Alliance Resource Partners LP Message Board

It costs money to open new mines and hire 700 new miners.We are going to double in size in the next 18-24 months.At the time of planning this increase in production. Illinois coal was $22.00 now it is $70.00.Last spring I thought we would get a 7% yield at a stock price of $60.00 and said that on this board.Now our stock will go to $90.00 in the next 18 months and we will still have a 7% yield.Our contracts reset every 1-2 years and they all weren't signed on the same day,but the real bucks are in selling this 1/2-3/4 of the new production at $70.00 or more a ton in long term contracts.Take delivery of your stock certificates and put them in your lock box at the bank.

This maybe a close second to contract prices -bottom of second paragraph of 6am press release:

"We are also encouraged about our future growth opportunities and, as a result, are setting a goal of increasing unitholder distributions by approximately 6% - 8% per quarter through 2010.


This amounts to a compounded ANNUAL distribution increase of 26% to 36% thru 2010! Distribution should double in 9-10 qtrs! WOW!

DLS

some of these questions are asked during the conference calls. For example, ARLP said in the last conference call that the contract prices are adjusted but they were not specific on how. Since their prices did not change significantly and spot prices did, one can only infer that spot prices are not one of the adjustments.

This question was asked again. And, again, the answer was vague. Contract prices are adjusted based on indices and inflation. But, what indices? No answer was given. What prices were used in the future contracts? Again, for competitive reasons we are told, none of this was revealed. So, the bottom line is that you have to have faith in management. I must tell you that the lack of change in selling price this quarter kind of leaves me a little untrusting.

The only thing that management was willing to commit to was the 6 to 8% increase in distributions over the next eight quarters. Everything else was vague. There simply is not enough concrete informaton to perform any sort of due diligence calculation.

ARLP was somewhat vague in its explanation last quarter. It stated that most of its production is sold on long-term contracts, but they are not fixed price contracts. The contracts call for adjustments to the sales price, within ranges (that's the key point, I guess), for changes in the market price, changes in costs, etc. They made a big point in their release of year end 2007 earnings - "ARLP is currently anticipating coal production for 2008 in a range of 26.2 to 26.7 million tons, essentially all of which is committed to market pricing." I don't think they repeated that statement in the Q1 or Q2 2008 earnings releases.

So the issue that ARLP has not discussed is how much "market pricing" adjustments are allowed under its contracts. Either the allowable range is low, or else ARLP's high sulfur coal sells at a real discount in the marketplace.

Anyway, even tho ARLP is up today, it's clear that investors should shift to AHGP because of the increasing profit split that AHGP gets.

I do understand that argument. Longterm contracts are "safer." Their current participation in the spot market is essentially zero. ARLP has tacitly admitted this is a mistake since they plan to have 9% and 25% non-committed (i.e. available to the spot market) in 2009 and 2010 respectively.

that is just spin to try to paper over a really lousy quarter. In light of the other coal companies having spectacular earnings, this is most disappointing.