Alliance Resource Partners, L.P. Reports Quarterly and Annual Financial and Operating Results; Increases Quarterly Cash Distribution 1.0% to $0.51 Per Unit; and Provides Initial 2018 Guidance

TULSA, Okla.–(BUSINESS WIRE)–Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported financial
and operating results for the quarter and year ended December 31, 2017
(the "2017 Quarter" and the "2017 Year", respectively). Total revenues
were $483.2 million in the 2017 Quarter compared to $527.4 million for
the quarter ended December 31, 2016 (the "2016 Quarter"), as coal sales
revenues declined due to reduced coal sales volumes and prices. Lower
revenues contributed to reduced net income attributable to ARLP for the
2017 Quarter, which declined to $74.2 million, or $0.55 per basic and
diluted limited partner unit, compared to $119.6 million, or $1.30 per
basic and diluted limited partner unit, for the 2016 Quarter. EBITDA in
the 2017 Quarter of $159.9 million was also lower compared to $217.8
million in the 2016 Quarter. (For a definition of EBITDA, Adjusted
EBITDA and related reconciliations to comparable GAAP financial measures
and actual and pro forma earnings per basic and diluted limited partner
unit reflecting the exchange transaction announced in our July 28, 2017
press release as if it had occurred on January 1, 2016, please see the
end of this release.)

ARLP’s financial performance for the 2017 Quarter improved compared to
the quarter ended September 30, 2017 (the "Sequential Quarter"). Led by
higher production and sales volumes from our Hamilton longwall
operation, net income attributable to ARLP and EBITDA increased by 21.2%
and 12.5%, respectively, compared to the Sequential Quarter. Increased
volumes also helped drive Segment Adjusted EBITDA Expense per ton down
by 3.5% compared to the Sequential Quarter. (For a definition of Segment
Adjusted EBITDA Expense per ton and related reconciliation to comparable
GAAP financial measures, please see the end of this release.)

Total revenues were $1.80 billion in the 2017 Year compared to $1.93
billion for the year ended December 31, 2016 (the "2016 Year"), as the
anticipated reduction in coal sales prices more than offset increased
sales volumes. Although lower revenues were partially offset by
decreased operating expenses, reduced depreciation, depletion and
amortization and increased income from our oil and gas investments, net
income attributable to ARLP for the 2017 Year declined to $303.6
million, or $2.80 per basic and diluted limited partner unit, compared
to $339.4 million, or $3.39 per basic and diluted limited partner unit,
for the 2016 Year. Adjusted EBITDA for the 2017 Year also decreased to
$620.8 million compared to $706.7 million in the 2016 Year.

As previously announced on January 26, 2018, the Board of Directors of
ARLP’s general partner (the "Board") increased the cash distribution to
unitholders for the 2017 Quarter to $0.51 per unit (an annualized rate
of $2.04 per unit), payable on February 14, 2018 to all unitholders of
record as of the close of trading on February 7, 2018. The announced
distribution represents a 16.6% increase over the cash distribution of
$0.4375 per unit for the 2016 Quarter and a 1.0% increase over the cash
distribution of $0.505 per unit for the Sequential Quarter.

"ARLP achieved significant milestones and delivered impressive
performance in 2017," said Joseph W. Craft III, President and Chief
Executive Officer. "Operationally ARLP increased year-over-year
production volumes by more than 6% or 2.4 million tons and reduced
Segment Adjusted EBITDA Expense by $1.81 per ton. Sales volumes also
increased 1.1 million tons as ARLP expanded its presence in the
international coal markets, delivering a record 5.6 million tons to the
export thermal market and 745,000 tons to the export metallurgical
market. This solid performance from our coal business and increased
contribution from our investments in oil and gas minerals and
compression services led ARLP to strong EBITDA and distributable cash
flow in 2017. These results along with the successful completion of an 8
year, $400 million bond offering earlier in the year contributed to an
improved balance sheet, allowed ARLP to return to growing distributions
to unitholders beginning in July 2017 and continuing with the increase
approved by the Board for the 2017 Quarter. For the year, ARLP achieved
a robust 1.75 times distribution coverage ratio."

