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Cloud Peak Energy’s 2Q15 Cost per Ton Rises on Lower Shipments


Aug. 5 2015, Updated 9:06 a.m. ET

2Q15 cost performance

After exhibiting stellar cost performance in 1Q15, backed by lower diesel prices and lower repair and maintenance costs, Cloud Peak Energy (CLD) reported a considerable uptick in its cost per ton in 2Q15. The cost per ton came in at $10.75 in 2Q15 compared to 2Q14’s $10.48 and 1Q15’s $10.02. Substantially lower coal (KOL) shipments were the key reason for the spike, as fixed costs were divided among fewer tons.

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Arch Coal (ACI) reported an operating cost per ton in its Powder River Basin (or PRB) segment of $10.99 in 2Q15. This marks a 10-cent drop from 2Q14’s $11.09. However, ACI’s costs were marginally higher than its 1Q15 cost of $10.96.

Peabody Energy (BTU) reported a PRB cost per ton of $10.36 in 2Q15 compared to $10.19 in 2Q14. BTU is the lowest-cost producer in the region, ahead of Cloud Peak Energy (CLD).

Another major PRB-based producer, Alpha Natural Resources (ANRZ), has yet to publish its 2Q15 earnings. ANRZ filed for bankruptcy on Monday, August 3, 2015, as we anticipated.

Capital expenditure

Cloud Peak Energy spent $8.4 million in capital expenditure in 2Q15 against $2.6 million in 2Q14. The company also made a federal coal lease payment of $69 million in June—months before the due date. The company has reduced its 2015 capital expenditure guidance by $5 million to $40 million–$50 million. The reduced guidance shows that the company is trying to cut down its capital expenditure amid limited operating cost-saving opportunities.


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