Alliance Resource Partners (ARLP) – An Interesting Turn of Events


Monday, May 20, 2024

ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins. ARLP currently produces coal from seven mining complexes its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast growing energy and infrastructure transition.

Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Location, location. Alliance is the largest coal producer in the eastern U.S. with operations in the Illinois Basin and Appalachia. The partnership produces a diverse range of thermal coals with high heat content and benefits from access to both domestic and export markets. With demand for electricity expected to grow, Alliance is well-positioned to increase its market share despite efforts to curb coal-fired generation and coal’s declining share of the electricity generation market. Closure dates for coal-fired power plants are being delayed due to growing energy demand and reliability concerns.

Trouble brewing in the Powder River Basin (PRB)? Last week the Bureau of Land Management (BLM) proposed ending federal coal leasing in the Powder River Basin. The PRB includes Wyoming and Montana and accounted for 44% of the coal produced in the United States in 2022. The Bureau expects coal production in Wyoming to continue through 2041 under existing leases. While we expect the ruling to be challenged, it underscores the uncertainty and challenges facing coal mining operations on federally leased lands. The BLM manages public land in the western United States. In our view, coal could turn into an increasingly scarce resource in the United States which could be supportive of pricing.


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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

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