Alliance Resource Partners LP (ARLP) 2007 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2007 earnings call for both Alliance Resource Partners, LP, and Alliance Holdings, GP.

My name is Fab and I'll be your coordinator for today. (OPERATOR INSTRUCTIONS) I would now like to turn the presentation over to Mr. Brian Cantrell, Senior Vice President and Chief Financial Officer. Please proceed.

Thank you, Fab, and welcome everyone. We appreciate your interest in Alliance Resource Partners, which today we refer to as ARLP, and Alliance Holdings GP, which we will refer to as AHGP.

We released our 2007 fourth quarter earnings this morning and will today discuss these results and our outlook for 2008. Following our prepared remarks, we will open the call to your questions.

Before we begin, let me provide a few reminders. First, since AHGP's only assets are its ownership interest in ARLP, our comments today will be directed to ARLP's results and outlook unless otherwise noted. In addition, please be aware that some of our may include statements which are not historical in nature and may concern future expectations, plans and objectives of the partnerships regarding their future operations.

Such comments constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, and are based on the beliefs of the partnerships and those of their respective general partners and management, as well as the assumptions made by and information currently available to them.

Although the partnerships, their general partnerships partners and management believe the forward-looking statements are reasonable at the time such statements are made, no assurances can be given that such statements will prove to be correct. These forward-looking statements are subject to a variety of risks, uncertainties and assumptions, which are contained in our filings from time to time with the Securities and Exchange Commission, and are also reflected in the partnerships' press releases dated today.

If one or more these risks or uncertainties materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those the partnerships anticipated, estimated, projected or expected. In providing these remarks, the partnerships have no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

We will also be discussing non-GAAP financial measures today. Definitions and reconciliations of the differences between the non-GAAP financial measures and the most directly comparable GAAP financial measure, are contained at the end of the ARLP press release, which has been posted on the partnerships' website and was furnished to the SEC on Form 8-K.

Also on the call this morning is Joe Craft, our President and Chief Executive Officer. And at this time, I would like to turn the call over to him for some brief opening comments. Joe?

Thank you, Brian. Good morning, everyone, and thank you for joining our year-end 2007 earnings review. For the 7th year in a row, ARLP delivered record financial and operating performance. In 2007 we exceeded $1 billion in revenue for the first time in our history, and along the way set new records for coal sales and production volumes, revenues and EBITDA.

ARLP also reported its second highest net income in the partnership's history. We didn't quite reach a record for net income, due to the higher depreciation, resulting from our recent capital investments made for the future growth of our partnerships.

Capital investments for 2007 totaled nearly $173 million and included the acquisition of the Providence Reserves in June, which added approximately 87 million tons of mineable coal reserves to our western Kentucky operations and provided ARLP with operating efficiencies and flexibility in the growing Illinois Basin market.

The completion of a new portal and airshaft at our Gibson mine, as well as a new rail load-out facility, which will provide expanded market access for both our existing Gibson mine and our proposed Gibson South development project.

We added additional production units at two of our western Kentucky operations, to meet current customer demand. We began construction of the slope and shaft at our River View project in western Kentucky. And we also continue to invest in our other development projects in anticipation of future growth and demand for scrubber-quality coal.

Safety first is a core value in all ARLP operations and I'm particularly gratified that all of our achievements in 2007 were accomplished while matching our safest year ever recorded. Last year our Warrior and Mountain View mines received statewide recognition for outstanding safety performance and ARLP's total accident rate was well below the industry average and among the best in the industry.

I'm also pleased that we were able to share our success with our unit holders. Over the past 12 months, our strong performance allowed ARLP to increase cash distributions to unit holders by 8.3%, while AHGP increased distributions to unit holders by 15% during the same period.

At this time, I'll turn the call back to Brian, for a review of our financial results, after which I will return to discuss our outlook for 2008 and beyond.

Thank you, Joe. ARLP's financial results for the 2007 quarter were generally in line with or slightly above our expectations, and as anticipated, slightly below results for the 2006 quarter.

Net income for the 2007 quarter decreased to $39.9 million or $0.89 of adjusted net income per diluted limited partner unit, compared to $45.5 million or $1.03 of adjusted net income per diluted limited partner unit in the 2006 quarter.

