Atlas Energy Solutions Inc. Commitments Disclosure

Note 8—Commitments and Contingencies

Royalty Agreements

Atlas LLC entered into a royalty agreement associated with its leased property at the Kermit facilities and a mining agreement associated with its leased property at the Monahans facility, in each case, with The Sealy & Smith Foundation, a related party. The royalty agreement associated with the Kermit facilities terminated on the date of our IPO, pursuant to the terms of the agreement. Under the mining agreement associated with the Monahans facility, we are committed to pay royalties on product sold from that facility and are required to pay a minimum royalties of $1.0 million for any lease year following our IPO. Royalty expense associated with these agreements is recorded as the product is sold and is included in costs of sales. Royalty expense totaled less than 10% of cost of sales, between 10% and 15% of cost of sales, and less than 10% of cost of sales for the years ended December 31, 2023, 2022, and 2021, respectively.

Standby Letters of Credit

On February 22, 2023, the 2018 ABL Credit Facility was terminated and our standby letters of credit were transferred to our 2023 ABL Credit Facility. For the years ended December 31, 2023 and 2022, we had $1.1 million outstanding in standby letters of credit issued under the 2023 ABL Credit Facility and we had $1.1 million outstanding in standby letters of credit issued under the 2018 ABL Credit Facility, respectively.

Lease Obligations

As of December 31, 2023, the Company’s estimated future minimum lease payments under long-term operating and finance lease agreements are associated with the Company’s adoption of ASC 842 and relate to lease payment maturities. The Company’s leases include office space, equipment and vehicles. See Note 6 - Leases, for additional disclosure on the Company’s estimated future minimum lease payments.

Purchase Commitments

On March 23, 2022, we entered into an agreement to purchase transportation and logistics equipment in the amount of $26.2 million and $5.2 million in 2023 and 2022, respectively, subject to customary terms and conditions. As of December 31, 2023, there was no outstanding commitment associated with this agreement. On April 20, 2022, we entered into an agreement to purchase transportation and logistics equipment in the amount of $11.9 million and $8.5 million in 2023 and 2022, respectively, subject to customary terms and conditions. As of December 31, 2023, there was no outstanding commitment associated with this agreement. In addition, in connection with the construction of the Dune Express, we enter short-term purchase obligations for products and services. We expect to use the remaining $104.2 million of the net proceeds from the IPO and cash flow from operations to fund the obligations over the next approximately 12 months.

Litigation

We are involved in various legal and administrative proceedings that arise from time to time in the ordinary course of doing business. Some of these proceedings may result in fines, penalties or judgments being assessed against us, which may adversely affect our financial results. In addition, from time to time, we are involved in various disputes, which may or may not be settled prior to legal proceedings being instituted and which may result in losses in excess of accrued liabilities, if any, relating to such unresolved disputes. Expenses related to litigation reduce operating income. We do not believe that the outcome of any of these proceedings or disputes would have a significant adverse effect on our financial position, long-term results of operations or cash flows. It is possible, however, that charges related to these matters could be significant to our results of operations or cash flows in any single accounting period. Management is not aware of any legal, environmental or other commitments and contingencies that would have a material effect on the Financial Statements.