ALLIANCE HOLDINGS GP, L.P. Reports Strong Fourth Quarter 2006 Financial Results; and Increases Distribution 16.3% to $0.25 Per Unit

Business Wire, Jan 29, 2007

TULSA, Okla. -- Alliance Holdings GP, L.P. (NASDAQ: AHGP) today reported net income for the quarter ended December 31, 2006 (the "2006 Quarter") of $23.1 million, an increase of 3.7% over net income of $22.3 million for the quarter ended December 31, 2005 (the "2005 Quarter"). Basic and diluted net income per limited partner unit for the 2006 Quarter decreased to $0.39 per unit, compared to $0.47 per limited partner unit for the 2005 Quarter. This decrease in basic and diluted net income per limited partner unit is the result of an increase in the number of common units outstanding due to the issuance of 12,500,000 common units on May 9, 2006 in conjunction with AHGP's initial public offering.

AHGP reported net income of $85.7 million, or $1.55 per limited partner unit, for the twelve months ended December 31, 2006, as compared to $75.6 million, or $1.60 of basic and diluted net income per limited partner unit, for the twelve months ended December 31, 2005.

The Board of Directors of AHGP's general partner (the "Board") also declared a quarterly cash distribution for the 2006 Quarter of $0.25 per unit (an annualized rate of $1.00 per unit), payable on February 16, 2007, to AHGP's unitholders of record as of the close of trading on February 9, 2007. This distribution represents an increase of 16.3% over the cash distribution of $0.215 per unit (an annualized rate of $0.86 per unit) paid for the third quarter of 2006. Increases to AHGP's quarterly cash distribution to unitholders are generally considered by the Board at its January and July meetings.

The declared distribution is based on the distributions AHGP will receive from its ownership interests in Alliance Resource Partners, L.P. (NASDAQ: ARLP). On January 29, 2007, ARLP announced a quarterly cash distribution for the 2006 Quarter of $0.54 per unit, or $2.16 per unit on an annualized basis, which distribution will be paid on February 14, 2007 to all ARLP unitholders of record as of the close of trading on February 7, 2007. (See ARLP Press Release dated January 29, 2007.)

"On the strength of its sixth consecutive year of record financial and operating results, ARLP again provided its unitholders with attractive increases in quarterly distributions during 2006," said Joseph W. Craft, III, President and Chief Executive Officer. "The resulting increase in cash flow from our ownership interests in ARLP has allowed AHGP to increase quarterly distributions to our unitholders by 35.1% over the initial quarterly cash distribution reflected in our Prospectus."

AHGP reports its financial results on a consolidated basis with the financial results of ARLP. The difference in AHGP's consolidated net income and that of ARLP is primarily attributable to non-controlling interest in consolidated ARLP net income resulting from the allocation of a significant portion of AHGP's consolidated earnings to the limited partners of ARLP.

AHGP currently has no other operating activities apart from those conducted by the operating subsidiaries of ARLP, and AHGP's principal sources of cash flow are its ownership of general partner interests, limited partner interests and incentive distribution rights in ARLP. Based on ARLP's current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $15.6 million, or $62.5 million on an annualized basis. AHGP's primary cash requirements are for general and administrative expenses, including for 2007 an estimated $2.1 million in incremental general and administrative expenses associated with being a publicly traded limited partnership, working capital requirements, and distributions to its unitholders. At December 31, 2006, AHGP had no borrowings outstanding under its revolving credit facility.

The statements and projections used throughout this release are based on current expectations. These statements and projections are forward-looking, and actual results may differ materially. These projections do not include the potential impact of any mergers, acquisitions or other business combinations that may occur after the date of this release. At the end of this release, we have included more information regarding business risks that could affect our results.

AHGP is a limited partnership formed to own and control Alliance Resource Management GP, LLC, the managing general partner of ARLP, through which it holds a 1.98% general partner interest and the incentive distribution rights in ARLP. In addition, AHGP owns 15,544,169 common units of ARLP.

News, unit prices and additional information about AHGP including filings with the Securities and Exchange Commission, are available at http://www.ahgp.com. For more information, contact the investor relations department of AHGP at 918-295-1415 or via e-mail at investorrelations@ahgp.com.

FORWARD-LOOKING STATEMENTS: With the exception of historical matters, any matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. These risks, uncertainties and contingencies include, but are not limited to, the following: initially, our operating cash flow will be derived exclusively from cash distributions from ARLP; the risks to the business of ARLP include: fluctuation in coal prices, which could adversely affect ARLP's operating results and cash flows; if the direct or indirect benefit to ARLP from certain state and federal tax credits, including non-conventional source fuel tax credits is materially reduced, it could negatively impact ARLP's results of operations and reduce ARLP's cash available for distribution; from time to time, conditions in the coal industry may make it difficult for ARLP to extend existing or enter into new long-term contracts, which could materially adversely affect the stability and profitability of ARLP's operations.