During the final five months of 2015, the mine near McLeansboro is expected to produce about 500,000 tons a month or a total of 2.5 million tons. That would equal White Oak 1’s output of 2.5 million tons in the first two quarters of this year.

It also would set up the mine in 2016 for annual production of 5 to 6 million tons annually from the Herrin No. 6 seam, drawing upon a reserve base of 1 billion tons. Alliance, based in Tulsa, Oklahoma, controls a little more than half of that total.

Joe Craft, Alliance president and CEO, told analysts during an early August conference call that his company is confident it can increase production at White Oak 1, the first of a potential multimine development planned by White Oak Resources in the largely rural southern Illinois county.

“We think we can increase production out of White Oak,” he declared. White Oak 1 started longwall production in October 2014, extracting a total of 1.7 million tons last year.

Alliance, one of the largest producers in the high-sulfur Illinois Basin (ILB), is counting on its White Oak holdings to lower its overall production costs. That would enable the company to more effectively compete against low-cost rival Foresight Energy LP, the largest coal producer in the ILB. Ohio’s Murray Energy Corp. purchased a major ownership stake in Foresight earlier this year.

Indeed, Craft said Alliance wants to operate its lower-cost mines such as White Oak 1 “at full capacity” while optimizing other, unspecified operations. According to Brian Cantrell, Alliance senior vice president and chief financial officer, the company’s total expenditures are estimated at $265 million to $285 million this year, down about $40 million from the midpoint of 2015.

Moreover, Alliance anticipates White Oak 1 will be “modestly accretive” to Alliance’s bottom line over the August-December period.

Under terms of the agreement to acquire the remaining interest in White Oak Resources, Alliance paid $50 million at the sale closing. The transaction was funded with cash on hand. Additional contingent consideration may be due in the future, Alliance said.

For all of 2015, Alliance now is targeting overall coal production in a range of 42.8 to 43.5 million tons, including the anticipated production and sales from White Oak 1 for the remainder of the year. Alliance said it has secured price commitments for approximately 42.8 million tons in 2015 and also has firmed up coal sales and price commitments for approximately 31.2 million tons, 13 million tons, and 9.6 million tons in 2016, 2017 and 2018, respectively.

Alliance anticipates its average coal sales price per ton at the midpoint of its 2015 guidance ranges will be approximately 4% than 2014 realizations. Based on current cost and production estimates, including the addition of low-cost production from White Oak 1, the company now anticipates total 2015 segment adjusted EBITDA expense per ton at the midpoint will be comparable to 2014.