Consolidated Financial Results

Three Months Ended December 31, 2017 Compared to Three Months Ended
December 31, 2016

Reduced coal sales volumes and prices led coal sales revenues lower in
the 2017 Quarter to $454.9 million compared to $504.2 million for the
2016 Quarter. Lower sales volumes in the 2017 Quarter reflect the
closure of the Pattiki mine in the 2016 Quarter, reduced sales volumes
from our River View and Tunnel Ridge mines, partially offset by strong
sales performance at our Mettiki and Gibson South mines. As anticipated,
ARLP’s coal sales prices were also lower in the 2017 Quarter, falling to
$45.03 per ton sold, a 6.2% decrease compared to $48.01 per ton sold in
the 2016 Quarter. Total production in the 2017 Quarter was comparable to
the 2016 Quarter.

Compared to the 2016 Quarter, operating expenses increased in the 2017
Quarter by 5.6% to $298.3 million resulting in higher Segment Adjusted
EBITDA Expense per ton of $29.48 in the 2017 Quarter compared to $26.87
in the 2016 Quarter. This increase in the 2017 Quarter was primarily due
to reduced recoveries at our Gibson South and Tunnel Ridge mines,
year-end actuarial adjustments to workers’ compensation expense and
higher coal inventory charges, offset in part by a favorable production
mix from ARLP’s lower-cost operations in the Illinois Basin; all as
compared to the 2016 Quarter.

Depreciation, depletion and amortization decreased $15.9 million to
$74.9 million in the 2017 Quarter primarily due to the previously
mentioned closure of the Pattiki mine in the 2016 Quarter. General and
administrative expenses fell $3.7 million in the 2017 Quarter, primarily
due to lower incentive compensation expenses.

Compared to the 2016 Quarter, increased earnings from our investments in
oil and gas mineral interests led equity investment income higher to
$3.4 million in the 2017 Quarter and distributions of additional
preferred interests received from our recent investment in compression
services contributed $3.6 million of cost investment income to the 2017
Quarter.

Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Increased coal sales and production volumes in the 2017 Year from the
Hamilton, Gibson South, Mettiki, MC Mining and Tunnel Ridge mines drove
coal sales volumes up by 3.1% to 37.8 million tons and production
volumes higher by 6.7% to 37.6 million tons, both as compared to the
2016 Year. Higher sales volumes reflect the benefit of strong export
markets as ARLP shipped 6.3 million tons into the international thermal
and metallurgical coal markets during the 2017 Year, an increase of 4.7
million tons compared to the 2016 Year. Partially offsetting these
increases were reduced sales and production volumes at our Dotiki and
Warrior mines, the closure of the Pattiki mine in the 2016 Quarter and
the depletion of reserves at our Elk Creek mine in the first quarter of
2016. Despite increased sales volumes, coal sales revenues of $1.71
billion for the 2017 Year decreased 8.1% compared to the 2016 Year as a
result of the expiration of higher-priced legacy contracts, which led
coal sales prices lower by 10.9% to $45.24 per ton sold.

Even though coal sales and production volumes increased for the 2017
Year, operating expenses of $1.10 billion were 2.6% lower compared to
the 2016 Year, reflecting our initiatives to shift production to ARLP’s
lower-cost operations. As a result of reduced operating expenses and
lower selling expenses, Segment Adjusted EBITDA Expense per ton sold
declined to $28.88 in the 2017 Year, an improvement of 5.9% compared to
the 2016 Year.

Depreciation, depletion and amortization decreased $67.5 million to
$269.0 million in the 2017 Year, primarily as a result of the previously
mentioned depletion of reserves at the Elk Creek mine, closure of the
Pattiki mine and volume reductions at our Dotiki and Warrior mines. The
use of surplus equipment from our idled mines and ongoing capital
reduction initiatives also contributed to lower depreciation and
amortization in the 2017 Year. General and administrative expenses
decreased $10.8 million to $61.8 million in the 2017 Period, primarily
due to lower incentive compensation expenses.

