Coal news and updates

U.S. miner Arch Coal Inc said it expected costs in the Powder River Basin and Appalachian regions to fall this year, helped partly by lower diesel prices and easing railroad snarls, sending its shares up as much as 13 percent.

 

The company also reported a smaller-than-expected quarterly loss as fourth-quarter operating costs fell 29 percent and said it would suspend its dividend, mimicking larger rival Peabody Energy Corp, which slashed its dividend last week.

 

While the dividend suspension is expected to result in minimal savings, it is important for coal miners trying to shore up liquidity as coal prices stay weak.

 

Arch Coal and its rivals have been hurt by weak demand for thermal coal as utilities have switched to cheap and abundantly available natural gas. Sluggish demand from Europe and Asia, especially China, has also weighed on metallurgical or steel-making coal prices.

 

A rail jam in the Powder River Basin in Wyoming and Montana over the past year, which is only now showing signs of easing, has further complicated things for coal miners.

 

Arch Coal said on Tuesday that it expects to sell 130.3 million-143 million tons of coal in 2015, compared with 134.4 million tons last year.

 

The company estimated a capital budget of $145 million-$160 million this year, versus $147.2 million in 2014.

 

On an adjusted basis, Arch Coal posted a quarterly loss of 37 cents per share, topping the average analyst estimate by a cent, according to Thomson Reuters I/B/E/S.

 

Arch Coal's dividend suspension is consistent with current trends in the sector, while the company's solid forward cost guidance and slim capex and selling, general and administrative expense projections would preserve liquidity in 2015, Cowen and Co analysts said in a research note.

 

Revenue rose 3.6 percent to $745.2 million, above the average estimate of $729 million.

 

Arch Coal shares were up 9 percent at $1.03 in midday trading on the New York Stock Exchange. Up to Monday's close, the stock had lost nearly three-quarters of its value in the past 12 months. 

 

 

 

Source: Reuters