Alliance Resource Partners (ARLP) risk factors, FY2024 10-K

Other

1. 01Risks Inherent in an Investment in Us

Risks Related to Our Industries

1. 02Tax Risks to Our Common Unitholders
2. 03Cash distributions to unitholders are not guaranteed
3. 04We may issue an unlimited number of limited partner interests, on terms and conditions established by our general partner, without the consent of our unitholders, which will dilute your ownership interest in us and could increase the risk that we will not have sufficient available cash to make distributions
4. 05The market price of our common units could be adversely affected by sales of substantial amounts of our common units in the public markets, including sales by our existing unitholders
5. 06An increase in interest rates could cause the market price of our common units to decline
6. 07The credit and risk profile of our general partner and its owners could adversely affect our credit ratings and profile
7. 08Our unitholders do not elect our general partner or vote on our general partner’s officers or directors
8. 09The control of our general partner may be transferred to a third party without unitholder consent
9. 10Unitholders may be required to sell their units to our general partner at an undesirable time or price
10. 11Cost reimbursements due to our general partner could be substantial and could reduce our ability to pay distributions to unitholders
11. 12Your liability as a limited partner may not be limited, and our unitholders could have to repay distributions or make additional contributions to us under certain circumstances
12. 13Our partnership agreement limits our general partner’s fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner that may otherwise constitute breaches of fiduciary duty
13. 14Our general partner’s discretion in determining the level of cash reserves may adversely affect our ability to make cash distributions to our unitholders
14. 15Our general partner has conflicts of interest and limited fiduciary responsibilities, which may permit our general partner to favor its interests to the detriment of our unitholders
15. 16Some of our executive officers and directors face potential conflicts of interest in managing our business
16. 17Increased attention to ESG matters may negatively impact our business, financial results, and unit price
17. 31Prices for oil & gas, as well as coal, are volatile and can fluctuate widely based on a number of factors beyond our control. An extended decline in the prices of such commodities could negatively impact our results of operations
18. 32Competition within the coal industry could adversely affect our ability to sell coal. In addition, foreign currency fluctuations could adversely affect the competitiveness of our coal abroad
19. 33Changes in taxes or tariffs and other trade measures by the United States and foreign governments could adversely affect our results of operations, financial position, and cash flows
20. 34Global geopolitical tensions have caused, and may cause in the future, significant market disruptions that may lead to increased volatility in the price of commodities, including oil & gas, coal, and other sources of energy
21. 35aforementioned commodity markets. Such conflicts and the resulting volatility may significantly affect prices for our coal and oil & gas or the cost of supplies and equipment, as well as the prices of competing sources of energy for our electric power plant customers
22. 36Changes in consumption patterns by utilities regarding the use of coal, including plans by utilities to shut down or move away from coal-fired generation, have affected our ability to sell the coal we produce and may do so in the future
23. 37We, our customers, or the operators of our oil & gas mineral interests could be subject to litigation or regulatory fines or penalties related to climate change
24. 38Litigation resulting from disputes with our customers could result in substantial costs, liabilities, and loss of revenues
25. 39Our profitability could decline due to unanticipated mine operating conditions and other events that are not within our control and that may not be fully covered under our insurance policies
26. 40These conditions have the potential to significantly impact our operating results. Prolonged disruption of production at any of our mines would result in a decrease in our revenues and profitability, which could materially adversely impact our quarterly or annual results
27. 41We could be unable to obtain and renew permits necessary for our coal mining operations, which could reduce our production, cash flow, and profitability
28. 42Fluctuations in transportation costs and the availability or reliability of transportation could reduce revenues by causing us to reduce our production or by impairing our ability to supply coal to our customers
29. 43costs. An increase in transportation costs could have an adverse effect on our ability to increase or maintain production and could adversely affect revenues
30. 44Unexpected increases in raw material costs could significantly impair our operating profitability
31. 45A shortage of skilled labor may make it difficult for us to maintain labor productivity and competitive costs and could adversely affect our profitability
32. 46Disruptions in supply chains, inflationary pressures and unexpected increases in raw material costs could significantly impair our operating profitability
33. 47Inflationary pressures could significantly impair our operating profitability
34. 48The unavailability of an adequate supply of coal mineral reserves and resources that can be mined at competitive costs could cause our profitability to decline
35. 49The estimates of our coal mineral reserves and resources could prove inaccurate and could result in decreased profitability
36. 50Coal mining in certain areas in which we operate is more difficult and involves more regulatory constraints than mining in other areas of the United States, which could affect the mining operations and cost structures of these areas
37. 51Extensive environmental laws and regulations affect coal consumers and could affect the demand for coal as a fuel source
38. 52Our industries are subject to extensive and costly laws and regulations, and such current and future laws and regulations, and uncertainties around the same, could increase current operating costs or otherwise negatively impact our operations
39. 53Our coal mining operations are subject to extensive and costly laws and regulations, and such current and future laws and regulations could increase current operating costs or limit our ability to produce coal
40. 54Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs, additional operating restrictions or delays, and fewer potential drilling locations, which could adversely affect revenues from our mineral interests
41. 55Legislation or regulatory initiatives intended to address seismic activity could restrict the operators’ drilling and production activities, as well as their ability to dispose of produced water gathered from such activities, which could have a material adverse effect on our business
42. 56Our coal operations, and the third-party operations related to our oil and gas mineral interests, are subject to a series of risks resulting from climate change
43. 57Some of our operating subsidiaries lease a portion of the surface properties upon which their mining facilities are located
44. 58Federal and state laws require bonds to secure our obligations related to statutory reclamation requirements and workers’ compensation and black lung benefits. Our inability to acquire or failure to maintain surety bonds that are required by federal and state law would have a material adverse effect on us
45. 59We depend on unaffiliated operators for all of the exploration, development, and production of the oil & gas properties in which we own mineral interests
46. 60We have little to no control over the timing of future drilling with respect to our oil & gas mineral interests
47. 61We could experience delays in the payment of royalties and be unable to replace operators that do not make required royalty payments, and we may not be able to terminate our leases with defaulting lessees if any of the operators on those leases declare bankruptcy
48. 62If the operators of our oil & gas properties suspend our right to receive royalty payments due to title or other issues, our business, financial condition, and/or results of operations could be adversely affected
49. 63Our estimated oil & gas reserves are based on many assumptions that could turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves
50. 64Drilling for and producing oil & gas are high-risk activities with many uncertainties that could materially adversely affect our business, financial condition, and results of operations
51. 65We do not currently enter into hedging arrangements with respect to commodity production from our properties, and we will be exposed to the impact of decreases in the price of such commodities
52. 66Expansions and acquisitions involve a number of risks, any of which could cause us not to realize the anticipated benefits
53. 67requirements. No assurance can be given that we will be able to identify suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms, or successfully acquire identified targets
54. 68The integration of any expansions or acquisitions that we complete will be subject to substantial risks
55. 69We may not be able to effectively identify investment opportunities in the growth and development of energy and related infrastructure on favorable terms, or at all, and failure to do so may limit our future growth
56. 70Our inability to obtain commercial insurance at acceptable rates or our failure to adequately reserve for self-insured exposures could increase our expenses and have a negative impact on our business
57. 71The anticipated after-tax benefit of an investment in our common units depends largely on our being treated as a partnership for U.S. federal income tax purposes
58. 72The tax treatment of publicly traded partnerships or an investment in our units could be subject to potential legislative, judicial or administrative changes or differing interpretations, possibly applied on a retroactive basis
59. 73If the IRS were to contest the U.S. federal income tax positions we take, it may adversely impact the market for our common units, and the costs of any such contest would reduce cash available for distribution to our unitholders
60. 74Our unitholders are required to pay taxes on their share of our income even if they do not receive any cash distributions from us
61. 75Tax gain or loss on the disposition of our common units could be more or less than expected
62. 76Unitholders may be subject to limitation on their ability to deduct interest expense incurred by us
63. 77Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences to them
64. 78We treat each purchaser of our common units as having the same tax benefits without regard to the common units actually purchased. The IRS may challenge this treatment, which could adversely affect the value of our common units
65. 79Certain U.S. federal income tax deductions currently available with respect to coal mining and production may be eliminated as a result of future legislation
66. 80Our unitholders will likely be subject to state and local taxes and income tax return filing requirements in jurisdictions where they do not live as a result of investing in our common units

