US Coal Markets: An Investor s Perspective

Transcription

1 US Coal Markets: An Investor s Perspective For required disclosures, including analyst certification, please refer to the important disclosures section on page 34 of this report 1

2 Companies Under Coverage Source: Company reports 2

3 What The Markets Want? Cost competitive (even in today s market) Heavily contracted position (which disadvantages met) Free cash flow (EBITDA less capex less interest expense) through the cycle Low leverage/conservative balance sheets (not one size fits all) Limited CAPP exposure Some tangible signs of market recovery (i.e. higher coal prices)! 3

4 Regional Cost Breakdown APPALACHIAN COST POSITION Total 2015E Met as a % of 2015E Actual Guidance APP Shipments Total APP Volume ARLP $ NA CNX $ % ANR $61.66 $58-$ % RNO $ NA ACI $63.39 $56.75-$ % ALL OTHER TOTAL POWDER RIVER BASIN COST POSITION Total 2015E Actual Guidance PRB Shipments CLD $ ACI $11.05 $10.60-$ ANR $11.15 $10.00-$ BTU $ WLB ALL OTHER ILLINOIS BASIN COST POSITION Total 2015E Actual Guidance IB Shipments FELP $ ARLP $ BTU $ HNRG $31.43 $27 in H2 7.5 ARMSTRONG $ ALL OTHER TOTAL TOTAL Source: Company reports, BB&TCM estimates 4

5 US Coal Company Capex 2011A 2012A 2013A 2014A 2015E 2016E Alliance Resource Partners $ (321.9) $ (424.6) $ (329.2) $ (307.4) $ (274.8) $ (235.0) YOY Growth 11% 32% (22%) (7%) (11%) (14%) Arch Coal (540.9) (335.2) (237.0) (87.3) (75.4) (80.0) YOY Growth 72% (38%) (29%) (63%) (14%) 6% Cloud Peak Energy (108.7) (53.6) (46.8) (18.7) (44.8) (41.8) YOY Growth 67% (51%) (13%) (60%) 139% (7%) CONSOL Energy (676.6) (662.9) (458.7) (383.7) (250.0) (200.0) YOY Growth (4%) (2%) (31%) (16%) (35%) (20%) Foresight Energy Partners (336.0) (209.9) (210.7) (229.3) (105.1) (108.0) YOY Growth 32% (38%) 0% 9% (54%) 3% Hallador Energy (33.0) (26.2) (31.4) (25.8) (34.5) (26.3) YOY Growth (5%) (21%) 20% (18%) 34% (24%) Peabody Energy (846.9) (986.0) (328.4) (194.4) (160.9) (180.0) YOY Growth 52% 16% (67%) (41%) (17%) 12% Rhino Resource Partners (91.9) (61.8) (54.5) (63.0) (45.0) (45.0) YOY Growth 250% (33%) (12%) 16% (29%) 0% Westmoreland Coal (27.6) (21.0) (28.6) (50.3) (71.8) (77.5) YOY Growth 21% (24%) 36% 76% 43% 8% TOTAL $ (3,948.8) $ (3,575.1) $ (2,094.8) $ (1,637.9) $ (1,342.3) $ (1,328.6) YOY Growth 44% (9%) (41%) (22%) (18%) (1%) Source: Company reports, BB&TCM estimates 5

6 Cash Burn Analysis 2016 Estimated FCF Calculation Symbol 2016E Adj. EBITDA 2016E Int. Expense 2016E Capex 2016E Dividends 2016E FCF ACI $239 ($365) ($140) $0 ($266) BTU $667 ($465) ($530) $0 ($328) CLD $84 ($46) ($42) $0 ($4) HNRG $87 ($15) ($26) ($5) $42 WLB $245 ($90) ($78) $0 $78 AVG. $264 ($196) ($163) ($1) ($69) Source: Company reports, BB&TCM estimates 6

7 EBITDA Sensitivities Every $10/mt increase in met prices impact on 2016/2017 EBITDA Ticker $ Change EBITDA % Change EBITDA $ Change EBITDA % Change EBITDA ACI $36 15% $46 21% BTU $96 14% $96 12% CNX $29 3% $42 4% Every $5/st increase in thermal (East) impact on 2016/2017 EBITDA Ticker $ Change in EBITDA % Change in EBITDA $ Change in EBITDA % Change in EBITDA ACI $18 7% $20 9% CNX $52 6% $90 9% Every $1/st increase in thermal (PRB) impact on 2016/2017 EBITDA Ticker $ Change EBITDA % Change EBITDA $ Change EBITDA % Change EBITDA ACI $50 21% $74 34% BTU $38 6% $80 10% CLD $17 20% $37 57% Source: BB&TCM estimates 7

8 US Coal Company Balance Sheets (2008A) Total Net Debt $'s in Millions $2,500 $2,000 $1,500 $1,000 $500 $0 ($500) $2,344 $1,481 $1,242 $910 $276 $194 ($137) ACI ANR ARLP BTU CLD CNX WLT Net Debt/TTM EBITDA ACI ANR ARLP BTU CLD CNX WLT 1.6x -0.3x 1.1x 1.3x 0.9x 0.8x 3.4x TTM EBITDA/Interest ACI ANR ARLP BTU CLD CNX WLT 9.9x 11.1x 11.6x 8.4x 10.2x 29.6x 16.5x Source: Company reports, BB&TCM estimates 8

9 US Coal Company Balance Sheets (2014A) Total Net Debt $6,000 $5,000 $4,164 $5,689 Net Debt/TTM EBITDA ACI ANR ARLP BTU CLD CNX WLT 14.9x 11.2x 1.0x 7.0x 1.9x 3.0x 195.0x $'s in Millions $4,000 $3,000 $2,000 $1,000 $2,751 $814 $377 $3,112 $2,667 TTM EBITDA/Interest ACI ANR ARLP BTU CLD CNX WLT 0.7x 0.8x 23.1x 1.9x 2.6x 4.7x 0.0x $0 ACI ANR ARLP BTU CLD CNX WLT Source: Company reports, BB&TCM estimates 9

