Q1 2024 Alliance Resource Partners LP Earnings Call

Participants

Cary Marshall; Chief Financial Officer, Senior Vice President; Alliance Resource Partners LP

Joseph Craft; Chairman of the Board, President, Chief Executive Officer of General Partner; Alliance Resource Partners LP

Nathan Martin; Analyst; The Benchmark Company

Mark Reichmann; Analyst; NOBLE Capital Markets

Dave Storms; Analyst; Stonegate Capital

David Marshall; Analyst; Singular Research

Yves Siegel; Analyst; Siegel Assets

Presentation

Operator

Greetings, and welcome to the Alliance Resource Partners. First Quarter 2024 Earnings Conference Call. at this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Carrie Marshall, Senior Vice President and Chief Financial Officer. Thank you, sir. You may begin.

Cary Marshall

Thank you, operator, and welcome, everyone. Earlier this morning, Alliance Resource Partners released its first quarter 2024 financial and operating results, and we will now discuss those results as well as our perspective on current market conditions and reiterated outlook for 2024.
Following our prepared remarks, we will open the call to answer your questions before beginning a reminder that some of our remarks today may include forward-looking statements subject to a variety of risks, uncertainties and assumptions contained in our filings from time to time with the Securities and Exchange Commission and are also reflected in this morning's press release. While these forward-looking statements are based on information currently available to us, if one or more of these risks or uncertainties materialize or if our underlying assumptions prove incorrect, actual results may vary materially from those we projected or expected In providing these remarks, the partnership has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, unless required by law to do so.
Finally, we will also be discussing certain non-GAAP financial measures. Definitions and reconciliations of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures are contained at the end of this morning's press release, which has been posted on our website and furnished to the SEC on Form eight K with the required preliminaries out of the way, I will begin with a review of our results for the first quarter, give an update of our 2024 guidance, then turn the call over to Joe Craft, our Chairman, President and Chief Executive Officer, for his comments.
Let me start by recognizing the dedicated efforts of our of our entire team that delivered solid first quarter results and a good start to the year. Our first quarter performance was led by higher coal sales volumes and record oil and gas royalty volumes. These factors were more than offset by lower average coal sales price per ton and higher segment-adjusted EBITDA expense per ton compared to the 2023 quarter.
Specifically, coal sales volumes increased 2.4% to 8.7 million tons, while coal production declined 1.4% to 9.1 million tons compared to the 2023 quarter. Our contracted coal position contributed to our sales volumes for the 2020 fourth quarter, lessening the impact of mild winter weather and low natural gas prices. In the Illinois Basin, sales volumes were up 4%, and in Appalachia, they were down 1.8%. Royalty volumes for oil and gas minerals increased to a record 898,000 barrel of oil equivalent, an 18.3% increase year over year.
At the same time coal sales price per ton sold was down 5.2% as a 5.8% increase in the Illinois Basin was more than offset by a 19.4% decrease in Appalachia. The decline in Appalachia largely reflects the residual effects of strong export markets in 2022, which benefited the 2023 quarter compared to the sequential quarter. Average coal sales prices increased 6.9% to $64.78 per ton sold compared to $60.60 per ton sold. Coal sales price per ton sold rose in the Illinois Basin by 4.6% and in Appalachia by 11.3%. In our oil and gas royalty segment, average realized sales prices were down 9.3% per barrel of oil equivalent versus the 2023 quarter, reflecting lower commodity prices.
Sequentially, average realized sales prices were 7.6%, lower per barrel of oil equivalent. Our coal royalty segment reported higher coal royalty volumes and prices during the 2024 quarter, with coal royalty tons rising 9% and coal royalty revenue per ton increasing 10.4% year over year. Sequentially, coal royalty tons were up 9.8%. In total, consolidated revenue was $651.7 million, down 1.7% from $662.9 million in the year ago period and up 4.2% sequentially. Segment adjusted EBITDA expense per ton sold for our coal operations was $40.85, an increase of 3% versus the 2023 quarter, primarily due to continued inflationary pressures on labor and material costs as well as higher maintenance costs.
