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Preference Rights Lease Application Settlement Income
9 Months Ended
Sep. 30, 2020
Commitments and Contingencies  
Preference Rights Lease Application Settlement Income

7. Preference Rights Lease Application Settlement Income

The Company recorded a $39 million gain during the third quarter of 2019 related to a settlement with the United States Department of Interior over a long-standing dispute, dating back to the 1970’s, on the valuation and disposition of Preference Rights Lease Applications that Arch controlled in northwestern New Mexico with a joint venture partner. As part of the settlement, Arch received $67.0 million in the form of royalty credits on its federal coal leases which will be used to settle 50% of the Company’s monthly royalty obligations. The Company expects to realize the royalty credits beginning in September 2019 through the next 18-24 months depending on market conditions. Additionally, as part of the settlement, the Company made a one-time payment of $27.0 million during October 2019 to its’ partner in the venture for its ownership interest in the underlying mineral reserves, as well as paid $1.0 million in closing fees.

As of September 30, 2020, the Company realized $8.7 million and $25.8 million towards its royalty obligations for the three months and nine months ended September 30, 2020. The Company realized a credit of $5 million towards its royalty obligations during the quarter ended September 30, 2019. The remaining receivable balance outstanding at September 30, 2020 is $27.8 million which is expected to be received over the next three quarters.