10 US Coal Company Liquidity (as of 6/30/15) $2,500 $2,000 $2,100 $'s in Millions $1,500 $1,000 $500 $0 $812 $689 $628 $487 $345 $203 $16 $41 $87 $96 $36 $28 $43 HNRG WLB FELP ARLP CLD ACI BTU Cash Total Liquidity Source: Company reports, BB&TCM estimates 10

11 Distribution Of Debt Maturities Arch Coal Peabody Energy $'s in Millions $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $1,852 $1,725 $500 $1,000 $'s in Millions $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $1,519 $1,766 $1,340 $200 $0 $0 $0 $ $200 $0 $0 $0 $0 $ Source: Bloomberg Note: Does not include non-interest bearing cash commitments like VEBA s and LBA s 11

12 The Have s And The Have Not's Access to Capital Limited Access to Capital No Access to Capital 12

13 Arch: Unsecured Bond Prices Source: Bloomberg 13

14 Peabody: Unsecured Bond Prices Source: Bloomberg 14

15 Foresight: Unsecured Bond Prices Source: Bloomberg 15

16 US Coal Production Data EIA Production Data by Region Week Week Week Ending Ending Y/Y Ending Weekly YTD YTD YTD % 10/3/15 10/4/14 % Chg. 9/26/15 % Chg Chg. By EIA Region Appalachia 4,434 4,756 (6.8%) 4,565 (2.9%) 179, ,890 (13.4%) Interior 3,373 3,545 (4.9%) 3,375 (0.1%) 130, ,974 (8.2%) Western 9,910 10,206 (2.9%) 9, % 381, ,944 (5.9%) U.S. Total 17,717 18,506 (4.3%) 17, % 691, ,808 (8.4%) Coal Region Estimates Central Appalachia (CAPP) 1,827 2,042 (10.5%) 1,911 (4.4%) 75,207 91,433 (17.7%) Northern Appalachia (NAPP) 2,326 2,412 (3.6%) 2,392 (2.8%) 92, ,969 (9.9%) Illinois Basin (IB) 2,536 2,541 (0.2%) 2, % 99, ,346 (3.6%) Powder River Basin (PRB) 8,219 8,362 (1.7%) 7, % 313, ,358 (4.3%) Other U.S. 2,809 3,149 (10.8%) 2,894 (2.9%) 110, ,702 (15.0%) U.S. Total 17,717 18,506 (4.3%) 17, % 691, ,808 (8.4%) U.S. Railcar Loadings 102, ,884 (4.9%) 101, % 4,002,528 4,404,417 (9.1%) Note : For purposes of this table, CAPP is southern WV, eastern KY, TN & VA. NAPP is northern WV, PA, MD & OH. IB is western KY, IL & IN. PRB is WY & MT. Source: EIA, BB&TCM estimates 16

17 US Utility Coal Inventories Utility Coal Inventories & Days of Burn By Region Jul/Jun Jul Y/Y Jul '15 Jun '15 Chg. Jul '14 Chg. Northeast Inventories (000 tons) 7,497 7,743 (3.2%) 5, % South Inventories (000 tons) 36,559 40,041 (8.7%) 33, % Midwest Inventories (000 tons) 51,571 54,393 (5.2%) 38, % West Inventories (000 tons) 37,032 38,446 (3.7%) 23, % Total U.S. Days of Burn Bituminous Subbituminous Not e: Stockpile lev els reflect a surv ey sam ple of power plants used to generate day s of burn. Will not equal total reported EIA stockpile lev els. Excludes lignite coal. U.S. Electric Utility Coal Stockpiles Short tons (thousands) Year Jan Feb March April May June July Aug Sept Oct Nov Dec , , , , , , , , , , , , ,545 98, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,514 98, , , , , ,631 98,879 98, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , A/E 155, , , , , , , , , , , ,833 5-YR AVG ( ) 167, , , , , , , , , , , ,855 % Above/Below L5YR AVG -7.4% -7.8% -6.5% -3.1% -1.2% -1.2% 1.7% 3.6% 4.2% 5.2% 5.6% 4.2% Source: EIA, BB&TCM estimates 17

18 US Coal Production Data Estimated Full-Year 2015 Production Data by Region BB&T 2015 Y/Y BB&T Coal Region Estimates 2015E Annualized % Var. 2014E % Chg. 2016E Central Appalachia (CAPP) 84, , % 116,213 (12.5%) 82,234 Northern Appalachia (NAPP) 118, , % 134,010 (4.5%) 117,960 Illinois Basin (IB) 130, ,279 (3.1%) 137,156 (7.9%) 134,207 Powder River Basin (PRB) 402, ,660 (1.3%) 440,182 (9.7%) 405,586 Other U.S. 169, ,717 (9.8%) 172,089 (11.3%) 169,955 U.S. Total 905, , % 999,650 (9.3%) 909,943 Note : For purposes of this table, CAPP is southern WV, eastern KY, TN & VA. NAPP is northern WV, PA, MD & OH. IB is western KY, IL & IN. PRB is WY & MT. Based on info through week 40 of Source: EIA, BB&TCM estimates 18

