Alliance Resource Partners, L.P. · NASDAQ:ARLP
Alliance Resource Partners, L.P — Wachovia Securities Pipeline & MLP Symposium 2006
34 slides from Alliance Resource Partners, L.P's conference presentation, Dec 5, 2006
Slide 1: Alliance Resource Partners, L.P. / Alliance Holdings GP, L.P.
Exhibit 99.2 * * * Alliance Resource Partners, L.P. Alliance Holdings GP, L.P. Wachovia Securities Pipeline & MLP Symposium December 5, 2006
Slide 2: Forward-Looking Statements
* Forward-Looking Statements This presentation contains forward-looking statements and information that are based on the beliefs of Alliance Resource Partners, L.P. and Alliance Holdings GP, L.P. (the “Partnerships”) and those of their respective general partners (the “General Partners”), as well as
Slide 3: Alliance Overview
Alliance Overview A\ Avuance Resource A ALLIANCE y_ (N PARTNERS. LP. y (NN HOLDINGS GP. LP.
Slide 4: Alliance Resource Partners, L.P.
* * * Alliance Resource Partners, L.P. Diversified producer and marketer of coal to major U.S. utilities and industrial users Only publicly-traded master limited partnership involved in the production and marketing of coal Began mining operations in 1971 Currently operate eight underground mining co
Slide 5: Two Ways to Invest in Alliance Partnerships
Two Ways to Invest in Alliance Partnerships 80.0% 20.0% L.P. Alliance Holdings L.P. Management / Interest GP , L.P. Interest Public Others (NASDAQ: AHGP) Unitholders 59.9 million units outstanding 1.98% General IDRs 42.3% L.P. Partner Interest (a) Interest Alliance Resource Partners, L.P. Public (NA
Slide 6: Alliance Partnership Profiles
* Alliance Partnership Profiles * * NASDAQ Symbol: ARLP AHGP Unit Price (11/27/06): $34.45 $18.75 Distribution: $2.00 $0.86 Total Unit Coverage: 1.99x 1.00x Equity Market Cap: $1,255 mm $1,122 mm Enterprise Value: $1,363 mm $1,123 mm Net Debt / Book Cap: 32.2% 0.0% Net Debt / Enterprise Value: 7.9%
Slide 7: Alliance Investment Highlights
* * * Alliance Investment Highlights Strong operational and financial attributes of Alliance Resource Partners, L.P. Established history of operating and financial performance Efficient, low-cost operator Proven track record of executing growth strategy Robust long-term industry fundamentals Meaning
Slide 8: Complementary Business Objectives
* Complementary Business Objectives Alliance Resource Partners, L.P. * Create sustainable, capital efficient growth in distributable cash flow to maximize growth in distributions to ARLP unitholders Maximize existing asset base – expand / extend current operations, continuous focus on productivity i
Slide 9: Alliance Resource Partners, L.P. Overview
* * * * Alliance Resource Partners, L.P. Overview
Slide 10: Alliance Resource Partners, L.P. Snapshot
* Alliance Resource Partners, L.P. Snapshot ARLP operates eight underground mining * complexes in all major eastern coal producing regions Diversified reserve position in the Illinois Basin, Central Appalachia and Northern Appalachia regions 6 Significant organic development projects identified in t
Slide 11: Operations Summary
* Operations Summary * * 2005 Production 2005 Summary (MM Tons) Northern Production Reserves Primary Customers Appalachia Illinois Basin 15% Dotiki 4.7 89.5 Seminole; TVA Central Warrior 4.1 17.8 Synfuel Solutions, LG&E Appalachia Pattiki 2.6 47.6 TVA; Tampa Electric 15% Illinois Basin Hopkins 0.9 6
Slide 12: Efficient Operator
* ** Efficient Operator ARLP is a low-cost, efficient coal operator, delivering sector-leading EBITDA margins 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Alliance Arch Consol Foundation Peabody Massey Alpha 2003 2004 2005 2006YTD __________________ Source: Public filings EBITDA margin represents EBITDA
Slide 13: Focused on Safety
* Focused on Safety * ARLP’s safety performance has been consistently better than our industry peer group Innovative use of technology to improve safety Recently completed installation of state-of- the-art Leaky Feeder mine communication systems at all operations Fiber optic based mine monitoring sy
Slide 14: Consistent Track Record of Growth at ARLP
* * * Consistent Track Record of Growth at ARLP Production Revenue 25.0 $1,000.0 24.1 $920.0 $800.0 22.3 $799.6 20.0 20.4 $600.0 19.2 $623.5 18.0 $523.2 $499.9 $400.0 15.0 CAGR: 7.6% $200.0 CAGR: 16.5% 10.0 $0.0 (a) (a) 2002 2003 2004 2005 2006E 2002 2003 2004 2005 2006E EBITDA Cash Flow from Operat
Slide 15: Continuous Unit Distribution Growth
* * * Continuous Unit Distribution Growth ARLP has increased its quarterly distribution by 100% over the last four years (a) $2.00 $2.00 $1.95 $1.84 $1.84 $1.75 $1.65 $1.65 $1.55 $1.50 $1.50 $1.35 $1.30 $1.30 $1.25 $1.13 $1.15 $1.05 $1.05$1.05 $1.05 $1.00 $1.00 $0.95 $0.75 __________________ (a) In
Slide 16: Leader in Distribution Growth
* * * Leader in Distribution Growth ARLP compares favorably to the broad MLP universe in terms of distribution growth since the beginning of 2004 (a) 114% 60% 54% 48% 41% 39% 38% 38% 35% 33% 24% 21% 19% 17% 16% 16% 14% 9% 2% 0% __________________ (a) Total distribution growth from distribution paid