Risks Related to our Business

1. 18Global economic conditions or economic conditions in any of the industries in which our customers operate as well as sustained uncertainty in financial markets could have material adverse impacts on our business and financial condition that we currently cannot predict
2. 19Growing our business could require significant amounts of financing that may not be available to us on acceptable terms, or at all
3. 20Our indebtedness could limit our ability to borrow additional funds, make distributions to unitholders, or capitalize on business opportunities
4. 21In addition, we have unused borrowing capacity under our revolving credit facility. Future borrowings, under our credit facilities or otherwise, could increase our leverage
5. 22We depend on the leadership and involvement of Joseph W. Craft III and other key personnel for the success of our business
6. 23We and our subsidiaries are subject to various legal proceedings, which could have a material adverse effect on our business
7. 24The stability and profitability of our operations could be adversely affected if our customers do not honor existing contracts or do not extend existing or enter into new long-term contracts for coal
8. 25Some of our long-term sales contracts contain provisions allowing for the renegotiation of prices and, in some instances, the termination of the contract or the suspension of purchases by customers
9. 26We depend on a few customers for a significant portion of our revenues, and the loss of one or more significant customers could affect our ability to maintain the sales volume and price of the coal we produce
10. 27Our ability to collect payments from our customers could be impaired if their creditworthiness declines or if they fail to honor their contracts with us
11. 28Terrorist attacks or cyber incidents could result in information theft, data corruption, operational disruption, and/or financial loss
12. 29We face various risks related to pandemics and similar outbreaks, which have had and may in the future have material adverse effects on our business, financial position, results of operations, and/or cash flows
13. 30Although none of our employees are members of unions, our workforce may not remain union-free in the future