19 US Coal Generation Data EIA Generation by Fuel Source Data Coal accounted for 34.9% of electricity generation in July This compares to 35.0% for natural gas, 17.9% for nuclear, 5.3% for hydro, and 6.9% for all other sources. Coal as a percentage of the overall generation mix bottomed at 30.3% in April of Y/Y M/M YTD YTD Y/Y % Jul-15 Jul-14 % Chg, Jun-15 % Chg Chg. Net Generation (billion KWh) Coal (7.1%) % (13.3%) Natural Gas % % % Nuclear (0.7%) % % Hydro (13.3%) % (5.8%) All Other* % % % U.S. Total % % 2, ,399.6 (0.1%) Fossil Fuel Consumption (quantity) Coal (tons in 000's) 76,401 81,580 (6.3%) 69, % 448, ,324 (12.0%) Natural Gas (mmcf) 1,078, , % 920, % 5,613,976 4,741, % Source: EIA, BB&TCM estimates 19

20 Potential Clean Power Plan (CPP) Impact on US Coal Production Total US Coal production in Clean Power Plan cases, (M tons) Source: EIA 20

21 Potential Clean Power Plan (CPP) Impact on US Electric Generation Summary results for AEO2015 Reference case and Clean Power Plan cases Percentage of Total Generation Under Clean Power Plan (CPP) Base Case 2020 Coal: 31% Gas: 32% Nuclear: 19% Wind/Solar: 8% 2030 Coal: 25% Gas: 31% Nuclear: 18% Wind/Solar: 15% 2040 Coal: 26% Gas: 29% Nuclear: 16% Wind/Solar: 18% Source: EIA 21

22 Potential CPP Impact Goal is to reduce CO2 emissions by ~30% below 2005 levels by Report clearly states, Switching from coal-fired generation to natural gas-fired generation is the predominant compliance strategy." The rule, if unmodified (highly doubtful) and implemented (dependent upon the courts/future elections), would be a nightmare. Projected coal plant retirements, which are currently 40 GW under the current EIA base case (mostly before 2017), would increase to 90 GW (nearly all by 2020). US coal production would fall 20% below the 2015 level by 2020 and by nearly a third lower by US coal production could be shaved by more than 200M tons. Which regions would be affected the most? In the near to intermediate term, the Interior (mostly Illinois) and Western region's (mostly PRB) coal production would decline by a respective 24% and 22% from 2015 to On an absolute basis, the impact on the Western region (a projected decline of 130M tons) is far worse than the Interior one (a projected decline of 53M tons). From a fuel mix perspective, coal would decline to 31% by 2020 and to 25% by It would rise to 40% by Source: EIA, BB&TCM estimates 22

23 The Met Coal Market What is met (coking) coal? Coal suitable to make coke for the manufacturing of steel. Met coal typically has a high Btu and low ash content. From most valuable to least, what are the different grades of met coal? Low-vol: <20% volatile matter (impurities that become gaseous at certain temperatures) (27M tons in US) Mid-vol: 20-34% volatile matter (12M tons in US) High-vol: 35%+ volatile matter (depending upon price, high vol also used as utility coal) (HVA=17M tons; HVB=20M) PCI: Suitable for direct injection into a blast furnace in pulverized state Met Coal Consumption, 2009 Global Seaborne Met Coal Trade (millions of metric tons) Rest of the World, 3 06 India, 6 4 U.S., 14 China, E 2016E 2017E 2018E 2019E 2020E Met coal imports Japan EU China India South Korea Rest of world Global imports (tons millions) Source: World Steel Institute Coking coal represents only ~8% of total US production Met coal exports Australia U.S Canada Russia Rest of world Global exports Source: ABREE 23

24 Key price drivers: Met Coal Drivers & Prices Global steel production/demand/utilization expectations Chinese steel consumption: ~45% of the global total Currency fluctuations, supply shut-ins, exogenous weather events Pace of US/CAN/Australian shut-ins versus development of major met reserves in Mozambique (Tete Moatize) and Mongolia (Tavan Tolgoi) Seaborne High-Quality Hard Coking Coal Prices ($/mt FOB Port) $380 $330 $280 $230 $180 $130 $80 Platts' Low-Vol Met Spot Prices (Peak Downs) Current: $79.45 (10/13/15) High: $ (1/20/11) Low: $79.45 (10/13/15) January-11 March-11 May-11 July-11 September-11 November-11 January-12 March-12 May-12 July-12 September-12 November-12 January-13 March-13 May-13 July-13 September-13 November-13 January-14 March-14 May-14 July-14 September-14 November-14 January-15 March-15 May-15 Period ($/mt FOB Port) Q1'11 $225 Q2'11 $330 Q3'11 $315 Q4'11 $285 Q1'12 $235 Q2'12 $206 Q3'12 $225 Q4'12 $170 Q1'13 $165 Q2'13 $172 Q3'13 $145 Q4'13 $152 Q1'14 $143 Q2'14 $120 Q3'14 $120 Q4'14 $119 Q1'15 $117 Q2'15 $ Q3'15 $93 Q4'15 $89 Note: Global benchmark price betw een the BHP Billiton-Mitsubishi Alliance (BMA) and Japanese steel producers for high-quality hard coking coal contracts for the Japanese fiscal year (4/1-3/31). HQHCC contracts settled on a quarterly basis beginning 4/1/10. Source: Bloomberg, Reuters, Platts 24

25 Met Coal Market Indicators Global Steel Capacity Utilization US Steel Capacity Utilization 90% 100% 90% 80% 80% 70% 70% 60% Most Recent: 68.0% (Aug. '15) High: 88.4% (Mar. '08) Low: 58.1% (Dec. '08) % 50% Current: 72.2% (10/3/15) High: 95.9% (Apr. '00) Low: 33.5% (Dec. '08) % 40% 30% Chinese Hot-Rolled Steel Prices Chinese Coal Net Imports Current: CNY 1,982 (10/13/15) High: CNY 5,957 (Jul. '08) Low: CNY 1,982 (Oct. '15) 6,500 5,500 4,500 3,500 Yuan/metric ton Most Recent: 13.0 mt (Aug. '15) High: 28.2M mt (Dec. '12) Low: -5.8M mt (Mar. '05) millions of metric tons 2, , Imports Exports Net Imports Source: Bloomberg 25

