Alliance Resource Partners Expands Oil and Gas Royalties Platform Through $206 Million AllDale Acquisition
Alliance Resource Partners, L.P. has announced a major expansion of its oil and gas royalties business through definitive agreements to acquire significant ownership interests in AllDale Minerals III, LP and AllDale Minerals IV, LP. The transaction, valued at approximately $206.2 million for Alliance Resource Partners’ portion, represents a strategic move to strengthen the partnership’s position in some of the most productive hydrocarbon basins in the United States while further diversifying its energy portfolio.
The acquisition marks another important step in Alliance Resource Partners’ long-term strategy of growing its minerals and royalties segment, which has become an increasingly significant contributor to the partnership’s earnings and cash flow. By increasing its ownership stake in AllDale III and IV, the company is expected to gain greater exposure to premium oil and gas acreage and enhance its participation in future production growth opportunities.
Under the terms of the agreement, the overall transaction implies a gross valuation of approximately $410 million for AllDale III and IV combined. Third-party sellers are divesting general partner and limited partner interests valued at approximately $306.2 million. Of that amount, Alliance Resource Partners will acquire interests worth roughly $206.2 million, while related parties affiliated with Joseph W. Craft III, the partnership’s Chairman, President, and Chief Executive Officer, will acquire the remaining $100 million of interests.
The difference between the total implied valuation of $410 million and the $306.2 million being purchased reflects ownership interests that are already held by Alliance Resource Partners and entities affiliated with Mr. Craft. Following completion of the transaction, the partnership’s aggregate economic ownership in AllDale III and IV is expected to rise dramatically from approximately 5% to 61%.
In addition to increasing its economic stake, Alliance Resource Partners will obtain full ownership of the general partner interests in both AllDale III and IV through a wholly owned subsidiary. These general partner interests will be non-economic after the transaction closes but will provide the partnership with operational control and strategic oversight of the assets.
The acquisition is expected to become effective as of April 1, 2026, with closing anticipated during July 2026, subject to customary conditions and approvals. Because related parties connected to Mr. Craft are participating in the transaction, the deal was reviewed and approved by the conflicts committee of the Board of Directors of the partnership’s general partner. The committee is composed entirely of independent directors, ensuring appropriate governance and oversight throughout the transaction process.
A key attraction of the acquisition is the quality and scale of the underlying royalty assets. AllDale III and IV collectively own approximately 48,500 net royalty acres across several of North America’s most prolific oil and gas producing regions. These holdings span major resource plays including the Permian Basin, Anadarko Basin, Bakken Formation, and Haynesville Shale.
Among these assets, the Permian Basin stands out as the most significant contributor to royalty income. The portfolio includes approximately 7,300 net royalty acres in the Permian, which accounted for roughly 52% of total royalty revenue generated during the first quarter of 2026. The basin remains one of the most active and economically attractive oil-producing regions in the world, offering substantial opportunities for continued drilling and production growth.
Production associated with AllDale III and IV averaged approximately 5,940 barrels of oil equivalent per day during the first quarter of 2026. Based on Alliance Resource Partners’ expected economic ownership after the transaction, approximately 3,665 barrels of oil equivalent per day will be attributable to the partnership. The production mix consists of approximately 27% crude oil, 18% natural gas liquids, and 55% natural gas.
Despite natural gas representing the majority of production volumes, oil generated the largest share of revenue. Approximately 67% of total first-quarter royalty revenue came from oil production, highlighting the value of the portfolio’s liquids-rich assets and exposure to higher-margin hydrocarbon streams.
The acquisition also delivers meaningful strategic benefits by expanding Alliance Resource Partners’ minerals footprint while reducing concentration risk. Management noted that the newly acquired acreage has limited overlap with the partnership’s existing royalty holdings, creating a broader and more diversified asset base. This diversification helps strengthen the company’s long-term growth profile while reducing dependence on any single producing area.
The transaction is expected to significantly enhance the partnership’s position in several important resource plays. In the northern Delaware Basin, Anadarko Basin, and Bakken Formation, the acquisition substantially increases exposure to active drilling programs. Based on trailing twelve-month activity levels, new wells placed into production are expected to increase by approximately 59%, 78%, and 91%, respectively, across these regions.
Another notable advantage is the partnership’s entry into the Haynesville Shale, one of North America’s premier natural gas-producing regions. The Haynesville has gained increasing importance as growing liquefied natural gas export demand drives interest in reliable natural gas supply sources. By establishing a position in this basin, Alliance Resource Partners gains additional exposure to long-term natural gas market opportunities.
From a financial perspective, management believes the acquisition offers an attractive valuation and strong returns. The implied acquisition multiple for the interests being purchased by Alliance Resource Partners is approximately 5.0 times projected next-twelve-month adjusted EBITDA. This calculation is based on commodity strip pricing as of June 5, 2026, and incorporates the value of existing hedges that will be assumed at closing.
The transaction is also expected to be immediately accretive to free cash flow per unit, a key metric for investors focused on income generation and distributions. Increased cash flow from the acquired royalty interests should support the partnership’s ability to continue delivering value to unitholders while maintaining financial flexibility.
Funding for the acquisition will come from a combination of available cash, borrowings under the partnership’s revolving credit facility, and a new debt facility at Alliance Minerals, LLC, a wholly owned subsidiary of Alliance Resource Partners. Despite utilizing debt financing, management expects the partnership’s balance sheet to remain exceptionally strong. Pro forma leverage following completion of the transaction is projected to stay below 1.0 times, reflecting a conservative financial profile.
Upon closing, Alliance Resource Partners’ oil and gas royalties segment will reach a significantly larger scale. The partnership is expected to control approximately 115,680 net royalty acres, including more than 44,770 net royalty acres located in the Permian Basin. Average production across the expanded portfolio is projected to reach approximately 17,295 barrels of oil equivalent per day, with around 14,285 barrels of oil equivalent per day attributable to the partnership’s economic interests.
The enlarged portfolio will also benefit from substantial drilling activity. Alliance Resource Partners expects exposure to 59 gross active rigs across its pro forma acreage position, including 47 active rigs operating within the Permian Basin. This level of activity provides strong visibility into future development and production growth opportunities.
Overall, the acquisition of additional interests in AllDale III and IV represents a transformative step in Alliance Resource Partners’ ongoing strategy to expand its oil and gas royalties business. By increasing ownership, broadening geographic diversification, strengthening exposure to premium resource plays, and maintaining a disciplined financial structure, the partnership is positioning itself for sustained growth and enhanced cash flow generation in the years ahead.
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