Arch Coal Inc.
Challenges before Peabody Energy’s US operations in fiscal 2015
The retirement of coal-fired power plants and the impact of new regulations proposed by the EPA present two major blows to the US thermal coal industry.
Must-know: Why Peabody Energy fell 1.9% on July 22
Wall Street analysts’ consensus estimate for loss per share was $0.289.
Why Most Analysts Recommend a ‘Hold’ for Cloud Peak Energy
Of the nine analysts covering Cloud Peak Energy (CLD), seven analysts rated its stock as a “hold,” and two gave CLD a “buy” or “strong buy” rating.
Analysts Expect Peabody Energy’s Revenues to Rise in 3Q17
In 3Q15, Peabody Energy (BTU) reported $1.42 billion in revenues. Analysts anticipate that it will post $1.46 billion in 3Q17 compared to $1.26 billion in 2Q17.
Understanding Arch Coal’s Financial Position
Arch Coal’s leverage On June 30, 2017, the book value of Arch Coal’s (ARCH) long-term debt was about $315.6 million, of which ~$297 million is due for payment in 2024. Arch Coal’s leverage, which is its net debt divided by EBITDA (earnings before interest, tax, depreciation, and amortization), has increased since the acquisition of International […]
Why we’re not seeing capacity additions from coal-fired plants
The first half of 2014 saw 4,350 MW (megawatts) of new electricity generating capacity, according to the EIA (Energy Information Administration). Of this, 2,319 MW, or 53.3%, was natural gas–fired.
A lower-than-expected natural gas draw-down – what does it mean?
According to the EIA, 115 Bcf of natural gas was drawn out during the week ending January 30. It was a lower-than-expected draw-down.
How Westmoreland Coal Maintains Positive Cash Flow Each Quarter
Range-bound margins Since the majority of Westmoreland Coal’s (WLB) contracts are long-term cost-protected contracts, its margins are protected. Many contracts have high-margin reclamation. The company’s EBITDA[1.earnings before interest, tax, depreciation, and amortization] margins have remained between 10% and 26% during the last six quarters. This trend contrasts with that followed by other major coal producers (KOL) such as […]
Uptick in price of natural gas gives hope to coal producers
The marginal increase in natural gas prices last week is good news for coal producers (KOL), especially the ones in the Appalachians and the Midwest.
Must-know: Why coal producers are wary of the EPA’s proposal
Generally, natural gas burns more cleanly than coal. Coal has the highest carbon intensity among major fossil fuels.
Coal Prices Stabilized Last Week after the Previous Week’s Fall
PRB coal prices have remained under pressure since the start of the year due to low natural gas prices.
Natural gas prices stay pressured on a predicted warmer winter
Natural gas prices and coal’s market share in electricity generation highly correlate. When natural gas prices rise, coal gains market share.
Powder River Basin Coal Breaks the $10 Barrier: Will It Stay Up?
Powder River Basin coal prices averaged $10.55 per ton for the week ended July 24. Prices averaged above $10 a ton for the first time in the last five weeks.
Crude oil prices recover a bit—what does it mean for coal?
Crude oil prices as of January 22 Crude oil prices recovered marginally during the week ended January 22, 2016. WTI (West Texas Intermediate) crude oil prices closed at $30.99 per MMBtu (million British thermal units) on January 22, 2016, compared to the closing price of $29.42 per barrel on January 15, 2016. Meanwhile, Brent crude […]
Coal producers are feeling the heat
So far, the milder weather this winter kept natural gas prices subdued. As a result, coal producers (KOL) are under pressure. The current environment isn’t encouraging for coal.
Gauging Arch Coal’s Net Losses and EBITDA in 3Q15
Arch Coal reported adjusted EBITDA of $134.8 million in 3Q15 compared to $71.9 million in 3Q14 despite the pricing pressure it experienced during 3Q15.
What Could Drive Arch Coal Stock in 2017?
Although the majority of coal (KOL) stocks began 2016 on a weak note, they outperformed the broader market in 2016.
