Alliance Resource Partners, L.P. (NASDAQ: ARLP) today announced
that it has entered into definitive agreements to acquire the
general partner interests in AllDale Minerals, LP and AllDale
Minerals II, LP (collectively "AllDale") and all of the limited
partner interests in AllDale not currently owned by ARLP’s
affiliate, Cavalier Minerals JV, LLC ("Cavalier") (collectively the
"Partnership Interests"). ARLP also announced that it has begun
development of the Excel Mine No. 5, an extension of its MC Mining
operation in Pike County, Kentucky.
"Today’s announcements reflect ARLP’s commitment to continually
invest in our business to build and support long-term cash flows,"
said Joseph W. Craft III, President and Chief Executive Officer.
"The AllDale acquisition gives ARLP control of a significant
ownership position in the oil and gas minerals sector and lays the
foundation for a new growth platform for the future. Development of
the Excel Mine No. 5 supports ARLP’s ongoing commitment to the coal
sector and will allow ARLP to maintain its regional diversity as
well as provide the opportunity to retain and grow its market share
in both the domestic and international coal markets for this
highly-valued low sulfur, high BTU product. Upon completion, both
of these strategic investments are expected to be accretive to cash
flow and create long-term value for our unitholders."
AllDale Transaction
Currently, ARLP owns a 96.0% interest in Cavalier, which owns
approximately 72.0% of the limited partner interest in AllDale.
Upon closing the transaction, ARLP will own 100.0% of the general
partner and approximately 97.0% of the limited partner interests in
AllDale, therefore controlling approximately 42,000 net royalty
acres strategically positioned in the core of the Anadarko,
Permian, Williston and Appalachian basins. The acquired acreage is
concentrated in the SCOOP/STACK (48.5%), Delaware Basin (19.5%),
Midland Basin (16.2%), Bakken (9.7%) and Appalachian Basin (6.1%).
The acquired acreage position will provide ARLP with diversified
exposure to industry-leading operators, including Continental
Resources, Devon Energy, Anadarko Petroleum, Pioneer Natural
Resources and Concho Resources.
ARLP will acquire the Partnership Interests for a cash purchase
price of $175.96 million, which will be funded with cash on hand
and borrowings under its credit facility. The agreements provide
for an effective date of November 1, 2018 and the transaction is
expected to close in early January 2019.
In addition, ARLP also owns approximately 3,950 net royalty
acres through its limited partner interest in AllDale Minerals III,
LP.
Excel Mine No. 5
Development
ARLP has begun development activity for the Excel Mine No. 5 and
currently anticipates deploying total capital of approximately
$45.0 million to $50.0 million over the next 18 to 24 months.
ARLP’s subsidiary, MC Mining, LLC ("MC Mining"), controls the
estimated 15 million tons of coal reserves assigned to the Excel
Mine No. 5 and will own the new mining complex, and our Excel
Mining, LLC subsidiary will conduct all mining operations. The
underground operation will utilize continuous mining units
employing room-and-pillar mining techniques and annual production
capacity is expected to be approximately 1.3 million tons of high
BTU, low-sulfur coal.
MC Mining plans to utilize its existing underground mining
equipment and preparation plant to produce and process coal from
the Excel Mine No. 5 and expects to ship coal produced from the
mine to various transloading facilities on the Ohio River and the
Big Sandy River for barge deliveries or directly to customers via
the CSX railroad and by truck. MC Mining expects to transition its
current workforce to the Excel Mine No. 5 and will continue to
employ approximately 211 workers.
The development plan for the Excel Mine No. 5 is designed to
provide a seamless transition from the current MC Mining operation
as its reserves deplete in 2020.
About Alliance Resource Partners, L.P.
ARLP is a diversified producer and marketer of coal to major
United States and international utilities and industrial users.
ARLP, the nation’s first publicly traded master limited partnership
involved in the production and marketing of coal, is currently the
second largest coal producer in the eastern United States with
mining operations in the Illinois Basin and Appalachian coal
producing regions.
ARLP currently operates eight mining complexes in Illinois,
Indiana, Kentucky, Maryland and West Virginia as well as a coal
loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP
also generates income from a variety of other sources, including
investments in oil and gas mineral interests and gas compression
services.
News, unit prices and additional information about ARLP,
including filings with the Securities and Exchange Commission, are
available at http://www.arlp.com. For more information, contact the
investor relations department of ARLP at (918) 295-7674 or via
e-mail at investorrelations@arlp.com.
FORWARD-LOOKING STATEMENTS: With the exception of
historical matters, any matters discussed in this press release are
forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from projected
results. These risks, uncertainties and contingencies
include, but are not limited to, the following: changes in coal
prices, which could affect our operating results and cash flows;
changes in competition in coal markets and our ability to respond
to such changes; legislation, regulations, and court decisions and
interpretations thereof, including those relating to the
environment and the release of greenhouse gases, mining, miner
health and safety and health care; deregulation of the electric
utility industry or the effects of any adverse change in the coal
industry, electric utility industry, or general economic
conditions; risks associated with the expansion of our operations
and properties; dependence on significant customer contracts,
including renewing existing contracts upon expiration; adjustments
made in price, volume or terms to existing coal supply agreements;
changing global economic conditions or in industries in which our
customers operate; liquidity constraints, including those resulting
from any future unavailability of financing; customer bankruptcies,
cancellations or breaches to existing contracts, or other failures
to perform; customer delays, failure to take coal under contracts
or defaults in making payments; fluctuations in coal demand, prices
and availability; changes in oil and gas prices, which could affect
our investments in oil and gas mineral interests and gas
compression services; our productivity levels and margins earned on
our coal sales; the coal industry's share of electricity
generation, including as a result of environmental concerns related
to coal mining and combustion and the cost and perceived benefits
of other sources of electricity, such as natural gas, nuclear
energy and renewable fuels; changes in raw material costs; changes
in the availability of skilled labor; our ability to maintain
satisfactory relations with our employees; increases in labor costs
including costs of health insurance and taxes resulting from the
Affordable Care Act, adverse changes in work rules, or cash
payments or projections associated with post-mine reclamation and
workers' compensation claims; increases in transportation costs and
risk of transportation delays or interruptions; operational
interruptions due to geologic, permitting, labor, weather-related
or other factors; risks associated with major mine-related
accidents, such as mine fires, or interruptions; results of
litigation, including claims not yet asserted; difficulty
maintaining our surety bonds for mine reclamation as well as
workers' compensation and black lung benefits; difficulty in making
accurate assumptions and projections regarding post-mine
reclamation as well as pension, black lung benefits and other
post-retirement benefit liabilities; uncertainties in estimating
and replacing our coal reserves; a loss or reduction of benefits
from certain tax deductions and credits; difficulty obtaining
commercial property insurance, and risks associated with our
participation (excluding any applicable deductible) in the
commercial insurance property program; and difficulty in making
accurate assumptions and projections regarding future revenues and
costs associated with equity investments in companies we do not
control.
Additional information concerning these and other factors can
be found in ARLP's public periodic filings with the SEC, including
ARLP's Annual Report on Form 10-K for the year ended December 31,
2017, filed on February 23, 2018 and ARLP's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2018, June 30, 2018 and
September 30, 2018, filed on May 7, 2018, August 6, 2018 and
November 5, 2018, respectively, with the SEC. Except as
required by applicable securities laws, ARLP does not intend to
update its forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20181217005172/en/
Alliance Resource Partners, L.P.Brian L. Cantrell, (918)
295-7673
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