Alliance Resource Partners
Annual Report 2013

Plain-text annual report

C O N N E C T Alliance Resource Partners, L.P. | Alliance Holdings GP, L.P. 2013 Annual Report Alliance Resource Partners, L.P.’s mission is to connect coal, one of America’s most crucial natural resources, with electricity generators powering the nation. Serving as an integral link in a system that provides comfort, enjoyment, opportunity and economic progress helps define our motivation. Achieving extraordinary success along the way inspires us to continue this rewarding adventure. 1 FELLOW UNITHOLDERS The dedicated men and women of Alliance proudly led our partnerships to a 13th consecutive record-breaking year in 2013. Capitalizing on our strategy to invest in expanding markets at our low-cost operations, the Alliance team’s ability to overcome challenges and connect with opportunities lifted production and sales volumes to record highs. Production totaled 38.8 million tons, up 11.4 percent over 2012 results, and sales volumes followed suit at 38.8 million tons – a 10.4 percent jump compared with the prior year. Credit, again, goes to our employees for their incredible work ethic and determination to succeed. Their efforts drove revenues to $2.2 billion, surpassing last year’s milestone by 8.4 percent. Increased volumes also lowered our production costs on a per ton basis, contributing to net income growth of 17.3 percent to $393.5 million. Earnings before interest, taxes, depreciation and amortization (EBITDA)1 rose 18.0 percent to $685.9 million. To connect unitholders with the ongoing success of the Alliance Partnerships, distributions have increased for 23 consecutive quarters. During that period Alliance Resource Partners, L.P. (ARLP) grew distributions by 104.7 percent while distributions from Alliance Holdings GP, L.P. (AHGP) increased by 187.8 percent. At 2013 year-end, ARLP’s annualized cash distribution was $4.79 per unit, up 8.1 percent from the prior year; AHGP’s was $3.31 per unit, an 11.8 percent increase. Looking ahead, near-term fundamentals for coal are improving. With favorable weather patterns and higher natural gas prices driving increased coal demand, the U.S. Energy Information Administration (EIA) expects coal industry production to increase by 3.6 percent in 2014.2 ARLP has benefited from these market dynamics, securing price commitments for approximately 94 percent of our anticipated coal sales volume for 2014, with an additional 28.9 million tons committed in 2015 and 23.1 million tons for 2016. These commitments reflect our customers’ confidence in ARLP and help create additional value for our unitholders. 2013 ARLP Production 38.8 Million Tons 16% 5% 17% ARLP Reserves – 31 Dec 2013 1.1 Billion Tons 1% Illinois Basin Northern Appalachia Central Appalachia 79% 82% 2 Cash Flow Growth Drives Distributions » ARLP Distributions Paid/Unit » AHGP Distributions Paid/Unit *Company filings. D o l l a r s 5 4 3 2 1 0 23 Consecutive Quarters of Increased Distributions* $2.95 $1.69 $3.21 $1.90 $3.63 CAGR 11.5% $4.16 $2.72 $2.28 CAGR 16.3% $4.57 $3.10 2009 2010 2011 2012 2013 The Alliance Strategy for Success » Safety first » Strong customer relationships » Expanding market opportunities » Low-cost operations » High-return development projects » Disciplined acquisitions Moving forward, we expect coal sales and production volumes to increase again in 2014, as Tunnel Ridge reaches full capacity and our new Gibson South mine is slated to begin production in the third quarter of this year. On a broader horizon, coal will remain a critical fuel source for U.S. electricity generation for years to come, and we will continue to strengthen and expand our asset portfolio. Capital expenditures and equity investments, including production expansion projects related to completion of development at our new Gibson South mine and reserve acquisitions and funding of the White Oak project, are expected to be in the range of $400 million to $445 million in 2014. Diverse power sources complement America’s base-load coal electricity generation. But the fact remains – no other resource is as plentiful, reliable and consistently