EX-99.2 3 dex992.htm PRESENTATION FOR THE 16TH ANNUAL WACHOVIA SECURITUES NANTUCKET CONFERENCE Presentation for the 16th Annual Wachovia Securitues Nantucket Conference
Wachovia Securities
Nantucket Equity Conference
June 22, 2006
Exhibit 99.2
*
*
*
*
*
*

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
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.

Alliance  Overview

Ownership of Alliance Partnerships
(a)  Includes general partner interest held directly in ARLP’s Intermediate Partnership.
__________________
56.7%
L.P.
Interest
42.3% L.P.
Interest
1.98% General
Partner Interest
Alliance Holdings
GP , L.P.
(NASDAQ: AHGP)
59.9 million units outstanding
Alliance Resource
Partners, L.P.
(NASDAQ: ARLP)
36.4 million units outstanding
Public
Unitholders
Public
Unitholders
Management /
Others
1
(a)
IDRs
80.0%
L.P.
Interest
20.0%
L.P.
Interest
Ownership structure provides two ways to invest in Alliance Partnerships
Strong alignment of interests throughout the Alliance Partnerships
Management owns significant interests directly in AHGP and indirectly in ARLP
All unitholders benefit from increased distributions by ARLP

5
th
largest eastern coal producer
549 million tons of reserves at
1/1/06
642 million tons at 4/12/06
following River View
acquisition
5.9%
29.4%
$2,197 mm
$2,067 mm
2.17x
$1.84
$35.06
ARLP
$22.31
Unit Price (6/12/06):
$1,335 mm
Equity Market Cap:
Ownership Interests in ARLP
1.98% G.P. Interest
100% of Incentive Distribution Rights
15.6 mm ARLP common units
Asset Profile:
0.0%
Net Debt / Net Book Cap:
$1,335 mm
Enterprise Value:
$0.74
Distribution:
AHGP
NASDAQ Symbol:
0.0%
Net Debt / Ent. Value:
1.00x
Total Distribution Coverage:
Alliance Partnership Profiles
2

3
Increase cash distributions to unitholders by actively assisting
ARLP in implementing its business strategy
AHGP
intends
to
support
ARLP
by
assisting
with
the
identification,
evaluation
and
pursuit of growth opportunities
AHGP
may
provide
ARLP
access
to
AHGP’s
capital
resources
to
facilitate
such
growth opportunities, including:
Loans
Capital contributions
Guarantees
Complementary Business Objectives
Alliance Holdings GP, L.P.
Create sustainable, capital efficient growth in distributable cash flow
to maximize growth in distributions to ARLP unitholders
Alliance Resource Partners, L.P.

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 through re-contracting exposure to market prices
Experienced management team
Visible inventory of growth prospects
Industry-leading distribution coverage at ARLP provides stability and a catalyst
for future growth
Accelerated cash flow growth potential of Alliance Holdings GP, L.P. through
ownership of ARLP incentive distribution rights
Strong economic alignment throughout organization
Management owns significant interests in both ARLP and AHGP
Alliance Investment Highlights
4

Alliance Resource Partners, L.P.
Overview

__________________
ARLP is a diversified producer and
marketer of coal to major U.S. utilities and
industrial users
Fifth largest eastern coal producer and
eleventh
largest
in
the
U.S.
(a)
Only publicly-traded master limited
partnership involved in the production and
marketing of coal
At 1/1/06, ARLP had approximately
549.0
million tons of proven and probable
coal reserves in the Illinois Basin, Central
Appalachia and Northern Appalachia
regions
On April 12, 2006, ARLP announced the
acquisition of River View, adding 99.3
million tons of reserves
(a)
Source: Platts coal data as of 9/30/05.
(b)
Includes value of ARLP general partner interest / IDR interest as of June 12, 2006. Net debt as of March 31, 2006.
Alliance Resource Partners, L.P. Snapshot
Unit Price at 6/12/06:
$35.06
Current Annualized Distribution:
$1.84
Current Yield:
5.25%
Equity Market Value
(b)
:
~$2,067 mm
Enterprise Value
(b)
:
~$2,197 mm
ARLP Trading Information
5
1
2
3
4
Pattiki Complex
River View Complex
Dotiki Complex
Mount Vernon
Transfer Terminal
5
6
7
8
Warrior Complex
Hopkins Complex
Gibson Complex
Pontiki Complex
9
10
11
12
MC Mining Complex
Tunnel Ridge Complex
Penn Ridge Complex
Mettiki Complex

