Wednesday, November 02, 2022
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, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Enviable year-over-year comparisons. Alliance reported third quarter net income of $164.6 million or $1.25 per limited partner unit compared to $57.5 million or $0.44 per limited partner unit during the prior year period. The company generated EBITDA of $250.2 million compared to $135.9 million during the prior year period and free cash flow increased to $244.5 million from $120.5 million. Third quarter financial results reflected higher coal sales prices and volumes which increased 40.5% and 8.1%, respectively, along with greater oil & gas royalty prices and volumes which rose 31.6% and 33.1%. Compared to the prior year period, consolidated revenues increased 51.3% to $628.4 million.
Updating estimates. We have made several adjustments to our model to reflect updated 2022 guidance, along with estimated distributions to and undistributed earnings attributable to participating securities. We have lowered our 2022 EBITDA and adjusted EPU estimates to $919.1 million and $4.48, respectively, from $945.3 million and $4.85. We lifted our 2023 EPU and EBITDA estimates to $5.85 and $1.116 billion, respectively, from $5.75 and $1.077 billion. Looking ahead to 2023, Alliance expects to boost coal sales by roughly two million tons and expects coal pricing per ton to increase by roughly 10% compared to the 2022 average. Within the oil and gas royalty segment, volumes are expected to benefit from two recent acquisitions that added 1,200 producing wells, 101 wells to be completed and 98 permitted locations on the acquired acreage.
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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.