A coal producer and natural resource company from Tulsa, Oklahoma, Alliance Resource Partners runs several underground mines across the Illinois Basin and holds oil-and-gas royalty acres in the Permian, Anadarko, and Williston basins. Its roots date to 1971, when MAPCO Inc. began buying coal mines; management bought them out in 1996 and went public in 1999 as the first master limited partnership in coal. It also mines bitcoin via its Bitiki subsidiary, using surplus power at a Kentucky coal mine.
Record oil & gas royalties and lower coal costs lifted net income 34% to $79.6M, despite weaker coal prices.
Oil & gas royalties hit a record and coal costs fell, reversing the margin squeeze of recent quarters. edged up 0.7% to $551.6M and rose 34% to $79.6M, driven by a 30.5% increase in royalty revenue and a 6.3% drop in per-ton coal costs. The partnership closed a $206.2M oil & gas acquisition just after the quarter, deepening its shift beyond coal.
Key takeaways
Oil & Gas Royalties reached a record $38.0M, up from $29.1M a year ago, as the average realized price rose 22.7% and royalty volumes increased 6.4% from acquisitions and drilling.
Coal operations Expense per ton fell 6.3% to $42.49, driven by lower labor, materials, and maintenance costs and the absence of outside coal purchases.
Appalachia Coal Operations rose 67.2% to $49.2M, as Tunnel Ridge volumes increased 27.6% and per-ton expenses dropped 29.7%, more than offsetting a 22.9% decline in the average sales price.
Section summaries
Management's Discussion and Analysis
Q2 2026 net income rose 34% to $79.6M on record oil & gas royalties and lower coal costs, despite weaker coal prices.
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Total revenues edged up 0.7% to $551.6M as record oil & gas royalties ($46.3M, +30.5%) and higher other revenues offset a 3.3% decline in coal sales driven by a 5.3% drop in average coal sales prices.
benefited from a $9.5M gain compared with a $1.5M loss a year ago, and from the absence of the prior-year's $25.0M on the Ascend investment.
A $206.2M oil & gas royalty acquisition closed on July 1, 2026, funded with cash, borrowings, and a new $150M term loan, adding $159.1M in .
Cash and equivalents rose to $111.2M from $55.0M a year ago, while increased 13.5% to $498.5M following the post-quarter acquisition financing.
What changed
Oil & gas royalty pricing, which had declined for multiple consecutive years, reversed course: the average realized price rose 22.7% this quarter, lifting to a record $38.0M.
Coal expense per ton, flagged across multiple prior filings as a margin risk, fell 6.3% to $42.49 — the second consecutive quarter of decline after the 3.1% drop in Q1 2026.
Tunnel Ridge production volumes, which had dragged Appalachia down for multiple quarters, rebounded with a 27.6% increase in tons sold, driving a 67.2% rise in Appalachia .
The Mettiki mine closure, which triggered a $37.8M in Q1 2026, produced no additional restructuring charges this quarter.
The six wage-and-hour lawsuits, flagged across multiple prior filings, were fully resolved in late 2025 and no longer represent a contingent liability.
What to watch
Coal sales prices per ton, which fell 5.3% this quarter as higher-priced legacy contracts continue to roll off, and whether the decline stabilizes against the partnership's remaining contract book.
Oil & gas royalty pricing per BOE, to see whether the 22.7% increase this quarter marks a durable inflection after multiple years of decline.
generation against the $280M–$300M capital expenditure plan, with the post-quarter $206.2M acquisition adding $150M in new term loan debt and borrowings.
Integration and performance of the $206.2M oil & gas royalty acquisition closed July 1, 2026, and whether the added materially changes .
Coal operations fell 4.3% to $331.0M, with per-ton costs down 6.3% due to lower labor, materials, and maintenance expenses, and the absence of outside coal purchases.
Appalachia Coal Operations surged 67.2% to $49.2M on a 27.6% volume increase at Tunnel Ridge and a 29.7% reduction in per-ton expenses, despite a 22.9% price decline.
Oil & Gas Royalties reached a record $38.0M, benefiting from a 22.7% increase in average sales prices and a 6.4% rise in royalty volumes from acquisitions and drilling activity.
benefited from a $9.5M equity method investment gain (vs. a $1.5M loss last year) and the absence of a prior-year $25.0M , partially offset by a $19.2M smaller fair value gain on bitcoin.
Liquidity remains solid with $111.2M in cash, and the company completed a $206.2M oil & gas royalty acquisition on July 1, 2026, funded by cash, borrowings, and a new $150M term loan.
Quantitative and Qualitative Disclosures About Market Risk
Commodity price risk from coal and oil & gas sales is the primary exposure; the company does not currently use derivatives to hedge.
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Long-term sales contracts include price adjustment provisions tied to indices or regulatory cost changes, but short-term coal contracts increase exposure to price declines.
Oil & gas royalty revenues are highly sensitive to price changes, and supply costs for items like electricity and steel are managed through strategic sourcing contracts.
The company has not historically used commodity price hedges or for sales or supply cost risks but may do so in the future.
Credit risk is concentrated with U.S. electric utilities and global brokerage firms, managed through credit evaluations and tools like or prepayments.
Currency risk is not material as most transactions are in U.S. dollars, though a stronger dollar could disadvantage the company's coal in international markets.
Interest rate risk arises from $159.1 million in variable-rate borrowings across three facilities, but earnings have not been materially affected and no interest rate are used.
The information in Note 13. Contingencies to the Unaudited Condensed Consolidated Financial Statements included in "Part I. Item 1. Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q herein is hereby incorporated by reference. See also "Item 3. Legal Proce…
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The information in Note 13. Contingencies to the Unaudited Condensed Consolidated Financial Statements included in "Part I. Item 1. Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q herein is hereby incorporated by reference. See also "Item 3. Legal Proceedings" of our Annual Report on Form 10-K for the year ended December 31, 2025.
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I - Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially aff…
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In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I - Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial condition or future results. The risks described in these reports are not our only risks. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial based on current knowledge and factual circumstances, if such knowledge or facts change, also may materially adversely affect our business, financial condition and/or operating results in the future.