26 Chinese Steel Margins Platts China Long Steel Spread (CLSS using IODEX) The Platts China long steel spread is calculated by taking the difference between long steel prices in China and the two input costs of IODEX CFR China iron ore and hard coking coal 64 mid vol CFR China $/MT Current: $ (10/12/15) High: $ (5/31/13) Low: $ (10/12/15) 160 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Source: Platts 26

27 Valuation Summary Page Equity Ratings, Price Targets & Balance Sheet Price Price Shares Out. Market Total Legacy Liab. Shareholders Book Value/ Enterprise Current Net Debt/ Total U.S. Coal Producers Ticker 10/13/15 Rating Target (Dil.) Cap Debt (12/31/14) Cash Equity Share Value (ex. LL) Dividend Yld TTM EBITDA Debt/Cap. Arch Coal ACI $3.83 Hold NA 21.3 $82 $5,146 $542 $746 $1,394 $65.47 $4, % 14.0x 78.7% Cloud Peak Energy CLD $2.98 Hold NA 61.0 $182 $499 $216 $109 $1,033 $16.92 $ % 0.4x 32.6% CONSOL Energy CNX $11.37 Hold NA $2,600 $3,708 $1,347 $10 $4,682 $20.47 $6, % 4.1x 44.2% Hallador Energy HNRG $7.46 Hold NA 29.0 $217 $278 $0 $16 $203 $6.99 $ % 2.9x 57.8% Peabody Energy BTU $21.05 Hold NA 18.2 $382 $6,305 $2,547 $533 $1,656 $91.22 $6, % 8.3x 79.2% Westmoreland Coal WLB $14.78 Buy $ $265 $1,033 $764 $36 ($423) ($23.59) $1, % 4.6x 169.2% U.S. Coal Avg. 0.5% 5.9x 58.5% Estimates & Trading Data Revenues EPS EBITDA Free Cash Flow/Share 30-Day Avg. Short Total U.S. Coal Producers 2015E 2016E 2017E 2015E 2016E 2017E 2015E 2016E 2017E 2015E 2016E 2017E Volume (mil.) Interest % Liquidity Arch Coal $2,642 $2,634 $2,635 ($23.83) ($19.65) ($20.46) $265 $239 $220 ($11.23) ($12.52) ($11.06) % $812 Cloud Peak Energy $1,179 $1,209 $1,220 ($0.50) ($0.95) ($1.18) $126 $84 $64 ($0.50) ($0.07) ($0.37) % $628 CONSOL Energy $3,121 $3,556 $3,881 ($2.20) $0.62 $0.72 $802 $925 $1,029 ($2.01) $0.50 $ % $1,316 Hallador Energy $341 $301 $335 $1.05 $0.76 $0.72 $102 $87 $91 $1.62 $1.44 $ % $41 Peabody Energy $5,736 $6,010 $6,104 ($34.85) ($20.75) ($14.73) $445 $667 $783 ($21.36) ($18.09) $ % $2,100 Westmoreland Coal $1,517 $1,564 $1,579 ($3.68) ($2.22) ($2.50) $241 $245 $240 $3.85 $4.34 $ % $87 U.S. Coal Avg % $831 Valuation Metrics P/E 5-Yr Median EV/EBITDA 5-Yr Median P/FCF Coal Reserve Data (as of 12/31/14) Reserve Life U.S. Coal Producers 2015E 2016E 2017E Fwd Multiple 2015E 2016E 2017E Fwd Multiple 2015E 2016E 2017E P&P Tons (M) % Assigned % Owned (Yrs; 2014E) Arch Coal x 18.3x 21.0x 23.3x 6.1x ,064 34% 23% 39 Cloud Peak Energy x 4.4x 6.4x 8.1x 4.9x , % 5% 15 CONSOL Energy x 15.9x 12.5x 8.3x 6.9x 6.2x 6.4x x 42.7x 3,238 32% 72% 111 Hallador Energy 7.1x 9.8x 10.4x NA 4.5x 4.8x 4.3x NA 4.6x 5.2x 5.1x % 0% 27 Peabody Energy x 14.6x 10.2x 8.6x 6.3x x 7,550 61% 32% 35 Westmoreland Coal x 5.1x 4.8x 4.6x 4.0x 3.8x 3.4x 3.4x 1,265 68% 9% 22 U.S. Coal Avg. 7.1x 14.0x 13.1x 11.3x 10.0x 9.9x 10.1x 5.5x 4.6x 14.0x 17.8x 62% 26% 45 Source: BB&TCM estimates, FactSet; Prices as of 10/13/15 27

