Why Energy Company Alliance Resource Partners Shares Are Falling Today

Alliance Resource Partners LP ARLP shares are trading lower after the company reported worse-than-expected fourth-quarter earnings per unit and sales results.

Revenue declined 11.2% Y/Y to $625.4 million, missing the consensus of $661.9 million.

Revenue declined Y/Y due to lower coal and oil & gas prices and decreased coal sales volumes. Coal sales price per ton sold decreased 10.7% Y/Y to $60.60 due to lower Illinois Basin export pricing.

Segment adjusted EBITDA stood at $203.2 million, down 35.5% Y/Y, in the quarter. Earnings per unit of $0.88 came below the consensus of $1.14. 

As of December 31, 2023, the company had a total liquidity of $492.1 million, including $59.8 million of cash and cash equivalents.

The company completed $24.8 million in oil & gas mineral interest acquisitions in the quarter, resulting in record BOE volumes.

FY24 Guidance: The company expects coal sales volumes of 34.0 – 35.8 Million short tons.

Joseph W. Craft III, Chairman, President and Chief Executive Officer, said, “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. 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.”

Distributions: In January 2024, the company reported quarterly cash distribution of $0.70 per unit, or $2.80 per unit annualized, payable on February 14, 2024, to all unitholders of record as of February 7, 2024.

Price Action: ARLP shares are down 4.98% at $20.68 on the last check Monday.