Profile: Alliance Resource Partners LP (ARLP.O)

ARLP.O on Nasdaq

24.85USD
2 Jul 2015
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Alliance Resource Partners, L.P., incorporated on May 17, 1999, is a producer and marketer of coal primarily to the United States utilities and industrial users. The Company operates through four segments: the Illinois Basin, Appalachia, White Oak Resources LLC (White Oak), and Other and Corporate. The Illinois Basin segment is comprised of multiple operating segments, including Webster County Coal’s Dotiki mining complex, Gibson County Coal’s mining complex, which includes the Gibson North mine and Gibson South mine, Hopkins County Coal’s mining complex, which includes the Elk Creek mine and the Fies property, White County Coal’s Pattiki mining complex, Warrior’s mining complex, Sebree Mining’s mining complex, which includes the Onton mine and River View’s mining complex. The Appalachia reportable segment is comprised of multiple operating segments, including the Mettiki mining complex, the Tunnel Ridge mining complex, the MC Mining mining complex and the Penn Ridge property. The Mettiki mining complex includes Mettiki Coal (WV)’s Mountain View mine, Mettiki Coal’s preparation plant and a small third-party mining operation. The White Oak reportable segment is comprised of two operating segments, WOR Processing and WOR Properties. WOR Processing includes both the surface operations at White Oak and the equity investment in White Oak. WOR Properties owns coal reserves acquired from White Oak under lease-back arrangements. The Other and Corporate segment includes marketing and administrative expenses, Alliance Service, Inc. (ASI) and its subsidiaries, Matrix Design Group, LLC (Matrix Design) and Alliance Design Group, LLC (Alliance Design) (collectively, Matrix Design and Alliance Design are referred to as the Matrix Group) and ASI’s ownership of aircraft, the Mt. Vernon Transfer Terminal, LLC (Mt. Vernon) dock activities, coal brokerage activity, equity investment in MAC, certain activities of Alliance Resource Properties, LLC, the Pontiki mining complex, Wildcat Insurance, LLC, Alliance Minerals, LLC and its affiliate, Cavalier Minerals JV, LLC, which holds an equity investment in AllDale Minerals L.P. (AllDale Minerals) and AROP Funding, LLC.

The Company operates ten underground mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia. The Company’s mining activities are conducted in two geographic regions: the Illinois Basin and Appalachian region.

Illinois Basin Operations

The Company’s Illinois Basin mining operations are located in western Kentucky, southern Illinois and southern Indiana. As of February 1, 2015, it operates seven mining complexes in the Illinois basin.

Webster County Coal, LLC (Webster County Coal), a subsidiary of the Company, operates Dotiki complex, which is an underground mining complex located near the city of Providence in Webster County, Kentucky. The Dotiki complex utilizes continuous mining units employing room-and-pillar mining techniques to produce high-sulfur coal.

The Company’s subsidiary, Warrior Coal, LLC (Warrior), operates the Warrior complex, an underground mining complex located near the city of Madisonville in Hopkins County, Kentucky. Warrior utilizes continuous mining units employing room-and-pillar mining techniques to produce high-sulfur coal.

The Company’s subsidiary, White County Coal, LLC (White County Coal), operates Pattiki complex, an underground mining complex located near the city of Carmi in White County, Illinois. The Pattiki complex utilizes continuous mining units employing room-and-pillar mining techniques to produce high-sulfur coal.

The Hopkins complex is located near the city of Madisonville in Hopkins County, Kentucky. The Company’s subsidiary, Hopkins County Coal, LLC (Hopkins County Coal) operates the Elk Creek underground mine using continuous mining units employing room-and-pillar mining techniques to produce high-sulfur coal. Coal produced from the Elk Creek mine is processed and shipped through Hopkins County Coal’s preparation plant.

The Company’s subsidiary, Gibson County Coal, LLC (Gibson County Coal), operates the Gibson North mine, an underground mine located near the city of Princeton in Gibson County, Indiana. The Gibson North mine utilizes continuous mining units employing room-and-pillar mining techniques to produce medium-sulfur coal.

The Company’s subsidiary, River View Coal, LLC (River View), operates the River View mine complex, which is located in Union County, Kentucky and is a room-and-pillar underground coal mine in the United States. The River View mine utilizes continuous mining units to produce high-sulfur coal.

The Onton mine is operated by its subsidiary, Sebree Mining, LLC (Sebree Mining). Sebree Mining utilizes continuous mining units employing room-and-pillar mining techniques to produce high-sulfur coal.

Appalachian Operations

The Company’s Appalachian mining operations are located in eastern Kentucky, Maryland and West Virginia. As of February 1, 2015, it operates three mining complexes in Appalachia. It also controls undeveloped reserves in West Virginia and Pennsylvania.

