Why Alliance Resource Partners jumped today


What happened

Shares of Alliance Resource Partners (ARLP 14.86%) jumped nearly 15% on Wednesday after the natural resources company raised its full-year production and earnings forecast.

So what

The conflict in Ukraine is causing the United States and many countries in Europe and other international markets to reduce their dependence on Russian energy supplies. This fuels demand for energy produced in the United States and other less volatile regions, driving up the prices of coal, oil and natural gas in the process.

“Since we provided an initial forecast for 2022 to the ARLP on January 31, 2022, global commodity prices have skyrocketed,” CEO Joseph Craft said in a press release. “We expect energy markets to remain supportive over the next few years, allowing ARLP to capture price realizations well above our previous expectations.”

Image source: Getty Images.

The ARLP now expects its coal sales volumes in 2022 to be about 500,000 tonnes higher than its previous estimate. Even better, coal selling prices could be up to 22% higher than expected.

Additionally, rising oil and gas prices have prompted energy companies to increase production. Craft, in turn, expects ARLP’s oil and gas royalties to rise as a result of these increases.

Now what

With these powerful trends fueling its expansion, ARLP’s Board of Directors approved a whopping 40% increase in its quarterly cash distribution to $0.35 per share. This puts ARLP’s dividend at an annualized rate of $1.40 per share – and its yield at 7.7%. This likely put ARLP on the radars of many income-focused investors, and its stock price rose accordingly.


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