Q1 2024 Alliance Resource Partners L.P. Earnings Call

Operator: Greetings and welcome to the Alliance Resource Partners first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Cary Marshall, Senior Vice President and Chief Financial Officer. Thank you, sir. You may begin.

Greetings and welcome to the Alliance Resource Partners first quarter 2024 earnings Conference call.

At this time all participants are in a listen only mode.

A brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Gary Marshall Senior Vice President and Chief Financial Officer. Thank you Sir you may begin.

Cary P. Marshall: Thank you, Operator, and welcome, everyone. Earlier this morning, Alliance Resource Partners released its first quarter 2024 financial and operating results, and we will now discuss those results as well as our perspective on current market conditions and reiterated outlook for 2024. Following our prepared remarks, we will open the call to answer your questions. Before beginning, a reminder that some of our remarks today may include forward-looking statements subject to a variety of risks, uncertainties, and assumptions contained in our filings from time to time with the Securities and Exchange Commission and are also reflected in this morning's press release.

Cary P. Marshall: Thank you operator and welcome everyone earlier. This morning Alliance Resource partners released its first quarter 2024 financial and operating results and we will now discuss those results as well as our perspective on current market conditions and reiterated outlet for 2024.

Speaker Change: Following our prepared remarks, we will open the call to answer your questions.

Speaker Change: Before beginning a reminder, that some of our remarks today may include forward looking statements subject to a variety of risks uncertainties and assumptions contained in our filings from time to time with the Securities and Exchange Commission and are also reflected in this morning's press release.

Cary P. Marshall: While these forward-looking statements are based on information currently available to us, if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect, actual results may vary materially from those we projected or expected. In providing these remarks, the Partnership has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, unless required by law to do so.

Speaker Change: While these forward looking statements are based on information currently available to us if one or more of these risks or uncertainties materialize or if our underlying assumptions prove incorrect actual results may vary materially from those we projected or expected.

Speaker Change: In providing these remarks the partnership has no obligation to publicly update or revise any forward looking statement, whether as a result of new information future events or otherwise unless required by law to do so.

Cary P. Marshall: Finally, we will also be discussing certain non-GAAP financial measures. Definitions and reconciliations of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures are contained at the end of this morning's press release, which has been posted on our website and furnished to the SEC on Form 8K. With the required preliminaries out of the way, I will begin with a review of our results for the first quarter, give an update on our 2024 guidance, then turn the call over to Joe Craft, our Chairman, President, and Chief Executive Officer, for his comments. Let me start by recognizing the dedicated efforts of our entire team that delivered solid first-quarter results and a good start to the year.

Speaker Change: Finally, we will also be discussing certain non-GAAP financial measures definitions and reconciliations of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures are contained at the end of this mornings press release, which has been posted on our website and furnished to the SEC.

Speaker Change: <unk> 8-K.

Speaker Change: With the required preliminaries out of the way I will begin with a review of our results for the first quarter give an update of our 2024 guidance then turn the call over to Joe craft, Our chairman President and Chief Executive Officer for his comments.

Joseph W. Craft: Let me start by recognizing the dedicated efforts of our of our entire team that delivered solid first quarter results and a good start to the year.

Cary P. Marshall: Our first quarter performance was led by higher coal sales volumes and record oil and gas royalty volumes. However, these factors were more than offset by lower average coal sales price per ton and higher segment-adjusted EBITDA expense per ton compared to the 2023 quarter. Specifically, coal sales volumes increased 2.4% to 8.7 million tons, while coal production declined 1.4% to 9.1 million tons compared to the 2023 quarter. Our contracted coal position contributed to our sales volumes for the 2024 quarter, lessening the impact of mild winter weather and low natural gas prices.

Joseph W. Craft: Our first quarter performance was led by higher coal sales volumes and record oil and gas royalty volumes. These factors were more than offset by lower average coal sales price per ton and higher segment adjusted EBITDA expense per ton compared to the 2023 quarter.

Joseph W. Craft: Specifically coal sales volumes increased two 4% to $8 7 million tonnes, while coal production declined one 4% to $9 1 million tons compared to the 2023 quarter.

Joseph W. Craft: Our contracted coal position contributed to our sales volumes for the 'twenty 'twenty four quarter lessening the impact of mild winter weather and low natural gas prices.

Cary P. Marshall: In the Illinois Basin, sales volumes were up 4%, and in Appalachia, they were down 1.8%. Royalty volumes for oil and gas minerals increased to a record 898,000 barrels of oil equivalent, an 18.3% increase year over year. At the same time, coal sales price per ton sold was down 5.2%, as a 5.8% increase in the Illinois Basin was more than offset by a 19.4% decrease in Appalachia. The decline in Appalachia largely reflects the residual effects of strong export markets in 2022, which benefited the 2023 quarter.

In the Illinois Basin sales volumes were up 4% and in Appalachia, They were down one 8%.

Joseph W. Craft: Royalty volumes for oil and gas minerals increased to a record 898000 barrel of oil equivalent and 18, 3% increase year over year.

Joseph W. Craft: At the same time coal sales price per ton sold was down five 2% is at five 8% increase in the Illinois basin was more than offset by a 19.4% decrease in Appalachia.

Joseph W. Craft: The decline in Appalachia, largely reflects the residual effects of strong export markets in 2022, which benefited the 'twenty to 'twenty three quarter.

Cary P. Marshall: Compared to the sequential quarter, average coal sales prices increased 6.9% to $64.78 per ton sold, compared to $60.60 per ton. Coal sales prices per ton sold rose in the Illinois Basin by 4.6%, and in Appalachia by 11.3%. In our oil and gas royalty segment, average realized sales prices were down 9.3% per barrel of oil equivalent versus the 2023 quarter, reflecting lower commodity prices. Similarly, sequentially, average realized sales prices were 7.6% lower per barrel of oil equivalent.

Joseph W. Craft: Compared to the sequential quarter average coal sales prices increased six 9% to $64.78 per ton sold compared to $60 60 per ton sold.

Coal sales price per ton sold rose in the Illinois basin by four 6% and in Appalachia by 11, 3%.

Joseph W. Craft: In our oil and gas royalty segment average realized sales prices were down 9.3% per barrel of oil equivalent versus the 2023 quarter, reflecting lower commodity prices sequentially average realized sales prices were seven 6% lower per barrel of oil equivalent.

Cary P. Marshall: Our co-royalty segment reported higher co-royalty volumes and prices during the 2024 quarter, with co-royalty tons rising 9% and co-royalty revenue per ton increasing 10.4% year over year. Sequentially, coal royalty tons were up 9.8%. In total, consolidated revenue was $651.7 million, down 1.7% from $662.9 million in the year-ago period and up 4.2% sequentially. Segment adjusted EBITDA expense per ton sold for our coal operations was $40.85, an increase of 3% versus the 2023 quarter, primarily due to continued inflationary pressures on labor and material costs, as well as higher maintenance.

Joseph W. Craft: Our coal royalty segment reported higher coal royalty volumes and prices during the 'twenty 'twenty four quarter with coal royalty tons rising 9% in coal royalty revenue per ton, increasing 10, 4% year over year.

Joseph W. Craft: Sequentially coal royalty tons were up nine 8%.

Joseph W. Craft: In total consolidated revenue was $651 7 million down one 7% from $662 9 million in the year ago period, and up four 2% sequentially.

Joseph W. Craft: Segment, adjusted EBITDA expense per ton sold for our coal operations was $40.85 an increase of 3% versus the 2023 quarter, primarily due to continued inflationary pressures on labor and material costs as well as higher maintenance costs on.

Cary P. Marshall: On a sequential basis, cost per ton was 4.8% lower as a result of a return to normal operations across our portfolio following adverse geological conditions experienced in late 2023. For the 2024 quarter, we completed one long-law move at our Hamilton. For the second quarter, we expect to have three long wall moves, with one each at Hamilton, Metiki, and Tunnel Ridge.

Joseph W. Craft: On a sequential basis cost per ton were four 8% lower as a result of a return to normal operations across our portfolio following adverse geological conditions experienced in late 2023.

Joseph W. Craft: Or the 'twenty 'twenty four quarter, we completed one longwall move at our Hamilton mine.

Joseph W. Craft: For the second quarter, we expect to have three longwall moves with one each at Hamilton Med Peaky and tunnel Ridge.

Cary P. Marshall: During the 2024 quarter, we booked a $15.3 million accrual relating to the settlement of certain litigation, as described in our most recent Form 10-K, filed in February of this year with the SEC. Because we characterize this accrual as unrepresentative of our ongoing operations, we have not included it in our segment-adjusted EBITDA expense per ton figure. The litigation expense accrual was partially offset by an increase in the fair value of the partnership's digital assets of $11.9 million. In the second half of 2020, we started mining Bitcoin as a pilot project to monetize the already paid for yet underutilized electricity load at our Riverview mine.