economical as coal. America should continue to embrace our domestic advantage, unleashing our low-cost coal resources to spur job creation and economic growth for decades to come. Coal connects our nation’s consumers with necessities, keeps our economy humming and provides us with better quality of life. Alliance’s coal production, which leads to affordable electricity, benefits everyday citizens, industries, employees and, ultimately, our unitholders. Those connections drive our commitment to contribute to America’s success and be the best in the business. Joseph W. Craft III President, Chief Executive Officer, and Director of ARLP and AHGP, and Chairman of the Board of AHGP March 25, 2014 1 Please see the inside back cover for a definition of EBITDA and GAAP to non-GAAP reconciliation information. 2 U.S. Energy Information Administration, “Short-term Energy Outlook,” January 7, 2014. 3 » CONNECT WITH THE ECONOMY America Plugged In 85 % use the Internet. Pew Research Center 2013. 91 % own mobile phones. Pew Research Center 2013. 99 % plugged in. 99% of the almost 25 consumer electronic devices owned by the typical U.S. household must be plugged in or recharged. U.S. Environmental Protection Agency Program Energy Star. 65.9 % of American homes have central air-conditioning. 2011 Housing Profile: United States issued July 2013 by the U.S. Department of Housing and Urban Development and U.S. Department of Commerce. 91 % consumed. 91% of all coal consumed in the United States is used for generating electricity. U.S. Energy Information Agency, 2014 Annual Energy Outlook – Early Release Overview. 4 20 % from lighting. 40 lightbulb sockets are located in the average U.S. house. 20% of annual household electricity bills are due to lighting. U.S. Environmental Protection Agency Program Energy Star. In 2013, the average price of retail residential electricity was 12.12 cents per kilowatt-hour (kWh). Families in the 17 states that rely on coal for more than half of their electricity only paid 11 cents per kWh on average, whereas residential electricity in the 16 states that relied on coal for less than 15 percent of their electricity was 45 percent more expensive at an average price of almost 16 cents per kWh.3 Coal: affordable and reliable energy to power America. » Roughly 40 percent of all electricity in the U.S. is coal-generated.1 That single fact makes it easy to understand why American life is so intertwined with coal. Appliances, electronics, conveniences, tools and toys that we rely on, that keep us connected, are plugged in 24/7. Keeping energy rates as low as possible is important to consumers. So is electric reliability. In 2014, the average American family will spend 11 percent of after-tax income on residential and transportation energy. The burden is even greater for the nearly one-third of U.S. households in the under-$30,000 per year income bracket: energy usage will take a 26 percent bite out of their take-home pay this year. For lower-income families and fixed- income seniors, this reduces funds available for daily necessities such as food, health care and housing.2 EIA statistics reveal that residential rates are consistently lower in the 17 states where coal generates at least half of the electricity. For example, in West Virginia, where coal provides 95 percent of the electricity, families paid 9.52 cents per kWh in 2013, 21 percent below the national average. Likewise, coal generates 93 percent of electricity in Kentucky and residents paid 9.71 cents per kWh in 2013. Contrast these low-cost energy states with residential power rates in Vermont and Rhode Island – the nation’s only two states not using coal. Their average rates for electricity in 2013, respectively, were 17.15 cents per kWh and 15.47 cents per kWh.3 The good news is that our nation has enough estimated coal reserves to last almost 300 years based on current consumption.4 Also important: coal can be efficiently transported by train, truck or barge when and where it is needed. Coal is the affordable, stable fuel that connects consumers with inexpensive and reliable power. 1 U.S. Energy Information Administration, “Short-term Energy Outlook,” January 7, 2014. 