Continued robust market fundamentals during the second quarter of 2022 pushed coal sales prices, volumes and coal sales revenues higher for Alliance Resource Partners (ARLP) by 25.1%, 9.4% and 36.9%, respectively, compared to the first quarter of 2022.
“ARLP delivered strong financial and operating performance during the second quarter of 2022, as we again posted significant increases to coal and oil and gas sales volumes and prices, total revenues, net income and EBITDA compared to the second quarter of 2021,” said Joe Craft, chairman, president and CEO. “Segment Adjusted EBITDA at our coal operations climbed sharply to $222.6 million for the second quarter as increased coal sales volumes and prices more than offset continued inflationary cost pressures, supply chain challenges and ongoing shipping delays due to poor rail performance.”
Alliance’s coal sales prices per ton increased in all regions compared to both Q2 2021 and Q1 2022 as a result of continued favorable market conditions. In the Illinois Basin, significantly higher export prices during Q2 2022 drove coal sales prices higher by 28.5% and 15.4% compared to Q2 2021 and Q1 2022, respectively. In Appalachia, coal sales prices increased by 62.7% and 32.0% compared to Q2 2021 and Q1 2022, respectively, primarily due to substantially higher export price realizations at all mines in the region and increased domestic pricing at the Tunnel Ridge and Mettiki mines.
Coal sales volumes were higher by 7.5% in the Illinois Basin compared to Q2 2021 due to increased sales volumes at the Gibson South and Hamilton mines. In Appalachia, coal sales volumes increased 28.1% and 36.1% compared to Q2 2021 and Q1 2022, respectively, as a result of higher domestic sales volumes from the Tunnel Ridge longwall operation and increased export shipments from the Mettiki and MC Mining operations. ARLP ended Q2 2022 with total coal inventory of 1.6 million tons, representing an increase of 200,000 tons compared to the end of Q2 2021 and comparable to the end of Q1 2022.
“ARLP was able to execute new coal sales commitments for delivery of 24.9 million tons through 2025 at prices above our recent expectations,” Craft said. “Our coal operations have delivered significant year-over-year per ton margin expansion, and we believe ARLP is positioned to see further margin growth in 2023 and 2024.” Craft said the company plans to add a fifth production unit at the Gibson South mine and another development unit at the Hamilton mine later this year or early next year. As a result, Alliance expects total tons produced and sold in 2023 to be approximately 1 million tons higher than this year.