Joseph W. Craft: During the 'twenty 'twenty four quarter, we booked a $15 $3 million accrual relating to the settlement of certain litigation as described in our most recent Form 10-K filed in February of this year with the SEC Because we characterized this accrual is unrepresentative of our ongoing operations, we have not incur.

Did it in our segment adjusted EBITDA expense per ton figures.

Joseph W. Craft: The litigation expense accrual was partially offset by an increase in the fair value of the partnerships digital assets of $11 9 million.

Joseph W. Craft: In the second half of 'twenty 'twenty, we started mining bitcoin as a pilot project to monetize already paid for yet underutilized electricity load at our river view mine.

Cary P. Marshall: Since then, we have mined and now own Bitcoin valued at approximately $30 million at the end of the 2024 quarter. Our crypto mining net property plant and equipment book balance at the end of the 2024 quarter was $7.3 million. The increase in fair value reflects the adoption of new accounting guidance to reflect the mark-to-market change in the value of our digital assets during the quarter. Our net income for the 2024 quarter attributable to ARLP was $158.1 million, or $1.21 per unit, which compares to $191.2 million, or $1.45 per unit, in the year-ago period.

Joseph W. Craft: Since then we have mined and now own bitcoin valued at approximately $30 million at the end of the 'twenty 'twenty four quarter.

Our crypto mining net property plant and equipment book balance at the end of the 'twenty 'twenty four quarter was $7 $3 million. The increase in fair value reflects the adoption of new accounting guidance to reflect the mark to market change in the value of our digital assets during the quarter.

Our net income for the 'twenty 'twenty four quarter attributable to air L. P was $158 $1 million or $1.21 per unit, which compares to $191 2 million or $1 45 per unit in the year ago period.

Cary P. Marshall: EBITDA in the 2024 quarter was $235 million, which compares to $270.9 million in the year-ago period. These decreases reflect lower revenue and higher total operating expenses. Sequentially, net income was up 36.9%, and EBITDA was up 26.8%. Now turning to our balance sheet and uses of cash, Alliance generated $209.7 million of cash flows from operating activities in the 2024 quarter.

Joseph W. Craft: EBITDA in that 'twenty 'twenty four quarter was 235 million, which compares to $270 9 million in the year ago period. These decreases reflect lower revenue and higher total operating costs sequentially. Net income was up 36, 9% and EBITDA was up 26, 8%.

Joseph W. Craft: Now turning to our balance sheet and uses of cash alliance generated $209 7 million of cash flows from operating activities in the 'twenty 'twenty four quarter.

Cary P. Marshall: During the quarter, we invested $123.8 million in capital expenditures, as our 2024 capital program is well underway, and we paid our quarterly distribution of $0.70 per year. Subsequent to quarter end, we announced a quarterly distribution for the current quarter of $0.70 per unit, payable to unit holders of record as of May 8, 2024. As we have discussed previously, the Board considers the appropriate distribution levels on a quarter-by-quarter basis after considering a wide range of factors, including the implied current yield on our units, distribution coverage, capital needs, investment opportunities, and debt service.

Joseph W. Craft: During the quarter, we invested $123 8 million in capital expenditures as our 2024 capital program is well underway and we paid a quarterly distribution of <unk> 70 cents per unit subs.

Joseph W. Craft: Subsequent to quarter end, we announced a quarterly distribution for the current quarter of 70 cents per unit payable to unit holders of record as of May eight 2024.

Joseph W. Craft: As we have discussed previously the board considers the appropriate distribution levels on a quarter by quarter basis. After considering a wide range of factors, including the implied current yield on our units distribution coverage capital needs investment opportunities and debt service costs.

Joseph W. Craft: We were pleased to report continued support by our senior lender group as we successfully increased our accounts receivable securitization facility by 50% to $90 million and entered into a new $54 6 million four year amortizing term loan maturing February 2028 to replace prior equipment financing that.

Cary P. Marshall: We are pleased to report continued support by our senior lender group as we successfully increased our accounts receivable securitization facility by 50% to $90 million and entered into a new $54.6 million four-year amortizing term loan maturing February 2028 to replace prior equipment financing that matured in November 2023. At quarter end, our total and net leverage ratios were 0.49 and 0.34 times total debt to trailing 12 months adjusted EBITDA, respectively, and our liquidity increased to $551 million, which included approximately $134 million of cash on the balance.

Joseph W. Craft: [noise] matured in November 2023.

Joseph W. Craft: At quarter end, our total and net leverage ratios were 0.49, and 0.34 times total debt to trailing 12 months adjusted EBITDA and our liquidity increased to 551 million, which included approximately $134 million of cash on the balance sheet.

Joseph W. Craft: We expect to retire the $284 6 million outstanding on our senior notes throughout the balance of 'twenty 'twenty four using a combination of operating cash flows and attractive financing options. We believe are currently available to us and that are at various stages of execution today.

Cary P. Marshall: We expect to retire the $284.6 million outstanding on our senior notes throughout the balance of 2024 using a combination of operating cash flows and attractive financing options we believe are currently available to us and that are at various stages of execution today.

Joseph W. Craft: Now turning to our guidance detailed in this morning's release, we are reiterating our full year guidance for coal sales volumes coal sales price per ton sold.

Joseph W. Craft: Segment, adjusted EBITDA expense per ton sold royalties volumes and royalties unit expenses.

Joseph W. Craft: We did make slight updates to our committed and priced sales tends to reflect modest net contracting activity that occurred during the 'twenty 'twenty four quarter.

Cary P. Marshall: Now turning to our guidance detailed in this morning's release, we are reiterating our full-year guidance for co-sales volumes, co-sales price per ton sold, segment-adjusted EBITDA expense per ton sold, royalties volumes, and royalties unit expenses. We did make slight updates to our committed and priced sales tons to reflect modest net contracting activity that occurred during the 2024 quarter. As a reminder, Q1 is typically a seasonally light contracting quarter, and this year was no different.

Joseph W. Craft: As a reminder, Q1 is typically a seasonally light contracting quarter and this year was no different.

Joseph W. Craft: At the end of the 'twenty 'twenty four quarter, our committed tonnage for 2024 was $32 6 million tons or approximately 93% of our anticipated sales tons at the midpoint of our guidance range.

Joseph W. Craft: Of that total 20 point $28 1 million tons are currently committed to the domestic market, while $4 5 million tons are committed to the export markets. We continue to anticipate most of the sales activity for our unsold coal for 'twenty 'twenty four to occur in the back half of the year and be sold in the export markets.

Joseph W. Craft: Finally, as it relates to our oil and gas segment, our first quarter results signaled the strong start to the year.

Joseph W. Craft: Given that it is still early in the year, we are reiterating our guidance for oil volumes of one four to $1 5 million barrels natural gas at five six to 6 million M. C F and liquids 675 to 725000 barrels there could be some upside to these volumes if market conditions remain as they are.

Cary P. Marshall: At the end of the 2024 quarter, our committed tonnage for 2024 was 32.6 million tons, or approximately 93% of our anticipated sales tons at the midpoint of our guidance. Of that total, 28.1 million tons are currently committed to the domestic market, while 4.5 million tons are committed to the export market. We continue to anticipate most of the sales activity for our unsold coal for 2024 to occur in the back half of the year and be sold in export.

Joseph W. Craft: Today.

Joseph W. Craft: The remainder of our guidance ranges remain the same as previously discussed and with that I'll turn the call over to Joe for comments on the market and his outlook for ARLP Joe.

Joseph W. Craft: Thank you and good morning, everyone.

Joseph W. Craft: I want to begin my comments by thanking the entire alliance organization for their resilience continued hard work and dedication in delivering a solid and safe start to 'twenty 'twenty four.

Cary P. Marshall: Finally, as it relates to our oil and gas segment, our first quarter results signal a strong start to the year. Given that it is still early in the year, we are reiterating our guidance for oil volumes of 1.4 to 1.5 million barrels, natural gas of 5.6 to 6 million MCF, and liquids of 675 to 725,000 barrels. There could be some upside to these volumes if market conditions remain as they are today. The remainder of our guidance ranges remains the same as previously discussed. And with that, I'll turn the call over to Joe for comments on the market.

Joseph W. Craft: Carey did an excellent job summarizing our first quarter 'twenty 'twenty four results and updating our guidance for the full year.

Joseph W. Craft: Almost four full months into 'twenty 'twenty four we continue to expect that our coal sales book will be equally as strong as last year and be the anchor to deliver another solid revenue year.

We enter 2024 with over 90% of our coal sales volumes committed and priced at similar levels relative to 2023 and during the quarter, we made modest updates to that contracted order book.