Why the Powder River Basin produces more coal with fewer mines
The western region in the U.S. includes the area west of the Mississippi River. The region produced 520 million tons of coal for the 12 months ending September 11, 2014. The entire U.S. produced 974 million tons of coal during the same period. The western region accounted for 53% of the total coal production in the U.S. It’s important to note that 13 out of 24 western states produce coal.
Why Cloud Peak Energy is well positioned to survive the downturn
Unlike its peers (KOL) like Walter Energy (WLT), Alpha Natural Resources (ANR), and Arch Coal (ACI), Cloud Peark doesn’t have any exposure to metallurgical coal.
Coal Shipments Continue to Rise amid Weak Natural Gas Prices
According to EIA estimates, US coal shipments increased marginally to 18.7 million tons during the week ending August 28.
Why Coal and Utilities Indicators Matter To Long-Term Investors
Thermal coal is mostly used for electricity generation. So the state of the utilities sector is by far the biggest driver of the coal industry.
Coal Spot Prices Remain Steady for the Second Month
On December 18–22, the PRB and Illinois Basin coal prices remained at $12.10 per short ton and $32.60 per short ton, respectively.
Why thermal coal industry indicators are important for investors
Currently, the coal industry is going through heightened volatility. As a result, it makes even more sense for us to cover the short-term indicators.
Why Rio Tinto’s Kestrel Ramp-Up Keeps Coal Volumes Going
RIO’s hard coking coal production was up 10% YoY to 4 million tons in 9M15 due to improved production rates at Kestrel.
A Closer Look at Arch Coal’s Financial Position and 2017 Guidance
Arch Coal’s (ARCH) 4Q16 earnings were driven by a strong rebound in metallurgical coal prices.
No Change in Coal Prices Week-Over-Week
Powder River Basin coal prices Powder River Basin (or PRB) coal stood at $12.10 per short ton on November 24, 2017. PRB coal prices have not changed for the last three weeks. PRB has surface mines, where sub-bituminous coal is mined. These surface mines, located in Wyoming and Montana, are in the lowest-cost coal mining region in […]
Coal Prices Have Been Steady Week-over-Week
Powder River Basin (or PRB) coal prices settled at $12.10 per short ton when the market closed on December 1, 2017. The prices were constant for all of November.
What Factors Could Drive Arch Coal Stock in 2H17?
1H17 in review Majority of the coal (KOL) stocks began 2017 on a weak note. The stocks have not been able to recoup from the slump until now. They have been outperformed by the broader market and the VanEck Vectors Coal ETF so far in 2017. On September 19, 2017, Arch Coal (ARCH) has fallen […]
Carload Gains Drive BNSF Railway’s Traffic in Week 23
In Week 23, Western US major rail carrier BNSF Railway’s (BRK.B) carload traffic, excluding intermodal, rose 10.2% YoY (year-over-year) to ~103,600 railcars from ~94,000.
Indicators affect regional coal producers differently
Peabody Energy (BTU), Arch Coal (ACI), and Cloud Peak Energy (CLD) are major coal producers that operate in the Powder River Basin region.
China—global iron ore and met coal industry’s lifeline
China accounts for almost half of the world’s raw steel production. In 2013, China produced 779 million tons of steel. This was a 7.5% increase over 724 million tons in 2012.
Westmoreland Coal Company is probably the strongest US coal name
Westmoreland Coal Company (WLB) operates a unique business model of supplying coal to power plants in the vicinity of mines through cost-effective transportation modes on long-term, cost-protected contracts.
Analyzing Walter Energy’s 1Q15 Costs and Profitability
Walter Energy’s 1Q15 net losses were $80.2 million, compared with $92.2 million in 1Q14. The lower net loss largely resulted from a $58.6 million gain on the extinguishment of debt.
Evaluating Arch Coal’s Bituminous Thermal Coal Costs in 3Q15
Operating costs for Arch Coal’s bituminous thermal segment dropped in 3Q15. Operating cost per ton hit $24.63, higher than in 3Q14 but lower than in 2Q15.
Did last week’s indicators impact thermal coal prices?
Central Appalachian thermal coal prices came in at $50.90 per ton for the week ending February 6. Coal prices increased—despite the fall in natural gas prices.