EBITDA for the 2007 quarter decreased 3.1% to $64.6 million, compared to EBITDA of $66.7 million for the same quarter last year. Several factors contributed to these results. First, revenues for the 2007 quarter fell approximately 4.1%, primarily as a result of reductions in tons of coal sold and synfuel-related revenues.

With respect to our sales tons volumes, ARLP sold 6 million tons in the 2007 quarter, a decrease of approximately 477,000 tons compared to the 2006 quarter. As you may recall, however, we posted record coal sales volumes during the 2006 quarter, as ARLP continued to reduce coal inventories built earlier in 2006, while we completed the Elk Creek mining complex development and as we prepared to transition our longwall operations from the Mettiki mine to the Mountain View mine.

ARLP also realized approximately $4.2 million higher synfuel related operating revenues during the 2006 quarter, due to higher synfuel production volumes compared to the 2007 quarter.

Turning now to expenses. ARLP's operating expenses declined in the 2007 quarter to $163.3 million, compared to $172.7 million in the 2006 quarter. Lower total operating expenses reflect the lower coal sales volumes I discussed earlier, as well as a $9.8 million reduction in Worker's Compensation expense in the 2007 quarter.

Benefits attributable to our safety programs and our claims management processes have resulted in improved trends for cost associated with Worker's Compensation and allowed us to adjust actuarial assumptions to better reflect these positive developments.

Partially offsetting these reductions were increased cost in the 2007 quarter, due to continuing pressures on other labor related expenses, materials, supplies and regulatory compliance. In addition, the higher than anticipated cost structure at our Northern Appalachian operations, which were primarily due to higher transportation costs, West Virginia severance taxes and the lost of certain Maryland state tax benefits reflected the impact of transitioning the longwall operation from Maryland to West Virginia, late in 2006.

General and administrative cost rose in the 2007 quarter, primarily due to higher incentive compensation expenses, which increased approximately $1.9 million when compared to the 2006 quarter. Although increased incentive comp expense reduced ARLP's net income, earnings per unit was not impacted, since its increase was fully allocated to our general partner to reflect funding provided by a related party this specific purpose.

On a segment basis, coal sales volumes during the 2007 quarter declined in the Illinois Basin region, due to higher sales volumes in the 2006 quarter, reflecting the previously discussed coal inventory reductions at Elk Creek. Lower coal sales volumes in the Northern Appalachian region during the 2007 quarter also reflect our planned reduction of inventory accumulated at the Mettiki mine to meet sales commitments to our customers during the longwall transition in the 2006 quarter.

Average coal sale prices rose $1.86 per ton to a record $39.20 per ton sold in the 2007 quarter. This increase was led by higher pricing under new coal sales contracts in the Northern Appalachian region, which reflect the impact of the anticipated higher operating costs at our Mountain View mining operation.

In addition, improved contract pricing in the Central Appalachian region resulted in a 9.3% increase in average coal sales price per ton during the 2007 quarter.

Total segment adjusted EBITDA expense per ton increased 1.9% during the 2007 quarter, as each of ARLP's operating regions continued to experience reduced productivity and higher compliance costs associated with new mine safety standards. In addition, increased expenses in the Northern Appalachian region also reflect the higher operating cost structure of the Mountain View mine.

With that, I'll turn the call back over to Joe for his guidance review and closing comments. Joe?

Thank you, Brian. Based on our current projections for 2008, ARLP is estimating EBITDA in a range of $240 to $260 million, compared to 2007 EBITDA of $267 million. Keep in mind, however, that 2007 EBITDA included approximately $31.3 million in synfuel related benefits and $12.3 million in benefits related to the XL No.3 mine fire insurance recovery. Excluding these nonrecurring benefits, EBITDA is expected to increase 9 to 16% in 2008 compared to 2007.

Net income for 2008 is currently estimated in a range of $120 million to $140 million, which at the midpoint is comparable to 2007 net income, excluding the XL No.3 mine fire settlement and the loss of approximately $28.5 million in synfuel related benefits.

In addition, our depreciation expense is expected to increase approximately $21 million year-over-year, which is reflected in the net income guidance of $120 to $140 million in 2008. Market fundamentals are extremely positive at this time for coal producers. Demand from international coal purchases remain strong and domestic utilities are increasingly willing to make commitments for high-sulfur coal.