28 Additional Statistical Information Shipment Statistics Thermal Coal (millions of tons) Met Coal (millions of tons) Total Shipments (millions of tons) Met as % of Total Prod. By Mine EV/ EV/ U.S. Coal Producers 2015E 2016E 2017E 2015E 2016E 2017E 2015E 2016E 2017E 2015E 2016E 2017E % Surface Reserves Assgn. Res. Arch Coal % 5% 5% 86% $0.88 $2.58 Cloud Peak Energy % 0% 0% 100% $0.51 $0.51 CONSOL Energy % 12% 13% 7% $1.94 $6.15 Hallador Energy % 0% 0% 0% $2.40 $2.93 Peabody Energy % 7% 6% 90% $0.82 $1.34 Westmoreland Coal % 0% 0% 100% $1.00 $1.47 U.S. Coal Avg. $1.26 $2.50 Additional Shipment Statistics % Thermal Priced % Met Priced % Total Priced Regional Shipment Breakdown % (2014E) U.S. Coal Producers 2015E 2016E 2017E 2015E 2016E 2017E 2015E 2016E 2017E CAPP NAPP IB PRB WBIT / SW OTHER Arch Coal 97% 45% 20% 81% 11% 0% 96% 43% 19% 11% 0% 0% 83% 6% 0% Cloud Peak Energy 100% 67% 26% NA NA NA 100% 67% 26% 0% 0% 0% 100% 0% 0% CONSOL Energy 98% 53% 19% 71% 18% 0% 94% 49% 17% 25% 75% 0% 0% 0% 0% Hallador Energy 100% 87% 46% NA NA NA 100% 87% 46% 0% 0% 100% 0% 0% 0% Peabody Energy 100% 63% 25% 55% 0% 0% 100% 59% 23% 0% 0% 11% 62% 10% 17% Westmoreland Coal 100% 100% 100% NA NA NA 100% 100% 100% 0% 0% 0% 51% 12% 37% U.S. Coal Avg. 99% 63% 27% 69% 9% 0% 98% 61% 26% Margins, Returns & Other EBITDA Margins ROE ROCE FCF Yields % Miners % Coal Shipments (2014E) U.S. Coal Producers 2015E 2016E 2017E 2015E 2016E 2017E 2015E 2016E 2017E 2015E 2016E 2017E Union Domestic International Arch Coal 10% 9% 8% % 92% 8% Cloud Peak Energy 11% 7% 5% % 95% 5% CONSOL Energy 26% 26% 27% -- 3% 3% -- 2% 2% % 2.3% 1% 95% 5% Hallador Energy 30% 29% 27% 14% 9% 8% 8% 6% 6% 21.7% 19.3% 19.5% 0% 100% 0% Peabody Energy 8% 11% 13% % % 39% 86% 14% Westmoreland Coal 16% 16% 15% 15% 8% 8% 2% 3% 3% 26.0% 29.4% 29.3% 64% 93% 7% U.S. Coal Avg. 17% 16% 16% 14% 6% 6% 8% 4% 3% 21.7% 11.8% 13.2% 17% 94% 6% Source: BB&TCM estimates, FactSet; Prices as of 10/13/15 28

29 BB&T vs. Consensus Estimates EPS Estimates U.S. Coal Producers BB&T Consensus BB&T Consensus % BB&T Consensus % BB&T Consensus % Arch Coal ($5.68) ($5.85) $0.17 ($23.83) ($24.71) $ ($19.65) ($20.36) $ ($20.46) ($18.83) ($1.64) -- Cloud Peak Energy ($0.09) ($0.13) $0.04 ($0.50) ($0.56) $ ($0.95) ($0.74) ($0.21) -- ($1.18) ($0.75) ($0.43) -- CONSOL Energy $0.03 ($0.02) $0.05 ($2.20) $0.09 ($2.29) (2,488%) $0.62 $0.41 $ % $0.72 $1.04 ($0.32) (31%) Hallador Energy $0.27 $0.27 ($0.00) $1.05 $1.06 ($0.01) (1%) $0.76 $0.90 ($0.13) (15%) $0.72 $0.72 ($0.00) (0%) Peabody Energy ($10.53) ($8.39) ($2.14) ($34.85) ($31.99) ($2.85) -- ($20.75) ($21.30) $ ($14.73) ($12.94) ($1.79) 14% Westmoreland Coal ($0.49) ($0.38) ($0.12) ($3.68) ($3.34) ($0.34) -- ($2.22) ($2.03) ($0.20) -- ($2.50) ($2.22) ($0.28) -- U.S. Coal Avg. 18% (6%) EBITDA Estimates ($M) U.S. Coal Producers BB&T Consensus BB&T Consensus % BB&T Consensus % BB&T Consensus % Arch Coal $65.6 $63.9 $1.6 $264.7 $278.7 ($14.0) (5%) $238.5 $246.5 ($8.0) (3%) $219.5 $265.9 ($46.4) (17%) Cloud Peak Energy $36.9 $32.9 $3.9 $125.5 $116.1 $9.4 8% $83.6 $95.0 ($11.4) (12%) $64.5 $89.6 ($25.2) (28%) CONSOL Energy $192.5 $183.0 $9.5 $801.7 $801.8 ($0.1) (0%) $925.1 $955.6 ($30.5) (3%) $1,028.8 $1,161.2 ($132.4) (11%) Hallador Energy $24.6 $27.5 ($2.9) $101.6 $107.9 ($6.3) (6%) $87.2 $83.4 $3.8 5% $90.6 $83.0 $7.6 9% Peabody Energy $82.3 $116.7 ($34.3) $445.1 $513.6 ($68.5) (13%) $666.6 $667.2 ($0.6) (0%) $783.0 $816.0 ($33.1) (4%) Westmoreland Coal $63.4 $65.8 ($2.4) $240.5 $248.5 ($8.0) (3%) $245.0 $236.6 $8.4 4% $239.8 $242.3 ($2.5) (1%) U.S. Coal Avg. (3%) (10%) Historic Share Price Performance Q Q U.S. Coal Producers MTD QTD YTD Arch Coal 16.1% 16.1% (78.5%) 45.9% 15.0% 125.0% (24.0%) 50.8% (63.4%) 39.5% 57.6% (58.6%) (49.6%) (39.2%) (60.0%) Cloud Peak Energy 13.3% 13.3% (67.5%) % (16.8%) 0.1% (6.9%) (49.0%) CONSOL Energy 16.0% 16.0% (66.4%) 54.6% 61.5% 60.5% (0.7%) 124.2% (59.8%) 76.2% (2.1%) (24.7%) (12.5%) 18.5% (11.1%) Hallador Energy 7.3% 7.3% (32.2%) (25.0%) 16.7% (14.3%) 161.7% 33.6% (5.3%) (16.8%) (2.4%) 36.6% Peabody Energy 1.7% 1.7% (81.9%) 44.9% 96.0% 105.0% (1.5%) 63.8% (62.9%) 100.3% 41.5% (48.2%) (19.6%) (26.6%) (60.4%) Westmoreland Coal 4.9% 4.9% (55.5%) 48.9% 74.1% (24.8%) (14.1%) (29.3%) (20.1%) (19.7%) 34.0% 6.8% (26.7%) 106.5% 72.2% U.S. Coal Average 9.9% 9.9% (63.7%) 48.6% 61.6% 66.4% (13.1%) 45.2% (44.1%) 71.6% 37.4% (24.5%) (20.9%) 8.3% (12.0%) S&P 500 Index 4.4% 4.4% (2.7%) 26.4% 9.0% 3.0% 13.6% 3.5% (38.5%) 23.5% 12.8% (0.0%) 13.4% 29.6% 11.4% Source: BB&TCM estimates, FactSet; Prices as of 10/13/15 29

