September 11, 2020 Read More →

Coal companies slashed asset values by almost $2 billion in Q2

S&P Global Market Intelligence ($):

Accountants at publicly-traded U.S. coal companies are bringing company books in line with the declining market for the once-dominant fuel, with four U.S. coal companies reporting about $1.80 billion in asset impairments during the second quarter alone.

The companies booking impairments pointed to lower long-term expectations for some coal assets as the sector also deals with the near-term impacts of the COVID-19 pandemic. The bulk of the impairments comprised a $1.42 billion reduction in the value of a Powder River Basin mine owned by Peabody Energy Corp., the largest coal miner in the U.S.

“What’s happening here is you have accounting estimates catching up to the things that we’ve discussed for a year or more,” Benjamin Nelson, senior credit officer and lead coal analyst at Moody’s Investors Service, said in an interview. “What it’s telling you is that industry conditions in the coal industry are not going to reverse, at least in our view.”

“Peabody’s North Antelope Rochelle write-down is simply a reflection of the new reality in U.S. coal mining that has been evident almost since the moment the company came out of bankruptcy,” Institute for Energy Economics and Financial Analysis data analyst Seth Feaster wrote in a recent commentary. “The industry continues to be battered by rapid structural decline driven by low gas prices, the low and falling cost of building wind and solar power generation, and sweeping initiatives by utilities and corporations to cut emissions.” 

[Taylor Kuykendall]

More: US coal companies reduced estimated asset value by at least $1.80B in Q2

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