On a sequential basis, cost per tonne were 4.8% lower as a result of a return to normal operations across our portfolio following adverse geological conditions experienced in late 2023. For the 2020 fourth quarter, we completed one longwall move at our Hamilton Mine for the second quarter, we expect to have three longwall moves with one each at Hamilton met TE. and Tunnel Ridge.
During the 2024 quarter, we booked a $15.3 million accrual relating to the settlement of certain litigation as described in our most recent Form 10 K filed in February of this year with the SEC because we characterized this accrual as unrepresentative of our ongoing operations, we have not included it in our segment adjusted EBITDA expense per ton figures. The litigation expense accrual was partially offset by an increase in the fair value of the partnership's digital assets of $11.9 million in the second half of 2020, we started mining Bitcoin as a pilot project to monetize already paid for yet underutilized electricity load at our River View mine.
Since then, we have mined and now own bitcoin valued at approximately $30 million at the end of the 2020 fourth quarter, our crypto mining, net property, plant and equipment. The balance at the end of the 2024 quarter was $7.3 million. The increase in fair value reflects the adoption of new accounting guidance to reflect the mark-to-market change in the value of our digital assets during the quarter.
Our net income for the 2020 fourth quarter attributable to ARLP was $158.1 million or $1.21 per unit, which compares to $191.2 million or $1.45 per unit in the year ago period. Ebitda in the 2020 fourth quarter was $235 million, which compares to $270.9 million in the year ago period. These decreases reflect lower revenue and higher total operating costs. Sequentially, net income was up 36.9% and EBITDA was up 26.8%.
Now turning to our balance sheet and uses of cash. Alliance generated $209.7 million of cash flows from operating activities in the 2020 fourth quarter. During the quarter, we invested $123.8 million in capital expenditures as our 2024 capital program is well underway and we paid our quarterly distribution of $0.7 per unit. Subsequent to quarter end, we announced a quarterly distribution for the current quarter of $0.7 per unit payable to unitholders of record as of May eighth, 2024.
As we have discussed previously, the Board considers the appropriate distribution levels on a quarter-by-quarter basis after considering a wide range of factors, including the implied current yield on our units, distribution coverage, capital needs, investment opportunities and debt service costs. We are pleased to report continued support by our senior lender group as we successfully increased our accounts receivable securitization facility by 50% to $90 million and entered into a new $54.6 million four year amortizing term loan maturing February 2028 to replace prior equipment financing that matured in November 2023.
At quarter end, our total and net leverage ratios were 0.49 and 0.34 times total debt to trailing 12 months adjusted EBITDA and our liquidity increased to $551 million, which included approximately $134 million of cash on the balance sheet. We expect to retire the 284.6 million outstanding on our senior notes throughout the balance of 2024 using a combination of operating cash flows on attractive financing options we believe are currently available to us and that are at various stages of execution today.
Now turning to our guidance detailed in this morning's release, we are reiterating our full year guidance for coal sales volumes, coal sales, price per ton sold, segment-adjusted EBITDA expense per ton sold, royalties volumes and royalties unit expenses.
We did make slight updates to our committed and priced sales tons to reflect modest net contracting activity that occurred during the 2020 fourth quarter. As a reminder, Q1 is typically a seasonally light contracting quarter, and this year was no different at the end of the 2020 fourth quarter.
Our committed tonnage for 2024 was 32.6 million tons or approximately 93% of our anticipated sales tons at the midpoint of our guidance range. Of that total 20 point 28.1 million tons are currently committed to the domestic market. While 4.5 million tons are committed to the export markets, we continue to anticipate most of the sales activity for our unsold coal for 2024 to occur in the back half of the year and be sold in the export markets.
Finally, as it relates to our oil and gas segment, our first quarter results signaled a strong start to the year. Given that it is still early in the year, we are reiterating our guidance for oil volumes of 1.4 million to 1.5 million barrels natural gas at 5.6 million to 6 million Mcf in liquids, 675,000 to 725,000 barrels. There could be some upside to these volumes if market conditions remain as they are today. The remainder of our guidance ranges remain the same as previously discussed.
And with that, I'll turn the call over to Joe for comments on the market and his outlook for ARLP.

