The growth of the renewable energy industry and slumping coal demand have affected Tulsa’s Alliance Resource Partners, L.P. resulting in lower revenues for the third quarter 2019.
Reduced coal sales volumes and prices were blamed as the Tulsa company announced total revenues for the quarter were $464.7 million compared to the same quarter a year earlier when revenues were $497.8 million.
The company said the revenue drop in coal sales were only “partially offset” by the addition of oil and gas revenues in the quarter. Still, net income dropped from $73.7 million a year ago to $39.1 million this past quarter. The third quarter net income was 30 cents per company unit compared to 55 cents for the 2018 quarter.
EBITDA in the 2019 Quarter of $123.1 million was also lower compared to $153.7 million in the 2018 Quarter. Excluding the impact of the non-cash asset impairment, Adjusted EBITDA decreased 10.1% to $138.3 million in the 2019 Quarter.
“Challenging coal market conditions continued to impact ARLP’s financial and operating performance in the 2019 Quarter, as our coal inventories increased 1.0 million tons sequentially,” said Joseph W. Craft III, Chairman, President and Chief Executive Officer. “Weak power demand, persistently low prices for competing fuels and ongoing transportation issues have reduced coal-fired generation in the U.S. and internationally, leading to an oversupplied coal market and unsustainably low coal prices.”
The company was forced to close one of its mines as a result of the decline in coal demand. But Craft explained that since the last earnings release, the company managed to secure new sales contracts for the deliver of more than 11 million tons through 2023.
He said the company’s oil and gas minerals segment performed strongly compared to a year ago and to the second quarter of 2019.
“In addition, we completed the acquisition of Permian Basin mineral interests from Wing – adding approximately 9,000 net royalty acres in the Midland Basin, enhancing our already strong position in this prolific, liquids rich area. With exposure to more than 400,000 gross acres under active development by well-capitalized operators, we expect the newly acquired interests will generate long-term cash flow growth for ARLP.”
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