The MC Mining complex is located near the city of Pikeville in Pike County, Kentucky. The Company’s subsidiary, MC Mining, LLC (MC Mining), owns the mining complex and controls the reserves, and its subsidiary, Excel Mining, LLC (Excel) conducts all mining operations. The underground operation utilizes continuous mining units employing room-and-pillar mining techniques to produce low-sulfur coal.

The Mettiki complex comprises the Mountain View mine located in Tucker County, West Virginia operated by the Company’s subsidiary Mettiki Coal (WV), LLC (Mettiki (WV)) and a preparation plant located near the city of Oakland in Garrett County, Maryland operated by the Company’s subsidiary Mettiki Coal, LLC (Mettiki (MD)). In addition, production from the Mountain View mine can be supplemented with production from a temporarily sealed smaller-scale mine in Maryland controlled by another subsidiary, Backbone Mountain, LLC. The Mountain View mine produces medium-sulfur coal, which is transported by truck either to the Mettiki (MD) preparation plant for processing or directly to the coal blending facility at the Virginia Electric and Power Company Mt. Storm Power Station.

The Company’s subsidiary, Tunnel Ridge, LLC (Tunnel Ridge), operates the Tunnel Ridge mine, an underground longwall mine in the Pittsburgh No. 8 coal seam, located near Wheeling, West Virginia. Coal produced from the Tunnel Ridge mine is transported by conveyor belt to a barge loading facility on the Ohio river.

Penn Ridge Coal, LLC (Penn Ridge), a subsidiary of the Company, is party to a coal lease agreement effective December 31, 2005 with Allegheny Pittsburgh Coal Company (Allegheny). Pursuant to the agreement, Penn Ridge leases Allegheny’s Buffalo coal reserve in Washington County, Pennsylvania, which is estimated to include approximately 56.7 million tons of proven and probable high-sulfur coal in the Pittsburgh No. 8 seam.

White Oak

White Oak also has agreements with the Company’s subsidiaries for the purchase of various services and products, including for coal handling services provided by the Company’s Mt. Vernon transloading facility. For the year ended December 31, 2014, the Company has recorded revenues of $3.9 million for services and products provided by Mt. Vernon and Matrix Design to White Oak.

The Company’s subsidiary, Alliance WOR Processing, LLC (WOR Processing), constructed, owns, and operates the coal handling and processing facilities associated with the White Oak Mine No. 1 (Mine No. 1), which have the capacity to process 2,000 tons of raw coal per hour. WOR Processing processed 3.8 million tons of coal feedstock in 2014.

Alliance Resource Properties, LLC owns coal reserves that it leases to certain of the Company’s subsidiaries that operate the Company’s mining complexes. Alliance Resource Properties’ subsidiary, Alliance WOR Properties, LLC (WOR Properties), acquired from and leased back to White Oak the rights to approximately 309.6 million tons of proven and probable high-sulfur coal reserves. White Oak pays WOR Properties earned royalties. Earned royalties from coal production in 2014 in the amount of $0.2 million were paid to WOR Properties by White Oak.

Other Operations

The Company’s subsidiary, Mt. Vernon, leases land and operates a coal loading terminal on the Ohio river at Mt. Vernon, Indiana. During 2014, the terminal loaded approximately 1.8 million tons for customers of Gibson County Coal, Warrior, Webster County Coal, White County Coal and White Oak.

Matrix Group provides mine products and services for its mining operations and to unrelated parties. Matrix Group’s products and services include design and installation of underground mine hoists for transporting employees and materials in and out of mines; design of systems for automating and controlling various aspects of industrial and mining environments, and design and sale of mine safety equipment, including its miner and equipment tracking and proximity detection systems.

Alliance Minerals, LLC (Alliance Minerals), the Company’s subsidiary, owns a 96% ownership interest in Cavalier Minerals JV, LLC (Cavalier Minerals). Cavalier Minerals contributed $7.4 million in return for a limited partner interest in AllDale Minerals, an entity created to purchase oil and gas mineral interests in various geographic locations within producing basins in the continental United States.

The Company develops and markets additional services, including ash and scrubber sludge removal, coal yard maintenance and arranging alternate transportation services. Other major subsidiaries of the Company include Intermediate Partnership, Alliance Coal, Alliance Land, LLC, Alliance Properties, LLC, ARP Sebree, LLC, ARP Sebree South, LLC, CR Services, LLC, Steamport, LLC, UC Coal, LLC, UC Mining, LLC and UC Processing, LLC.

The Company competes with Alpha Natural Resources, Inc., Arch Coal, Inc., CONSOL Energy, Inc., Foresight Energy LP, Murray Energy, Inc., Patriot Coal Corporation and Peabody Energy Corporation.

Company Address

Alliance Resource Partners LP

1717 S Boulder Ave
TULSA   OK   74119-4805
P: +1918.2957600

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