Joseph Craft

Joe?
Thank you, and good morning, everyone. I want to begin my comments by thanking the entire alliance organization for their resilience, continued hard work and dedication in delivering a solid and safe start to 2020.
For Kerry, did an excellent job summarizing our first quarter 2024 results and updating our guidance for the full year almost four full months into 2024. We continue to expect that our coal sales book will be equally as strong as last year and be the anchor to deliver another solid revenue year.
We entered 2024 with over 90% of our coal sales volumes committed and priced at similar levels relative to 2023. And during the quarter, we made modest updates to that contracted order book. While low natural gas prices are suppressing domestic coal demand, we continue to have confidence the export market demand will remain available to us this year, supporting our sales guidance for the year. We also expect our production to be more predictable this year due to our belief that we have moved beyond the several adverse geologic areas that we faced last year.
As we think about the outlook for the domestic coal industry and the markets we serve. Several key themes are emerging data center growth driven by artificial intelligence and industrial load, led by electric vehicles and battery manufacturing are driving significant growth in anticipated electricity demand over the next several years. This outlook underscores the critical need for reliable, affordable baseload fuel for electric generation.
The past few months have shown no shortage of rising concerns about the nation's grid and its ability to reliably serve rapidly increasing load expectations. While I could talk for hours about those examples, let me highlight three in particular. First, according to the grid, the clean grid initiatives.
Grid strategies report the era of flat power demand is over according to 2023 for filings, $630 billion of near term investment in large load has driven the 5-year outlook for nationwide peak demand to 852 gigawatts from just 835 gigawatts in the year ago report. That's a doubling of the five-year five-year growth projection from 2.6% to 4.7% in just a 12 month window. This is attributable to investments in new manufacturing, industrial loads and data center facilities, all the types of customers that not just expect rather require highly reliable, affordable electricity supply 24 seven.
This unexpected new demand is set to ramp up even as the nation's power portfolio continues to be hamstrung by politically motivated regulatory driven forced premature closures of coal-fired and other fossil fuel generating sources. Beyond the obvious limitations of renewable resources for round-the-clock availability.
The actual investment in needed high-voltage transmission to utilize those renewable sources has not come close to expectations, making the ability to shift supply across regions far less practical point in many cases even possible.
Another example is a recent op-ed in the Wall Street Journal published on March 28th and titled, quote, The coming electricity crisis, AI. data centers and climate rules are pushing the power grid to what could become a breaking point and Globe and it they cited Georgia Power's recent 17 fold increase in winter power demand forecast by 2031 from growth in EV and battery facilities. PJ. M's double 15-year annual forecast for demand growth and a new micron chip plant in New York that is expected to draw more power than the states of New Hampshire and Vermont combined, among other examples.
Finally, the Washington Post an article on March seventh entitled, quote, amid explosive demand. America is running out of power in quotes in it. They describe how vast swaths of the U.S. are at risk of running short of power due to the growth of data centers and clean tech facilities. Georgia's industrial demand is at record levels. Arizona Public Service expects to be out of transmission capability before the end of the decade without major investment North Northern Virginia. These are the equivalent of several large nuclear reactors to serve all of the data centers being planned.
And Texas, as we know, is already facing frequent shortages and interruptions. I said, notwithstanding these warnings and the practical realities of how the grid works, the Biden administration through the United States, Environmental Protection Agency last Thursday, finalized several regulations designed to prove maturely close existing coal plants that are essential to providing grid saving baseload power in heavily energy consuming states. In response to these rules, the National Mining Association called out EPA or one refusing to account for irrefutable evidence that electricity demand is soaring to disregarding validated warnings from grid experts related to coal plant closures, and three, ignoring the basic fact that there is no adequate replacement ready to replace the sorely needed dispatchable generating capacity.
