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San Juan Acquisition Keeps Driving Westmoreland Coal’s Top Line

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Nov. 3 2016, Updated 2:04 p.m. ET

Segment-wise revenue

Westmoreland Coal (WLB) derives the majority of its revenues through its operations in the US and Canada as well as from its Westmoreland Resource Partners’ (WMLP) subsidiary.

Revenue from the company’s coal mining operations in the US came in at about $168.9 million compared to $132.0 million in 3Q15 and $151.4 million in 2Q16. Revenue from the company’s Canadian coal mining segment fell both on a year-over-year and quarter-over-quarter basis in 3Q16. WLB reported its Canadian coal mining segment’s revenue at $96.5 million in 3Q16 compared to $107.8 million in 3Q15 and $109.1 million in 2Q16. In contrast, the company’s WMLP segment witnessed a marginal decline in revenue from $94.8 million in 3Q15 to $90.3 million in 3Q16.

Revenue from the company’s Power Generation segment marginally fell to about $21.6 million from $22.1 million in 3Q15. However, revenue was almost flat on a quarter-over-quarter basis.

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Westmoreland Coal’s overall revenue

For 3Q16, Westmoreland Coal reported its consolidated revenue at about $371 million as compared to $350 million in 3Q15. Moreover, the reported revenue is about 4% higher when compared to the company’s 2Q16 revenue of $356 million.

Why the increase?

Westmoreland Coal’s average revenue realized per ton of coal sold came in at $25.6 in 3Q16 compared to $24.2 during the same period in 2015. The increase in overall shipments and higher average price realized per ton sold resulted in a higher consolidated revenue for the company. Notably, WLB’s January 2016 San Juan acquisition added about $51.7 million revenue in 3Q16.

However, low natural gas prices, subsidized renewable energy generation, mild weather conditions, and stringent environmental regulations continue to impact the revenues of pure-play coal (KOL) producers like Cloud Peak Energy, Peabody Energy (BTUUQ), and Alpha Natural Resources (ANRZQ).

Next, let’s look at the operating performance of Westmoreland Coal in 3Q16.

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