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Alliance Resource Closes Acquisition Interest in AllDale

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Alliance Resource Partners, L.P. (ARLP - Free Report) recently announced that it has completed the previously announced acquisition of certain partnership interests in AllDale Minerals, LP and AllDale Minerals II, LP. The purchase has been done for a total cash consideration of $175.96 million.

Also, Alliance Resource has begun its development activity for the Excel Mine No. 5 and estimates a total capex in the range of $45-$50 million over the next 18 to 24 months. Alliance Resource’s subsidiary, MC Mining, LLC, currently controls approximately 15 million tons of coal reserves assigned to the Excel Mine No. 5.

Details of the Deal

Per the agreement, Alliance Resource will record a non-cash benefit in the $145-$155 million band during the first quarter of 2019, based on the purchase price paid for the acquisition. Also, after the wrap-up of the buyout, the company gained control of nearly 42,000 net royalty acres in premier oil and gas resource plays.

Acquisition Synergy

The AllDale acquisition will provide Alliance Resource with control of a significant ownership position in the oil and gas minerals sector coupled with the foundation for a new growth platform. The company expects the royalty income generated from these mineral interests to be accretive to the 2019’s cash flow.

Also, AllDale acreage is strategically placed in the core of the Anadarko, Permian, Williston and Appalachian basins and is concentrated in the SCOOP/STACK, Delaware Basin, Midland Basin, Bakken and Marcellus/Utica.

Price Performance

Units of Alliance Resource have lost about 12.9% in the past 12 months compared with the industry’s decline of 22.5%.



 

Zacks Rank & Other Key Picks

Alliance Resource currently sports a Zacks Rank #1 (Strong Buy). Some other top-ranked stocks in the same sector are SunCoke Energy, Inc. (SXC - Free Report) , Warrior Met Coal Inc. (HCC - Free Report) and Canadian Solar Inc. (CSIQ - Free Report) , each carrying a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

SunCoke Energy pulled off average earnings surprise of 302.65% in the trailing four reported quarters. The Zacks Consensus Estimate for 2018 earnings has moved 13.2% north to 43 cents over the past 60 days.

Warrior Met Coal delivered average positive surprise of 0.62% in the last four reported quarters. The Zacks Consensus Estimate for 2018 earnings has been revised 3% upward to $8.23 over the past 60 days.

Canadian Solar came up with average beat of 49.66% in the preceding four reported quarters. The Zacks Consensus Estimate for 2018 earnings has been raised 53.2% to $2.65 over the past 60 days.

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