2 American Coalition for Clean Coal Electricity, “Energy Cost Impacts on American Families 2001-2014,” February 2014. 3 U.S. Energy Information Administration, “Electric Power Monthly with Data for December 2013,” February 2014. 4 U.S. Energy Information Administration, “International Energy Outlook 2013,” July 2013. 5 » CONNECT WITH PEOPLE Almost 80,000 individuals work in U.S. coal mines each day.1 ARLP invested more than half a billion dollars in employee salaries and benefits in 2013. » Coal is a labor-intensive business that fosters job creation, and is a critical component of our nation’s economic health. Industry-wide, almost 80,000 individuals go to work in U.S. coal mines each day and earn average salaries of $82,836 per year.1 This direct-job financial contribution to the economy, though, is only a sliver of the entire picture. When transportation, upstream suppliers, contractors and their associated vendors are added, the U.S. coal industry – with mines in 25 states – represents 805,680 jobs, $53.4 billion in labor income and $97.5 billion in contributions to the nation’s gross domestic product.2 Another 500,0003 people are directly employed by U.S. electricity generation companies, which depend on coal for base-load fuel. However, this is only the beginning. Affordable electricity from coal spurs economic growth, and states that rely on coal are better positioned to create jobs in energy-intensive sectors, such as manufacturing and advanced technologies. 1 Bureau of Labor Statistics, Quarterly Census Employment and Wages, First Quarter, 2013. 2 National Mining Association, “The Economic Contributions of U.S. Mining,” September 2013. 3 Edison Electric Institute 2014, eei.org/electricity101. 7 * e m o c n i n o i l l i t e n . m 5 3 9 3 $ n o i l l i * A D T B E I . m 9 5 8 6 $ * s e u n e v e r n o i l l i b . 2 2 $ S T C A F E C N A I L L A 3 1 0 2 H T I W T C E N N O C » % 5 3 9 . l r e d n u d o s e g a n n o t f o s t n e m e e r g a m r e t - g n o l 0 5 2 , 6 0 1 ~ 1 . 1 N O I L L I B s e v r e s e r l a o c f o s n o t s e i t i l i t u c i r t c e e o t d o s l l s n o t f o % 7 . 3 9 n o t r e p e c i r p s e l a s l a o c e g a r e v a . 4 0 5 5 $ . s t l u s e r l i a c n a n fi 3 1 0 2 P L R A s t c e fl e R * 5 6 5 4 $ . i P L R A y b d a p s n o i t u b i r t s i d y l i a d d e c u d o r p l a o c f o s n o t 5 9 0 3 $ . i P G H A y b d a p s n o i t u b i r t s i d l a t i p a c n i n o i l l i m d n a s e r u t i d n e p x e s t n e m t s e v n i y t i u q e . 9 6 1 4 $ » CONNECT WITH TECHNOLOGY Coal powers innovation. As the fastest-growing fuel in the world, coal is powering a technological global renaissance. Here in America, our digital lifestyle is also driving growth in demand for electricity. Coal and the electricity produced from it help fuel the advanced materials, instruments and knowledge that bring goods, services and leading-edge inventions to end-users. ARLP stands ready to help connect American ingenuity with the energy it needs to succeed. Dependence on Coal for Data Centers Greenpeace International, April 2012. 55.1 49.7 49.5 48.7 39.4 39.3 35.6 33.9 33.9 31.6 28.7 20.3 20.1 0 5 10 15 20 25 30 35 40 45 50 55 % Share Electricity from Coal 10 » Our wholly owned subsidiary, Matrix Design Group, LLC, is the industry leader in safety and productivity technology for underground mines. The picture below features Matrix’s new MX3 communications and monitoring system. The system allows operators to communicate wirelessly, monitor data, control equipment, and perform other advanced functions over a single high-speed network. For more information about Matrix, visit www.matrixteam.com. » CONNECT WITH REALITY Billion Kilowatt-hours Renewables in Perspective In 2013, coal continued to serve as America’s primary source for electricity generation and is expected to remain in that role for years to come. 2013 data from “Electric Power Monthly” prepared by the Energy Information Agency (EIA), which is part of the U.S. Department of Energy. 