30 Coal MLPs: Valuation Summary Page Equity Ratings, Price Targets & Balance Sheet Price Price Units Out. Market Total Legacy Liab. Shareholders Book Value/ Enterprise Net Debt/ Total U.S. Coal MLPs Ticker 10/13/15 Rating Target (Dil.) Cap Debt (12/31/14) Cash Equity LP Unit Value (ex. LL) TTM EBITDA Debt/Cap. Alliance Resource Partners ARLP $23.15 Buy $ $1,717 $873 $252 $43 $1,052 $14.18 $2, x 45.4% CNX Coal Resources LP CNXC $12.41 Buy $ $288 $184 $8 $0 $172 $7.41 $ x 51.7% Foresight Energy LP FELP $6.74 Buy $ $876 $1,697 $31 $55 $128 $0.99 $2, x 93.0% Natural Resource Partners NRP $2.55 Hold NA $312 $1,432 $5 $28 $712 $5.82 $1, x 66.8% Coal MLP Avg. 2.8x 64.2% Estimates & Trading Data EPU EBITDA Distributable Cash Flow/Unit 30-Day Avg. Short U.S. Coal MLPs 2015E 2016E 2017E 2015E 2016E 2017E 2015E 2016E 2017E Volume (000s) Interest % Beta Alliance Resource Partners $3.75 $3.55 $1.70 $782 $748 $562 $7.89 $6.55 $ % 0.55 CNX Coal Resources LP $2.10 $1.66 $2.66 $92 $121 $220 $2.38 $2.19 $ % 0.75 Foresight Energy LP $0.30 $0.56 $0.20 $385 $351 $318 $1.58 $1.31 $ % 0.64 Natural Resource Partners $0.62 $0.55 $0.68 $273 $276 $292 $1.47 $1.60 $ % 0.94 Estimates & Trading Data Distribution/Unit Distribution Yield 5-Yr Median Distribution Coverage Ratio U.S. Coal MLPs Current Rate 2015E 2016E 2017E Current 2015E 2016E 2017E Yield 2015E 2016E 2017E Alliance Resource Partners $2.700 $2.675 $2.819 $ % 11.6% 12.2% 12.7% 6.1% 1.82x 1.53x 0.90x CNX Coal Resources LP $2.050 $1.039 $2.248 $ % % 37.0% NA 2.29x 0.97x 1.33x Foresight Energy LP $1.520 $1.499 $1.604 $ % 22.2% 23.8% 25.0% NA 1.05x 0.82x 0.60x Natural Resource Partners $0.360 $0.620 $0.360 $ % 24.3% 14.1% 14.1% 8.1% 2.25x 4.44x 4.91x Coal MLP Avg. 16.2% 19.4% 20.9% 22.2% 7.1% 1.85x 1.94x 1.94x Valuation Metrics P/E 5-Yr Median EV/EBITDA 5-Yr Median P/DCF U.S. Coal MLPs 2015E 2016E 2017E Fwd. Multiple 2015E 2016E 2017E Fwd. Multiple 2015E 2016E 2017E Alliance Resource Partners 6.2x 6.5x 13.6x 11.1x 3.1x 3.0x 4.0x 4.6x 2.9x 3.5x 5.7x CNX Coal Resources LP 5.9x 7.5x 4.7x NA 4.5x 5.8x 4.5x NA x 3.7x Foresight Energy LP 22.5x 12.0x 33.7x NA 6.2x 7.0x 8.1x NA 4.3x 5.1x 6.7x Natural Resource Partners 4.1x 4.6x 3.8x 18.4x 6.4x 6.3x 6.0x 10.0x 1.7x 1.6x 1.4x Coal MLP Avg. 9.7x 7.6x 13.9x 14.8x 5.1x 5.5x 5.6x 7.3x 3.0x 4.0x 4.4x Shipment Statistics Total Volumes (millions of tons) Total % Met % Assign. % Owned Regional Volume Breakdown (%) U.S. Coal MLPs 2015E 2016E 2017E Reserves Reserves Reserves Reserves CAPP NAPP IB PRB OTHER Alliance Resource Partners ,169 1% 54% 20% 4% 20% 76% 0% 0% CNX Coal Resources LP ,238 0% 32% 72% 0% 100% 0% 0% 0% Foresight Energy LP ,071 0% 100% 0% 0% 0% 100% 0% 0% Natural Resource Partners ,326 20% NA 100% 40% 19% 26% 6% 10% Coal MLP Avg. 5% 62% 48% Source: BB&TCM estimates, FactSet; Prices as of 10/13/15 30