Compared to the 2016 Year, equity investment income rose $10.3 million
to $13.9 million due to increased earnings from our investments in oil
and gas mineral interests. Distributions of additional preferred
interests received from our recent investment in compression services
contributed $6.4 million of cost investment income to the 2017 Year.

Comparative results between the 2017 and 2016 Years were also impacted
by a debt extinguishment loss of $8.1 million related to ARLP’s early
repayment of its Series B Senior Notes in May 2017 following our
high-yield bond issuance in April 2017.

Regional Results and Analysis

Tons sold in the 2017 Quarter decreased 7.8% in the Illinois Basin
compared to the 2016 Quarter as a result of the closure of our Pattiki
mine in the 2016 Quarter and reduced sales volumes from our River View
mine, partially offset by increased volumes at our Gibson South
operation. Strong sales performance at the Mettiki mine drove coal sales
tons for the 2017 Quarter higher in Appalachia by 8.6% compared to the
2016 Quarter. Compared to the Sequential Quarter, tons sold increased
7.6% in the Illinois Basin primarily as a result of significantly higher
sales and production volumes from the Hamilton mine due to increased
recoveries in the 2017 Quarter and the impact of a longwall move and
adverse geological conditions on Hamilton’s results during the
Sequential Quarter. ARLP ended the 2017 Quarter with total coal
inventory of 0.8 million tons, including approximately 266,000 in
transit tons for deliveries to the export markets, a reduction of
approximately 0.2 million tons and 0.7 million tons compared to the end
of the 2016 and Sequential Quarters, respectively.

As anticipated, ARLP’s coal sales price realizations decreased 6.2% per
ton sold in the 2017 Quarter compared to the 2016 Quarter, primarily due
to the expiration of higher-priced legacy contracts offset in part by
higher price realizations in Appalachia from sales at our Mettiki mine
into the metallurgic coal export market and improved prices at our MC
Mining mine.

Total Segment Adjusted EBITDA Expense per ton increased by 9.7% compared
to the 2016 Quarter as a result of higher expenses per ton in both the
Illinois Basin and Appalachian regions. In the Illinois Basin, Segment
Adjusted EBITDA Expense per ton increased 2.8% compared to the 2016
Quarter primarily due to lower recoveries at our Gibson South and Dotiki
mines and increased roof support and contract labor costs at all of our
Illinois Basin mines, partially offset by lower selling expenses in the
2017 Quarter and the favorable production mix with ARLP’s lower-cost
operations. Segment Adjusted EBITDA Expense per ton in Appalachia
increased by 19.0% compared to the 2016 Quarter reflecting higher
selling expenses and lower recoveries at our Tunnel Ridge mine as well
as an increased sales mix of higher-cost metallurgical coal production
at Mettiki in the 2017 Quarter. Both segments were also impacted by
increased workers’ compensation expense and inventory costs in the 2017
Quarter compared to the 2016 Quarter. Compared to the Sequential
Quarter, higher sales and production volumes and increased recoveries
from our Hamilton mine drove Segment Adjusted EBITDA Expense per ton in
the Illinois Basin lower by 11.0%. In Appalachia, Segment Adjusted
EBITDA Expense per ton increased 15.1% compared to the Sequential
Quarter resulting primarily from reduced sales and production volumes at
our Tunnel Ridge mine due in part to a longwall move in the 2017 Quarter.

Market Update and Outlook

"ARLP enters 2018 poised for continued strong operating and financial
performance," said Mr. Craft. "We expect improved demand from our
domestic customers in the first half of 2018 as recent cold weather
across much of the U.S. has resulted in increased coal burn and reduced
utility stockpiles. The international thermal and metallurgical coal
markets continue to support participation by U.S. producers and we
anticipate ARLP’s sales to these markets will increase in 2018, having
already booked commitments to export approximately 5.9 million tons this
year. As a result, ARLP is planning to increase production and sales
volumes by 5.0% to 6.0% in 2018, which along with continued strong cost
performance by our mines and an improving price environment are expected
to drive solid results from ARLP’s coal operations. During the 2017
Quarter, we booked close to 10.0 million tons for delivery in 2018 and
currently have price and volume commitments for approximately 85.0% of
ARLP’s estimated 2018 production at the midpoint of our guidance. Longer
term, we expect the strength of our market presence and
strategically-located, low-cost mines will continue to support strong
results from our coal operations for many years in the future."