Coal is providing America's power also issued a statement last week in response to the EPA's new Clean Power Plan 2.0 that described the rule as quote an extreme and unlawful overreach that endangers America's supply of dependable and affordable electricity and quote, they followed by saying, quote the new Clean Power Plan is the same kind of overreach that caused the U.S. Supreme Court to reject EPA's first clean power plan in 2022 and close at the end of the day, it is our view that FY'06 will always trump bad policy that we believe is impossible to meet.
For example, the Edison Electric Institute at trade association representing the interest of all U.S. investor owned electric companies responded to the EPA package of final rules for power plants. By stating quote, we are disappointed that the agency did not address the concerns we raised about carbon capture and storage.
Ccs is not yet ready for full-scale economy-wide deployment, nor is there sufficient time to permit finance and build the CCS infrastructure needed for compliance by 2032 and quote, The Wall Street Journal editorial board also wait in writing, quote, section one 11 of the Clean Air Access. The EPA can regulate pollutants from stationary sources through the quote, best system of the emission reduction and quote that is quote, adequately demonstrated in quotes.
Carbon capture is neither the best nor adequately demonstrated as of last year, only one commercial scale coal plant in the world use carbon capture capture and no gas fire plants bid and quote, they went under, say, bad quote by the way, EPA plans to unveil soon another rule to reduce CO2 emissions from existing gas-fired plants. So some of them, they also have to shut down.
Meantime, Karma China has added about 200 gigawatts of coal-fired over the last five years about as much as the entire US coal fleet Biden fossil fuel onslaught will have no effect on global temperatures and growth government directives designed to support greater dependence on renewables cannot change the fundamental realities of how electricity is generated and transmitted.
As we look at expected supply and demand, our customers whose job it is to keep the lights on reliably and affordably Novoste. That is why we believe the US will continue to see delays and extensions and the premature closure of critical coal plants. And while we are committed to serving these markets for many years to come over the past few quarters, utilities have extended the planned operating life of approximately 10 gigawatts of coal generating capacity as a result of increasing electricity demand and delays in the construction of replacement generation, and we see room for that number to increase.
Now turning to strategic updates related to our business this year. In our coal segment, we expect to complete major infrastructure projects at Tunnel Ridge, Hamilton Warrior and our Riverview that complex.
These already well-capitalized mines will benefit from these payout projects, making them more productive, improving their cost structure and extending their over all long mine lives. As a result, we expect to maintain our position as the most reliable, low-cost producer in our operating regions for many years to come.
Turning to our royalty segment, we remain committed to growing our oil and gas royalties business, which delivered record volumes in 2023. And again, in the first quarter of this year, we like the cash flow potential. The segment offers the hedge free exposure to commodity prices and organic growth. We are looking for investment opportunities that meet our current underwriting standards as we seek to grow this segment in a tight market.
As such, we will remain highly disciplined as additional mineral acquisition opportunities emerge outside of our coal core coal operations in oil and gas royalties business, we remain active in pursuing other opportunities that align with our core competencies. Our relationships and experience established over soon to be 25 years as a public company position us to add significant strategic value across many segments of the energy spectrum.
You've have seen a number of these initial investments, which should be thought of as potential platforms for future lines of business with long-term growth and cash flow generation potential.
In closing, our first quarter results were in line with our expectations and set the tone for what we believe will be another strong year. Our partnership remains a generator of strong cash flows that positions us to grow unitholder value. I am encouraged by the opportunities in front of us and look forward to delivering what should be another successful year in 2024.
That concludes our prepared comments. And now that I now ask the operator to open the call for questions.
Operator?

Question and Answer Session

Operator

(Operator Instructions)
Nathan Martin, The Benchmark Company.