Operations Summary
2005 Production
Northern
Appalachia
31%
Illinois Basin
61%
Central
Appalachia
8%
Reserves -
2005 YE
6
2005 Summary (MM Tons)
Production
Reserves
Primary Customers
Illinois Basin
Dotiki
4.7
89.5
Seminole; LG&E; TVA
Warrior
4.1
17.8
Synfuel Solutions
Pattiki
2.6
47.6
TVA; Tampa Electric
Hopkins
0.9
64.3
LG&E
Gibson (North)
3.4
35.1
PSI Energy
Gibson (South)
-
82.7
-
Region Total
15.7
337.0
Central Appalachia
Pontiki
1.7
18.4
ICG
MC Mining
1.6
22.8
Various
Region Total
3.3
41.2
Northern Appalachia
Mettiki / Mettiki WV
3.3
43.6
Virginia Electric Power
Tunnel Ridge
-
70.5
-
Penn Ridge
-
56.7
-
Region Total
3.3
170.8
Total Company
22.3
549.0
Including River View Reserves (4/12/06)
642.0
Northern
Appalachia
15%
Illinois Basin
70%
Central
Appalachia
15%

Efficient Operator
Source: Public filings
EBITDA
margin
represents
EBITDA
/
Total
Revenues.
EBITDA
is
a
non-GAAP
measure.
See
Slide
22
for
a
reconciliation
of
EBITDA
to
Net
Income.
ARLP is a low-cost, efficient coal operator, delivering sector-leading EBITDA
margins
__________________ 
7
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Alliance
Foundation
Consol
Peabody
Massey
Arch
Alpha
2003
2004
2005

__________________ 
Note: EBITDA is a non-GAAP measure defined as income before net interest expense, income taxes and depreciation, depletion and amortization.  See Slide 22 for a reconciliation of EBITDA to GAAP.
(a)   Based on the midpoint of management guidance.
Consistent Track Record of Growth at ARLP
18.0
19.2
20.4
22.3
24.4
10.0
15.0
20.0
25.0
2002
2003
2004
2005
2006E
Production
$499.0
$523.2
$623.5
$799.6
$920.0
$0.0
$200.0
$400.0
$600.0
$800.0
$1,000.0
2002
2003
2004
2005
2006E
Revenue
$101.3
$110.3
$145.1
$193.6
$250.0
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
2002
2003
2004
2005
2006E
Cash Flow from Operations
$102.5
$119.0
$147.9
$230.1
$255.0
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
2002
2003
2004
2005
2006E
EBITDA
CAGR: 7.9%
CAGR: 16.5%
CAGR: 25.6%
CAGR: 25.3%
(a)
(a)
(a)
8
(a)

$1.00
$1.00
$1.05
$1.05
$1.05
$1.05
$1.13
$1.25
$1.30
$1.30
$1.50
$1.50
$1.65
$1.65
$1.84
$1.84
$0.75
$0.95
$1.15
$1.35
$1.55
$1.75
$1.95
(a)
On
4/24/06,
ARLP
management
announced
a
quarterly
cash
distribution
to
$0.46
per
unit
for
the
first
quarter
ended
3/31/06
($1.84
per
unit,
annualized).
Continuous Unit Distribution Growth
__________________ 
ARLP has increased its quarterly distribution by 84% over the last four years
(a)
9

Leader in Distribution Growth
ARLP compares favorably to the broad MLP universe in terms of distribution
growth since the beginning of 2004
(a)
10
81%
64%
41%
40%
36%
36%
35%
34%
30%
26%
19%
19%
18%
16%
16%
13%
10%
5%
2%
0%
__________________ 
(a)   Total distribution growth from distribution paid in the first quarter of 2004 to the latest announced distribution.