Where Cloud Peak Energy’s Stock Is Trading next to Peers
On August 17, 2017, Cloud Peak Energy (CLD) had a forward EV-to-EBITDA multiple of 5.5x.
What Does a Spike in Coal Power Plant Utilization Rates Mean?
The EIA published its latest report on capacity factors for power plants on July 27. Coal-based power plants surpassed natural gas-based power plants in utilization.
How Arch Coal’s Rise in Bituminous Thermal Coal Volumes Hurt Prices in 3Q15
Arch Coal’s Bituminous Thermal coal segment sold 2.3 million tons in 3Q15 compared to 2.2 million tons in 3Q14 and 1.9 million tons in 2Q15.
Walter Energy’s Path to Bankruptcy: The Beginning
Western Coal acquisition As we discussed in the previous part, Walter Energy traded under a dollar for more than a quarter until trading was suspended on the NYSE on July 8. The seeds of the fall were sowed back in 2011. Walter Energy filed for Chapter 11 bankruptcy on July 15, 2015. On April 1, […]
Cloud Peak Energy’s 2Q15 Shipments: Potential Risk Factors
Cloud Peak Energy (CLD) shipped 16.0 million tons of coal from its three owned and operated mines in the Powder River Basin (or PRB) in 2Q15.
Westmoreland Coal’s Canadian Operations: An Overview
Westmoreland’s Canadian operations Westmoreland Coal (WLB) acquired seven surface mines in Alberta and Saskatchewan, a stake in an activated carbon plant, and a char plant in Canada from Sherritt International in 2014. As of January 1, 2016, WLB’s Canadian operations are grouped as one entity, Prairie Mines & Royalty ULC. Its Canadian operations hold total […]
Overview: Ambre Energy—a coal and oil shale export company
Ambre Energy was founded in June 2005. It’s an Australian-American coal and oil shale company. The company’s Australian headquarters are located at Brisbane. The head American office is located at Salt Lake City, Utah. The company operates in three business lines—U.S. coal export infrastructure, international coal marketing and trading, and U.S. thermal coal production.
Why Natural Gas Dented Arch Coal’s Appalachia Segment in 3Q15
Arch Coal’s Appalachia segment shipped 3 million tons of coal in 3Q15, down from 3.6 million tons in 3Q14, including 1.6 million tons of metallurgical coal.
Coal Prices in All Major Regions Remain Steady
For the week ending September 4, Powder River Basin spot coal prices averaged $10.7 per ton—$0.17 higher than the price for the week ending August 28.
The Flip Side of Alliance Resource Partners’ Business: Key Risks
As of June 30, 2017, ARLP’s long-term contracts totaled ~38.0 million tons for 2017, 20.1 million tons for 2018, and 11.0 million tons for 2019.
What Do Rising Crude Oil Prices Mean for Coal?
Crude oil prices rose for the second straight week, albeit at a slower pace. When crude oil production rises, there are fewer railcars available to transport coal.
Inside Alliance Resource Partners’ Mining Operations
Alliance Resource Partners (ARLP) operates eight underground mining complexes in two regions: Illinois and Appalachia.
Coal Prices Have Been Constant Week-over-Week
The coal prices in the Powder River Basin (or PRB) reached $12.10 per short ton for the week ended December 8, 2017.
Why Coal and Power Indicators Matter for Long-Term Investing
Why are we combining thermal coal and power indicators? Thermal coal is mostly used for electricity generation.
Rio Tinto’s Coal Production Went On as Expected in 1H15
A sustained rise or fall in coal shipments is a significant indicator that affects the stock value of coal producers (KOL).
Analyzing Arch Coal’s Powder River Basin Cost Drops in 3Q15
In 3Q15, Arch Coal’s PRB operating cost per ton came in substantially lower, at $11.71 per ton compared to $12.42 in 3Q14.
Why the RAAX ETF Has Reduced Its Exposure to Coal Equities
At launch, RAAX had a small weighting to coal, but in May, this exposure was completely eliminated based on falling coal equity prices and weakening supply and demand data.