Joseph W. Craft: While low natural gas prices are suppressing domestic coal demand, we continue to have confidence the export market demand will remain available to us this year supporting our sales guidance for the year.

Joseph W. Craft: We also expect our production to be more predictable this year due to our belief that we have moved beyond the several adverse geologic areas that we faced last year.

Joseph W. Craft: Thank you and good morning, everyone. I want to begin my comments by thanking the entire Alliance organization for their resilience, continued hard work, and dedication in delivering a solid and safe start to 2024. Cary did an excellent job summarizing our first quarter 2024 results and updating our guidance for the full year, almost four full months into 2024. We continue to expect that our co sales book will be equally as strong as last year and be the anchor to deliver another solid revenue year. We enter 2024 with over 90% of our coal sales volumes committed and priced at similar levels relative to 2023, and during the quarter, we made modest updates to that contracted order book.

Joseph W. Craft: As we think about the outlook for the domestic coal industry and the markets. We serve several key themes are emerging.

Joseph W. Craft: <unk> center growth driven by artificial intelligence and industrial load led by electric vehicles and battery manufacturing.

Joseph W. Craft: Are driving significant growth and anticipated electricity demand over the next several years.

Joseph W. Craft: This outlook underscores the critical need for reliable affordable baseload fuel for electric generation.

Joseph W. Craft: The past few months have shown no shortage of rising concerns about the nations grid.

Joseph W. Craft: And its ability to reliably serve rapidly increasing load expectations.

Speaker Change: Well I could talk for hours about those examples let me highlight three in particular.

Speaker Change: Burst according to the grid or the Queen grid initiatives grid strategies report.

Speaker Change: There are black power demand is over.

Speaker Change: According to 'twenty twenty-three Bert filings $630 billion of near term investment in large load has driven the five year outlook for a nationwide peak demand to 852 Gigawatts from just 835 gigawatts in the year ago report.

Joseph W. Craft: While low natural gas prices are suppressing domestic coal demand, we continue to have confidence the export market demand will remain available to us this year, supporting our sales guidance for the year. We also expect our production to be more predictable this year due to our belief that we have moved beyond the several adverse geologic areas that we faced last year. As we think about the outlook for the domestic coal industry and the markets we serve, several key themes are emerging.

Speaker Change: That's a doubling of the Fi your five year growth projections from two 6% to four 7% and just a 12 month window.

Speaker Change: This is attributable to investments in new manufacturing industrial loads and datacenter facilities. All the types of customers that not just expect but rather require highly reliable affordable electricity supply 24 seven.

This unexpected new demand is set to ramp up even as the nation's power portfolio continues to be hamstrung.

Joseph W. Craft: Data Center Growth Driven by Artificial Intelligence and Industrial Load Led by Electric Vehicles and Battery Manufacturers are driving significant growth in anticipated electricity demand over the next several years. This outlook underscores the critical need for reliable, affordable baseload fuel for electric generation. The past few months have shown no shortage of rising concerns about the nation's grid and its ability to reliably serve rapidly increasing load expectations. While I could talk for hours about those examples, let me highlight three in particular.

Speaker Change: Politically motivated regulatory.

Speaker Change: Driven borst premature closures of coal fired and other fossil fuel generating sources.

Speaker Change: Beyond the obvious limitations of renewable resources.

Speaker Change: For round the clock availability, the actual investment and needed high voltage transmission to utilize those renewable sources has not come close to expectations.

Speaker Change: Making the ability to ship supply across regions.

Speaker Change: Less practical or in many cases, even impossible.

Joseph W. Craft: First, according to the Clean Grid Initiatives Grid Strategies report, the era of flat power demand is over. According to 2023 FERC filings, $630 billion of near-term investment in large load has driven the five-year outlook for nationwide peak demand to 852 gigawatts from just 835 gigawatts in the year-ago report. That's a doubling of the five-year growth projection from 2.6% to 4.7% in just a 12-month window.

Speaker Change: Another example is a recent op Ed in the Wall Street Journal published on March 28, entitled quote the coming electricity crisis, AI data centers and climate rules are pushing the power grid to what could become a breaking point and quote.

Speaker Change: And yet they cited Georgia Power's recent 17 fold increase in winter power demand forecast by 2031 from growth in Hebei and battery facilities.

Speaker Change: P J and doubled 15 year annual forecast for demand growth.

Joseph W. Craft: This is attributable to investments in new manufacturing, industrial loads, and data-centered facilities, all the types of customers that not just expect, but rather require highly reliable, affordable electricity supply 24-7. This unexpected new demand is set to ramp up even as the nation's power portfolio continues to be hamstrung by politically motivated regulatory, and forced premature closures of coal-fired and other fossil fuel generating sources. Beyond the Obvious Limitations of Renewable Resources for round-the-clock availability

Speaker Change: The new Micron chip plant in New York that is expected to draw more power than the states of New Hampshire, and Vermont combined among other examples.

Speaker Change: Finally, the Washington Post published an article on March 7th and.

Speaker Change: Entitled quote amid explosive demand America is running out of power and quote.

Speaker Change: In it they describe how vast swaths of U S alright.

Speaker Change: Alright risk of running short of power due to the growth of data centers and clean tech facilities.

Speaker Change: Georgia as industrial demand is at record levels, Arizona public service expects to be out of transmission capability before the end of the decade without major investment North Northern Virginia needs that the equivalent of several large nuclear reactors to serve all of the data centers being planned in Texas is.

Joseph W. Craft: The actual investment in needed high-voltage transmission to utilize those renewable sources has not come close to expectations, making the ability to shift supply across regions far less practical, or in many cases, even impossible. Another example is a recent op-ed in the Wall Street Journal published on March 28, entitled "The coming electricity crisis, AI data centers, and climate rules are pushing the power grid to what could become a breaking point." End quote.

We know, it's already face and frequent shortages and interruptions they said.

Notwithstanding these warnings and the practical realities of how the grid works.

Speaker Change: Biden administration through the United States Environmental Protection Agency last Thursday finalized several regulations designed to prematurely close existing coal plants that are essential to providing grid saving baseload power and heavily energy consuming states.

Joseph W. Craft: In it, they cited Georgia Power's recent 17-fold increase in winter power demand forecast by 2031 from growth and EV and battery facilities, PJM's doubled its 15-year annual forecast for demand growth, and a new micron chip plant in New York that is expected to draw more power than the states of New Hampshire and Vermont combined, among other examples. Finally, the Washington Post published an article on March 7 entitled, quote, "Amid Explosive Demand, America is Running Out of Power," end quote.

Speaker Change: In response to these rules of the National Mining Association called out E. P. A four one refusing to account for irrefutable evidence that electricity demand is soaring.

Speaker Change: Two disregarding validated warnings from grid experts related to coal plant closures and three ignoring the basic fact that there is no adequate replacement ready to replace the sorely needed dispatch of coal generating capacity colas, providing.

Joseph W. Craft: In it, they describe how the vast U.S. is at risk of running short of power due to the growth of data centers and clean tech facilities. Georgia's industrial demand is at record levels, and Arizona Public Service expects to be out of transmission capability before the end of the decade without major investment.

Speaker Change: America's Power also issued a statement last week in response to the Epa's, new clean power plan to point out that describe the rule as quote and extreme and unlawful overreach that Endangers America supply, a dependable and affordable electricity and quote.

Joseph W. Craft: Northern Virginia needs the equivalent of several large nuclear reactors to serve all of the data centers being planned, and Texas, as we know, is already facing frequent shortages and interruptions. Notwithstanding these warnings and the practical realities of how the grid works, the Biden administration through the United States Environmental Protection Agency.

Speaker Change: They followed that same quote the new clean power plan is the same kind of overreach that caused the U S. Supreme Court to reject Epa's first clean power plan in 2022 and quote.

Speaker Change: At the end of the day. It is our view that physics will always Trump bad policy.

Speaker Change: We believe is impossible to meet.

Joseph W. Craft: Last Thursday, the EPA finalized several regulations designed to prematurely close existing coal plants that are essential to providing grid-saving baseload power in heavily energy-consuming states. In response to these rules, the National Mining Association called out EPA for one, refusing to account for irrefutable evidence that electricity demand is soaring.

Speaker Change: For example, the Edison Electric Institute, a trade association, representing the interest of all U S investor owned electric companies.

Speaker Change: Responded to the E. P. A package of final rules for power plants by stating quote we are disappointed that the agency did not address the concerns we raised about carbon capture and storage C.

Speaker Change: C. C. S is not yet ready for full scale economy wide deployment, nor is there sufficient time to permit finance and build the Ccs infrastructure needed for compliance by 2032 and quote.

