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20 fourth-quarter questions for Powder River Basin coal producers

November 01, 2014
Tom Sanzillo
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Key Findings

While the overall U.S. stock market has risen dramatically since 2010, U.S. coal stocks have collapsed, and the U.S. coal industry is in its fourth year of decline.

Two of the companies (Alpha and Arch) are facing multiyear losses: 2014 will be the fourth consecutive money-losing year for Alpha and the third consecutive years of losses for Arch.

Some coal-industry executives argue for an inevitable turnaround in the coming years.

Executive Summary

This memo highlights the recent financial performance of the largest coal producers in the Powder River Basin (Alpha Natural Resources, Arch Coal, Cloud Peak Energy and Peabody Energy). It also presents several questions for each company about their likely fourth-quarter performance, their year-end financial status and their longer-term possibilities.

We focus on the Powder River Basin (PRB) producers because while they should be performing better than their peers elsewhere in the country in the current low-price environment, they aren’t. We’re interested also in these four producers because they carry a special element of risk tied to their controversial proposals to rely on export shipment through existing or expanded West Coast ports.

Please view full report PDF for references and sources.

Press release: Report: 20 Fourth-Quarter Questions for Powder River Basin Coal Producers

Tom Sanzillo

Tom Sanzillo is Director of Financial Analysis for IEEFA. He has produced influential studies on the oil, gas, petrochemical and coal sectors in the U.S. and internationally, including company and credit analyses, facility development, oil and gas reserves, stock and commodity market analysis, and public and private financial structures.

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