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Peabody Energy: Coal producer's 3Q14 performance and outlook

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Peabody Energy: Coal producer's 3Q14 performance and outlook PART 1 OF 11

Peabody Energy: Largest private coal producer’s 3Q 2014 earnings

Peabody Energy’s 3Q 2014 earnings

Peabody Energy Corporation (BTU) released its 3Q 2014 earnings on October 20, 2014. We’ll update you on these results in this series. Before moving on to the company’s performance, let’s take a quick look at the company’s operations.

Peabody Energy: Largest private coal producer&#8217;s 3Q 2014 earnings

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Biggest coal producer in the U.S.

Self-described as the world’s largest private-sector coal company, Peabody Energy runs coal operations in the United States and Australia. Combined, these operations serve customers in 25 countries. As of December 31, 2013, Peabody Energy controlled over 8.3 billion tons of coal reserves. Of these, ~7.3 billion tons, of thermal-grade coal reserves, are located in the United States.

In 2013, the company sold 251.7 million tons of coal and generated $7 billion in revenue. It’s important to note that all of the coal Peabody Energy produces within the United States is thermal coal. The company’s Australian mines produce both thermal and met coal.

Peabody Energy is part of the SPDR S&P Metals and Mining ETF (XME), along with other American coal producers including Cloud Peak Energy Inc. (CLD), Alpha Natural Resources, Inc. (ANR), and Arch Coal Inc (ACI).

Operations

Peabody Energy is the largest reserve holder and producer in the Powder River Basin and the Illinois Basin. The company also operates in the Southwest and in Colorado. It owns three mines in the Powder River Basin including the largest mine in the U.S., the North Antelope Rochelle Mine, in Wyoming. The Southwest operations include three mines. The company’s Illinois Basin and Colorado operations include 11 mines.

The Australian mining operations focus on exporting to developing Asian countries such as India and China.

Product mix

As noted, the company produces only thermal coal in the U.S., while Australian operations produce both thermal and metallurgical coal. Met coal, which is used in steel production, accounted for 7.3% of the total tons sold by the company. We’ll have a look at the performance of the company’s U.S. operations in the next part of this series.

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