EX-99.2 3 dex992.htm PRESENTATION MATERIALS Presentation Materials
Alliance Resource Partners, L.P.
Alliance Holdings GP, L.P.
Wachovia Capital Markets
Pipeline & MLP Symposium
December 9, 2008
Exhibit 99.2


Forward-Looking Statements
Forward-Looking Statements
2
2
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
assumptions
made
by
and
information
currently
available
to
them.
When
used
in
this
presentation,
words
such
as
“anticipate,”
“project,”
“expect,”
“plan,”
“goal,”
“forecast,”
“intend,”
“could,”
“believe,”
“may,”
and
similar
expressions
and
statements
regarding
the
plans
and
objectives
of
the
Partnerships
for
future
operations,
are
intended
to
identify
forward-looking
statements.
Although
the
Partnerships
and
their
General
Partners
believe
that
such
expectations
reflected
in
such
forward-looking
statements
are
reasonable
at
the
time
such
statements
are
made,
neither
the
Partnerships
nor
the
General
Partners
can
give
assurances
that
such
expectations
will
prove
to
be
correct.
Such
statements
are
subject
to
a
variety
of
risks,
uncertainties
and
assumptions.
If
one
or
more
of
these
risks
or
uncertainties
materialize,
or
if
underlying
assumptions
prove
incorrect,
actual
results
may
vary
materially
from
those
the
Partnerships
anticipated,
estimated,
projected
or
expected.
The
Partnerships
have
no
obligation
to
publicly
update
or
revise
any
forward-looking
statement,
whether
as
a
result
of
new
information,
future
events
or
otherwise.


Outlook for coal


Macro Coal Dynamics
Macro Coal Dynamics
Liquidity Crunch
Hedge
fund
deleveraging
Financial coal traders exiting the market
Reduced capital availability
Instinct to preserve capital countered by….
Anticipated 2009-2010 cash flow surge
Alternative energy investments
Demand Destruction
China, India and global economic slowdown
Domestic energy consumption
Natural gas competition mitigated by….
Base load nature of Coal
Recessionary Pressures
Hyperinflation has been arrested
4
4


Macro Coal Dynamics
Macro Coal Dynamics
Obama and a Democratic Congress
Positives
Acknowledged importance of Coal
Generates
~50%
of
U.S.
electricity
1
Employees
hundreds
of
thousand
of
Americans
Provides millions in tax revenues to coal states
America’s
most
abundant
low-cost
fuel
source
Economic stimulus & commitment to U.S. jobs
Infrastructure investments will increase energy demand
Investment in Clean Coal technology
Negatives
Challenging legislative/regulatory landscape
Climate
Change
Cap
&
Trade?
Structure?
Union influence –
Card Check
New MSHA
5
5
(1)  Energy Information Administration


Domestic Coal Supply Outlook
Domestic Coal Supply Outlook
Short Term Supply –
Will Be Lower
Reduced investment capital & credit capacity
Lack of equipment availability
MSHA –
productivity declines
Permitting delays and litigation
Labor shortages are still a factor
High cost operations at risk
International production constraints continue
6
6
Long Term Supply
Governmental action
Depletion of low cost reserves


Domestic Coal Demand Outlook
Domestic Coal Demand Outlook
Short Term Demand –
Lower Due to
Worldwide Economic Downturn
Met market
Steel production cuts
Coal prices –
U.S. vs. Australian production
U.S. currency value
PCI market
Steam coal
Natural gas competition
Stockpiles are normal?
7
7


Domestic Coal Demand Outlook
Domestic Coal Demand Outlook
8
8
Long Term Demand
Positives
29
new
U.S.
coal-fired
power
plants
(16.5GW)
under
construction
Plug-in Hybrids
Economic stimulus programs –
U.S. $700B / China $300B
Met market will return
U.S. currency will reverse
BTU conversion –
coal to gas / liquids
Clean coal technology
Negatives
Climate change
Renewable energy standard
Conservation/energy efficiency –
smart meters, save a watt
programs…
Natural gas competition –
price/demand volatility, depletion, capital
constraints
(1)  U.S. Department of Energy, “Tracking New Coal-Fired Power Plants”, June 2008
1


Summary –
Summary –
Domestic Coal Outlook
Domestic Coal Outlook
Despite challenges….
Coal has been and is best positioned
to remain the Cornerstone of
America’s Electric Energy Future
9
9


