Equity Investments and Membership Interests in Joint Ventures

Below are the equity method investments reflected in the consolidated balance sheets:



	Knight Hawk			DKRW			DTA			Tenaska			Millennium			Tongue River		Total
	(In thousands)
Balance at January 1, 2010	$	49,603		$	23,589		$	14,076		$	—		$	—		$	—	$	87,268
Investments in affiliates	77,637			—			—			9,768			—			—		87,405
Advances to (distributions from) affiliates, net	(12,639		)	—			4,264			—			—			—		(8,375		)
Equity in comprehensive income (loss)	16,649			(1,628		)	(3,868		)	—			—			—		11,153
Balance at December 31, 2010	$	131,250		$	21,961		$	14,472		$	9,768		$	—		$	—	$	177,451
Investments in affiliates	—			—			—			5,500			25,000			12,989		43,489
Advances to (distributions from) affiliates, net	(16,621		)	—			6,498			—			3,477			—		(6,646		)
Equity in comprehensive income (loss)	20,596			(2,246		)	(4,884		)	(2		)	(2,153		)	—		11,311
Balance at December 31, 2011	$	135,225		$	19,715		$	16,086		$	15,266		$	26,324		$	12,989	$	225,605
Investments in affiliates	—			—			—			—			—			—		—
Advances to (distributions from) affiliates, net	(7,151		)	—			4,335			—			8,798			1,708		7,690
Equity in comprehensive income (loss)	20,989			(4,200		)	(4,959		)	(2		)	(2,908		)	—		8,920
Balance at December 31, 2012	$	149,063		$	15,515		$	15,462		$	15,264		$	32,214		$	14,697	$	242,215
Notes receivable from investees:
Balance at December 31, 2011	$	—		$	30,751		$	—		$	5,059		$	—		$	—	$	35,810
Balance at December 31, 2012	$	—		$	38,680		$	—		$	5,148		$	—		$	—	$	43,828

The Company holds an equity interest in Knight Hawk Holdings, LLC ("Knight Hawk"), a coal producer in the Illinois Basin. In June 2010, the Company exchanged 68.4 million tons of coal reserves in the Illinois Basin for an additional 9% ownership interest, increasing the Company's ownership in Knight Hawk to 42% from 33.33%. The Company recognized a gain of $41.6 million on the transaction, representing the difference between the fair value and the $12.1 million net book value of the coal reserves, adjusted for the Company's retained ownership interest in the reserves through its investment in Knight Hawk. In December 2010, the Company increased its ownership interest in Knight Hawk to 49% for $26.6 million in cash.

The Company holds a 24% equity interest in DKRW Advanced Fuels LLC ("DKRW"), a company engaged in developing coal-to-liquids facilities. DKRW may borrow funds from the Company under a convertible secured promissory note. Amounts borrowed are due and payable in cash or in additional equity interests on the earlier of June 30, 2013 or upon the closing of DKRW's next financing, bear interest at the rate of 15% per annum, and are secured by DKRW's equity interests in Medicine Bow Fuel & Power LLC. The note balances above are reflected in other receivables on the consolidated balance sheets.

The Company holds a general partnership interest of 21.875% in Dominion Terminal Associates ("DTA"), which is accounted for under the equity method. DTA operates a ground storage-to-vessel coal transloading facility in Newport News, Virginia for use by the partners. Under the terms of a throughput and handling agreement with DTA, each partner is charged its share of cash operating and debt-service costs in exchange for the right to use the facility's loading capacity and is required to make periodic cash advances to DTA to fund such costs.

The Company holds a 35% ownership interest in Tenaska Trailblazer Partners, LLC ("Tenaska"), the developer of the Trailblazer Energy Center, a fossil-fuel-based electric power plant near Sweetwater, Texas. The plant, fueled by low sulfur coal, will capture and store carbon dioxide for enhanced oil recovery applications. Additional future payments are due upon the achievement of project milestones to maintain the Company's interest. The Company made a milestone payment of $5.5 million in 2011. The Company will also pay 35% of the future development costs of the project, not to exceed $12.5 million without prior approval from the Company. The receivables for these development costs, shown above, are reflected in the consolidated balance sheets in other noncurrent assets, as the development costs will either be reimbursed when the project receives construction financing, or they will be considered an additional capital contribution, with ownership percentages adjusted accordingly.

In January 2011, the Company purchased a 38% ownership interest in Millennium Bulk Terminals-Longview, LLC ("Millennium"), the owner of a brownfield bulk commodity terminal on the Columbia River near Longview, Washington, for $25.0 million, plus additional future consideration upon the completion of certain project milestones. Millennium continues to work on obtaining the required approvals and necessary permits to complete dredging and other upgrades to enable coal, alumina and cementitious material shipments through the terminal. The Company will control 38% of the terminal's throughput and storage capacity, in order to facilitate export shipments of coal off the west coast of the United States.

In July 2011, the Company purchased a 35% membership interest in the Tongue River Holding Company, LLC ("Tongue River") joint venture. Tongue River will develop and construct a railway line near Miles City, Montana and the Company's Otter Creek reserves. The Company has the right, upon the receipt of permits and approval for construction or under other prescribed circumstances, to require the other investors to purchase all of the Company's units in the venture at an amount equal to the capital contributions made by the Company at that time, less any distributions received.

The Company may be required to make future contingent payments of up to $72.9 million related to development financing for certain of its equity investees. The Company’s obligation to make these payments, as well as the timing of any payments required, is contingent upon a number of factors, including project development progress, receipt of permits and construction financing.

Summarized financial information of the Company's equity method investees follows:



	December 31
	2012		2011		2010
	(In thousands)
Condensed combined income statement information:
Revenues	$	190,661	$	184,358	$	172,933
Gross profit	15,308		19,495		25,203
Income from operations	8,898		13,180		20,243
Net income	641		6,788		16,015
Condensed combined balance sheet information:
Current assets	$	78,961	$	94,644
Noncurrent assets	387,884		331,848
Total assets	$	466,845	$	426,492
Current liabilities	$	57,403	$	51,674
Noncurrent liabilities	128,489		120,494
Equity	280,690		254,163
Noncontrolling interest	263		161
Total liabilities and equity	$	466,845	$	426,492