As I mentioned earlier, we responded to these strong markets by adding production units at our western Kentucky operations in 2007. To meet additional customer demand in that market, we will add an additional production unit at these operations during the first quarter of 2008. In addition, discussions with customers continue to advance toward securing the coal sales commitments necessary to timely execute on our organic growth projects.

As a result of these capacity expansions, we currently anticipate coal production in 2008 will increase by approximately 8 to 10% to a range of 26.2 to 26.7 million tons. Essentially all of our 2008 production committed and priced as we head into this year, we are currently expecting average coal sales prices per ton in 2008 to be comparable to 2007 levels, excluding the synfuel related benefits.

Based on these estimates, ARLP is currently anticipating 2008 revenues in a range of $1 billion to $1.03 billion, excluding transportation revenues.

On the cost side, we currently anticipate the lower cost to produce the incremental ton, as I mentioned earlier, will generally offset the anticipated increase to cost for labor and benefits, maintenance, regulatory compliance and materials and supplies. As a result, ARLP is currently expecting our 2008 operating expenses per ton to be comparable to 2007 levels.

Looking beyond 2008, ARLP has secured sales commitments for approximately 71% of its anticipated production in 2009 and 59% in 2010. As a result of our unsold position and price re-openers in our existing commitments, ARLP has 60% of its total anticipated production in 2009, open to market pricing, and 78% open in 2010. With these open to market positions, ARLP is well positioned to benefit from the strengthening coal markets in the future.

That concludes our prepared comments and we'll now be happy to entertain your questions.

(OPERATOR INSTRUCTIONS) Michael Blum.

Just a couple of questions. One, can you talk about number one, what exactly is driving the increased demand from utilities in terms of you increasing the production by 10%?

Mostly that's in our Illinois Basin operations and I think it's confirming the increased demand as a result of the scrubber construction. So essentially all of it is new demand to that region, related to scrubber adds in 2008.

Okay. And in terms of the CapEx budget that you put out there for 2008, how much of that -- can you maybe just break that down a little bit in terms of how much you're spending on the various projects and maybe most importantly, how much do you have budgeted for some of the organic growth projects that you've laid out in the past?

I'll talk a little bit generally and then I'll ask Brian if he wants to amplify on that. The capital that we've got in the budget does include the things that we've previously announced, which does include completion of the slope and shaft at River View. It also includes anticipation for some [mineral] interest purchases that we anticipate doing in 2008. It includes completion of the Gibson County slope and shaft project that we have. And it also includes some additional reserve and/or permitting cost for some of the other development projects.

It does not include the full scale capital for River View, so we're still focused on a first quarter decision for River View. We've got several negotiations that we are engaged in, as well as anticipate in the first quarter that should allow us to be on track for that. So hopefully by the end of the quarter we will have an announcement for that. And assuming that that goes as we hope it to go, there would be additional capital that will be announced to be committed for that project with some of that being spent in 2008 that's not included in that number.

I think relative to the other growth projects, I think we're looking at a second quarter to third quarter timeline for those. They too could require additional capital, but most of that capital would be spent post 2008 and not required in 2008. It would be started spend in some significant level in 2009. There are a few other efficiency projects like the fifth unit in our west Kentucky operations that's included in our capital numbers. That capital is comparable to what we did for the 14 at Elk Creek a year ago, which was around $10 million.

Brian, do you have other--?

I think the other major thing that we haven't talked about yet is we did just recently make an acquisition of some mineral interests in coal reserves, Michael, that was about $13 million or thereabouts. But I think those are the bulk of the major items.

Okay, thank you. That's very helpful. The last question I had was just in terms of the distribution increase, I was wondering if you could just talk about what the thinking was? I guess the increase was a little more modest than you've done in the past and at least the way my model reads, you could have certainly increased it more. So I'm wondering what the thinking was for the fourth quarter? And then looking into '08, how are you thinking about distribution increases?

I think we actually increased the rate of our distribution this quarter versus what we did in the second quarter distribution. I mean obviously, Michael, as we've talked about in the past, we look at this over a very long-term time horizon. And we do have confidence that these projects are coming on. The timing of those is dependent upon getting the contracts we need.

So we're trying to factor all of those things in as we make our decisions. Obviously the loss of synfuel at the end of 2007, has an impact on 2008 cash flows as well. And so we factored that in, in addition.

We've seen significant market run up since we really considered that as well.

Very recently, that's true.

