angel_nt
Summary
- Alliance Resource Partners is transitioning from the coal business to the Oil & Gas royalty business for long-term survival.
- The company is actively pursuing new investments in undeveloped oil and gas fields to grow its portfolio of royalties-generating assets.
- The market is currently undervaluing the company as a coal business, but a successful transition could lead to a re-rate of the stock and a potential 50% upside to $29 per share.
Alliance Resource Partners (NASDAQ:ARLP) is undergoing a process to transition from the coal business to the Oil & Gas royalty business. This fundamental change is essential for its long-term survival, in light of regulatory and financial pressures arising from the existing coal exposure. We believe that if successful, the company could emerge as a leading royalty player and stand to benefit from a potential valuation multiples re-rate. The overall upside potential is around 50%, to $29 per share.