31 Coal MLPs: BB&T vs. Consensus Est. EPS Estimates Q U.S. Coal MLPs Actual Consensus Actual Consensus % BB&T Consensus % BB&T Consensus % Alliance Resource Partners $0.99 $0.88 $0.12 $3.75 $3.52 $0.22 6% $3.55 $3.27 $0.28 8% $1.70 $2.60 ($0.90) (35%) CNX Coal Resources LP $0.50 $0.55 ($0.05) $2.10 $1.96 $0.14 7% $1.66 $1.82 ($0.15) (9%) $2.66 $2.28 $ % Foresight Energy LP $0.15 $0.16 ($0.01) $0.30 $0.42 ($0.12) (29%) $0.56 $0.46 $ % $0.20 $0.46 ($0.26) (57%) Natural Resource Partners $0.10 $0.11 ($0.02) $0.62 $0.64 ($0.01) (2%) $0.55 $0.63 ($0.08) (12%) $0.68 $0.67 $0.01 2% Coal MLP Avg. 3% (18%) EBITDA Estimates ($M) Q U.S. Coal MLPs Actual Consensus Actual Consensus % BB&T Consensus % BB&T Consensus % Alliance Resource Partners $198.4 $199.3 ($1.0) $781.7 $784.5 ($2.8) (0%) $748.2 $760.4 ($12.2) (2%) $562.1 $677.1 ($115.0) (17%) CNX Coal Resources LP $22.1 $24.0 ($1.9) $92.1 $98.3 ($6.2) (6%) $121.1 $128.4 ($7.3) (6%) $220.1 $219.5 $0.7 0% Foresight Energy LP $89.4 $89.0 $0.4 $385.4 $389.7 ($4.3) (1%) $351.2 $363.7 ($12.5) (3%) $318.1 $372.8 ($54.7) (15%) Natural Resource Partners $64.9 $65.3 ($0.4) $273.5 $273.4 $0.0 0% $276.2 $281.7 ($5.6) (2%) $291.9 $293.1 ($1.3) (0%) Coal MLP Avg. (3%) (8%) Historic Share Price Performance U.S. Coal MLPs MTD QTD YTD Alliance Resource Partners 4.0% 4.0% (46.2%) 61.3% 64.8% 14.9% (23.2%) 32.6% 11.8% CNX Coal Resources LP 10.3% 10.3% Foresight Energy LP 26.5% 26.5% (60.0%) (15.7%) Natural Resource Partners 0.4% 0.4% (72.4%) 38.9% 32.2% (18.3%) (31.6%) 7.6% (53.6%) Coal MLP Avg. 10.3% 10.3% (59.6%) 50.1% 48.5% (1.7%) (27.4%) 20.1% (19.1%) S&P 500 Index 4.4% 4.4% (2.7%) 23.5% 12.8% (0.0%) 13.4% 29.6% 11.4% Source: BB&TCM estimates, FactSet; Prices as of 10/13/15 31

32 U.S. Coal Supply & Demand (millions of short tons) Last Updated: October 12, 2015 EIA Forecasts for as of October 6, 2015; EIA Projections for as of April 2015 as published in Annual Energy Outlook U.S. Coal Supply (millions of short tons) BB&T Est. EIA Est E 2016E 2015E 2016E 2020E 2025E 2030E 2035E 2040E U.S. Coal Production By EIA Region Appalachia Interior West Refuse Recov ery Total U.S. Coal Production 1, , , , , , ,071 1,105 1,118 1,111 1,117 U.S. Coal Production By Region Central Appalachia Northern Appalachia Southern Appalachia (Alabama) Illinois Basin Powder Riv er Basin Western Bituminous (Colorado & Utah) Other Total U.S. Coal Production 1, , , , , , Primary Inventory Withdrawals 2.5 (0.7 ) (6.6) (2.1) (2.1) Exports (Steam) Exports (Met) Total Exports Imports (Steam) Imports (Met) Total Imports Net Exports Total Primary Supply 1, , , , Secondary Inventory Withdrawals (8.4) (11.6) (27.1) (12.5) 37.9 (3.8) (23.1) (3.0) (4.1) 3.4 Waste Coal Supplied Total Supply 1, , , , , , Growth Rates Appalachia (3.4%) 3.3% (12.5%) (1.5%) 0.2% (12.8%) (8.3%) (1.1%) (18.0%) (6.0%) (11.1%) (4.9%) 9.7% (4.6%) (2.0%) (3.3%) (3.0%) I nterior (3.1%) (0.0%) (0.5%) 7.2% 9.3% 5.2% 1.9% 3.1% (4.5%) 0.5% (7.0%) 1.4% 24.9% 7.3% 9.8% 7.8% 7.9% West 0.3% 2.0% (7.7%) 1.1% (0.7%) (7.6%) (2.3%) 2.4% (7.0%) 0.0% (8.2%) (3.7%) 18.9% 5.1% (0.8%) (3.2%) (1.3%) Total (1.4%) 2.2% (8.3%) 0.9% 1.0% (7.2%) (3.1%) 1.5% (9.5%) (1.3%) (8.9%) (3.0%) 17.6% 3.2% 1.2% (0.6%) 0.5% Central Appalachia (4.2%) 3.4% (16.0%) (5.3%) (0.4%) (20.5%) (13.4%) (8.9%) (27.2%) (14.5%) Northern Appalachia (3.0%) 2.6% (6.9%) 2.4% 1.9% (4.3%) (2.1%) 8.6% (11.8%) (1.0%) Southern Appalachia (Alabama) 2.8% 6.6% (8.7%) 5.9% (0.6%) (1.2%) (4.8%) (12.0%) (2.5%) (0.5%) Illinois Basin 4.8% 0.5% 2.9% 1.9% 5.4% 14.3% 4.3% 3.8% (5.0%) 0.0% Powder River Basin 0.4% 3.6% (7.9%) 0.1% 1.5% (7.8%) (1.8%) 2.3% (8.5%) (0.5%) Western Bituminous (Colorado/Utah) (2.6%) (7.1%) (11.3%) (11.0%) 4.9% (3.6%) (8.4%) 1.7% (1.5%) (0.6%) Other (6.2%) (0.8%) (3.8%) 16.6% (4.0%) (9.8%) (1.6%) 1.9% (1.5%) 3.2% Total (1.4%) 2.2% (8.3%) 0.9% 1.0% (7.2%) (3.1%) 1.5% (9.5%) (1.3%) Exports (Steam) 22.1% 44.6% (44.1%) 17.4% 46.9% 48.6% (7.0%) (34.0%) (27.0%) (25.0%) (11.4%) (14.1%) Exports (Met) 17.0% 32.1% (12.2%) 50.4% 23.9% 0.5% (6.0%) (4.1%) (20.0%) (20.0%) (25.9%) (10.1%) Total Exports 19.3% 37.8% (27.5%) 38.2% 31.3% 17.2% (6.4%) (17.3%) (22.5%) (21.7%) (20.7%) (11.7%) 23.1% 17.9% 16.1% 0.8% 7.6% Imports (Steam) 0.3% (6.3%) (33.5%) (17.4%) (35.5%) (30.1%) (1.2%) 27.2% (8.0%) 1.0% Imports (Met) 0.0% 0.0% (41.2%) 52.0% 5.3% (30.0%) (13.7%) 24.3% (5.0%) 4.0% Total Imports 0.3% (5.8%) (33.9%) (14.3%) (32.3%) (30.1%) (2.8%) 26.9% (7.7%) 1.3% 1.8% (6.1%) (91.3%) 0.0% 0.0% 0.0% 0.0% Net Exports 70.1% 107.5% (22.8%) 70.8% 51.1% 23.8% (6.7%) (20.9%) (24.4%) (25.3%) (23.6%) (12.6%) 43.1% 17.0% 17.3% 0.8% 7.7% Waste Coal Supplied (2.1%) (2.8%) (9.3%) 10.3% (3.6%) (16.7%) (7.3%) 9.9% (3.0%) 1.0% (3.6%) 2.8% 15.5% (9.1%) 0.0% 0.0% 0.0% Source: EIA, BB&TCM estimates 32

