13.EQUITY INVESTMENTS

AllDale Minerals

On November 10, 2014, Cavalier Minerals (see Note 11 – Variable Interest Entity) made an initial contribution of $7.4 million in return for a limited partner interest in AllDale Minerals, which was created to purchase oil and gas mineral interests in various geographic locations within producing basins in the continental U.S. As of December 31, 2014, Cavalier Minerals’ had contributed $11.6 million to AllDale Minerals. During the year ended December 31, 2015, Cavalier Minerals contributed an additional $54.3 million bringing the total investment in AllDale Minerals to $65.9 million as of December 31, 2015. The ARLP Partnership continually review all rights provided to Cavalier Minerals and the ARLP Partnership by various agreements and continue to conclude all such rights do not provide Cavalier Minerals or the ARLP Partnership the ability to unilaterally direct any of the activities of AllDale Minerals that most significantly impact its economic performance. As such, the ARLP Partnership accounts for Cavalier Minerals’ ownership interest in the income or loss of AllDale Minerals as an equity investment in the consolidated financial statements. The ARLP Partnership records equity income or loss based on AllDale Minerals’ distribution structure as described below. For the years ended December 31, 2015 and 2014, the ARLP Partnership has been allocated losses of $0.6 million and $0.4 million, respectively, from AllDale Minerals.

In accordance with AllDale Minerals’ partnership agreements, limited partners, such as Cavalier Minerals, will initially receive all distributions of proceeds from certain producing basins based upon the greater of the limited partner’s cumulative contributions plus 25.0% or an amount sufficient to cause the limited partner to receive an effective internal rate of return of 10.0%. Afterwards, 20.0% of all distributions will be allocated to AllDale Minerals Management, as an incentive distribution to the general partner, with the remaining 80.0% allocated to limited partners based upon ownership percentages. In addition, upon an event of liquidation, any proceeds will be distributed using the same methodology. AllDale Minerals distributed $0.4 million to Cavalier Minerals during 2015. AllDale Minerals did not make any distributions to its owners during 2014.

White Oak

On September 22, 2011, the ARLP Partnership entered into a series of transactions (“Initial Transactions”) with White Oak to support development of a longwall mining operation, which the ARLP Partnership assumed control of in July 2015 through the ARLP Partnership’s acquisition of the remaining equity interests in White Oak (see Note 3 - Acquisitions). The Initial Transactions featured several components, including an equity investment in White Oak, the acquisition and lease-back of certain coal reserves and surface rights, a loan and a coal handling and preparation agreement, pursuant to which the ARLP Partnership constructed and operated Hamilton’s preparation plant and other surface facilities. Prior to the Hamilton Acquisition the ARLP Partnership recorded its previous equity in income or losses of affiliates from White Oak under the hypothetical liquidation at book value method of accounting due to the preferences to which the ARLP Partnership were entitled with respect to distributions. See Note 11 – Variable Interest Entities regarding our determination to account for White Oak as an equity investment prior to the Hamilton Acquisition.

White Oak’s results prior to the Hamilton Acquisition for the period from January 1, 2015 to July 31, 2015 and for the years ended December 31, 2014 and 2013, are summarized as follows:

	January 1, 2015 to July 31, 2015		December 31, 2014		December 31, 2013
			(in thousands)

Total revenues	$	108,256	$	42,748	$	-
Gross loss	(2,919)		(1,134)		(5,404)
Loss from operations	(38,148)		(21,018)		(24,103)
Net loss	(69,075)		(46,324)		(30,263)

White Oak’s financial position as of December 31, 2015 and 2014 are summarized as follows:

	2015 (1)		2014
	(in thousands)

Current assets	$	-	$	37,105
Noncurrent assets	-		639,953
Current liabilities	-		71,489
Noncurrent liabilities	-		372,507

(1)

White Oak was not an equity method investee as of December 31, 2015 (see Note 3 — Acquisitions).