12 COAL 1,586.00 WIND 167.67 SOLAR 9.25 Coal is here for the long haul. » All energy resources are not equal. There are differences in how power is generated to meet consumer demand and in the way providers connect electricity to customers. Coal is an excellent source of base-load fuel to keep the nation’s power grid energized. Coal is easy to transport and stockpile, so it is there to meet demand 24 hours a day, seven days a week. And in America, coal is expected to serve as a fundamental pillar of base-load “The Future of Coal: Sector Survives the Doubters. Coal remains the biggest source of fuel for generating electricity in the U.S. Even as coal production has dropped in Appalachia, it has climbed in Wyoming and in the country’s midsection.” The Wall Street Journal, January 8, 2014. electricity for the foreseeable future. Today, coal and natural gas account for 67 percent of our nation’s electricity generation and the EIA projects coal and natural gas will account for the exact same percentage in 2040.1 The reason is clear: America needs fossil fuels for reliability and needs fuel diversity to keep prices low. While the U.S. government continues to try to prop up renewable energy resources through generous subsidies and targeted goals, a similar program launched in Germany during 1997 provides a cautionary tale: although 25 percent of Germany’s electricity was being generated from renewables by 2012, the unreliable power created rolling brownouts and blackouts. Electricity rates also skyrocketed to almost triple those in the United States.2 In response, Germany is returning to its most stable fuel source: coal. Germany recently opened its first new coal- fired plant in eight years, with 10 new coal power stations to follow in the next two years.3 Fuel diversity is also important. This was underscored in January 2014 when record-setting cold snaps hit Eastern U.S. cities where coal plants have closed. The freezing temperatures drove natural gas price spikes as high as $140 per million BTUs, sent wholesale electricity prices to as much as $2,000 per megawatt hour, and had utilities asking customers to conserve electricity in order to avoid power outages.4 Alliance endorses continued use of coal as the backbone of U.S. electricity generation – a strategy that blends regionally and competitively priced domestic fuels to best support economic growth. The private sector can and will continue to champion technological advancement, with the EIA reporting that by 2015 more than 90 percent of U.S. coal-fueled electric generating capacity will have installed clean-coal technologies and other advanced emission controls.5 With these advanced technologies, America should fully rely upon its plentiful coal resources to connect American families and businesses with low-cost energy. That’s something to celebrate and embrace. 1 U.S. Energy Information Administration, “Annual Energy Outlook 2014 Early Release,” December 16, 2013. 2 The Wall Street Journal, “Germany Reinvents the Energy Crisis,” November 8, 2013. 3 Bloomberg News, “Steag Starts Coal-Fired Power Plant in Germany,” November 15, 2013. 4 American Coalition for Clean Coal Electricity, “Recent Electricity Price Increases and Reliability Issues Due to Coal Plant Retirements,” February 6, 2014. 5 U.S. Energy Information Administration, “Short-term Energy Outlook,” January 7, 2014. 13 Illinois Indiana Ohio Pennsylvania Maryland 14 10 9 West Virginia Kentucky 8 Virginia 6 11 12 1 2 13 7 3 4 5 » CONNECT WITH OPPORTUNITY ARLP looks ahead to visible growth on the horizon. » Moody’s Investors Service recently referred to the Illinois Basin as “the most dynamic coal-producing region in the U.S. today.”1 Production is booming in this centrally-located coalfield because utilities have installed new scrubber technology allowing them to burn high-sulfur content coal.2 Illinois Basin coal is typically low in cost, and meets a wide range of customer requirements. Transportation options by barge, rail and truck simplify logistics and make pricing more favorable. All of these characteristics place Illinois Basin coal in an attractive and competitive position. Alliance is the Illinois Basin’s largest coal producer, and our mines in this region are strategically located to