Alliance Resource Partners Expands Oil & Gas Royalties Platform with \$206 Million Acquisition
Key Acquisition Details
Alliance Resource Partners, L.P. (NASDAQ: ARLP) has announced a definitive agreement to acquire significant interests in AllDale Minerals III, LP and AllDale Minerals IV, LP (collectively, “AllDale III & IV”) for approximately \$206.2 million. The transaction, subject to customary closing price adjustments, values AllDale III & IV at an aggregate gross valuation of around \$410 million. Of the interests changing hands, \$206.2 million will be acquired by ARLP and \$100 million by related parties of Joseph W. Craft III, ARLP’s Chairman, President, and CEO.
The difference between the \$410 million gross valuation and the \$306.2 million value of interests being acquired reflects existing interests already owned by ARLP and related parties of Mr. Craft. Upon closing, ARLP’s aggregate economic interest in AllDale III & IV is expected to increase from approximately 5% to 61%. In addition, ARLP, through a wholly owned subsidiary, is anticipated to own 100% of the general partner interests in AllDale III & IV (these will be non-economic post-closing).
Deal Structure and Timing
- Effective date: April 1, 2026
- Expected closing: July 2026, subject to customary conditions
- Due to the participation of related parties of Mr. Craft, the transaction was approved by ARLP’s conflicts committee, composed entirely of independent directors
Strategic and Financial Highlights
- AllDale III & IV control approximately 48,500 net royalty acres (NRAs) across premier U.S. basins, including the Permian, Anadarko, Bakken, and Haynesville
- The Permian Basin accounts for about 7,300 NRAs and contributed 52% of Q1 2026 total royalty revenue
- Average Q1 2026 production from AllDale III & IV was about 5,940 BOE/day, with 3,665 BOE/day net to ARLP’s economic interests (27% oil, 18% NGLs, 55% natural gas)
- 67% of Q1 2026 total royalty revenue was generated from oil
- The acquisition will expand ARLP’s core acreage with limited overlap to its existing royalty asset base and significantly enhance positions in the northern Delaware, Anadarko, and Bakken regions
- Provides ARLP with entry into the Haynesville, a key natural gas play supporting LNG export demand
- The acquisition price implies a 5.0x projected next-twelve-month Adjusted EBITDA multiple (based on June 5, 2026 commodity strip pricing and inclusive of assumed hedges)
- The deal is expected to be immediately accretive to ARLP’s free cash flow per unit
- ARLP will finance the purchase through a mix of cash on hand, borrowings under its revolving credit facility, and a new debt facility at Alliance Minerals, LLC
- Pro forma total leverage is expected to remain below 1.0x after closing
Pro Forma Oil & Gas Royalties Segment
- ARLP will control about 115,680 NRAs, including over 44,770 NRAs in the Permian
- Average production is projected at 17,295 BOE/day in total, with 14,285 BOE/day net to ARLP’s economic interests
- Exposure to 59 gross active rigs across the portfolio, including 47 on Permian acreage
Management Commentary
Joseph W. Craft III, ARLP’s Chairman, President, and CEO, stated, “This acquisition accelerates the continued growth of our Oil & Gas Royalties segment. The AllDale III & IV portfolio adds scale and development upside across multiple U.S. basins, anchored by a meaningful Permian position. It also expands our natural gas footprint with entry into the Haynesville, a resource play well-positioned to benefit from long-term LNG export demand growth.”
Craft added, “We believe this acquisition strengthens ARLP’s long-term royalty platform, broadens our exposure to high-quality operators, and advances our strategy of building a durable, cash-generating royalties business that complements our existing coal operations.”
Cary Marshall, CFO, noted, “The participation by related parties of Mr. Craft is expected to enhance the capital efficiency of the transaction for ARLP. We expect this structure will generate attractive risk-adjusted returns, maintain pro forma leverage below 1.0x, and preserve liquidity for future growth opportunities.”
What Shareholders Need to Know (Potentially Price-Sensitive Information)
- Significant expansion of ARLP’s oil & gas royalties assets, particularly in the Permian and Haynesville, may materially increase recurring cash flows and diversify revenue sources beyond coal.
- The immediate accretion to free cash flow per unit and maintenance of low leverage are positive signals for potential distribution increases and financial stability.
- Participation by related parties of the CEO, with approval from a conflicts committee, could attract additional scrutiny but also demonstrates alignment of management interests.
- Exposure to growth in LNG export demand through Haynesville acreage positions ARLP to benefit from global energy market trends.
- The transaction, being one of the largest in ARLP’s history, marks a strategic pivot towards a more balanced energy portfolio, which could be viewed favorably by investors seeking lower-risk, diversified cash flows.
About Alliance Resource Partners, L.P.
ARLP is a diversified natural resource company and currently the second-largest coal producer in the eastern U.S., providing energy to utilities, industrial, and metallurgical customers. The company also earns operating and royalty income from mineral interests in strategic coal and oil & gas regions and is actively pursuing growth in energy-related technologies and infrastructure.
Investor Contact
Cary P. Marshall
Senior Vice President and Chief Financial Officer
Phone: 918-295-7673
Email: [email protected]
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Forward-looking statements in the company’s release involve risks and uncertainties that could cause actual results to differ materially. Investors should consult ARLP’s filings with the SEC and consider their own investment objectives and risk tolerance before making any investment decisions. The author assumes no responsibility for investment actions taken based on this article.
