Alliance off to strong start

RECORD-level revenue and coal sales volume helped Alliance Resource Partners get off to a positive start, according to quarterly results released Monday.
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The Pattiki mine, Indiana.

Donna Schmidt

Revenues for the period ended March 31 were a record $US283.6 million, up 10.3% from the $257.1 million reported in the same quarter of 2007.

The company cited higher coal sales volumes for the upswing; it saw a 13.2% increase to 7 million tons over the period versus 6.2Mt sold during the 2007 quarter.

While coal sales were up in each of the company's regions of operations, the consolidated average of overall coal sales went down over the quarter versus last year and during this time synfuel-related and coal brokerage activities impacted revenue.

The $7.2 million loss in the current year quarter from synfuel-related benefits drove other areas of sales and operating revenue down to $3.8 million versus $9.5 million last year.

Operating expenses, however, were also up period-over-period, to $192.6 million from $167 million in 2007.

ARLP cited the change to coal production volumes, which were a record 6.9Mt over the quarter, a 4.7% jump from 6.6Mt in the same period last year.

“Alliance Resource Partners once again started strong in 2008,” company president Joseph Craft III said.

“During the first quarter, ARLP responded to increased customer demand by posting records for coal sales and production volumes.

“We also successfully capitalized on market opportunities resulting in record revenues and … made significant progress on its growth initiatives as we received sufficient sales indications to begin construction of the River View mine and further expand the production capacity of our existing Illinois Basin operations.”

Craft added that the company's outlook is strong, considering there is a strengthening and growth in demand for scrubber-quality coal.

“Global demand for coal is robust resulting in stronger US coal markets," he said.

"Strong demand and persistent production constraints continue to support favorable long-term supply-demand fundamentals for domestic coal producers."

He added that ARLP remains "optimistic" about plans to secure coal sales commitments for its Tunnel Ridge, Gibson South and Penn Ridge projects.

ARLP said that total expected capital expenditures in 2008 are estimated to be $200-220 million, which includes recently-acquired funding for its River View operation and expanded production capacity at its Warrior complex.

It anticipates coal production to total 26.4-27.3Mt this year, essentially all of which is committed to pricing through existing projects.

"At this time, ARLP is anticipating total average coal sales prices for 2008 will be comparable to 2007 but expects total average realizations to increase over current levels by 15 percent to 20 percent, and 25 percent to 35 percent, in 2009 and 2010 respectively."