Joseph W. Craft: Disregarding validated warnings from grid experts related to coal plant closures. And three, ignoring the basic fact that there is no adequate replacement ready to replace the sorely needed dispatchable generating capacity COAS provided. America's Power also issued a statement last week in response to the EPA's new Clean Power Plan 2.0 that described the rule as, quote, an extreme and unlawful overreach that endangers America's supply of dependable and affordable electricity. They followed by saying, quote, the new clean power plan is the same kind of overreach that caused the US Supreme Court to reject EPA's first clean power plan in 2022. At the end of the day, it is our view that physics will always trump bad policy that we believe is impossible to meet.

Speaker Change: The Wall Street Journal editorial Board also weighed in our writing quote sex.

Speaker Change: Section 111 of the cleaner Act says the EPA can regulate pollutants from stationary sources through the quote burst system of emission reduction and quote that is quote adequately demonstrated end quote.

Speaker Change: Carbon capture is neither the best nor adequately demonstrated as of last year only one commercial scale coal plant in the world use carbon catcher capture and no gas fire plants did end quote.

Speaker Change: They went on to say by quote by the way EPA plans to unveil soon another rule to reduce C. O two emissions from existing gas fired plants. So some of them. They also have to shut down meantime comma.

Joseph W. Craft: For example, the Edison Electric Institute, a trade association representing the interests of all U.S. investor-owned electric companies, responded to the EPA package of final rules for power plants by stating, quote, "We are disappointed that the agency did not address the concerns we raised about carbon capture and storage." CCS is not yet ready for full-scale, economy-wide deployment, nor is there sufficient time to permit, finance, and build the CCS infrastructure needed for compliance by 2032.

Speaker Change: China.

Speaker Change: As a.

Speaker Change: Added about 200 Gigawatts of coal powered over the last five years.

As much as the entire U S coal fleet.

Speaker Change: Biden fossil fuel onslaught will have no effect on global temperatures and quote.

Speaker Change: [laughter] government directives designed to support greater dependence on renewables cannot change the fundamental realities of how electricity is generated.

Speaker Change: And transmit it as we look at the expected supply and demand.

Speaker Change: Our customers, whose job it is to keep the lights on and reliably and affordably notice that.

Joseph W. Craft: The Wall Street Journal editorial board also weighed in by writing, quote, Section 111 of the Clean Air Act says the EPA can regulate pollutants from stationary sources through the, quote, best system of emission reduction, end quote, that is, quote, adequately demonstrated. Carbon capture is neither the best nor adequately demonstrated.

Speaker Change: That is why we believe the U S will continue to see delays in extensions of the premature closure a critical co plants and why we are committed to serving these markets for many years to come.

Over the past few quarters utilities have extended the planned operating life of approximately 10 gigawatts of coal generating capacity as a result of increasing electricity demand and delays in the construction of replacement generation and we see room for that number to increase.

Joseph W. Craft: As of last year, only one commercial-scale coal plant in the world used carbon capture, and no gas-fired plants did, end quote. They went on to say by quote, by the way, EPA plans to unveil soon another rule to reduce CO2 emissions from existing gas fired plants. So some of them may also have to shut down. Meanwhile, karma. China has added about 200 gigawatts of coal power over the last five years, about as much as the entire U.S. coal plant. The Biden fossil fuel onslaught will have no effect on global temperatures.

Now turning to strategic updates related to our business. This.

Speaker Change: This year in our core segment, we expect to complete major infrastructure projects at tunnel Ridge, Hamilton Warrior and Riverview complex.

Speaker Change: These already well capitalized mines will benefit from these payout projects, making them more productive improving their cost structure and extending their over all long mine lives.

Speaker Change: As a result, we expect to maintain our position as the most reliable low cost producer in our operating regions for many years to come.

Joseph W. Craft: Government directives designed to support greater dependence on renewables cannot change the fundamental realities of how electricity is generated and transmitted as we look at expected supply and demand. Our customers, whose job it is to keep the lights on reliably and affordably, know this. That is why we believe the U.S. will continue to see delays and extensions in the premature closure of critical coal plants and why we are committed to serving these markets for many years to come.

Turning to our royalty segment, we remain committed to growing our oil and gas royalties business, which delivered record volumes in 'twenty two 'twenty three and again in the first quarter of this year.

Speaker Change: We like the cash flow potential of this segment offers via hedge free exposure to commodity prices and organic growth.

Speaker Change: We are looking for investment opportunities that meet our current underwriting standards as we seek to grow this segment and a tight market.

Speaker Change: As such we will remain highly disciplined as additional mineral acquisition opportunities emerge.

Joseph W. Craft: Over the past few quarters, utilities have extended the planned operating life of approximately 10 gigawatts of cold generating capacity as a result of increasing electricity demand and delays in the construction of replacement generation, and we see room for that number to increase. Now turning to strategic updates related to our business, this year, in our COLE segment, we expect to complete major infrastructure projects at Tunnel Ridge, Hamilton, Warrior, and our Riverview complex.

Speaker Change: Outside of our KOL core coal operations in oil and gas royalties business, we remain active in pursuing other opportunities that align with our core competencies.

Speaker Change: Our relationships and experience established over soon to be 25 years as a public company position us to add significant strategic value.

Speaker Change: Cross many segments of the energy spectrum.

Speaker Change: I've seen a number of these initial investments, which should be thought of as potential platforms for future lines of business with long term growth and cash flow generation potential.

Joseph W. Craft: These already well-capitalized mines will benefit from these payout projects, making them more productive, improving their cost structure, and extending their overall mine life. As a result, we expect to maintain our position as the most reliable, low-cost producer in our operating regions for many years to come.

Speaker Change: In closing our first quarter results were in line with our expectations and set the tone for what we believe will be another strong year.

Speaker Change: Our partnership remains a generator of strong cash flows that positions us to grow unitholder value.

Joseph W. Craft: Turning to our royalty segment, we remain committed to growing our oil and gas royalties business, which delivered record volumes in 2023 and again in the first quarter of this year. We like the cash flow potential the segment offers hedge-free exposure to commodity prices and organic growth. We are looking for investment opportunities that meet our current underwriting standards as we seek to grow this segment in a tight market. As such, we will remain highly disciplined as additional mineral acquisition opportunities emerge outside of our core coal operations and oil and gas royalties business.

I am encouraged by the opportunities in front of us and look forward to delivering what should be another successful year in 2024.

Speaker Change: That concludes our prepared comments and on that note I'll now ask the operator to open the call for questions operator.

Speaker Change: Thank you we will now be conducting a question and answer session.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: A confirmation tone will indicate your line is in the question queue.

Speaker Change: I start to if he would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Joseph W. Craft: We remain active in pursuing other opportunities that align with our core business. Our relationships and experience established over soon-to-be 25 years as a public company position us to add significant strategic value across many segments of the energy spectrum. You have seen a number of these initial investments, which should be thought of as potential platforms for future lines of business with long-term growth and cash flow generation potential. In closing, our first quarter results were in line with our expectations and set the tone for what we believe will be another strong year.

Speaker Change: Okay.

Speaker Change: Thank you. Our first question comes from the line of Nathan Martin with the Benchmark Company. Please proceed with your question.

Nathan Pierson Martin: Thanks, operator, good morning, Joe Carrie Congrats on the strong start to the year.

Nathan Pierson Martin: Thank you Nate.

Nathan Pierson Martin: Wanted to lead off with a market related question for 'twenty for you guys only added about 100000, plus it looks like it can carry I know you mentioned, how the first quarter is usually low from a seasonality perspective, but there was a bit of a shift downward in the basket commitments about exports increased assuming some of that has to do with the Uh huh.

Joseph W. Craft: Our partnership remains a generator of strong cash flows that positions us to grow unit holder value. I am encouraged by the opportunities in front of us and look forward to delivering what should be another successful year in 2024. That concludes our prepared comments, and I'll now ask the operator to open the call for questions. Thank you.

Domestic stockpiles, where maybe customers electing to take minimums.

Nathan Pierson Martin: Great to get your thoughts you know, what's driving that shift you know how our conversations with our customers going would you expect there to be any further pressure on domestic commitments I'm just given the mild winter low Nat gas prices stockpiles hooked up before you talked about thanks.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Yeah, I think that are specific to that one minor change and it did result in some negotiation to extend some times.

Speaker Change: Andy out years as to where the market is.

Speaker Change: You know it continues to be pressured by low natural gas prices, we do see natural gas production.

Speaker Change: Being curtailed a little bit to try to bring that market back into more of a balance we're seeing price of natural gas made me up a little bit.

Operator: One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Nathan Martin with the Benchmark Company. Please proceed with your question.

Speaker Change: As we speak and we think that it will finish strong.

Speaker Change: And towards the end of the year.

Speaker Change: Similar to what the current script is projecting.

Nathan Pierson Martin: Thanks, operator. Good morning, Joe Cary. Congratulations on the strong start to the year. Thank you.