Nathan Martin

Thanks, operator. Good morning, Jacques Carriere, congrats on the strong start to the year. Thank you, Nick. I wanted to lead off with a market related question for 24, and you guys only added about 100,000 tons looks like and carry. I know you mentioned now the first quarter is usually low from a seasonality perspective, but there was a bit of a shift downward in the domestic commitments and exports increased. I mean some of that has to do with the high domestic stockpiles, maybe customers electing to take minimums. It would be great to get your thoughts on what's driving that shift or how are conversations with customers going? Would you expect there to be any further pressure on domestic commitments, just given the mild winter and low gas prices stockpiles that we've already talked about.

Joseph Craft

Thanks. And I think that the specific to that one minor change that did result in some negotiation to extend some tons in the out years as to where the market is. It continues to be pressured by low natural gas prices. We do see natural gas production. It being curtailed a little bit trying to bring that market back into more of a balance. We're seeing price of natural gas moving up a little bit as we speak, and we think that it will finish strong going towards the end of the year, similar to what the current strip is projecting and suggesting So and a lot will depend.
The answer to your question will depend a lot on what the weather is this summer because that will have an impact obviously. But based on what we believe is the case today, we do believe that those tons that we have contracted will be delivered this year as we are guiding to as we're looking beyond this year, we are seeing several solicitations. We bid for different solicitations that we are currently bidding.
We're are in negotiations for all of them. They're multiyear expectation or bidding or RFPs for multi-year contracts. So we feel that the and that we're in a great position to complete this year as we're projecting the export markets, as I said in my opening comments, we believe are open to us and we feel confident that over the next five, six years, we'll be able to maintain our volumes at current levels.

Nathan Martin

Appreciate those comments, Joe. And then maybe kind of along those same lines, 25, you did add a little bit more, maybe 700,000 tons looks like first, any of that some rollover tonnage, maybe you just alluded to from 24? And then maybe could you give us any commentary on what prices look like on those tons, whether it's domestic or export on just so we can kind of compare to what we're seeing out there in the marketplace on reported rates, we view fixed.

Cary Marshall

So the pricing of the contracts that we did enter into in the quarter were at levels that were quite a bit higher than what you would see is that the current spot market prices. So we I do believe as we move forward that our customers are recognizing and that natural gas demand is going to grow because of LNG and pricing will be more constructive in the out years compared to what we're experiencing currently update that though our customers also recognize that we have experienced inflation like most people in the world these days. And so they our so far in our conversations have been understanding, but we need to make adequate margins to continue to invest in the industry to be there for the long term to be there for them as they want to keep their plants open for the long term as well. So we're encouraged so far based on our experience, but we've got four others out there that for other solicitations out there that we're talking to. So stay tuned.

Nathan Martin

Okay, got it.
Thanks. And then maybe just the final one. Are you guys ARLP seeing any impacts from the Baltimore port outage we're currently experiencing.

Cary Marshall

We are not we have very little with nothing just like one vessel we had for the year. So most of our shipments do not go through Baltimore. So we have not seen any seen any direct and the impact to us, and we really haven't seen any indirect impact at this moment. So it's been a nonevent for us.

Nathan Martin

Okay. Got it.

Joseph Craft

Yes, I guess I was sort of more specific. Just wondering if you guys were able to pick up any business because of the outage, but it sounds like no material impact in.

Nathan Martin

Okay. Very helpful. I'll leave it there, Joe, appreciate your time.

Operator

Mark Reichmann, NOBLE Capital Markets.

Mark Reichmann

Thank you and good morning. So one analysis for Illinois prices for Illinois Basin and Appalachia volumes were above the high end of the guidance ranges. And so I was just kind of curious if that was just due more to more export volumes and if we are expecting the balance of the volume for 2024 to be from the export in the export market. Does that imply that maybe within your guidance range for 2024, you might be closer to the high end versus the low end? Just kind of how you're thinking about pricing for the balance of the year?