Mr. Craft continued, "The contribution from ARLP’s current investments
in oil and gas minerals and compression services are expected to
increase meaningfully in 2018, adding an estimated $25.0 to $35.0
million to ARLP’s net income and EBITDA this year. As ARLP continues to
receive preferred returns on its investment in compression services and
drilling activity on our mineral acreage continues to grow, we expect
similar annual increases in earnings from these investments over the
next 24 to 36 months. With expectations for strong distributable cash
flow and healthy distribution coverage for the foreseeable future, ARLP
remains focused on delivering value to our unitholders and is currently
targeting annual distribution growth of approximately 4.0% in 2018."

For 2018, ARLP is providing the following full-year guidance for its
operating and investment activities:

Capital Expenditures and Investments – Total 2018 capital
expenditures for ARLP’s operating activities are currently estimated in
a range of $220.0 million to $240.0 million. 2018 Capital expenditures
are primarily related to maintenance capital expenditures as well as
$16.5 million of growth capital to re-open the Gibson North mine by
bringing two mining units back into production. Considering its current
five-year planning horizon, ARLP is estimating total average maintenance
capital expenditures of approximately $4.72 per ton produced for
long-term distribution planning purposes. Depreciation, depletion and
amortization in 2018 is estimated in a range of $275.0 million to $285.0
million.

In addition, ARLP currently expects 2018 investments of approximately
$30.0 million for existing commitments related to compression services
and the acquisition of oil and gas mineral interests.

Coal Production and Sales Volumes – During 2018, coal production
is currently estimated in a range of 39.0 million to 40.0 million tons
and sales volumes are expected in a range of 39.5 million to 40.5
million tons. To date, ARLP has secured price and volume commitments for
approximately 33.7 million tons in 2018 and has also secured coal sales
and price commitments for approximately 11.6 million tons, 7.6 million
tons and 1.3 million tons in 2019, 2020 and 2021, respectively.

Revenue, Net Income and EBITDA – Based on current expectations,
ARLP is estimating 2018 revenues, excluding transportation revenues, in
a range of $1.78 billion to $1.82 billion, net income in a range of
$290.0 million to $310.0 million and EBITDA in a range of $610.0 million
to $630.0 million. These 2018 estimates for net income and EBITDA
include a contribution of approximately $25.0 million to $35.0 million
related to our investments in oil and gas mineral interests and
compression services. (For a definition of EBITDA and related
reconciliations to comparable GAAP financial measures, please see the
end of this release.)

Per Ton Estimates – ARLP currently anticipates its average coal
sales price per ton at the midpoint of its 2018 guidance ranges will be
2.0% to 3.0% lower than 2017 realizations, primarily reflecting soft
coal market conditions during the first half of last year. ARLP also
expects its ongoing efforts to enhance operational efficiency and
control costs will result in a modest improvement to total Segment
Adjusted EBITDA Expense per ton in 2018 compared to 2017. Based on these
price and cost estimates, total Segment Adjusted EBITDA per ton sold in
2018 is currently expected to be approximately 2.0% to 6.0% below the
prior year.

A conference call regarding ARLP’s 2017 Quarter and Year financial
results and 2018 outlook is scheduled for today at 10:00 a.m. Eastern.
To participate in the conference call, dial (877) 506-1589 and request
to be connected to the Alliance Resource Partners, L.P. earnings
conference call. Canadian callers should dial (855) 669-9657 and all
other International callers should dial (412) 317-5240 and request to be
connected to the same call. Investors may also listen to the call via
the "investor information" section of ARLP’s website at http://www.arlp.com.