So when you look at our unsold position and the revenue sensitivities that we applied to that at that moment in time, that was a factor. So I think as we go forward, as Brian mentioned, we're hopeful that with the improved market scenarios as well as the opportunity to have more of our production committed in both tons and price, because we are seeing an acceleration of utilities that are now starting to think in terms of securing their supply.

So, I think the revenue picture may become a little bit more definitive as we consider what our distribution increases would be starting July forward. So, I'm trying to answer your second part of your question of how we're going to look at this going forward. I think that we will continue to take [Lipen] mine evaluations, look at it on a long-term basis, what is sustainable, factoring in the market realities as well as the cost realities. Because you know, there continues to be cost volatility. Steel price is a perfect example. Oil price is a second example. And we have to factor those in. So we run not only what our expected results are, but also sensitivities to that, to assure that the distributions that we do commit to are sustainable for the long-term.

And that we have a nice growth picture looking forward.

Emily Wang.

Hi, this is Billy. My question is, can you talk a little bit about what you're seeing at the customer inventory levels?

I think that it varies region by region. Region meaning producing region, as far as looking from an Illinois Basin producer, Central App producer, Northern App and PRB. So I think that from what the utilities are telling us, versus what you might see as public data, utility stockpiles, particularly for Illinois Basin and Central App and Northern App, are at levels that I think they're comfortable for the utilities for Central App and Illinois Basin. They're not comfortable for Northern App producers.

And even though they may be higher than average over the last 5 to 10 years, I think that the utilities have adjusted what their expectations are needs are, because there is some concern about supply for 2008. Most producers are fully committed like we are and at the same time there are challenges from both transportation perspective with the export market. And domestically with some of the regulatory issues that the expectation is that for production, it has more probability to go down than it has to go up, for the industry as a whole.

So I think most utilities would prefer to have more coal committed, facing the uncertainty of supply for 2008. And I think we're seeing that, based on the increased number of solicitations that we have participated in, in January and that are on the calendar for February and March.

(OPERATOR INSTRUCTIONS) Noah Lerner from Hartz Capital.

Quick question. I was wondering if you can just discuss a little bit the current thoughts inside the organization on the impact of the various green efforts that are going around right now? I mean, clearly the scrubbers have been a benefit. And I'm curious as to, do you see an increase in speed of the implementation of scrubbers at the utilities? But also some planned coal-fired new builds have been cancelled and the cap and trade. Just kind of what your thoughts are and how it's going to impact you long term.

I think on the scrubber story itself, that is unfolding as we have expected. I don't really see an acceleration or even a delay in that regard. There are, again, if you look at it in total, there's some slight percentage delays in accelerations. But in general, the demand for scrubber quality coal is pretty much moving at the pace that we thought it would, which continues to bode well for our growth projects that we have defined for the next five years, say.

So then you start looking beyond that for the expansion, which you've got the issue of new coal-power power plants as well as coal to liquids, coal to gas conversions. I think that as you think in terms of CO2 and what that impact is, it's a very complex issue. There's no silver bullet. There appears to be significant interest to do something. So we're monitoring that. We're tracking that.

We're engaged in that process to try to communicate and educate what the impacts are of the various pieces of legislation that are being discussed and proposed. Due to the complexity of the issue, primarily because anything and everything that they're talking about affects about 80% of the economy of the United States, it's hard to predict exactly what's going to happen.

At the same time, with coal supporting over half the electricity generation in the country and there's no real alternative on a cost effective basis, I think there is consensus among the policy makers that we have to find a way to keep coal as a significant contributor to the energy picture for the long term.

So not withstanding the fact that there have been substantial number of coal-fire power plants that have been shelved for the moment, we are still seeing coal-fire power plants announced daily -- not daily, but on a current basis. And there are some that are being committed and permits issued and construction started to where there will be continued increase coal burn from new coal-fire power plants.

This nation needs to invest in its infrastructure, just like some of the other countries that are struggling right now that have failed to invest in the past. And I think that in order to meet the power demands of 2012 forward, new coal-fire power plants are needed, as well as possibly nuclear plants and/or gas plants and/or alternatives. So there will be increased demand for coal in my opinion.

The announcement with DOE today or yesterday, relative to funding for the carbon capture and sequestration to facilitate that on a faster pace, I think is positive. I'd like to see them continue with future gen, but maybe we can do both. Because I think that for the country, having low-cost energy is what has made this country and its economy great and I think that there's a need to continue to try to find the solutions to the CO2 issue in a way that still allows us to use all forms of energy, given the high price of energy around the globe today.