Cary Marshall

I think the pricing for the quarter reflects our contract book so both for the first quarter and second quarter, most of our sales are based off our contract contracts we had going into the year. So as we go to the back end of the year, we would expect that the export pricing that we're looking at will be at lower levels that will trend us down to the upper end of the ranges that we've given in our guidance if we're successful in achieving those prices in the one 10 to 1 20 APR to range. So that's sort of what we targeted that we believe is reasonable for us to expect in the back half of the year for the export shipments that we're going to need to finish to complete our book for 2024?

Mark Reichmann

And then could you just shed some additional light on the bitcoin mining activities, I mean, including the rationale and the any potential risk?

Cary Marshall

Yes. I think Mark, just as it relates to the bitcoin mining activity. As I mentioned in my prepared remarks, it was just an opportunity that we saw due to the fact that we've got excess power at our mining operations. And back in 2020, we were just looking for a way to potentially be able to monetize that particular asset that we had.
And so at that particular point in time, we chose to enter into the bitcoin mining area in purchase and miners and have been been mining there ever since and since late 2020 into 2021, if you look at the end of the quarter, we ended up with about 400, 25 bitcoin at quarter end. In terms of what we own, we're not actually out there buying Bitcoin or anything of that nature.
We're mining the bitcoin associated with these miners that we have and we are selling, you know what we need or however, our expenses so our exposure is limited, and we do have some extra capacity that we're renting out to other bitcoin miners with the within the data center that we've effectively built for this bitcoin mining take advantage of the low energy energy costs we have.

Mark Reichmann

Oh, I see. Okay. Well, I appreciate that. Just one final question. You've really done a great job growing the oil and gas business. And I was just wondering kind of how you're thinking about that going forward. I mean, you're right now you're weighted more to oil and the do you see that that continuing or do you I guess it's really driven by what's out there in terms of the acquisition opportunities, but do you kind of continue to maintain a preference for oil exposure? Or is this anticipated the growth in LNG change in thinking in any way with respect to natural gas, our focus today and really for the last two years has been in the Permian Basin.

Cary Marshall

So we have them more focused on the liquids side of them, coal on gas space. I mean, I think we'll continue to do that as we do move into the Delaware does have a little bit more gas exposure than what we have in the Midland, but we're not changing our strategy as far as I'm looking for more the liquid side of the oil and gas sector in our royalty business at this moment in time.

Operator

Dave Storms, Stonegate Capital.

Dave Storms

Please proceed with your question from Warner monetary Warren, I'm just hoping we could start. I know, you mentioned that you're expecting two longwall moves in the second quarter. Do you have a sense of how many longwall moves we should have in the second half of the year and any logistical challenges around the additional infrastructure projects that you mentioned?

Cary Marshall

Yes. As it relates to the longwall moves a we actually have three longwall moves in the upcoming quarter. So one in each of our longwall operations, which would be one in the Illinois Basin two in Northern Appalachia. If you look in the back half of the year in the third quarter, we're anticipating two longwall moves in the third quarter and one longwall move in the fourth quarter.

Dave Storms

Understood.
That's very helpful.
And then you also had a little bit of outside coal purchases in the quarter, it looks like it's coming down sequentially. How should we be thinking about outside coal purchases maybe in the next quarter and throughout the balance of the year if you have that foresight?

Cary Marshall

Yes, I think I think when you look at the coal purchases for the year, I think they came in or for the quarter, it was right about $9 million or so. We do anticipate those to continue on through the through the balance of the year, not to not to that level, but I think you know, as we look on a going forward basis more in the neighborhood of $5 million a quarter throughout the balance of the year.

Dave Storms

Understood.
Very helpful.
And then just one more for me. Are you and apologies if I missed this, are you able to quantify how much of your 2024 order book is contracted and how much is exposed to the spot.