An audio replay of the conference call will be available for
approximately one week. To access the audio replay, dial US Toll Free
(877) 344-7529; International Toll (412) 317-0088; Canada Toll Free
(855) 669-9658 and request to be connected to replay access code
10115818.

About Alliance Resource Partners, L.P.

ARLP is a diversified producer and marketer of coal to major United
States utilities and industrial users. ARLP, the nation’s first publicly
traded master limited partnership involved in the production and
marketing of coal, is currently the second largest coal producer in the
eastern United States with mining operations in the Illinois Basin and
Appalachian coal producing regions.

ARLP currently operates eight mining complexes in Illinois, Indiana,
Kentucky, Maryland and West Virginia as well as a coal loading terminal
on the Ohio River at Mount Vernon, Indiana. ARLP also generates income
from a variety of other sources, including investments in oil and gas
royalties and midstream services.

News, unit prices and additional information about ARLP, including
filings with the Securities and Exchange Commission, are available at http://www.arlp.com.
For more information, contact the investor relations department of ARLP
at (918) 295-7674 or via e-mail at [email protected].

The statements and projections used throughout this release are based on
current expectations. These statements and projections are
forward-looking, and actual results may differ materially. These
projections do not include the potential impact of any mergers,
acquisitions or other business combinations that may occur after the
date of this release. At the end of this release, we have included more
information regarding business risks that could affect our results.

FORWARD-LOOKING STATEMENTS: With the exception of historical
matters, any matters discussed in this press release are forward-looking
statements that involve risks and uncertainties that could cause actual
results to differ materially from projected results. These risks,
uncertainties and contingencies include, but are not limited to, the
following: changes in coal prices, which could affect our operating
results and cash flows; changes in competition in coal markets and our
ability to respond to such changes; legislation, regulations, and court
decisions and interpretations thereof, including those relating to the
environment and the release of greenhouse gases, mining, miner health
and safety and health care; deregulation of the electric utility
industry or the effects of any adverse change in the coal industry,
electric utility industry, or general economic conditions; risks
associated with the expansion of our operations and properties;
dependence on significant customer contracts, including renewing
existing contracts upon expiration; adjustments made in price, volume or
terms to existing coal supply agreements; changing global economic
conditions or in industries in which our customers operate; liquidity
constraints, including those resulting from any future unavailability of
financing; customer bankruptcies, cancellations or breaches to existing
contracts, or other failures to perform; customer delays, failure to
take coal under contracts or defaults in making payments; fluctuations
in coal demand, prices and availability; continuation or worsening of
depressed oil and gas prices adversely affecting our investments
in oil and gas mineral interests and midstream services; our
productivity levels and margins earned on our coal sales; the coal
industry's share of electricity generation, including as a result of
environmental concerns related to coal mining and combustion and the
cost and perceived benefits of other sources of electricity, such as
natural gas, nuclear energy and renewable fuels; changes in raw material
costs; changes in the availability of skilled labor; our ability to
maintain satisfactory relations with our employees; increases in labor
costs including costs of health insurance and taxes resulting from the
Affordable Care Act, adverse changes in work rules, or cash payments or
projections associated with post-mine reclamation and workers'
compensation claims; increases in transportation costs and risk of
transportation delays or interruptions; operational interruptions due to
geologic, permitting, labor, weather-related or other factors; risks
associated with major mine-related accidents, such as mine fires, or
interruptions; results of litigation, including claims not yet asserted;
difficulty maintaining our surety bonds for mine reclamation as well as
workers' compensation and black lung benefits; difficulty in making
accurate assumptions and projections regarding post-mine reclamation as
well as pension, black lung benefits and other post-retirement benefit
liabilities; uncertainties in estimating and replacing our coal
reserves; a loss or reduction of benefits from certain tax deductions
and credits; difficulty obtaining commercial property insurance, and
risks associated with our participation (excluding any applicable
deductible) in the commercial insurance property program; and difficulty
in making accurate assumptions and projections regarding future revenues
and costs associated with investments in companies we do not control.

Contacts

Alliance Resource Partners, L.P.
Brian L. Cantrell, 918-295-7673

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