Had all the fire plants been built that were announced a year ago, there would have been obviously a much more robust growth story for coal. At the same time, we're projecting that coal demand will continue to increase in a steady way over the next 10 to 15 years and we're still focused on investing in coal, that the country is going to need it.

I think the utilities will commit for that coal production to come on line and especially given the global demand for energy and specifically to coal. And we're seeing the benefit of that right now with our own coal markets, as to how that can influence the domestic market. We're continuing to be very bullish on the outlook for coal, not only in the short term, but in the long term.

Great. It sounds like you alluded to it, so if I could maybe ask a quick follow-up. It seems like the global coal market and what's happened, I guess in Australia and China and everything, that is having some beneficial follow-through to our domestic operation here that's increasing the economics of the partnership. Is that correct?

That's correct. Even though we're not a significant exporter, it does have ripple effects back to our product and the markets where we serve.

Justin Bergner with Gabelli & Company.

My first question concerns the new production units. It's great that you're able to bring new production into this current market. I was wondering if you might be able to give us an indication as to, I guess, when you decided to bring these new production units on line, how long that incremental production can last and are there other opportunities like this in the portfolio?

We made the decision in December and it was primarily driven by customer demand, where we had customers that were wanting more production than we had to offer at the time. And we elected to go ahead and accelerate that. We had previously projected doing that towards the end of '08, but we accelerated it to start by the end of the first quarter of '08.

We have the potential to add another unit, but more than likely that will not occur in '08. I think as far as sustainability, the question is going to get back to River View and what the demand for River View is. It's possible that for this particular unit that we would transfer the equipment and employees -- not necessarily from this particular mine, but we could transfer some units to River View to support the development of that project.

It really depends on how the market develops for our River View mine as to whether we would take a unit or two from our existing operations and transfer it to River View to support that development and then have that excess capacity as the market would develop in the 2010-2011 timeframe.

So, to try to be precise on sustainability, it's really market dependent. I think as we look at what we think the size of the market is and what we think we should -- what percent of market share we should have, our goal and objective is to operate at full capacity. And right now we think the potential for that happening is good. But we'll have to wait and see.

I mean, is it possible then that looking two years out, River View might I guess eat in a bit to the incremental production that's coming online in 2008?

I think as far as River View, our expectation that that will begin at least at a 4-unit coal mine. It has the ability to be more than that. So then you get in, you know, River View, obviously by its name, is on the River. So what we're finding is a significant amount of this new production for scrubber quality coal is on the River. And so, there is a cost advantage to eliminate that transportation from our inland operations getting it to the River that River View would benefit.

So there are some utilities, however, that we're negotiating with that are rail movements and it really depends on how many contracts we get for rail and how many we get for River movements that will answer the question. So it's possible that it could eat into our current production base. It's possible that we'll be able to maintain our existing production at our existing operations and just be additive at River View. Again, it's just totally market dependent.

Okay. Thank you for that detail. I have one more question, if I may. The flat cost guidance on a unit basis for 2008 is great. We're certainly not hearing that everywhere in the marketplace. Is it possible to give a sense as to what type of cost inflation you're seeing in the sense that if you didn't have this new production, one might expect unit cost increases in a certain range?

It's very volatile and it's hard, because--.

It continues to move.

Steel prices are a significant piece of that and it affects structure to roof bolts to equipment. So it's hard to predict exactly where that's going to be. So that's at a pretty high rate. I think that you can see what our costs have done in 2007. A large percent of that was driven by the emergency safety standards, which had a big spike up. And so a lot of that is behind us, as we look to 2008.

So if you look at it just strictly on commodity, we're seeing the same inflation everybody else is on commodity prices. But we've got the benefit on the year-over-year of anticipating lower entry compliance costs compared to 2007, as well as bringing on these incremental tons that are very low cost, because they're incremental. So when you increase your production value to 10% it's all incremental. It does have the benefit of offsetting the increased commodity prices.

Norman Oramer from Cramer Investments.

I wonder if you might be able to expand a little bit about your comments about export markets, specifically, is there a possibility that you might be a coal exporter at some future date, considering transportation access and type of call, etc.?