take advantage of the benefits of this basin today. For example, ARLP’s River View complex can load coal directly from the mine onto a barge. This infrastructure provides us significant price improvement when moving our production to market. And Alliance connects with the Illinois Basin’s bright opportunities for the future through two of our current expansion projects – the new Gibson South mine development and our investments in the White Oak project. We expect Gibson South’s production to begin in 2014’s third quarter and ultimately ramp to its full production capacity of about 5.1 million tons. The White Oak mine should begin longwall production by the fourth quarter of this year and provide Alliance with long-term cash flow growth through royalties, throughput payments and preferred equity distributions. Meanwhile, operations in our Northern Appalachia region also provide Alliance with solid growth. The Tunnel Ridge complex, our newest mine in that region, is expected to produce approximately 5.5 million tons in 2014, an increase of 1.8 million tons compared to last year. With approximately 89.1 million tons of high-sulfur coal reserves, Tunnel Ridge is expected to be a significant contributor to Alliance’s cash flow for decades. Strategic locations, diverse coal mix and solid performance history connect ARLP with impressive natural resources. As a result, we are the beneficiaries of contract flexibility, financial stability, optimized production and dynamic future prospects. 1 Moody’s Investors Service, October 15, 2013. 2 The Wall Street Journal, “In the Midwest, Coal Stages a Comeback,” May 5, 2013. 14 Illinois Indiana Ohio Pennsylvania Maryland 14 10 9 West Virginia Kentucky 8 Virginia Illinois Basin Central Appalachia Northern Appalachia 6 11 12 1 2 13 7 3 4 5 Current Mining Operations Mine Under Construction 1. Pattiki Complex 2. River View Complex 3. Dotiki Complex 4. Warrior Complex 5. Hopkins Complex 6. Gibson North Complex 7. Sebree Mining Complex 8. MC Mining Complex 9. Mettiki Complex 10. Tunnel Ridge Complex 11. Gibson South Project Estimated reserves: 75 million tons Production start-up: third quarter 2014 Mine Development / Reserve Investment 12. Investment in White Oak Resources Estimated reserves: 289 million tons Longwall Production start-up: late third quarter 2014 Mine Development Projects 13. Sebree Reserve Project Estimated reserves: 30 million tons 14. Penn Ridge Project Estimated reserves: 57 million tons Transfer Terminal Mount Vernon Transfer Terminal Operates a coal loading terminal in Indiana on the Ohio River 15 » CONNECT WITH ALLIANCE It is incredibly rewarding to know that Alliance coal helps power America every single day. Those with whom we connect – consumers, employees, investors – all have an important stake in what we do. Alliance has established a clear legacy of setting new benchmarks, and rest assured we do not take our success for granted. This partnership has a responsibility to connect the dots from the delivery of reliable and affordable coal to electricity generators, while continuing our track record of growing revenues and expanding profitability. We will continue improving our performance, meeting strategic objectives and contributing to America’s energy solution for decades to come. Clear strategy and focus Priorities: safety, customer relationships, growth markets, low costs, high-return projects and disciplined acquisitions Concentrated in expanding basins 79 percent of production currently in the Illinois Basin; expected to grow Northern Appalachian production by almost 22 percent in 2014 Well positioned, low-cost producer Operations meet diverse specifications and offer transportation options Highly contracted coal sales book Price commitments for approximately 94 percent of our anticipated coal sales volume for 2014 Solid balance sheet Liquidity at 2013 year-end was $519.4 million; leveraged at 1.27 times total debt to trailing 12-month EBITDA Exceptional track record 13 consecutive years of superior results Visible future production growth Tunnel Ridge, Gibson South and White Oak ramping up in 2014–2016 Strong distribution growth 23 consecutive