Outlook for Alliance


Alliance Snapshot
Alliance Snapshot
Fifth
largest
coal
producer
in
the
eastern
United
States
Eight
underground
mining
complexes
in
all
major
eastern
coal
producing
regions
Four
significant
organic
development
projects
in
the
growing
Illinois
Basin
and
Northern
Appalachia
coal
markets
Marketable
coal
reserves
of
~
713
million
tons
at
12/31/07
FY2008
estimated
coal
sales
of
26.8
to
27.3
million
tons
and
revenue
of
$1.03
to
$1.1
billion
1
1
2
2
3
3
5
5
6
6
4
4
9
9
8
8
12
12
11
11
10
10
Illinois
Illinois
Indiana
Indiana
Ohio
Ohio
Pennsylvania
Pennsylvania
Maryland
Maryland
Virginia
Virginia
West
West
Virginia
Virginia
Kentucky
Kentucky
7
7
Current
Mining
Operation
Future
Growth
Project
Transfer
Terminal
Pattiki
Complex
River View Complex
Dotiki Complex
Mount Vernon
Transfer Terminal
Warrior Complex
Hopkins
Complex
Gibson Complex
Pontiki Complex
MC Mining Complex
Tunnel
Ridge
Complex
Penn Ridge Complex
Mettiki Complex
3
3
4
4
1
1
2
2
5
5
6
6
7
7
8
8
9
9
10
10
11
11
12
12
11
11


Consistent Track Record of Distribution
Consistent Track Record of Distribution
Growth
Growth
ARLP has increased distributions 40% since June 2006
AHGP has increased distributions 81% since June 2006
Source:  Public filings
ARLP
ARLP
12
12
AHGP
AHGP
$2.24
$2.34
$2.34
$2.64
$2.80
$2.00
$2.16
$2.16
$2.24
$1.25
$1.50
$1.75
$2.00
$2.25
$2.50
$2.75
$3.00
$1.06
$1.15
$1.15
$1.41
$1.56
$0.86
$1.00
$1.00
$1.06
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75


Strong Realized Coal Price Growth
Strong Realized Coal Price Growth
$20.00
$30.00
$40.00
$50.00
$60.00
2008(e)
2009(e)
2010(e)
`
(1)
Based on guidance from October 27, 2008 earnings release.  For 2008, estimate reflects midpoint of guidance. For 2009 estimate, the
guidance range reflects an increase of 25% -
35% over the midpoint of 2008 estimated pricing.  For 2010 estimate, the guidance range
reflects an increase of 40% -
50% over the midpoint of 2008 estimated pricing.
Estimated
Coal
Sales
Price/Ton
(1)
Strong Coal Sales Commitments
$59.72
$55.74
$53.74
$49.76
$39.81
Committed and priced coal
sales
2009 ~ 90%
2010 ~ 80%
Executed agreements during
2008Q3 for 22.9 million tons
Terms up to 10 years
Prices 65% above
historical levels
13
13


Alliance’s Long Term Growth Strategy
Alliance’s Long Term Growth Strategy
Capitalize on the expected strong demand growth
in scrubber quality coal
Continue to be a disciplined producer -
project
developments tied to sales commitments
Continuous focus on safety and operational
optimization
Pursue opportunistic acquisitions
14
14


Large Inventory of Organic Growth Projects
Large Inventory of Organic Growth Projects
Permitting
in
progress
Estimated
capital
cost
~
$265
$285
million
Estimated
reserves
~
70
million
tons
high
sulfur
coal
Production
capacity
~
6
million
tons/year
Initial
production
in
2010Q4
Tunnel Ridge
Initiating
permitting
process
Estimated
capital
cost
~
$165
$175
million
Estimated
reserves
~
57
million
tons
high
sulfur
coal
Production
capacity
~
5
million
tons/year
Initial
production
in
2011
2013
Penn Ridge
Constructing
slope
and
shaft
Estimated
capital
cost
~
$250
$275
million
Estimated
reserves
~
117
million
tons
high
sulfur
coal
Production
capacity
~
6.4
million
tons/year
Initial
production
in
2009Q4
River View
Permitting
in
progress
Estimated
capital
cost
~
$100
$110
million
Estimated
reserves
~
83
million
tons
medium
sulfur
coal
Production
capacity
~
2.7
3.1
million
tons/year
Initial
production
in
2010
2012
Gibson South
Illinois
Illinois
Indiana
Indiana
Ohio
Ohio
Pennsylvania
Pennsylvania
Maryland
Maryland
Virginia
Virginia
West
West
Virginia
Virginia
Kentucky
Kentucky
Note:  Estimated capital costs are based on 2007 dollars and exclude capitalized development and interest expenses.  Timing of
anticipated initial production dependent upon obtaining  required permits and customer contracts.
15
15


Strong Balance Sheet
Strong Balance Sheet
Strong Balance Sheet
16
16
Net Debt as Percentage of
Capitalization
2003YE
2004YE
2005YE
2005YE
2006YE
2006YE
2007YE
92.1%
64.3%
34.1%
30.1%
32.5%
Source:  Public filings
24.1%
2008Q3
$350 million private placement of
Senior Notes completed 06/26/08
$205 million at 6.28% due 2015
$145 million at 6.72% due 2018
Existing $150 million revolving
credit facility expires in 2012
Liquidity of ~$380 million available
at 2008Q3
Current debt obligation of $18
million
Visible cash flow growth


Alliance Resource Partners, L.P.
Alliance Holdings GP, L.P.
Wachovia Capital Markets
Pipeline & MLP Symposium
December 9, 2008