How Arch Coal’s Leverage and Liquidity Compare
Arch Coal’s debt According to Arch Coal’s (ARCH) latest 10-Q filings, the book value of its long-term debt is ~$315 million, of which a term loan of ~$297 million is due for payment in 2024. It is also subject to quarterly principal amortization payments of $750,000. Arch Coal’s interest expenses were ~$6.0 million in 2Q17 […]
Could Arch Coal’s Debt Lead the Company to Bankruptcy?
Most American coal producers are building liquidity through various means to make sure they survive the downturn and avoid bankruptcy.
Are Rio Tinto’s Coal Volumes Expected to Increase in 2016?
Rio’s hard coking coal production was 8% lower YoY (year-over-year) in the first half of 2016.
How Westmoreland Coal’s Business Model Differs from Peers’
Business model Westmoreland Coal (WLB) has a different business model than American coal producer (KOL) peer Arch Coal (ARCH), Alpha Natural Resources (ANRZQ), and Peabody Energy (BTU). Contract Westmoreland Coal’s contracts are long term and cost protected. According to company filings, its weighted average contract life (contract life weighted by tonnage) extends to 2022. Low-cost supplier […]
Coal Prices Remain Steady in Week Ended November 17
Power River Basin coal prices In the week ended November 17, 2017, PRB (Power River Basin) coal prices closed at $12.10 per short ton, the same price reported at the end of the previous week. PRB produces sub-bituminous coal from surface mines, which make it a low-cost coal mining area. These coal reserves are located in […]
Interpreting BHP Billiton’s Declining Coal Production: More to Come?
BHP Billiton’s coal business is the world’s largest supplier of seaborne metallurgical coal. Metallurgical coal production is vital to steel production.
Why Outlook on Vale’s Coal Business Is Still Negative
Vale expects the coal market to remain oversupplied throughout 2015 despite a production decrease from US producers. The outlook thus remains negative for Vale’s coal operations.
Westmoreland Coal Company’s 3Q 2014 cost performance
With coal prices plummeting, WLB took a $24 million non-cash charge on derivative contracts. The company also reported interest expenses of $21.3 million in 3Q 2014 compared to $9.9 million in 3Q 2013.
Natural Gas Inventories and Coal in Week Ended September 1
When the prices of other fuels are more attractive, the demand for coal can fall, and when other fuel prices increase, coal can become more attractive.
Why you should care about the EPA’s war on coal
Coal is the cheapest energy source. But it’s also the most polluting fossil fuel. Power plants emit harmful airborne pollutants like mercury, arsenic, nickel, and sulfur dioxide.
Will a Republican majority affect the coal industry?
Deadlock may continue The Republican majority in Congress can create trouble for President Obama’s projects. These projects include an immigration bill, Obamacare, and a quest for cleaner energy. But Obama has vowed to use his executive powers to make way for some of these bills. With the next presidential elections two years away, we may see a […]
Why Cliffs wants to operate North American coal at zero EBITDA
Cliffs maintained its full-year 2014 North American coal expected sales and production volume of 7 million tons. Sales volume mix is anticipated to be ~70% low-volatile metallurgical coal, 20% high-volatile metallurgical coal, and 10% thermal coal.
Peabody Energy: Largest private coal producer’s 3Q 2014 earnings
Peabody Energy controls 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.
Why working capital management saved the day for Peabody
The company’s accounts receivables reduced to $447 million on June 30, 2014 from $557.9 million on December 31, 2013.
Key takeaways from CONSOL Energy’s analyst day meeting
As of June 12, 2014, CNX had a market cap of ~$10.3 billion and an enterprise value of ~$13.8 billion.
Crude Oil Prices Rise: Will It Impact Coal Miners?
On December 21, 2017, the price of Brent crude oil was $64.90 per barrel—up 2.6% from $63.23 per barrel recorded on December 15.
Coal Production Rebounded in the Week Ended December 2
For the week ended December 2, 2017, coal production rose sharply to 15.7 MMst (million short tons) from 14.1 MMst in the previous week.
Are Coal Miners Impacted by a Fall in Crude Oil Prices?