Slide 17: Alliance Holdings GP, L.P. Overview
* * * * Alliance Holdings GP, L.P. Overview
Slide 18: AHGP Leverage to ARLP Growth
* * * AHGP Leverage to ARLP Growth Incentive distribution rights provide AHGP unitholders with significant financial leverage to ARLP distribution growth $80,000 Current ARLP $70,000 Distribution ($2.00 per unit) IDRs $60,000 $50,000 G.P. $40,000 Interest $30,000 $20,000 Hypothetical L.P. Distributi
Slide 19: Impact of ARLP Distribution Growth
* * * Impact of ARLP Distribution Growth AHGP Leverage to ARLP Distribution Growth 32.6% 30% 25.5% 20% 17.9% 10% 9.5% 0% 0% 5% 10% 15% 20% __________________ ARLP Distribution Growth Note: Assumes constant 36.4 million common units outstanding at ARLP. 14
Slide 20: Benefits of Industry-Leading Distribution Coverage
* * * Benefits of Industry-Leading Distribution Coverage ARLP’s coverage ratio is among the highest of publicly traded limited partnerships in the energy sector (a) Benefits to AHGP investors include: Greater potential for future distribution growth Capital efficient financing for ARLP organic growt
Slide 21: Value Inherent in Underlying Cash Flows
* * * Value Inherent in Underlying Cash Flows Implied Yields (a) ARLP’s value 12.00% 10.69% proposition becomes 9.57% 10.00% clear through its current 7.30% 7.08% cash available for 8.00% 6.46% 6.37% 5.81% distribution 6.00% 4.59% 5.17% 4.11% The impact is even more 4.00% pronounced at Alliance 2.00
Slide 22: Positioned for Continued Growth
* * * * Positioned for Continued Growth
Slide 23: Robust Long-Term Coal Industry Fundamentals
* Robust Long-Term Coal Industry Fundamentals * Growing Domestic Coal Demand Strong U.S. economy New coal-fired power plants expected to result in 120 MTPY of additional coal demand by 2010(a) Btu conversion technologies could more than double U.S. coal demand by 2030(b) Constrained Domestic Coal Su
Slide 24: ARLP Has Benefited from Positive Coal Markets
* ARLP Has Benefited from Positive Coal Markets * * 2006YTD average coal sales prices have increased 9.4% since 2005Q3(a) Coal Sales / Ton Sold $40.00 $38.53 $36.58 $33.65 $30.00 $28.79 $25.77 $20.00 CAGR: 10.6% $10.00 $0.00 (b) (c) 2003 2004 2005 2006YTD 2007E __________________ (a) See ARLP Press
Slide 25: ARLP Is Positioned for Future Sector Growth
* * * ARLP Is Positioned for Future Sector Growth Future revenue growth potential enhanced by meaningful exposure to market pricing Coal Sales Volumes Open to Market Pricing 20 15 13.4 10 5 3.8 0 0.1 2006 2007 2008 19
Slide 26: Major Supply Shifts Influenced by Clean Air Act
* Major Supply Shifts Influenced by Clean Air Act U.S. Coal Supply (Million Tons) Change % Change 1990 1995 2000 2005 90 - '05 90 - '05 * Illinois Basin 141 109 87 92 (49) -35% Northern Appalachia 166 137 140 140 (26) -16% Central Appalachia 287 272 263 232 (55) -19% Powder River Basin 199 286 362 4
Slide 27: Significant Scrubber Market Dynamics
* Significant Scrubber Market Dynamics * Current and pending legislation has caused utilities to add or announce plans to add scrubbers which management expects should lead to additional market opportunities for the Illinois Basin and Northern Appalachian regions As utilities execute their environme
Slide 28: ARLP Well Positioned in Scrubber Markets
* ARLP Well Positioned in Scrubber Markets Approximately 590 million tons of “scrubber” quality coal Northern Appalachia Strong reserve base of ~168 million tons of high and medium sulfur coal Currently accounts for ~15% of total ARLP coal production Illinois Basin * Second largest producer in the b
Slide 29: Large Inventory of Organic Growth Projects
Large Inventory of Organic Growth Projects Penn Ridge Tunnel Ridge Initiating permitting process Permitting in progress Estimated capital cost ~ $165 - $175 Estimated capital cost ~ $195 - $210 million million Estimated reserves ~ 55 million tons high Estimated reserves ~ 70 million tons high sulfur
Slide 30: Summary
[Summary | A ALLIANCE RESOURCE A ALLIANCE ae MB urvirvace one PARTAIERE 1D n
Slide 31: Alliance Investment Highlights
* * * Alliance Investment Highlights Strong operational and financial attributes of Alliance Resource Partners, L.P. Established history of operating and financial performance Efficient, low-cost operator Proven track record of executing growth strategy Robust industry fundamentals Meaningful upside
Slide 32: Appendix
A\ Avuance Resource A ALLIANCE y N PARTNERS, L.P. y NX HOLDINGS GP. LP.
Slide 33: ARLP EBITDA Reconciliation
* * * ARLP EBITDA Reconciliation Year Ended December 31, 2006E 2002 2003 2004 2005 Midpoint Cash flows provided by operating activities $ 101,306 $ 110,312 $ 145,055 $ 193,618 $ 245,000 Reclamation and mine closing (1,365) (1,341) (1,622) (1,918) (2,000) Coal inventory adjustment to market (48) (687
Slide 34: Alliance Resource Partners, L.P. Alliance Holdings GP, L.P.
* * * Alliance Resource Partners, L.P. Alliance Holdings GP, L.P. Wachovia Securities Pipeline & MLP Symposium December 5, 2006
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