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 Alliance investors include:
Greater potential for future distribution growth
Capital efficient financing for ARLP organic growth projects
Added stability across operating and pricing environments
(a)
Source: public filings.  Coverage calculated as last twelve months (as of 12/31/05) total cash available for distribution divided by current annualized cash distributions.
(b)
Coal MLP Index includes NRP and PVR.  Coverage calculated as last twelve months (as of 12/31/05) total cash available for distribution divided by current annualized cash distributions.
(c)
Pipeline MLP Index includes APL, BPL, BWP, XTEX, DPM, EEP, EPD, ETP, HLND, HEP, KMP, MMP, MWE, MMLP, NBP, PPX, PAA, SXL, TCLP, TLP, TPP, WPZ and VLI. Coverage calculated as
last twelve months (as of 12/31/05) total cash available for distribution divided by current annualized cash distributions.
__________________ 
2.17x
1.33x
1.02x
ARLP
Coal MLP Index
Pipeline MLP Index
(b)
(c)
11

-50
0
50
100
150
200
250
300
350
400
1/1/2003
6/29/2003
12/26/2003
6/23/2004
12/19/2004
6/17/2005
12/14/2005
6/12/2006
Indexed Total
Return (%)   
ARLP
Coal MLP Index
Pipeline MLP Index
S&P 500
+253.1%
+202.5%
+85.8%
Total Returns Since 1/1/2003
+40.5%
Superior Total Returns to Unitholders
(a)
Coal MLP Index includes NRP and PVR.
(b)
Pipeline MLP Index includes APL, BPL, BWP, DPM, XTEX, EEP, EPD, ETP, HLND, HEP, KMP, MMP, MWE, MMLP, NBP, PPX, PAA, RGNC, SXL, TCLP, TLP, TPP, WPZ and VLI.
__________________ 
(a)
(b)
CAGR: 44.2%
12

Alliance Holdings GP, L.P.
Overview

13
Note:
This
graph
shows
the
impact
to
AHGP
as
a
result
of
ARLP
raising
its
quarterly
distribution
from
the
current
announced
distribution
of
$0.46
per
common
unit
($1.84
annualized).
This
information
is
presented
for
illustrative
purposes
only
and
is
not
intended
to
be
a
prediction
of
future
performance.
Assumes
constant
36.4
million
common
units
outstanding
at
ARLP.
__________________ 
Incentive distribution rights provide AHGP unitholders with significant
financial leverage to ARLP distribution growth
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$1.84
$1.94
$2.04
$2.14
$2.24
$2.34
$2.44
Hypothetical ARLP Annual Distribution per L.P. Unit
Hypothetical
Distributions to
AHGP
AHGP Leverage to ARLP Growth
G.P.
Interest
IDRs
L.P.
Interest
Current ARLP
Distribution
($45.8 million)

Note:
Assumes constant 36.4 million common units outstanding at ARLP.
__________________ 
Impact of ARLP Distribution Growth
14
AHGP Leverage to ARLP Distribution Growth
ARLP Distribution Growth
0%
10%
20%
30%
0%
5%
10%
15%
20%
9.5%
25.5%
17.9%
32.6%