Cary Marshall

Okay.
So when you look at our 2024 order book, we've got 32.6 million tons committed at this particular point in time. Our guidance ranges are anywhere from 34 to 35.8 million tons of overall sales. So if you take the midpoint of that guidance range, it's about 93% committed.

Operator

David Marshall, Singular Research.

David Marshall

Hey, guys, good morning. Thanks for taking the questions. And just echo in previous comments you that's some quarter sort of.

Nathan Martin

Good.

David Marshall

Thank you, David. I just wanted to follow up on to a previous question with regard to outside volumes or outside purchases.
Yes, it looked like your inventory ticked up a bit sequentially and you did produce a bit more than was sold in the quarter. Could you just give us a little bit of a little better understanding of what the and there's for the incremental outside purchases, just because the positioning of the call?

Cary Marshall

Yes, really the outside purchases really for the most part for this year is related to our metallurgical operation. And it's just a nice blend coal that we put in associated with our met tons that that allows us to to to benefit our metallurgical sales and throughout this year.

David Marshall

Okay. And then just of follow up on your comments, Terry, about about the notes and a plan to take those out throughout the course of the year.
Can you talk a little bit more? You mentioned some potential financing alternatives around those could you just talk about some some of those alternatives and what your what your timing, how you guys feel about timing and terms. I'm taking those notes out.

Cary Marshall

Sure. Glad to do that I think as I mentioned in my prepared remarks, we are looking at the options to refinance those senior notes. We that is what we would would like to do there are some the markets are open at this particular point in time. We do have a couple of different avenues that we could go down in terms of refinancing those senior notes but I mean, I don't want to get into too much specifics as it relates to it at this point in time.
But there's a couple of different avenues that that were going down at this particular point in time. I yes, as we take a look at that, we are looking to get that done here over the next six months or so so hopefully we'll be in a position to get that all completely taken care of throughout the the next six months or so while well, this well is bitcoin mining information has to stay, maybe that helps to repay 70 minutes Santa Clara.

David Marshall

Well, some of that will play into inventory, that stuff sooner subject here selling or kind of as you saw in the inventory you a little bit, I guess the whole more insight there that was outside of the US interesting new information and to be clear on that in terms of what we're what we're doing right now.

Cary Marshall

We're mining the Bitcoin, and we're selling generally on a monthly basis too, cover our operating costs. So so we are actually accumulating bitcoin over overtime so we do hold 400, 25 bitcoin right now. And at quarter end, as I mentioned, that was that was valued at about 30 million. And so we'll continue to do that our costs are are lower than where the bitcoin pricing is today. So we would anticipate continuing to accumulate coins on a monthly basis.

David Marshall

Could you talk about your production rates on your own production costs relative to that operation?

Cary Marshall

Yes, we just we just underwent the having an event here over this past month, but if you you kind of take a look at the first quarter, if you just kind of look at what our average operating expense was and just kind of look at it on a per claim basis, it was a little bit over 24,000 per coin in the first quarter was our was our average cost as we mined these mind, these coins. So when we when we looked at the first quarter.
Overall, we mined 69 bitcoin in the first quarter. We retained 51 of those Bitcoins in the first quarter. So we sold about 25%. Now we've got the halving event. So we'll have to see how the halving event turns out as to the amount of bitcoin that we mined here quarterly on a going forward basis. There's a number of factors that go into that, but that that kind of gives you a sense as to where we were at least in the first quarter in terms of what our costs were and how our mining was at that particular point in time.

David Marshall

Yes, absolutely. That's extremely helpful. Thank you very much, Vishal.

Cary Marshall

Thank you.

Operator

Yves Siegel, Siegel Assets.

Yves Siegel

Yes, thank you. Good morning. Hey, Carrie. I'm sorry. I'm just not that the, but that up to date, what does a halving event means as well?