Speaker Change: Suggesting so.

Speaker Change: A lot will depend on the answer to your question will depend a lot on what the weather is this summer because that will have an impact obviously, but based on what we believe is the case today.

Nathan Pierson Martin: I wanted to lead off with a market-related question. For 24, you guys only added about 100,000 tons, it looks like, and Cary, I know you mentioned how the first quarter is usually low from a seasonality perspective, but there was a bit of a shift downward in domestic commitments, and exports increased. I mean, some of that has to do with the high domestic stockpiles and maybe customers electing to take minimums. But it would be great to get your thoughts on what's driving that shift, how are conversations with customers going, would you expect there to be any further pressure on domestic commitments, just given the mild winter, low gas prices, and the stocks that we've already talked about?

Speaker Change: You know, we we do believe that those are times that we have contracted will be delivered this year as we are guiding to as.

As we're looking beyond this year, we are seeing several solicitations, we've got four different solicitations that we are currently bidding.

Speaker Change: Or in negotiations for all of them are multi year expect or bidding or rfps for multi year contracts.

Speaker Change: So we feel that.

Speaker Change: Now that we're in a great position to complete this year is where were projecting the export markets as I said in my opening comments, we believe are open to us.

Speaker Change: And we feel confident that over the next five to six years, we'll be able to maintain our volumes are at current levels.

Joseph W. Craft: Yeah, I think that specific to that one minor change did result in some negotiation to extend some time and the out years as to where the market is. You know, it continues to be pressured by low natural gas prices. We do see natural gas production being curtailed a little bit to try to bring that market back into more of a balance. We're seeing the price of natural gas moving up a little bit as we speak.

Speaker Change: Yeah.

Speaker Change: Appreciate those comments, Joe and then maybe kind of along those same lines.

Speaker Change: Five you did add a little bit more of a 700000 tons looks like.

Speaker Change: First any of that roll over tonnage maybe you just alluded to from 24, and maybe could you give us any commentary on what prices look like on those tons, whether it's domestic or export just so we can kind of compare to what we're seeing now out there in the marketplace on reports that we view thanks.

Speaker Change: Yeah, so the pricing of the contracts that we did enter into in the quarter were at levels that were quite.

Joseph W. Craft: And we think that it will finish strong, going towards the end of the year, similar to what the current script is projecting and suggesting. So a lot will depend, the answer to your question will depend a lot on what the weather is like this summer, because that will have an impact, obviously, but based on what we believe is the case today. You know, we do believe that those times that we have contracted will be delivered this year, as we are guiding to, as we're looking beyond this year, we are seeing several solicitations. We've got four different solicitations that we are currently bidding on or in negotiations for, all of them are multi-year multi-bid or RFPs for multi-year contracts.

Speaker Change: Quite a bit higher than what you would see is that.

Speaker Change: The current spot market prices. So we do believe as we move forward that our customers are recognizing.

Speaker Change: Is that a natural gas demand is going to grow because of LNG.

Speaker Change: And pricing will be.

Speaker Change: Be more constructive in the out years, you know compared to what we're experiencing currently.

Speaker Change: I think that.

Speaker Change: Customers also recognize that we have.

Speaker Change: Experienced inflation like most people in the world These days and so they.

Speaker Change: Our so far and our conversations have been understanding.

Speaker Change: That we need to make adequate margins do continue to invest in the industry to be there for the long term.

Joseph W. Craft: So we feel that, uh, we're in a great position to complete this year as we're projecting. The export markets, as I said in my opening comments, are open to us, and we feel confident that over the next five, six years, we'll be able to maintain our volumes at current levels.

Speaker Change: To be there for them as they want to keep their plants open for the long term as well so.

Speaker Change: We're encouraged so far based on our experience but.

We've got four others out there are four other solicitations out there that we're talking to so.

Speaker Change: Stay tuned.

Speaker Change: Okay got it and then maybe just a final one.

Joseph W. Craft: I appreciate those comments, Joe. And then maybe kind of along the same lines, you know, 25, you did add a little bit more, maybe 700,000 tons, it looks like. First, any of that, some rollover tonnage, maybe you just alluded to from 24. And then maybe you could give us any commentary on what prices look like on those tons, whether it's domestic or export, just so we can kind of compare to what we're seeing, you know, out there in the marketplace on reports that we review.

Speaker Change: Are you guys is they're all P seen any impacts from the Baltimore Port outage, we're currently experiencing.

Speaker Change: We are not are we in.

Speaker Change: Very little nothing just like one vessel that we had for the year. So most of our shipments do not go through Baltimore. So we have not seen any seen any direct.

Speaker Change: The impact to us and we really haven't seen any indirect impact.

Speaker Change: At this moment in time, so it's been a non event for us.

Speaker Change: Okay got it yeah, I guess I was I should've been more specific just wondering if you guys were able to pick up any business because of the outage, but it sounds like no material impact okay.

Joseph W. Craft: Yeah, so the pricing of the contracts that we did enter into in the quarter was at levels that were quite a bit higher than what you would see in the current spot market prices. So we do believe as we move forward that our customers are recognizing that natural gas demand is going to grow because of LNG, and prices will be more constructive in the coming years, you know, compared to what we're experiencing currently.

Speaker Change: Very helpful. I'll leave it there Joe I appreciate your time.

Speaker Change: Our next question comes from the line of Mark Reichman with Noble capital markets. Please proceed with your question.

Mark La France Reichman: Thank you and good morning.

Mark La France Reichman: So I'm wondering where I says for Illinois prices for Illinois Basin, and Appalachia volumes were above the high end of the guidance ranges are and so I was just kind of curious if that was just due more to more export volumes.

Mark La France Reichman: And if we are expecting the balance of the volume.

Joseph W. Craft: I think that our customers also recognize that we have experienced inflation like most people in the world these days, and so they have so far in our conversations understood that we need to make adequate margins to continue to invest in the industry to be there for the long term, to be there for them as they want to keep their plants open for the long term as well. We're encouraged so far, based on our experience, but we've got four other solicitations out there that we're talking to.

Mark La France Reichman: For 2024 to be from the export in the export market does that imply that maybe within your guidance range for 2024, you might be.

Mark La France Reichman: Closer to the high end versus the low end are just kind of how you're thinking about pricing for the balance of the year.

Mark La France Reichman: I think the pricing for the quarter reflects our contract book.

Nathan Pierson Martin: Okay, got it. Thanks. Maybe just the final one. Are you guys, is ARLP seeing any impacts from the Baltimore port outage that we're currently experiencing?

Mark La France Reichman: So both for the first quarter and second quarter.

Most of our sales are based off of our contract.

Mark La France Reichman: Contracts, we had going into the year.

Joseph W. Craft: We are not. We have very little with nothing, just like one vessel that we had for the year. So most of our shipments do not go through Baltimore. So we have not seen any direct impact on us, and we really haven't seen any indirect impact at this moment in time. So it's been a non-event for us. Okay.

So as we go to the back end of the year, we would expect that the XP.

Mark La France Reichman: Export pricing that we're looking at will be at lower levels.

Mark La France Reichman: That will trend is down to the upper end of the ranges that we've given in our guidance if we're successful achieving.

Mark La France Reichman: Those prices in the 110 to 120 API two range.

Nathan Pierson Martin: Okay, got it. Yeah, I guess I should have been more specific. Just wondering if you guys were able to pick up any business because of the outage, but it sounds like there was no material impact. Okay, very helpful. I'll leave it there, Joe. Appreciate your time.

Mark La France Reichman: So that's sort of what we targeted.

Mark La France Reichman: That we believe is reasonable for us to expect in the back half of the year.

Mark La France Reichman: For the export shipments here, we're going to need to finish to complete her book for 'twenty 'twenty four.

Mark La France Reichman: Uh huh.

Operator: Our next question comes from the line of Mark Reichman with Noble Capital Markets. Please proceed with your question.

Mark La France Reichman: I'm sure there's some additional light on the bitcoin.

Mark La France Reichman: Mining activities, including the rationale and and you know any potential risks.

Mark La France Reichman: Thank you and good morning. So prices for Illinois prices for Illinois Basin and Appalachian volumes were above the high end of the guidance ranges. And so I was just kind of curious if that was just due more to more export volumes and if we are expecting the balance of the volume for 2024 to be from the export market. Does that imply that maybe within your guidance range for 2024, you might be closer to the high end versus the low end, just kind of how you're thinking about pricing for the balance of the year?

Speaker Change: Yeah, I think you know mark just as it relates to the bitcoin mining activity and you know as I mentioned in my prepared remark. It was just an opportunity that we saw are due to the fact that we've got our excess power at our mining operations and back in 2020, we were just looking for way.

Speaker Change: To.