Value Inherent in Underlying Cash Flows
ARLP’s value proposition becomes clear through its current cash available for
distribution
The impact is even more pronounced at AHGP due to the IDR leverage
Implied Distributions Across Coverage Levels
(a)
Implied Yields
(b)
Current ARLP
Distribution / Unit
(a)
Source:
public
filings.
Coverage
calculated
as
last
twelve
months
(as
of
3/31/06)
total
cash
available
for
distribution
divided
by
current
annualized
cash
distributions.
(b)
Yields as of June 12, 2006.
(c)
Coal MLPs Index includes NRP and PVR.
(d)
Pipeline MLPs includes APL, BPL, BWP, DPM, XTEX, EEP, EPD, ETP, HLND, HEP, KMP, MMP, MWE, MMLP, NBP, PPX, PAA, RGNC, SXL, TCLP, TLP, TPP, WPZ and VLI.
(e)
GP Holdcos
includes XTXI, EPE, ETE, MGG, NRGP.
__________________ 
(c)
(d)
15
(e)
$0.74
$0.82
$0.98
$1.18
$1.47
$1.90
$1.84
$1.94
$2.12
$2.36
$2.69
$3.19
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
2.17x
2.00x
1.75x
1.50x
1.25x
1.00x
ARLP Coverage Ratio      
Implied ARLP Distribution
Implied AHGP Distribution
9.11%
7.90%
8.53%
4.68%
3.57%
3.32%
7.03%
5.86%
5.25%
7.50%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
ARLP
Coal MLPs
Pipeline
MLPs
AHGP
GP
Holdcos
Distributed Yield
Assuming 1.00x Coverage at MLP

Positioned for Continued Growth

Growing Domestic Demand for Coal
Continued U.S. economic strength
Electric power demand near all-time high and
expected to grow ~2.0% annually through 2030
(a)
Energy Policy Act of 2005 favors coal as fuel of the
future
New coal-fired power plants total ~174 GW by 2030
(a)
Btu
conversion
–
coal
to
liquids,
coal
gasification
Domestic Coal Supply Constraints
Significant barriers to entry (permitting, regulatory
compliance, etc.)
Higher capital costs and extended mining equipment
backlog
Skilled labor shortages
Ongoing transportation infrastructure issues
Low Coal Stockpiles
Inventory levels at 4Q’05 15.4% below five-year
average
(a)
Favorable Global Dynamics
Continued global expansion (China, India, U.S.)
Challenges for Competing Fuels
Nuclear utilization at full capacity
Non-competitive oil and natural gas prices
Continued challenges for LNG
Robust Coal Sector Industry Fundamentals
127
118
126
112
113
112
123
106
109
90
100
110
120
130
140
4Q
2003
1Q
2004
2Q
2004
3Q
2004
4Q
2004
1Q
2005
2Q
2005
3Q
2005
4Q
2005
U.S. Coal Inventories
(a)
__________________ 
(a)
Source: Energy Information Administration.
0
15
30
45
60
1980
1990
2000
2010
2020
2030
Historical and Projected Energy Consumption by
Source
(a)
Petroleum
Coal
Gas
Nuclear
Renewable
Hydropower
16

ARLP Positioned to Benefit from Sector Growth
Future revenue growth potential enhanced by meaningful exposure to market
pricing
$25.77
$28.79
$33.65
$36.01
$38.53
$0.00
$10.00
$20.00
$30.00
$40.00
2003
2004
2005
2006E
2007E
Coal Sales / Ton Sold
CAGR: 10.6%
Coal Sales Volumes Open to
Market Pricing
(a)
Tons of
Year
Coal (mm)
2006
1.4
2007
10.6
2008
16.7
17
(a)
Based on ARLP press releases dated 1/30/2006 and 4/24/2006.
__________________ 
(a)
(a)

Significant Scrubber Market Dynamics
Scrubber Additions -
Announced
Planned
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
environmental compliance
initiatives, a significant
amount of coal demand
historically supplied from
the Central Appalachian
region should switch to
higher sulfur Illinois Basin
and Northern Appalachian
coal
18
Source:  Company analysis.
__________________ 

ARLP Well Positioned in Scrubber Markets
Current Position
Four mining complexes
currently producing in the
Illinois Basin and one in
Northern Appalachia serving
the scrubbed utility markets
#2 overall producer in the
Illinois Basin
Growing presence with
announced projects in
Northern Appalachia
In 2005, 70% of the 22.3
million tons produced
serviced the high or medium
sulfur markets
Approximately 540 million
tons of “scrubber”
quality
coal reserves (high and
medium sulfur)
Recent Contract Agreements
Allegheny Coal Sales Agreement
•
New 10 year, 20 million ton
coal supply agreement
commencing with initial
production from Penn Ridge
mine
LG&E Coal Sales Agreement
•
New 6 year, 23.5 million ton
coal supply agreement
commencing January 1, 2006
with option to extend
VEPCO Coal Sales Agreement
•
New 7 year, 15.8 million ton
coal supply agreement
commencing January 1, 2007
Current Mine Developments
Elk Creek
Mountain View
Van Lear
New Mine Developments
Tunnel Ridge (Permitting in
Progress)
Penn Ridge (Initiating
Permitting Process)
Gibson South (Permitting in
Progress)
River View (Initiating
Permitting Process)
19

