or not the awards vest.

(2) During the three months ended March 31, 2024, we issued 936,544 unrestricted common units to the LTIP participants.

Non-vested grants at June 30, 2024

(1) The restricted units granted during 2024 have certain minimum-value guarantees per unit, regardless of whether the awards vest.

(2) During the six months ended June 30, 2024, we issued 936,544 unrestricted common units to the LTIP participants.

The remaining vested units were settled in cash to satisfy tax withholding.

LTIP expense for grants of restricted units was $ 2.0 million and $ 2.3 million for the three months ended March 31, 2024 and 2023, respectively.

The total obligation associated with LTIP grants of restricted units as of March 31, 2024 was $ 11.2 million and is included in the partners' capital Limited partners-common unitholders line item on our condensed consolidated balance sheets.

As of March 31, 2024, there was $ 16.7 million in total unrecognized compensation expense related to the non-vested LTIP restricted unit grants that are expected to vest.

LTIP expense for grants of restricted units was $ 2.3 million and $ 2.7 million for the three months ended June 30, 2024 and 2023, respectively, and $ 4.4 million and $ 4.9 million for the six months ended June 30, 2024 and 2023, respectively.

The total obligation associated with LTIP grants of restricted units as of June 30, 2024 was $ 13.5 million and is included in the partners' capital Limited partners-common unitholders line item on our condensed consolidated balance sheets.

As of June 30, 2024, there was $ 14.2 million in total unrecognized compensation expense related to the non-vested LTIP restricted unit grants that are expected to vest.

That expense is expected to be recognized over a weighted-average period of 1.4 years.

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Phantom units outstanding as of January 1, 2024

Phantom units outstanding as of March 31, 2024

Total SERP and Directors' Deferred Compensation Plan expense was $ 0.7 million and $ 0.6 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, the total obligation associated with the SERP and Directors' Deferred Compensation Plan was $ 17.1 million and is included in the partners' capital Limited partners-common unitholders line item on our condensed consolidated balance sheets.

Phantom units outstanding as of June 30, 2024

Total SERP and Directors' Deferred Compensation Plan expense was $ 0.7 million and $ 0.6 million for the three months ended June 30, 2024 and 2023, respectively, and $ 1.3 million and $ 1.2 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, the total obligation associated with the SERP and Directors' Deferred Compensation Plan was $ 17.7 million and is included in the partners' capital Limited partners-common unitholders line item on our condensed consolidated balance sheets.

COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS

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Three Months Ended

Six Months Ended

(in thousands)

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Net periodic benefit credit (1)

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

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

We do not expect to make material contributions to the Pension Plan during 2024.

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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, LLC's mining complex, (b) the Warrior Coal, LLC mining complex, (c) the River View mining complex and (d) the Hamilton mining complex.

The segment also includes our Mt.

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(in thousands)

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Revenues - Outside (1)

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Capital expenditures (4)

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Revenues - Outside (1)

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Capital expenditures (4)

Six Months Ended June 30, 2024

Revenues - Outside (1)

Revenues - Intercompany

Total revenues (1)

Segment Adjusted EBITDA Expense (2)

Segment Adjusted EBITDA (3)

Capital expenditures (4)

Six Months Ended June 30, 2023

Revenues - Outside (1)

Revenues - Intercompany

Total revenues (1)

Segment Adjusted EBITDA Expense (2)

Segment Adjusted EBITDA (3)

Capital expenditures (4)

(1) Revenues included in the Other, Corporate and Elimination column are attributable to intercompany eliminations, which are primarily intercompany coal royalty eliminations, outside revenues at the Matrix Group and awarded digital assets received for our crypto-mining activities.

(2) Segment Adjusted EBITDA Expense (a non-GAAP financial measure) includes operating expenses, coal purchases, if applicable, and other income or expense as adjusted to remove certain items from operating expenses that we characterize as unrepresentative of our ongoing operations such as litigation accruals.

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.

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.

Segment Adjusted EBITDA Expense is used as a supplemental financial measure by our management to assess the operating performance of our segments.

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Three Months Ended

Six Months Ended

(in thousands)

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Segment Adjusted EBITDA Expense

(3) 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 modified for certain items that we characterize as unrepresentative of our ongoing operations, such as the change in fair value of digital assets and litigation accruals.

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.

4 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

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Consolidated Segment Adjusted EBITDA

(4) Capital expenditures exclude $ 72.3 million paid for the JC Resources Acquisition for the three months ended March 31, 2023 and $ 1.8 million and $ 2.8 million paid towards oil & gas reserve acquisitions for the three months ended March 31, 2024 and 2023 respectively.

(See Note 3 – Acquisitions) .

(4) Capital expenditures exclude $ 72.3 million paid for the JC Resources Acquisition for the six months ended June 30, 2023, $ 2.9 million and $ 1.1 million paid towards oil & gas reserve acquisitions for the three months ended June 30, 2024 and 2023, respectively, and $ 4.7 million and $ 3.9 million paid towards oil & gas reserve acquisitions for the six months ended June 30, 2024 and 2023, respectively (See Note 3 – Acquisitions) .

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

What changed 10-Q

Item 1. Financial Statements