We do export some. It's in the hundreds of thousands, as opposed to the millions of tons. We're a 25 million to 26 million ton producer today. So, from a scale standpoint it's not going to be a large percentage of our volume. However, we do have the opportunity to export coal out of essentially all our operations and we will take advantage of that opportunity if we can.

So I think that as we look to 2008, since all of our commitment is pretty much domestic, you know, we've got I think a few small orders that will be in '08. As of '09 there is potential to maybe ship 0.5 million tons to 750,000 tons in the export market, which would be a sizeable jump for us. The pricing for that, I think when you compare back to the domestic markets, I think the domestic market's going to have to compete with that pricing.

So we'll have to make a decision as to whether the domestic market is willing to commit for that tonnage and keep that coal flow into their power plants or whether they're ready to allow that to go overseas. And as we face that over the last 12 months and looking into '08, in most cases our domestic customers have agreed to step up and meet our price alternatives of shipping that coal in the export market. It's hard to predict exactly what will happen in the 2009 timeframe, because that's really our only opportunity now, because of the fact that we're effectively sold out for '08.

Okay, thank you for that. Do you think that the current very high pricing in Europe as compared to American pricing is a trend that may continue over the next few years?

I think at this moment in time a lot of this spike is driven off of weather related events in Australia, as well as China. I mean, they've had some weather impacts, Indonesia's had some weather impacts. So those things I believe will normalize. There are infrastructure issues in Australia that I know there are investments being made to relieve some of that, but that's a little longer term, a couple of years out.

I think the biggest new information on the export side is what's going on in South Africa and we had two different conformations yesterday suggesting that they may be more permanent. That situation is one where their country has not invested in new power generation capacity and so they are in sort of a catch 22, where they don't have enough coal to generate power and so then they don't have enough power to run their coal mines.

And so they're having to shut their coal mines down because they don't have enough electricity to keep them running. And yet they need the product to generate the electricity. And we've been led to believe by some banks primarily that are focused on that part of the world that that could be more of a permanent issue instead of a temporary issue.

I think the global demand continues to grow. So when you start factoring that into the equation, that growth will more than likely stabilize the short-term weather issues to where I think most people feel that this demand growth in the world economy is more permanent than temporary, that it is different than some of the past cycles we've had, where we've had export markets that accelerate for a period of time and then they quickly disappear as fast as they arrive. It sure seems different today than what we've experienced in the past.

We've got relationships with two or three different entities that are talking to us about trying to find long-term supply in this country. So I think it's more likely than not that the export market will have a significant impact on domestic pricing for the next two to three years for sure. And beyond that it's hard to say.

Thank you very much for all those comments.

Paul [Musad] from Stifel Nicolaus,

I had a quick question about Illinois Basin coal, especially when you compare it to Northern App. We've heard other producers in the past allude to a chemical difference between the two that might limit the markets to which you could sell Illinois Basin coal, particularly with how it reacts with scrubbers. Is there something there that we should be considering? Are there markets -- apart from transportation issues, that might not be willing to -- that would rather have Northern App coal over Illinois Basin coal? And particularly, we've heard some talk about chlorine levels within Illinois Basin coal that might negatively affect the way scrubbers operate?

Well, you've got to look at the chlorine levels of the specific coal in that Illinois Basin. So the chlorine does range to an acceptable level to an unacceptable level. So there are certain coals that utilities will not take because the chlorine is too high.

For our coals that we particularly produce, we don't have that issue. The coals that we're producing at our existing operations plus the projected operations are within the tolerance levels of the boiler design for the markets we've identified. So we don't anticipate there are any issues for power operations in particular.

And at the same time as you look at potential growth in Illinois Basin with some projects, there are certain coal fields that chlorine is higher. It's an issue.

Okay. I guess, assuming that the export market remains hot and Europe continues to pay astronomical prices and the Illinois Basin becomes a bigger exporter, do you think that chemical issue will become a bigger issue as you start to look more at exporting to Europe in the future if possible?

I think specific to the chlorine issue, I think more than likely that coal will go to the export market as opposed to the domestic market. So it will move out of this market and out of the domestic market and it will find its home in the export market.

There are no further questions at this time. I would now like to turn the call back over to Management for closing remarks.

We appreciate everybody's time and attention and look forward to visiting with you at the end of the next quarter. Thank you, everyone.

Thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a wonderful day.