Speaker Change: Potentially be able to monetize them that particular asset that we had and so at that particular point in time, we we chose to enter into the bitcoin mining.

Joseph W. Craft: I think the pricing for the quarter reflects our contract book, so both for the first quarter and second quarter. Most of our sales are based on contracts we had going into the year. So as we go to the back end of the year, we would expect that the export pricing that we're looking at will be at lower levels, and that will trend us down to the upper end of the ranges that we've given in our guidance.

And area and purchase of miners and had been been mining there are ever since.

Speaker Change: Since late 2020 ended 2021.

Speaker Change: At the end of the quarter, we ended up with about 425 bitcoin at quarter end in terms of what we own we're not actually out there buying bitcoin or anything of that nature, where we're mining the bitcoin associated with these miners that we have.

Joseph W. Craft: If we're successful in achieving prices in the 110 to 120 API 2 range. So that's sort of what we've targeted, that we believe is reasonable for us to expect in the back half of the year for the export shipments that we're going to need to finish, you know, to complete our book for 2024.

Speaker Change: And we are selling you know what we need to cover our expenses, so or exposures limited.

Speaker Change: And we do have some.

Speaker Change: Extra capacity that were renting out to two other a bit.

Joseph W. Craft: And then could you just shed some additional light on the Bitcoin mining activities, including the rationale and any potential risks?

Speaker Change: Bitcoin miners and with that you know.

Speaker Change: Within the.

Speaker Change: Data centers, we've effectively built for this big 119 to take advantage of the low energy costs, we have.

Joseph W. Craft: We were able to monetize that particular asset that we had, and so at that particular point in time, we chose to enter the Bitcoin mining area and purchase some miners, and we have been mining there ever since. Since, you know, late 2020 into 2021, if you look at the end of the quarter, we ended up with about 425 Bitcoin at quarter end, in terms of what we own. We're not actually out there buying Bitcoin or anything of that nature. We're mining the Bitcoin associated with these miners that we have.

Speaker Change: Oh I see okay, well I appreciate that just one final question you know you've really done a great job growing their oil and gas business.

Speaker Change: I was just wondering kind of how you're thinking about that going forward I mean, you're right now your weighted more to oil do you see that you know that continuing or or do you.

Speaker Change: I guess, it's really driven by what's out there in terms of the acquisition opportunities, but do you will you kind of continue to maintain a preference for oil exposure or is this anticipated growth in LNG changed your thinking in any way.

Joseph W. Craft: And we are selling what we need to cover our expenses, so our exposure is limited, and we do have some extra capacity that we're renting out to other Bitcoin miners within the data center that we've effectively built for this Bitcoin mining to take advantage of the low energy costs we have.

Speaker Change: With respect to natural gas.

Speaker Change: Our our focus.

Speaker Change: Today and really for the last two years has been in the Permian Basin.

Speaker Change: So we have them more focused on the liquids side of the.

Speaker Change: Oh oil and gas space I think we will continue to do that.

Speaker Change: As we do.

Speaker Change: Do move into the Delaware It does have a little bit more gas exposure than what we have in the Midland, but we're not changing our strategy as far as.

Mark La France Reichman: Oh, I see. Okay. Well, I appreciate that. Just one final question.

Joseph W. Craft: You know, you've really done a great job growing the oil and gas business, and I was just wondering kind of how you're thinking about that going forward. I mean, you're right now weighted more towards oil. Do you see that, you know, that continuing? Or do you, I guess it's really driven by what's out there in terms of the acquisition opportunities. But do you, will you kind of continue to maintain a preference for oil exposure? Or is this anticipated growth in LNG changing your thinking in any way with respect to natural gas?

Looking for.

Speaker Change: More the liquid side of the.

Speaker Change: The oil and gas sector, and our royalty business at this moment in time.

Speaker Change: Okay, great well. Thank you very much that's very helpful. I appreciate it.

Mark.

Speaker Change: Our next question comes from the line of Dave storms with Stonegate capital. Please proceed with your question.

David Storms: Good morning.

David Storms: Good morning Gabe.

David Storms: Good morning, just hoping we could start I know you mentioned that you're expecting two longwall moves in the second quarter do you have a sense of how many longwall moves we should expect in the second half of the year and any logistical challenges around the additional infrastructure projects that you mentioned.

Joseph W. Craft: Our focus today and really for the last two years has been in the Permian Basin. So we have them more focused on the liquids side of that, on gas space. And I think we'll continue to do that, you know, as we do move into the Delaware. It does have a little bit more gas exposure than what we have in the Midland. But we're not changing our strategy as far as looking for more of the liquid side of the oil and gas sector in our royalty business at this moment in time. Okay, great.

Speaker Change: Yeah as it relates to the longwall moves they believe we actually have three longwall moves are in the upcoming quarter. So one at each of our longwall operations, and which would be one in the Illinois basin too and in Northern Appalachia are if you look in the back half of the year in the third quarter were.

Speaker Change: Anticipating a two longwall moves are in the third quarter and one longwall move in the fourth quarter.

Mark La France Reichman: Okay, great. Well, thank you very much. That's very helpful. I appreciate it. Thank you, Martin.

Speaker Change: Understood. That's very helpful. And then you also had a little bit of outside of coal purchases in the quarter. It looks like it's coming down sequentially.

Operator: Our next question comes from the line of Dave Storms with Stonegate Capital. Please proceed with your question.

David Storms: Morning, Dave. Morning. I know you mentioned that you're expecting two long wall moves in the second quarter. Do you have a sense of how many long wall moves we should expect in the second half of the year and any logistical challenges around the additional infrastructure projects that you mentioned? Yeah.

Speaker Change: How should we be thinking about outside coal purchases.

Speaker Change: Maybe in the next quarter and then throughout the balance of the year, if you have that foresight.

Speaker Change: Yeah, Yeah, I think I think when you look at our coal purchases for the year I think they came in or for the quarter. It was right at about $9 million or so we do anticipate those to continue on through the through the balance of the year not to not to that level, but I think you know as we look on a going forward base.

Joseph W. Craft: Yeah, as it relates to the longwall moves, Dave, we actually have three longwall moves in the upcoming quarter, so one at each of our longwall operations, which would be one in the Illinois Basin and two in Northern Appalachia. If you look at the back half of the year, in the third quarter, we're anticipating two longwall moves in the third quarter and one longwall move in the fourth quarter.

Speaker Change: There's more in the neighborhood of $5 million a quarter throughout the balance of the year.

David Storms: I understand. That's very helpful.

Speaker Change: Understood very helpful. And then just one more for me are you and apologies. If I missed this are you able to quantify how much of your 'twenty 'twenty four order book is contracted and how much is exposed to the spot market.

David Storms: And then you also had a little bit of outside coal purchases in the quarter. It looks like it's coming down sequentially. How should we be thinking about outside coal purchases, maybe in the next quarter and then throughout the balance of the year, if you have that foresight?

Speaker Change: Yeah.

Joseph W. Craft: Yeah, I think when you look at coal purchases for the year, I think they came in, you know, or for the quarter, it was right about, you know, 9 million or so. We do anticipate those to continue on through the balance of the year, not to that level. But I think, you know, as we look on a going forward basis, more in the neighborhood of 5 million a quarter throughout the balance of the year.

Speaker Change: So when you look at our 2024 order book, we've got $32 6 million tons committed at this particular point in time, our guidance ranges are anywhere from 34 to 35.8 million tons of overall sales. So if you take the midpoint of that guidance range, it's about 93% committed.

Understood very helpful and thank you for taking my questions.

David Storms: And then just one more for me. Are you, and apologies if I miss this, are you able to quantify, you know, how much of your 2024 order book is contracted and how much is exposed to the spot market?

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of David Maris with singular research. Please proceed with your question.

Speaker Change: Yeah.

David Storms: Hi, guys. Good morning, Thanks for taking my questions and just to echo previous comments congrats on the quarter was very good.

David Storms: Thank you David.

David Storms: I'm just wanted to follow up on a.

Joseph W. Craft: So when you look at our 2024 order book, we've got 32.6 million tons committed at this particular point in time. Our guidance ranges are anywhere from 34 to 35.8 million tons of overall sales. So if you take the midpoint of that guidance range, it's about 93% understood.

David Storms: Previous question with regard to outside volumes or outside purchases yeah. It looked like your inventory ticked up a bit sequentially and good produce a bit more of them are was sold in the quarter.

David Storms: Could you just give us a little bit of a little bit better understanding of what the new gifts for the incremental outside purchases.

David Storms: understood. Very helpful, and thank you for taking my questions.

David Storms: Just because the positioning of the of the coal.

David Storms: Yeah really the the outside purchases.

Operator: Our next question comes from David Marsh with Singular Research. Please proceed with your question.

