Green River Acquisition

In July 2005, we also acquired fee ownership of approximately 95 million tons of coal reserves in the western Kentucky portion of the Illinois Basin for approximately $62 million of cash (the "Green River Acquisition"). This coal reserve acquisition is our first in the Illinois Basin and was funded using our recently expanded credit facility. Currently, approximately 45 million tons of these coal reserves are leased to affiliates of Peabody Energy (NYSE:BTU). We expect the remaining coal reserves to be leased over the next several years, with a gradual increase in coal production and related cash flow from the property.

Wayland Acquisition

In July 2005, we acquired a combination of fee ownership and lease rights to approximately 15 million tons of coal reserves for approximately $14 million (the "Wayland Acquisition"). The reserves are located in Knott County in the eastern Kentucky portion of central Appalachia . The acquisition was funded with $4 million of cash and our issuance of approximately 209,000 common units. During the third quarter of 2005, we expect to begin construction of a new preparation plant and unit train coal loading facility on the property, with completion expected during the second quarter of 2006 at an estimated additional capital expenditure of approximately $12.5 million. The reserves have been leased to an operator who will commence the mining of raw coal on a limited basis during construction of the preparation and loading facility. After completion of the facility, the operator's production from the property is expected to increase to approximately one million tons of coal per year starting in 2007. We also expect to earn fees from third party operators for coal processed from adjacent properties.

Alloy Acquisition

In April 2005, we acquired fee ownership of approximately 13 million tons of coal reserves for $15 million (the "Alloy Acquisition"). The reserves, located on approximately 8,300 acres in the Central Appalachian region of West Virginia , will be produced from deep and surface mines with production anticipated to start in late 2005. Revenues will be earned initially from transportation-related fees on coal mined from an adjacent property, followed by royalty revenues as the mines commence production. The seller will remain on the property as the lessee and operator. The acquisition was funded with long-term debt under our revolving credit facility.

Coal River Acquisition

In March 2005, we acquired lease rights to approximately 36 million tons of undeveloped coal reserves and royalty interests in 73 producing oil and natural gas wells for $9.3 million (the "Coal River Acquisition"). The coal reserves are located in central Appalachia, adjacent to the Bull Creek tract on our Coal River property in southern West Virginia . The oil and gas wells are located in eastern Kentucky and southwestern Virginia . The acquisition was funded with long-term debt under our revolving credit facility.

The coal reserves are predominantly low sulfur and high BTU content; development will occur in conjunction with our Bull Creek reserves and loadout facility that was placed into service in 2004. The oil and gas property contains approximately 2.8 billion cubic feet equivalent of net proved oil and gas reserves and current net production of approximately 166 million cubic feet equivalent on an annualized basis.

Cantera Acquisition

On March 3, 2005, we completed our acquisition of Cantera, a midstream gas gathering and processing company with primary locations in the mid-continent area of Oklahoma and the panhandle of Texas . See the description of the Cantera Acquisition in "Natural Gas Midstream" above. The total cash paid for the Cantera Acquisition was approximately $198 million, which we funded with a $110 million term loan and with borrowings under our revolving credit facility. The purchase price allocation for the Cantera Acquisition has not been finalized. We used the proceeds from our sale of common units in a subsequent public offering in March 2005 to repay our term loan in full and to reduce outstanding indebtedness under our revolving credit facility. See Note 4 in the Notes to Consolidated Financial Statements for pro forma financial information.