Alliance Resource Partners (ARLP) capped off a strong 2023 with record revenues and net income, driven by its well-contracted coal order book and resilient operations. Looking ahead, the company expects another year of growth in 2024, citing stable coal demand and strategic investments.
Highlights:
- Record Full Year 2023: Total revenue of $2.6 billion, net income of $630.1 million, coal sales price realizations of $64.17 per ton.
- Strong Coal Performance: Over 90% of 2024 coal sales volumes already committed and priced at similar levels to 2023.
- Oil & Gas Growth: Record BOE volumes fueled by acquisitions and increased drilling activity.
- Debt Reduction: Total debt and finance leases down $85 million in 2023, resulting in low leverage ratios.
- Confident Outlook: 2024 expected to be another record year for revenues, driven by coal and continued Oil & Gas Royalty segment growth.
CEO Commentary:
- “Our strategic relationships with long-standing customers were evident in the 2023 Quarter as we contracted an additional 12.0 million tons for domestic deliveries over the 2024 through 2028 time period at attractive, escalating prices,” said CEO Joseph Craft III.
- “We are expecting production in the first quarter of 2024, for our Appalachia operations, to compare favorably to the first quarter of 2023.”
- “Combining the stability of our heavily contracted coal order book with continued growth in our Oil & Gas Royalty business, we are well-positioned for another record year of revenues in 2024.”
Key Takeaways:
- ARLP’s strong 2023 was built on its established coal business and strategic investments in the Oil & Gas segment.
- The company expects 2024 to be another banner year, with coal remaining the anchor.
- Stable demand, multi-year contracts, and infrastructure upgrades position ARLP for continued success in the coming years.
Outlook
“As we look to 2024, our coal sales book is expected to be equally as strong as last year and be the anchor to deliver another record year of revenues,” commented Mr. Craft. “Our dependability and the reliability of our coal quality is highly valued by our customers, evidenced by the premium pricing we have received, relative to the spot market, on recent commitments with domestic customers for multi-year contracts. We are entering 2024 with over 90% of our coal sales volumes committed and priced at similar levels relative to 2023. We are expecting our production to be more consistent in 2024, believing we have moved beyond the several negative geological areas that we faced in 2023.”
“We expect to complete the major infrastructure projects at Tunnel Ridge, Hamilton, Warrior and the River View complex in 2024,” Mr. Craft continued. “ARLP will start to recognize the benefits from these strategic investments in 2025 as total capital expenditures will be significantly lower and these mines will be more productive, ensuring we maintain our position as one of the most reliable, low-cost producers in the eastern United States over the next decade. We are forecasting domestic natural gas prices to rise in 2025 as new LNG terminal capacity comes online, driving an increase in natural gas exports, benefitting both our Coal and Royalties segments.”
Mr. Craft added, “As we think about the outlook for the coal industry and the markets we serve, we should all take notice that grid planners have nearly doubled five-year load growth forecasts in support of ongoing investments in U.S. industrial and manufacturing sectors, as well as rising energy needs associated with datacenters and artificial intelligence. While the speed of electrifying the transportation sector may have slowed, the enthusiasm for AI has accelerated.”
Mr. Craft concluded, “We remain confident in our projections for sustained coal demand for ARLP and the likelihood that the pre-mature closures of coal-fired power plants in the eastern U.S. will be delayed.”
Read more here.