quarters of increased distribution payments to ARLP and AHGP unitholders 16 ARLP Coal – Tons Produced ARLP Coal – Tons Sold 38.8 34.8 30.8 28.9 25.8 2013 2012 2011 2010 2009 38.8 35.2 31.9 30.3 25.0 40 35 30 25 20 15 10 10 15 20 25 30 35 40 Million Tons Million Tons ARLP Revenues ARLP EBITDA $2.21 $2.03 $1.84 $1.61 $1.23 2013 2012 2011 2010 2009 $685.9 $581.1 $570.8 $499.5 $340.4 2.20 2.00 1.80 1.60 1.40 1.20 1.00 100 200 300 400 500 600 700 Dollars in Billions Dollars in Millions $393.5 $389.4 $335.6 $321.0 ARLP Net Income ARLP Total Assets 2013 2012 2011 2010 $2.12 $1.96 $1.73 $1.50 400 350 300 250 200 150 100 1.00 1.20 1.40 1.60 1.80 2.00 2.20 $192.2 2009 $1.05 Dollars in Millions Dollars in Billions ARLP Distributions Paid Distributions paid per LP unit AHGP Distributions Paid Distributions paid per LP unit $4.565 $4.1625 $3.6275 $3.205 $2.95 2013 2012 2011 2010 2009 $3.095 $2.7225 $2.275 $1.90 $1.685 5.00 4.00 3.00 2.00 1.00 0 0 1.00 2.00 3.00 4.00 Dollars Dollars Reconciliation of GAAP “Cash Flows Provided by Operating Activities” to Non-GAAP “EBITDA” and Non-GAAP “EBITDA” to GAAP “Net Income” (in thousands) 2013 2012 2011 2010 2009 Cash flows provided by operating activities $ 704,652 $ 555,856 $ 573,983 $ 520,588 $ 282,741 Year Ended December 31 Non-cash compensation expense Asset retirement obligations Coal inventory adjustment to market Equity in loss of affiliates, net Net gain (loss) on foreign currency exchange Net gain (loss) on sale of property, plant and equipment Loss on retirement of vertical hoist conveyor system Asset impairment charge Valuation allowance of deferred tax assets Other Net effect of working capital changes Interest expense, net Income tax expense (benefit) EBITDA (8,896) (3,004) (2,811) (7,428) (2,853) (2,978) (24,441) (14,650) - (3,475) - - (3,483) 6,251 (6,392) 26,082 1,396 - (147) - (19,031) - 3,815 41,109 28,455 (1,082) (6,235) (2,546) (386) (3,404) - 634 - - - (1,488) (10,870) 21,579 (431) (4,051) (2,579) (498) - (274) (234) (1,204) - - (1,448) (42,402) 29,862 1,741 685,879 581,066 570,836 499,501 Depreciation, depletion and amortization (264,911) (218,122) (160,335) (146,881) Interest expense, net Income tax (expense) benefit Net income (26,082) (1,396) (28,455) (21,579) (29,862) 1,082 431 (1,741) $ 393,490 $ 335,571 $ 389,353 $ 321,017 $ 192,347 Net loss attributable to noncontrolling interest - - - - (190) Net income of ARLP $ 393,490 $ 335,571 $ 389,353 $ 321,017 $ 192,157 EBITDA is a financial measure not calculated in accordance with generally accepted accounting principles (“GAAP”) and is defined as net income before net interest expense, income taxes and depreciation, depletion and amortization. EBITDA is used as a supplemental financial measure by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others, to assess: » the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; » the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness; » our operating performance and return on investment as compared to those of other companies in the coal energy sector, without regard to financing or capital structures; and » the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities. EBITDA, should not be considered an alternative to net income, income from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. EBITDA is not intended to represent cash flow and does not represent the measure of cash available for distribution. Our method of computing EBITDA may not be the same method used to compute similar measures reported by other companies, or EBITDA may be computed differently by us in different contexts (e.g., public reporting versus computation under financing agreements). (3,582) (2,678) (3,030) - 653 (136) - - - (537) 36,440 29,798 708 340,377 (117,524) (29,798) (708) Partnership Tax Details Unitholders are partners in the partnership and receive quarterly cash distributions. Cash distributions generally are not taxable as long as the individual unitholder’s tax basis remains above zero. A partnership generally is not subject to federal or state income tax. The annual income, gains, losses, deductions or credits of the partnership flow through to the