Alliance Resource Partners, L.P. (NASDAQ: ARLP) today announced
a series of actions in response to the rapidly evolving impact of
the COVID-19 pandemic. The unprecedented decision by world leaders
to lockdown the global economy to combat the deadly virus has
crushed demand for energy. The price war initiated by Saudi Arabia
and Russia has lowered oil prices even more. All Americans are
having to adjust to a way of life none of us could have imagined
two months ago.
Given the essential, life-sustaining nature of its business,
ARLP continued to operate during the 2020 first quarter. For the
past six weeks, however, we have been working at reduced levels
while evaluating the needs of our customers amid the disruptions
caused by the pandemic. It appears these disruptions will continue
for the immediate near future and in light of the ongoing
uncertainty surrounding the COVID-19 pandemic, ARLP is taking the
following actions:
- ARLP is temporarily ceasing coal production at all of its
Illinois Basin mines. While this temporary idling is currently
scheduled to last through April 15, 2020, the actual return to
production may be accelerated or extended based upon the business
needs of our customers. As the year progresses, coal production at
all of our operations will be further modified to match existing
sales commitments of approximately 28 million tons for 2020.
- To mitigate the reduced revenues from lower coal sales volumes
and the impact of depressed commodity prices on our Minerals
segment, ARLP will optimize cash flows through numerous initiatives
to reduce costs, expenses, working capital and capital
expenditures.
- The Board of Directors of ARLP's general partner (the "Board")
has suspended the cash distribution to unitholders for the quarter
ending March 31, 2020 (the "Quarter"). The Board intends to revisit
this decision following the second quarter.
- ARLP is withdrawing its initial 2020 operating and financial
guidance provided on January 27, 2020, which of course did not
reflect the impact of the COVID-19 pandemic. We currently plan to
release financial and operating results for the Quarter on or about
May 8, 2020, in conjunction with filing our Form 10-Q.
"It is important to note that approximately 75% of our domestic
sales are targeted to states that depend on coal, more than any
other fuel, to generate electricity," said Joseph W. Craft III,
Chairman, President and Chief Executive Officer. "As serious as the
disruption caused by the virus has been to the citizens of these
states, imagine the impact if our miners didn’t show up every day
to ensure the reliable supply of this essential fuel necessary to
keep the lights on. We remain in constant contact with our
customers and stand ready to meet their needs for this essential
fuel."
Mr. Craft added, "Although we are suspending formal guidance, we
currently anticipate ARLP's total sales tons for 2020 will be
approximately 25% below our initial expectations. At the same time,
assuming we can successfully fulfill our coal sales commitments
this year, the improvements to ARLP’s cash flow resulting from the
steps outlined above are expected to substantially offset lower
revenues, allowing us to maintain ample liquidity and protect our
strong balance sheet."
Mr. Craft concluded, "In implementing these actions, ARLP’s
highest priorities remain safeguarding the employees’ health and
safety, supporting the communities in our operating areas and
serving our customers by continuing to safely and reliably operate
our critical infrastructure. I want to thank the employees
throughout our company for their dedication, resiliency and
commitment during these challenging times. I also want to express
my appreciation to our customers, suppliers, communities,
unitholders, friends and elected officials for the sacrifices you
are enduring during these uncertain times. We are all in this
together. We will get through this and be stronger for it. I look
forward to updating each of you as our circumstances change."
About Alliance Resource Partners, L.P.
ARLP is a diversified natural resource company that generates
income from coal production and oil & gas mineral interests
located in strategic producing regions across the United
States.
ARLP currently produces coal from seven mining complexes it
operates in Illinois, Indiana, Kentucky, Maryland and West
Virginia. ARLP also operates a coal loading terminal on the Ohio
River at Mount Vernon, Indiana. ARLP markets its coal production to
major domestic and international utilities and industrial users and
is currently the second largest coal producer in the eastern United
States.
ARLP generates royalty income from mineral interests it owns in
premier oil & gas producing regions in the United States,
primarily the Permian, Anadarko, Williston and Appalachian
basins.
In addition, ARLP also generates income from a variety of other
sources.
News, unit prices and additional information about ARLP,
including filings with the Securities and Exchange Commission
("SEC"), are available at http://www.arlp.com. To request a copy of
ARLP’s Annual Report on Form 10-K for the year ended December 31,
2019 or for more information, contact the investor relations
department of ARLP at (918) 295-7674 or via e-mail at
investorrelations@arlp.com.
The statements and projections used throughout this release are
based on current expectations. These statements and projections are
forward-looking, and actual results may differ materially. These
projections do not include the potential impact of any mergers,
acquisitions or other business combinations that may occur after
the date of this release. We have included more information below
regarding business risks that could affect our results.
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. Those forward looking statements include optimizing cash
flows, reducing operating and capital expenditures, preserving
liquidity and maintaining financial flexibility, among others.
These risks to our ability to achieve these outcomes include, but
are not limited to, the following: the impact of COVID-19 both to
the execution of our day to day operations including potential
closures, as well as to the pandemic’s broader impact on demand for
coal, oil and natural gas, the financial condition of our customers
and suppliers, available liquidity and credit sources and broader
economic disruption that is evolving. In addition, the actions of
Saudi Arabia and Russia to decrease oil prices may have direct and
indirect impacts over the near and long term to our minerals
segment. These risks compound the ongoing risks to our business,
including changes in coal, oil and natural gas prices, which could
affect our operating results and cash flows; changes in competition
in domestic and international coal, oil and natural gas markets and
our ability to respond to such changes; legislation, regulations,
and court decisions and interpretations thereof, both domestic and
foreign, 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; our ability to
identify and complete acquisitions; 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; recent action and the
possibility of future action on trade made by United States and
foreign governments; the effect of new tariffs and other trade
measures; 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 & gas prices, which could,
among other things, affect our investments in oil & gas mineral
interests; our productivity levels and margins earned on our coal
sales; decline in or change in 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, mine fires, mine floods or other interruptions;
results of litigation, including claims not yet asserted;
foreign currency fluctuations that could adversely affect the
competitiveness of our coal abroad; 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;
uncertainties in estimating and replacing our oil & gas
reserves; uncertainties in the amount of oil & gas production
due to the level of drilling and completion activity by the
operators of our oil & gas properties; a loss or reduction of
benefits from certain tax deductions and credits; difficulty
obtaining commercial property insurance, and risks associated with
our participation in the commercial insurance property program;
uncertainties in our ability to generate sufficient cash from
operations to maintain our per unit distribution level;
uncertainties in our ability to meet guidance, market expectations
and internal projections; 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,
2019, filed on February 20, 2020. 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/20200330005152/en/
Brian L. Cantrell Alliance Resource Partners, L.P. (918)
295-7673
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