Peabody Energy and Alliance Resource dominate the Illinois Basin

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Diversity

All sorts of companies including public companies, master limited partnerships (or MLPs), and private companies operate in the Illinois Basin (or ILB). It’s the most diversified coal basin in the U.S.—by company type.

Part 12 peabody stock

 

Peabody is also big

Peabody (BTU) is the largest reserve holder. It’s the second largest producer in the ILB. It shipped 30 million tons in 2013. The company runs three underground mines and five surface mines in the region. The coal’s average heat content produced here is ~11,500 British thermal units per pound (or Btu/lb). The coal has a high sulfur content of ~2.5%.

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BTU’s coal is shipped to utilities in the region. It’s also exported to Europe through the Gulf Coast. ILB operations accounted for the majority of the company’s Midwest operations. The only other mine in the Midwest—except mines in the ILB—was the Twentymile Mine in Colorado’s Uinta Basin. Midwest operations accounted for 41% of the company’s revenues and 26% of the company’s adjusted earnings before interest, taxes, depreciation, and amortization (or EBITDA) for the first half of 2014.

Arch Coal runs one underground mine—Viper Mine—in the ILB. It produced 2.1 million tons of coal in 2013. Hallador Energy (HNRG), through its subsidiary Sunrise Coal, operates Carlisle Mine. It produced three million tons of coal in 2013.

MLPs and private companies

Apart from public companies, some MLPs also operate in the region. The MLPs include Alliance Resource Partners LP (ARLP) and Natural Resource Partners LP (NRP). ARLP sold over 30 million tons of coal from the ILB in 2013. NRP leased its ILB coal mines to a private company—Foresight Energy. Foresight Energy holds three billion tons of reserves in the ILB. Foresight is the largest private coal miner (KOL) operating in the region. Other coal miners include Murray Energy and Armstrong Coal.

What opportunities are available for ILB-based producers? What challenges do they face? We’ll discuss this in the next part of the series.

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