unitholders, who are required to report their allocated share of these amounts on their individual tax returns, as though the unitholder had incurred these items directly. Schedule K-1 Unitholders of record receive Schedule K-1 packages that summarize their allocated share of the partnership’s reportable tax items for the fiscal year. It is important to note that cash distributions received should not be reported as taxable income. Only the amounts provided on the Schedule K-1 should be entered on each unitholder’s tax return. Schedule K-1 information also is available on our Web sites. Please visit www.arlp.com and www.ahgp.com. Unitholders should refer questions regarding their Schedule K-1 as follows: By Mail K-1 Support P.O. Box 799060 Dallas, TX 75379-9060 By Phone/Fax Alliance Resource Partners, L.P. Phone (800) 485-6875 Fax (866) 554-3842 Alliance Holdings GP, L.P. Phone (866) 867-4060 Fax (866) 554-3842 Transfer Agent and Registrar Direct requests regarding transfer of units, lost certificates, lost distribution checks or address changes to: American Stock Transfer and Trust Company Attn: Shareholder Services 59 Maiden Lane – Plaza Level New York, NY 10038 (800) 937-5449 Investor Information and Form 10-K For more information or free copies of the 2013 Form 10-K, please contact the appropriate e-mail address or phone number listed below. Form 10-K also may be downloaded from the Partnerships’ Web sites. Alliance Resource Partners, L.P. investorrelations@arlp.com E-mail: Phone: (918) 295-7674 Web site: www.arlp.com General Information The following information applies to Alliance Resource Partners, L.P. (ARLP) and Alliance Holdings GP, L.P. (AHGP) unless specified otherwise. Partnership Offices 1717 South Boulder Avenue, Suite 400 Tulsa, OK 74119 (918) 295-7600 Partnership Mailing Address P.O. Box 22027 Tulsa, OK 74121-2027 Contact Brian L. Cantrell Senior Vice President and Chief Financial Officer (918) 295-7674 brian.cantrell@arlp.com Business Structure Publicly traded master limited partnership. Common Unit Trading Common units are traded on the NASDAQ Global Select Market. NASDAQ Ticker Symbols Alliance Resource Partners, L.P. ARLP AHGP Alliance Holdings GP, L.P. Common Units Outstanding (12/31/2013) ARLP 36,963,054 common units AHGP 59,863,000 common units Independent Auditors Ernst & Young LLP 1700 One Williams Center Tulsa, OK 74172 Unitholder Information Cash Distributions The partnerships expect to make quarterly distributions to unitholders of record on the applicable record dates according to the following schedules: Alliance Resource Partners, L.P. Alliance Holdings GP, L.P. Within 45 days after the end of each March, June, September and December. Alliance Holdings GP, L.P. Within 50 days after the end of each March, June, September and December. investorrelations@ahgp.com E-mail: Phone: (918) 295-1415 Web site: www.ahgp.com Executive Officers & Directors ARLP » AHGP » Joseph W. Craft III » » President, Chief Executive Officer, and Director of ARLP and AHGP, and Chairman of the Board of AHGP Brian L. Cantrell » » Senior Vice President and Chief Financial Officer R. Eberley Davis » » Senior Vice President, General Counsel and Secretary Robert G. Sachse » Executive Vice President Charles R. Wesley » Executive Vice President and Director Thomas M. Wynne » Senior Vice President and Chief Operating Officer Michael J. Hall » » Director and Chairman of the Audit Committee for ARLP and AHGP, and member of the Compensation Committee for ARLP John P. Neafsey » Director, Chairman of the Board of Directors, Chairman of the Conflicts Committee, and member of the Compensation Committee John H. Robinson » Director, Chairman of the Compensation Committee, and member of the Audit and Conflicts Committees Wilson M. Torrence » Director, member of the Audit, Compensation and Conflicts Committees Thomas M. Davidson, Sr. » Director, Chairman of the Conflicts Committee and member of the Audit Committee Robert J. Druten » Director and member of the Audit and Conflicts Committees P.O. Box 22027, Tulsa, Oklahoma 74121-2027 | www.arlp.com | www.ahgp.com 

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