While the ultimate goal of environmentalists and the Biden administration is to wean the U.S. away from fossil fuels to green sources such as solar and wind power, “dirty” coal still plays a major role in the energy market – as demonstrated by an Oklahoma company.
Alliance Resource Partners L.P., a coal producer based in downtown Tulsa, reported record increases in its financial and operating results for the fourth quarter of 2022 and the entire year.
ARLP was founded in 1971 as MAPCO Coal and has since grown through acquisitions and internal development to become the sixth-largest coal producer in the eastern United States. ARLP is a diversified producer and marketer of coal to major United States utilities and industrial users.
ARLP operates 11 underground mining complexes in two regions, Illinois and Appalachia, which are spread across six states: Illinois, Indiana, Kentucky, Maryland, Pennsylvania and West Virginia. ARLP also operates a coal-loading terminal on the Ohio River at Mt. Vernon, Indiana.
Alliance mines about 32 million tons of coal annually, more than 70% of which is sold to electric utilities that have long-term contractual relationships with the company. Coal is the fuel source used by utilities to produce more than 50% of the electricity generated in the U.S. each year.
Alliance Resource Partners has a workforce of more than 2,000 employees.
“ARLP’s record performance during the quarter and full year, in a supply- and transportation-constrained operating environment, is a testament to our team’s ability to execute and deliver reliable energy supply under challenging circumstances,” said Joseph W. Craft III, chairman, president and chief executive officer.
“In 2022 ARLP achieved its highest reported EBITDA [earnings before interest, taxes, depreciation and amortization] and operating cash flow in the partnership’s history, driven by continued growth in sales volumes coupled with higher price realizations across our coal operations and royalty segments.”
In an earnings call, ARLP reported that higher coal sales revenues, combined with a $63.4 million increase in oil and gas royalty revenue, drove up ARLP’s 2022 total revenues by 53.3% to a record $2.4 billion. Net income increased 224% to $577.2 million, and EBITDA rose 96.3% to $940.2 million, both record results.
The quarterly cash distribution rate was increased last month to 70 cents per unit, or $2.80 per unit annualized, up 40% from the last quarter and 180% year-over-year.
ARLP also announced that the board of directors authorized an increase to the previously established unit repurchase program, which had $6.5 million of available capacity as of Dec. 31. The expanded program authorizes ARLP to repurchase up to $100 million of its outstanding limited partner common units.
On Jan. 27, the board also approved a $72.3 million cash purchase of 2,682 net oil and gas royalty acres in the Permian Basin from JC Resources LP, an entity owned by Craft.
“The supply-driven energy crisis, Russia’s invasion of Ukraine and the steep build of inflation disrupted energy prices and placed a new emphasis on energy security in 2022,” Craft said.
“Europe’s shift from Russian energy, and economic sanctions imposed by the U.S. and its allies, are lowering Russian supply to the world, changing global energy trade routes and energy markets for several years to come, if not permanently. U.S. natural gas and coal exports should benefit in 2023 and beyond.”