On December 8, 2017, the price of WTI crude oil was $57.36 per barrel. This price was nearly 2.0% below the price of $58.36 per barrel when the market closed on December 1.
Chart in Focus: Natural Gas Prices and the Henry Hub Benchmark
The January 2018 US natural gas futures contract price settled at $2.83 per MMBtu (million British thermal units) when the market closed on December 11, 2017.
Natural Gas Inventories Rose Unexpectedly: The Impact on Coal
According to EIA estimates, the natural gas inventory for the week ended December 1, 2017, is 3,695 Bcf (billion cubic feet). This reading is just 2 Bcf above the 3,693 Bcf recorded for the week ended November 24.
Are Coal Miners Impacted by Volatility in Crude Oil Prices?
On December 1, 2017, the price of WTI crude oil was $58.36 per barrel. That was 1% below $58.95 per barrel when the market closed on November 24, 2017.
Natural Gas Prices Rose: How That Could Affect Coal
The EIA (U.S. Energy Information Administration), in its recent Short-Term Energy Outlook report, has projected the average Henry Hub natural gas spot price for 2018 at $3.10 per MMBtu.
Natural Gas Prices Falls despite Strong Demand
Natural gas prices December US natural gas futures closed at $2.93 per MMBtu (million British thermal units), while Henry Hub natural gas settled at $2.82 per MMBtu on November 27, 2017. The Henry Hub figure was lower than the $3.05 per MMBtu reported on November 20, 2017. In its latest short-term energy outlook report, the […]
How Lower Crude Oil Prices Could Affect Coal Miners
Crude oil prices On November 17, 2017, WTI (West Texas Intermediate) was at $56.55 per barrel, 0.3% lower than the $56.74 per barrel reported when the market closed on November 10, 2017. On November 17, 2017, Brent crude oil was down 1.3% week-over-week, settling at $62.72 per barrel. Prices fell partially due to doubts on whether […]
Natural Gas Prices Fall despite Higher Demand
Natural gas prices On November 20, 2017, December US natural gas futures closed at $3.05 per MMBtu (million British thermal units), and Henry Hub natural gas spot prices settled at $3.05 per MMBtu, below the $3.12 per MMBtu posted on November 13, 2017. The EIA’s (US Energy Information Administration) latest short-term energy outlook report suggests […]
Can Rising Crude Oil Prices Affect Coal Miners?
On November 10, 2017, the price of WTI crude oil closed at $56.74 per barrel. That was 1.9% higher than $55.64 per barrel when the market closed on November 3, 2017.
How Natural Gas Inventories Are Affecting Coal
The EIA issued its natural gas inventory report on November 9, 2017. Natural gas inventory was 3,790 Bcf which is 0.4% more than 3,775 Bcf for the week ended October 27, 2017.
Natural Gas Inventory Continues to Fall below the 5-Year Average
On November 2, the EIA published the natural gas inventory report for the week ending October 27, 2017. The latest natural gas inventory is 3,775 Bcf.
Westmoreland Coal’s Leverage and Liquidity Position
Interest expenses for Westmoreland Coal (WLB) have gradually increased since 1Q15. In 3Q17, they were $30.0 million compared to $29.5 million in 3Q16.
Why Westmoreland Coal’s Revenue Fell in 3Q17
For 3Q17, Westmoreland Coal reported consolidated revenue of $358 million compared to $371 million in 3Q16. That’s 11% higher than $323 million in 2Q17.
Peabody Energy’s Future Earnings: What the Company Expects
After its 3Q17 earnings release, Peabody Energy (BTU) increased its 2017 US sales guidance to 151 million–158 million short tons, from 148 million–153 million short tons.
Analysts’ Views on Arch Coal Ahead of Its 3Q17 Results
Analysts’ ratings As of October 27, 2017, of the nine analysts covering Arch Coal (ARCH) stock, eight (89%) recommended “buy” or “strong buy,” and one (11%) recommended “hold.” There were no “sell” or “strong sell” ratings. Arch Coal’s price target Arch Coal’s 12-month target price was $94.88 as of October 27, 2017. The target price indicates an upside […]
What to Expect for Arch Coal’s 3Q17 Earnings
Arch Coal (ARCH) is expected to announce its 3Q17 earnings results on October 31, 2017, before market hours.