Really for the most part for this year as is related to our metallurgical operation and it's just a nice blend coal that we put in associated with our met tons and that that allows us to to to benefit our metallurgical sales throughout this year.

David Marsh: Hi guys. Good morning. Thanks for taking the questions and, just to echo some previous comments, congratulations on the quarter. That's very good. Thank you, David.

David Storms: Okay.

David Marsh: I just wanted to follow up on the previous question there with regard to outside volumes or outside purchases. You know, it looked like your inventory ticked up a bit sequentially, and you did produce a bit more than was sold in the quarter. Could you just give us a little bit of a better understanding of what the need is for the incremental outside purchases?

David Storms: And then just a follow up on your comments about about the notes Oh I'm too to take those out throughout.

David Storms: Throughout the course of the talk a little bit more of a bunch and hum.

Speaker Change: So financing alternatives around those could you just talk about you know some some of those alternatives and you know what your what your timing you know how you guys feel about timing in terms of.

David Marsh: just because of the positioning of the call. Yeah, really.

David Storms: Taking those notes out.

Speaker Change: Sure I'm glad to do that I think yeah as I mentioned in my prepared remarks, you know we are looking at are the options to to refinance the senior notes. We yeah that is that is what we would we'd like to do there are some the markets are open at this particular point in.

Cary P. Marshall: Yeah, really, the outside purchases are really, for the most part, related to our metallurgical operation, and it's just a nice blend coal that we put in associated with our MET tons that allows us to benefit from our metallurgical sales throughout this year.

David Marsh: And then just to follow up on your comments, Cary, about the notes and your plan to take those out throughout the course of the year, can you talk a little bit more? You mentioned some potential financing alternatives around those. Could you just talk about some of those alternatives and, you know, what your timing, you know, how you guys feel about timing in terms of taking those notes out? Sure.

Speaker Change: Time, we do have a couple of different avenues that we could go down in.

Speaker Change: In terms of refinancing those senior notes.

Speaker Change: But you know I don't want to get into too much specifics as it relates to it at this point in time, but there's a couple of different avenues that that were going down at this particular point in time I yeah. As we take a look at that we are looking to get that done here.

Cary P. Marshall: Sure, and I'm glad to do that. I think, as I mentioned in my prepared remarks, you know, we are looking at the options to refinance those senior notes. We, you know, that is what we would like to do. There are some, the markets are open at this particular point in time.

Speaker Change: Here over the next six months or so you know so hopefully we will we'll be in a position to get that all completely taking care of them throughout the next six months or so.

Cary P. Marshall: We do have a couple of different avenues that we could go down in terms of refinancing those senior notes. But, you know, I don't want to get into too many specifics as it relates to them at this point in time, but there are a couple of different avenues that we could go down at this particular point in time. I, you know, as we take a look at that, we are looking to get that done here in the next six months or so. You know, so hopefully we'll be in a position to get that all completely taken care of in the next six months or so.

Speaker Change: Well, well well well booked.

Speaker Change: We'll call them a lot of promotional tools staying maybe that's helpful. Paul.

Some of them as well.

Speaker Change: Well you guys are not well call it inventory.

Speaker Change: England taught me that stuff.

Speaker Change: We're selling.

Speaker Change: Oh come on guys who's so inventory.

Speaker Change: Yes.

Speaker Change: So there's a little more insight there that was Uh huh.

Interestingly promotion, yeah and to be clear on that in terms of lower.

David Marsh: Well, this Bitcoin mining information is pretty interesting; maybe that helps to repay some of those lists. It sounds like you guys are not really planning to inventory that stuff. It sounds like you're going to kind of produce or inventory a little bit, I guess. For a little more insight there, that's very interesting new information.

Speaker Change: What we're doing right now where we're mining the bitcoin and we're selling a generally on a monthly basis too.

Speaker Change: Cover our operating costs are so so we are actually accumulating bitcoin you know over over time. So we do hold 425, bitcoin right now and at quarter end as I mentioned that was that was valued at about a $30 million.

Cary P. Marshall: And to be clear on that, in terms of what we're doing right now, we're mining Bitcoin, and we're selling it generally on a monthly basis to cover our operating costs. So, we are actually accumulating Bitcoin, you know, over time. So we do hold 425 Bitcoin right now. And at quarter end, as I mentioned, that was valued at about $30 million. We'll continue to do that. Our costs are lower than where the Bitcoin price is today, so we would anticipate continuing to accumulate coins on a monthly basis.

Speaker Change: So we'll continue to do that you know are our costs are are lower than where the bitcoin pricing is today. So we would anticipate continuing to accumulate points.

Speaker Change:

Speaker Change: On a monthly basis.

Speaker Change: Could you talk about your production room.

Production costs relative to that operation.

Speaker Change: Yeah, we just we just underwent a the having event here over this this past month, but if you are do you kind of take a look at the first quarter. If you just kind of look at what our average operating expense was and just kind of look at it on a per claim basis. It was a little bit over 24000 per coin are in there.

Cary P. Marshall: Could you talk about your production rates and your production costs relative to that operation?

Cary P. Marshall: Yeah we just we just underwent the halving event here over this this past month but if you if you kind of take a look at the the first quarter if you just kind of look at what our average operating expense was and just kind of look at it on a per coin basis it was a little bit over 24,000 per coin in the first quarter was our was our average cost you know as we mine these mine these coins so you know when we when we looked at the the first quarter overall we mined 69 Bitcoin in the first quarter we retained 51 of those Bitcoin in the first quarter so we sold about 25% now we've got the halving event so we'll have to see how the halving event turns out as to you know the amount of Bitcoin that we mine here quarterly on a going forward basis there's a number of factors that go into that but that that kind of gives you a sense as to where we were at least in the in the first quarter in terms of what our costs were and how our mining was at that particular point. Yep.

Speaker Change: First quarter was our was our average cost you know as we mined. These mine these coins and so you know when we when we looked at the first quarter overall, we mined 69 bitcoin in the first quarter.

Speaker Change: We retained a 51 of those bitcoin in the first quarter. So we sold about 25% now we've got to having event. So we'll have to see how the having event.

Speaker Change: Turns out as to you know the amount of bitcoin that we mine here quarterly on a going forward basis Theres a number of factors that go into that but that that kind of gives you a sense as to where we were.

Speaker Change: At least in the in the first quarter in terms of what our costs were and how our mining was at that particular point in time.

Speaker Change: Yep, absolutely that's extremely helpful. Thank.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

David Marsh: Yep, absolutely. It's extremely helpful. Thank you very much. I appreciate it.

Speaker Change: As a reminder, if you would like to ask a question press star one on your telephone keypad.

Speaker Change: Our next question comes from the line of <unk> Siegel with single assets. Please proceed with your question.

Operator: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of Eve Siegel with Siegel Assets. Please proceed with your question.

Yeah. Thank you good morning.

David Storms: Hey, Kary, I'm I'm I'm, sorry, I'm, just not that the.

Michael Siegel: Not that up to date, what is having is that mean.

Eve Siegel: Yeah, thank you. Good morning. Hey, Cary, I'm sorry. I'm just not that. Not that up-to-date.

Speaker Change: Ah well.

Speaker Change: Yeah.

Speaker Change: So when you get into the Bitcoin protocol and.

Eve Siegel: What does a halving event mean?

Speaker Change: Essentially there's a finite number of bitcoin it is.

Cary P. Marshall: When you get into the Bitcoin protocol, and essentially, there's a finite number of Bitcoin that is expected to exist over the period of time for Bitcoin from the beginning to the end. Basically, there's an absolute amount. And so at various points along the way, effectively, they have to, or essentially, reduce the number of Bitcoin that can be produced to try to be able to meter in the Bitcoin as it goes forward to approach the ending number, the finite number that they're actually trying to do.

Speaker Change: As expected did exist over the period of time of bitcoin from the beginning to the end basically there is an absolute amount.

Speaker Change: And so at various points, along the way effectively they have or essentially.

Speaker Change: <unk> reduced the number of bitcoin that can be produced to try to be able to.

Speaker Change: Peter in.

Speaker Change: The bitcoin as it goes forward approach the ending number the finite number that they're actually trying to do it.

Cary P. Marshall: So as a result, you're effectively increasing your cost almost doubled, and you're producing about half the Bitcoin that was otherwise produced in the previous two or three year period that goes between each of these hash events. It's just part of the normal protocol of the way the Bitcoin universe is set up. Okay, people participate in generally the hash event occurs about once every four years.

Speaker Change: So as a result.

Speaker Change: Youre effectively your cost almost double.

Speaker Change: And you are producing about half the bitcoin that was otherwise produced in the previous two or three year period that goes between each of these having events.

Speaker Change: That's just part of the normal protocol of the way the bitcoin.

Speaker Change: Universes set up Oh can cause people to participate.