Cary Marshall

So when you get into the bitcoin protocol. And essentially, there's a finite number of bitcoin that is expected to exist over the period of time. But going from the beginning to the end, basically is an absolute amount.
And so at various points along the way, effectively they have or essentially reduce the number of bitcoin that can be produced a drive to be able to them meter in the Bitcoin as it goes forward to approach the ending number, the finite numbers that they're actually trying to do.
So as a result, you're effectively your cost almost double and you're producing about half the bitcoin that was otherwise produced in the previous two or three year period that goes between each of these having. I've it's just part of the normal protocol of the way the bitcoin universe is set up. You can't have people participating.
Generally, the halving event occurs about once every four years.

David Marshall

So I guess the other way to ask a question, how many Bitcoins do you think you'll have your mind for the full year?

Cary Marshall

I think? Well, of course, you know, the first quarter we had the benefit of the halving event. And I think when we look at the full year in total, our projections would show somewhere between 175 to 190 or so Bitcoin for the year in total that we would mine now we would monetize some of that to cover our operating expenses so far. So our net would probably being I don't know, you know, need maybe around 60% of that number, so ultimately at the end of the day. And so that becomes material what it meant and what it looks like right now.

David Marshall

Yes, I think. Well, moving to something else. I guess, Joe, how has your strategy evolved with the changing environment? Just your remarks earlier that just seems like a game changer in terms of the electricity consumption going forward. And so and not only that it sounds like there's growing recognition that the renewables will continue to grow, but they just can't solve the electricity needs so at has that informed you to maybe tweak the strategy at all?

Cary Marshall

And no, I think that the back, I guess it's probably given us some more optimism that and our coal operations will continue longer than we saw when we started on looking at some of this diversification as so we believe that demand is going to be extended longer than what we thought at the time we entered into the this type of strategy several years ago.
And now as far as some of the things we're looking at because of the growth in the data centers and some of the areas of and if you look at various components of data centers and you look at the land aspect and where these data centers are located, we see that there could be some opportunities for us and participating in that value chain at some in some way.
So we're exploring that. So as we think about different things we can invest in. We're very, very focused on only looking at those things where we have core competencies that we have either relationships and or skills that have been demonstrated by our past experience.
And so as I mentioned, what's going on in the data center world has definitely opened opportunities for us to consider beyond some of the things that we've already talked about previously of trying to work in areas that we feel like we can invest in companies and then be suppliers to those companies and or utilize some of that technology and be able to either manufacture or sale service in growing our matrix subsidiary and other things that may relate to the significant demand it's have going on with the various technology advantage advantages, the advances that are occurring, the mega data centers, as an example, just last week in Indiana,
Amazon announced an CAD11 billion, yes, data center investment in Indiana and Google announced a CAD2 billion investment in Indiana. So those are significant new adds and we expect that the several other announcements will be made over the course of this year as the United States continues to want to. It would be a first mover in the artificial intelligence world relative to they're their view of that and the national security implications of being a first mover relative to China as an example.
So So no, it hasn't changed. It does give us a little bit more cash flow as we think about investing. And I think that we also feel I'm more confident today on oil and gas based on where we see the demand for oil and gas over the next couple of decades. So we do believe there's opportunities for us there to be able to invest the cash flow that we are going to have. That's going to allow for the future for growth for our unit holders.

David Marshall

And the last question is, is there an opportunity for you to grow the coal that you export, but to take take advantage.

Joseph Craft

I do not know the growth in oil demand. We don't will we see the from the United States position for the Neo for export thermal be relatively flat. So we do not see that as a growing part of the opportunity or we may be able to pick up some more market share. But we don't see the actual absolute increase in demand for international markets for thermal coal, and we're not planning on that over the next decade.

Operator

Thank you.
We have no further questions at this time.
Mr. Marshall, I would like to turn the floor back over to you for closing comments.

Cary Marshall

Thank you, operator, and to everyone on the call. We appreciate your time this morning as well as well as and also your continued support and interest in Alliance.
Our next call to discuss our second quarter 2024 financial and operating results is currently expected to occur in July, and we hope everyone will join us again at that time. This concludes our call for the day.

Operator

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.