Could Arch Coal’s Margins Improve in 3Q17?
Arch Coal’s earnings estimates In 3Q16, Arch Coal’s (ARCH) adjusted EBITDAR (earnings before interest, tax, depreciation, amortization, and restructuring) were about $81.3 million, and its EBITDAR margin was 14.8%. Analysts expect the company to report EBITDAR of about $95 million in 3Q17 and an EBITDAR margin of 17.3%. A higher EBITDAR figure suggests higher income from […]
Analysts Expect a Marginal Rise in Arch Coal’s Revenue in 3Q17
Arch Coal’s estimated revenue In 3Q16, Arch Coal (ARCH) reported consolidated revenue of ~$550.3 million. Analysts expect Arch Coal to post revenue of $550.7 million in 3Q17, a marginal increase of 0.06% year-over-year. The expected rise is primarily due to an anticipated increase in metallurgical coal shipments. Arch Coal expects its metallurgical segment to benefit from […]
Why Wall Street Rates Westmoreland Coal a ‘Buy’
All three Wall Street analysts covering Westmoreland Coal Company (WLB) gave the company a “buy” rating. There were no “sell” or “hold” ratings for the company as of October 27.
Will Strong Crude Oil Prices Affect Coal Producers?
On October 20, 2017, WTI (West Texas Intermediate) crude oil prices closed at $51.47 per barrel.
Natural Gas Inventory Falls below 5-Year Average
Price fluctuations of natural gas affect US coal miners such as Arch Coal (ARCH), Cloud Peak Energy (CLD), Natural Resource Partners (NRP), and Peabody Energy (BTU).
Why Most Analysts Rate Peabody Energy a ‘Buy’
Of the eight analysts covering Peabody Energy (BTU), six (or 75.0%) have given the company a “buy” rating, and two (or 25.0%) have given it a “hold.”
How Crude Oil Indirectly Impacts Coal Prices
On September 29, 2017, Brent crude oil prices closed at $57.54 per barrel compared to $56.86 the previous week.
Can Natural Gas Inventory Rebalancing Affect Coal?
For the week ended September 22, natural gas inventory came in at 3,466 Bcf (billion cubic feet), which was higher than 3,408 Bcf one week earlier.
Are Coal Mines Affected by Higher Crude Oil Prices?
On September 22, Brent crude oil prices closed at $56.86 per barrel, compared with the closing price of $55.62 per barrel one week previously.
How Natural Gas Inventories Affected Coal as of September 15
Coal prices sway based on various factors, including the prices of other fuels. When the price of another fuel looks more appealing, coal demand falls.
An Investor’s Guide to Arch Coal’s Valuation
Arch Coal’s valuation methods There are many varieties of valuation methods available to value a coal producer like Arch Coal (ARCH). Valuing a mining company is a complex matter. Apart from the usual financing risk in the case of coal producers, other factors include price cyclicality, ongoing changes in operating and capital cost structures, stock market […]
The Key Risks Involved in Arch Coal’s Business
Commodity price risk Arch Coal (ARCH) has long-term coal supply agreements for their non-trading, thermal coal sales, hence managing commodity risk for thermal coal and also to a limited extent, through the use of derivative instruments. However, sales commitments in the metallurgical coal market are typically not long-term in nature and are subject to fluctuations […]
Coal for Steel: ARCH’s Met Coal Operations
Arch Coal (ARCH) operates five mining complexes in the Appalachian region that produce metallurgical coal. Metallurgical coal is also known as coking coal and is used in steelmaking.
How Arch Coal Emerged from Chapter 11 Bankruptcy
On October 5, 2016, Arch Coal (ARCH) emerged from bankruptcy through successful financial restructuring.
Understanding Arch Coal’s Chapter 11 Bankruptcy
In its largest-ever acquisition, Arch Coal purchased International Coal Group for ~$3.4 billion on June 15, 2011.