Generally they're having event occurs about once every four years.

Eve Siegel: So I guess the other way to ask a question: how many bitcoins do you think you'll mine for the full year?

Speaker Change: Alright, so I guess the other way to ask the question how many bitcoins do you think you'll you'll you mind for the full year.

Cary P. Marshall: I think, well, of course, you know, the first quarter we had the benefit of the halving event. I think when we look at the full year in total, our projections would show, you know, somewhere between 175 to 190 or so Bitcoin for the year in total that we would mine. Now, we would monetize some of that to cover our operating expenses. So our net would probably be, I don't know, you know, maybe around 60% of that number or so, ultimately, at the end of the day.

Speaker Change: I think well of course, you know the the first quarter, we had the benefit of having event I think when we look at the full year. In total you know our projections would show you know somewhere between 175 to 190 or so a big calling for the year.

In total that we would mine now we would monetize some of that to cover our operating expenses. So our so our net would probably be I don't know you know eat it may be around 60% of that number. So ultimately at the end of the day.

Eve Siegel: So that becomes material. Kind of what it looks like right now.

Speaker Change:

Speaker Change: Yeah, so that becomes Mckinney.

Speaker Change: Or what it looks like right now.

Speaker Change: Yeah.

Joseph W. Craft: Alright, well, moving to something else, I guess. Joe, has your strategy evolved with the changing environment, you know, just your remarks earlier, you know, just, you know, it seems like a game changer in terms of electricity consumption going forward. And not only that, you know, it sounds like there's growing recognition that renewables will continue to grow, but they just can't, you know, solve the electricity needs. So has that informed you to maybe tweak the strategy at all?

Speaker Change: Alrighty well.

Speaker Change: Moving to <unk>.

Speaker Change: There's something else I guess.

Speaker Change: Joe how has your strategy.

Joe: Evolved with the.

Joe: You know the changing environment.

Joe: Just you.

Joe: Your remarks earlier.

Joe: You know just you know it seems like a game changer in terms of the electricity consumption.

Joe: I'm going forward.

Joe: So and not only that it.

Joe: It sounds like there's growing recognition that.

Joe: Renewables will continue to to grow but they just can't.

Joe: Solved the electricity needs so.

Joe: How has that informed you to maybe tweak the strategy at all.

Joseph W. Craft: No, I think that, in fact, I guess it's probably given us some more optimism that our coal operations will continue longer than we thought when we started looking at some of this diversification. So we believe that our demand is going to be extended longer than we thought at the time we entered into this type of strategy several years ago. Now, as far as some of the things we're looking at, because of the growth in data centers and some of the areas where they are, If you look at the various components of data centers and you look at the land aspect and where these data centers are located, we see that there could be some opportunities for us to participate in that value chain in some way.

Joe: And now I think that.

I guess, it's probably giving us more optimism that.

Joe: Then our coal operations will continue longer than.

Joe: We when we started.

Joe: Looking at some of this diversification.

Speaker Change: Yeah. So we believe it sort of demand is gonna be extended longer than what we thought at the time, we entered into the this type of strategy several years ago.

Speaker Change: Now as far as some of the things we're looking at because of the growth in the data centers and some of the areas of.

Speaker Change: If you look at.

Speaker Change: Various components of the data centers are and you look at.

Speaker Change: The land aspect and where these data centers are located and we see that there could be some opportunities for us.

Speaker Change: And participating in that value chain and some.

Speaker Change: In some way so we're exploring that so as we think about different things weaken.

Joseph W. Craft: So we're exploring that. So as we think about different things, we can invest in. We're very, very focused on only looking at those things where we have core competencies, and that we have either relationships and or skills that have been demonstrated by our past experience. And so, as I mentioned, What's going on in the data center world has definitely opened opportunities for us to consider beyond some of the things that we've already talked about previously, of trying to work in areas that we feel like we can invest in companies and then be suppliers to those companies and or utilize some of the technology and be able to either manufacture, sell, service, in growing our Matrix subsidiary and other things that may relate to the significant demand that's going on with the various technology advances that are occurring.

Speaker Change: Invest and we're very very focused on.

Speaker Change: Only looking at those things, where we have core competencies.

Speaker Change: And that we have either relationships and or skills that have been demonstrated by.

Speaker Change: Our past experience.

Speaker Change: And so as.

Speaker Change: As I mentioned.

Speaker Change: What's going on in the data Center World is definitely opened opportunities for us to consider beyond some of the things we've already talked about previously.

Speaker Change: I'm trying to who work in areas that we feel like we can invest in companies and then be suppliers to those companies and or utilize some of the technology M.

Speaker Change: And be able to eat.

Speaker Change: Either manufacturer.

Speaker Change: Sale service.

Speaker Change: In growing our matrix subsidiary.

And other things.

Speaker Change: It may relate to the.

Speaker Change: This significant demand that's going on.

Speaker Change: With the the various technology advantage advantage or just the answers that are occurring there.

Joseph W. Craft: Back to data centers as an example, just last week in Indiana, Amazon announced an $11 billion Data Center Investment in Indiana, and Google announced a $2 billion investment in Indiana. So those are significant new ads. Yeah, we expect that several other announcements will be made over the course of this year as the United States continues to want to be a first mover in the artificial intelligence world relative to their view of that and the national security implications of being a first mover relative to China, as an example. So, no, it hasn't changed.

Speaker Change: Back of the data centers as an example, just last week in Indiana, Amazon announced an 11 billion dollar.

Speaker Change: Datacenter investment in Indiana.

Speaker Change: And Google announced a 2 billion dollar investment.

Speaker Change: In Indiana, So those are significant new adds in.

Speaker Change: We expect that a.

Speaker Change: Several other announcements will be made over.

Speaker Change: Over the course of this year.

Speaker Change: As the United States continues to want to do it.

Speaker Change: It would be a first mover in.

Speaker Change: In the artificial intelligence world relative to <unk>.

Speaker Change: They're there.

Their view of that in the National security implications of being a first mover relative to China as an example, so.

Speaker Change: So no it hasn't changed and it does give us a little bit more cash flow as we think about investing and I think that we also feel.

Joseph W. Craft: It does give us a little bit more cash flow as we think about investing. I think that we also feel more confident today about oil and gas based on where we see the demand for oil and gas going over the next couple of decades. We do believe there are opportunities for us to be able to invest the cash flow that we are going to have that's going to allow four units to be, yeah.

Speaker Change: More confident today on oil and gas are based on.

Speaker Change: Well, where we see the demand.

Speaker Change: For oil and gas.

Speaker Change: You know over the next couple of decades so.

Speaker Change: And we do believe there's opportunities for us to.

Speaker Change: To be able to invest the cash flow that we are going to have that's going to allow for years.

Speaker Change: Yeah for growth for our unit holders.

Eve Siegel: Last question, is there an opportunity for you to grow the coal that you export to take advantage of growth and coal demand?

Speaker Change: Yeah.

Speaker Change: Last question is is there opportunity for you to grow the Nicole that you export it.

Speaker Change: To take take advantage I do not know the grocery world demand.

Joseph W. Craft: We don't, well, we see the United States position for, you know, export thermal energy to be relatively flat. So we do not see that as a growing part of the opportunity that we may be able to pick up some more market share, but we don't see the actual absolute increase in demand for thermal energy in international markets for thermal co, and we're not planning on that over the next decade.

Speaker Change: We don't see well, we see the from the United States position or.

Speaker Change: For exports.

Speaker Change: Thermal.

Speaker Change: To be relatively flat, so we do not see that as a growing.

Car.

Speaker Change: The.

Speaker Change: The opportunity yeah, we may be able to pick up some more market share, but we don't see the actual absolute increase in demand for international markets for thermal coal and.

Speaker Change: And we're not planning on that over the next decade.

Eve Siegel: Well, thanks so much.

Speaker Change: Got it alright, well thanks, so much.

Cary P. Marshall: Thank you. We have no further questions at this time. Mr. Marshall, I would like to turn the floor back over to you for closing comments.

Speaker Change: Okay.

Speaker Change: Thank you we have no further questions at this time, Mr. Marshall I would like to turn the floor back over to you for closing comments.

Cary P. Marshall: Thank you, Operator. And to everyone on the call, we appreciate your time this morning, as well as your continued support and interest in Alliance. Our next call to discuss our second quarter 2024 financial and operating results is currently expected to occur in July, and we hope everyone will join us again at that time. This concludes our call for the day. Thank you.

Operator: Thank you operator and to everyone on the call. We appreciate your time this morning, as well as as well as and also your continued support and interest in alliance. Our next call to discuss our second quarter 2024 financial and operating results is currently expected to occur in July and we hope everyone will join us.

Again at that time this concludes our call for the day.

Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

Operator: King.

Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.