Key Points
Coal sales volumes reached 9.3 million tons in the third quarter.
Oil and gas royalty revenues reached a record $59.8 million.
The company committed 31.7 million coal tons for 2027 delivery.
On its third-quarter 2026 earnings call, held on Oct. 26, 2026, Alliance Resource Partners (NASDAQ:ARLP) reported net income attributable to ARLP of $140 million. The coal producer and oil royalty owner benefits from rising domestic electricity demand and expanding oil and gas royalty assets.
Three takeaways from management's comments stand out for long-term investors.
1. A New Supply Contract Reopens the Metiki Mine
Management had suspended operations at the Metiki coal mine in early 2026. Securing a new multiyear agreement with its largest historical customer restores production and adds 550,000 tons of coal volume in 2027.
We are pleased to announce a new multiyear coal supply agreement with our largest historical customer, that will allow the mine and nearly 150 mineworkers to return to coal production operations.
-- Joseph W. Craft, Chairman, President and Chief Executive Officer
2. Lower Mining Costs Boost Profitability Per Ton
Operational gains in underground coal mining reduced segment adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) expense per ton by 13.1% year over year. That expense reduction expanded profit margins even as average coal selling prices declined.
The reduction in per ton expense more than offset lower average pricing increasing the spread between sales price and segment adjusted EBITDA expense to $18.29 per ton from $16.19 per ton in the sequential quarter.
-- Cary Marshall, Senior Vice President and Chief Financial Officer
3. Oil and Gas Royalties Reach Record Heights
The first full quarter of contributions from the AllDale acquisition generated record performance in oil and gas royalties. BOE (barrels of oil equivalent) volumes rose sharply, diversifying cash flow beyond traditional coal sales.
Oil and gas royalty revenues were a record $59.8 million and BOE volumes were a record 1.45 million.
-- Cary Marshall, Senior Vice President and Chief Financial Officer
Looking Ahead
Electricity load growth and delays in bringing new power generation online are strengthening demand for baseline power assets. ARLP's low-cost operations and contracted volumes provide revenue visibility while management manages export logistics and capital allocation.
We believe this dynamic will extend the runway for the existing coal fleet.
-- Joseph W. Craft, Chairman, President and Chief Executive Officer
With 31.7 million tons of coal already committed and priced for 2027, management is focusing on maintaining capital discipline while growing its oil and gas royalty portfolio.
We expect to enter next year with substantial visibility and the operating capacity to capture additional demand as commercial opportunities develop.
-- Joseph W. Craft, Chairman, President and Chief Executive Officer
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