33 U.S. Coal Supply & Demand (millions of short tons) Last Updated: October 12, 2015 EIA Forecasts for as of October 6, 2015; EIA Projections for as of April 2015 as published in Annual Energy Outlook U.S. Coal Consumpt ion (millions of short tons) BB&T Est. EIA Est E 2016E 2015E 2016E 2020E 2025E 2030E 2035E 2040E Electric Power Sector 1, , Coke Plants Other Industrial Commercial & Residential Coal-to-Liquids Heat & Power Coal-to-Liquids Production Total Coal Consumption 1, , , , , U.S. Coal Inventories By Sector at Year-End Primary Inventories Producers and Distributors Secondary Inventories Electric Power Sector Coke Plants Retail & General Industry Commercial/Institutional Total U.S. Coal Inventories at Year-End Av erage Daily Consumption By Electric Power Sector Average Days of Burn Total Inventory Increase Y/Y (1.6) (41.4) (4.5) Losses (4.8) Total Inventory Change & Losses (1.8) (11.5) (6.2) (44.0) (17.5) (5.7 ) (4.5) Growth Rates Electric Power Sector 1.8% (0.4%) (10.3%) 4.5% (4.4%) (11.7%) 4.2% (0.8%) (9.5%) 0.0% (8.2%) (0.4%) 17.4% 2.0% (0.5%) (1.0%) (0.2%) Coke Plants (1.1%) (2.8%) (30.5%) 37.6% 1.5% (3.0%) 3.5% (5.0%) (3.0%) (2.5%) (7.4%) (3.7%) 11.1% 0.0% (4.8%) (5.0%) (5.3%) Other Industrial (4.8%) (4.0%) (16.7%) 7.0% (4.7%) (7.3%) 1.2% (1.2%) (4.0%) 1.4% (4.2%) 2.2% 14.6% 0.0% 2.1% 0.0% 2.1% Commercial & Residential 8.5% (0.6%) (7.7%) (4.0%) (9.1%) (27.0%) (4.6%) 12.8% 1.2% 1.2% 22.7% (3.7%) (25.9%) 0.0% 0.0% 0.0% 0.0% Coal-to-Liquids Heat & Power 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Coal-to-Liquids Production 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total Consumption 1.4% (0.7%) (11.0%) 5.1% (4.3%) (11.3%) 4.0% (0.9%) (9.1%) 0.0% (7.9%) (0.4%) 16.9% 1.8% (0.6%) (0.9%) (0.2%) Primary Inventories Producers and Distributors (7.0%) 2.1% 3.5% 38.7% 4.2% (11.1%) (7.5%) 4.7% (2.0%) (2.0%) (2.2%) (2.3%) Secondary Inventories Electric Power Sector 7.3% 6.9% 17.3% (7.5%) (1.6%) 7.4% (20.1 %) 2.3% 14.8% 1.5% 2.2% (2.5%) Coke Plants (34.4%) 19.8% (1 3.9%) (4.0%) 36.8% (3.0%) (1 2.8%) (1 3.6%) (1.0%) 0.0% 0.0% (5.3%) Retail & General Industry (1 3.9%) 7.1% (1 5.0%) (11.8%) 0.0% (0.6%) (8.2%) 16.8% 14.0% 7.0% 14.6% 7.3% Commercial/Institutional 0.0% 100.0% 0.0% (100.0%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total % Change In Inventories Y/Y 3.1% 6.4% 13.6% (0.7 %) 0.0% 3.2% (17.3%) 3.0% 10.9% 0.9% 1.5% (2.2%) Source: EIA, BB&TCM estimates 33

34 34