20
Large Inventory of Organic Growth Projects
ARLP has a number of significant, near-term development opportunities
Tunnel
Penn
Gibson
Development Project:
Ridge
Ridge
South
Status:
Permitting in
progress
Initiating
permitting process
Permitting in
progress
Expected Development
Cost:
$200 million
$165 million
$100 million
Anticipated Initial
Production:
2008 -
2009
2009 -
2010
2008 -
2009
Estimated Reserves
(million tons)
:
70
55
83
Coal Quality:
High Sulfur
High Sulfur
Medium Sulfur
Estimated Annual
Production Capacity
(million tons):
6.0
5.0
3.1
River
View
$110 -
$130 million
99
High Sulfur
3.5
2008 -
2009
Initiating
permitting process

Summary

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 through re-contracting exposure to market prices
Experienced management team
Visible inventory of growth prospects
Industry-leading distribution coverage at ARLP provides stability and a catalyst
for future growth
Accelerated cash flow growth potential of Alliance Holdings GP, L.P. through
ownership of ARLP incentive distribution rights
Strong economic alignment throughout organization
Management owns significant interests in both ARLP and AHGP
Alliance Investment Highlights
21

Questions and
Answers

ARLP EBITDA Reconciliation
EBITDA
is
defined
as
income
before
net
interest
expense,
income
taxes
and
depreciation,
depletion
and
amortization. 
Management
believes
EBITDA
is
a
useful
indicator
of
its
ability
to
meet
debt
service
and
capital
expenditure
requirements
and
uses
EBITDA
as
a
measure
of
operating
performance.
EBITDA
should
not
be
considered
as
an
alternative
to
net
income,
income
from
operations,
cash
flows
from
operating
activities
or
any
other
measure
of
financial
performance
presented
in
accordance
with
generally
accepted
accounting
principles.
EBITDA
is
not
intended
to
represent
cash
flow
and
does
not
represent
the
measure
of
cash
available
for
distribution.
The
Partnership's
method
of
computing
EBITDA
may
not
be
the
same
method
used
to
compute
similar
measures
reported
by
other
companies,
or
EBITDA
may
be
computed
differently
by
the
Partnership
in
different
contexts
(i.e.
public
reporting
versus
computation
under
financing
agreements).
22
($ in thousands)
Year Ended December 31,
2006E
2002
2003
2004
2005
Midpoint
Cash flows provided by operating activities
101,306
$
110,312
$
145,055
$
193,618
$
250,000
$
Reclamation and mine closing
(1,365)
(1,341)
(1,622)
(1,918)
(1,800)
Coal inventory adjustment to market                            
(48)
(687)
(488)
(573)
-
Other
1,014
353
(255)
(2,057)
(1,000)
Net effect of changes in operating assets and liabilities
(13,714)
(8,240)
(12,405)
26,577
(5,700)
Interest expense
16,360
15,981
14,963
11,816
10,700
Income taxes
(1,094)
2,577
2,641
2,682
2,800
EBITDA
102,459
$
118,955
$
147,889
$
230,145
$
255,000
$
Depreciation, depletion and amortization
(52,408)
(52,495)
(53,664)
(55,637)
(71,500)
Interest expense
(16,360)
(15,981)
(14,963)
(11,816)
(10,700)
Income taxes
1,094
(2,577)
(2,641)
(2,682)
(2,800)
Net income
34,785
$   
47,902
$   
76,621
$   
160,010
$
170,000
$

Wachovia Securities
Nantucket Equity Conference
June 22, 2006
*
*
*
*
*
*