Alliance Resource buys Permian royalties, lifts output forecast
The coal and oil producer raised its 2026 oil and gas royalties volume guidance after a $206.2 million acquisition.
Alliance Resource Partners (ARLP) spent $206.2 million to acquire oil and gas royalty interests in the Permian Basin, sharply expanding its net royalty acres and lifting its production outlook for the year. The transaction, announced alongside first-quarter results, increased the company’s net royalty acres to 115,680, with 44,770 located in the Permian, and is expected to boost net oil and gas royalties production to 14,285 barrels of oil equivalent per day, up nearly threefold from the first quarter.
The deal marks the coal producer’s largest acquisition in at least a year and underscores its push into oil and gas royalties as coal demand softens. While coal volumes and prices continued to decline, the oil and gas royalties segment delivered accelerating revenue growth, rising 16.1% year-over-year to $61.2 million. Adjusted EBITDA for the segment climbed 19.3% to $46.9 million, though it fell 5.1% sequentially.
Overall, Alliance Resource reported first-quarter revenue of $516.0 million, down 4.5% from a year earlier and 3.6% sequentially. Adjusted EBITDA declined 3.1% year-over-year to $155.0 million, while net income plunged 87.7% to $9.1 million, reflecting a $37.8 million non-cash impairment charge tied to the idling of longwall production at its Mettiki mine.
Coal sales volumes fell 3.1% sequentially to 7.86 million tons, with Illinois Basin volumes down 5.9% due to a planned longwall move at the Hamilton mine. Appalachia volumes, however, rose 8.0% sequentially to 1.792 million tons, recovering from a steep decline in the prior quarter. The average coal sales price dropped 6.5% year-over-year to $56.40 per ton, extending a trend of declining prices.
Despite the coal segment’s challenges, Alliance Resource raised its 2026 oil and gas royalties volume guidance, citing outperformance and the impact of the Permian acquisition. The company also reported that coal sales commitments for the year reached 95% of expected output, up from 93% in the prior quarter.
The company maintained its quarterly cash distribution at $0.60 per unit, unchanged from the prior quarter, and kept its total leverage ratio stable at 0.73x.