I imagine a few investors are feeling pretty confused now, with news that Patriot Coal (PCX)
has declared bankruptcy. So how is that a company whose assets ought to
hold hundreds of millions of dollars worth of net value is going the
route of bankruptcy?
Cue The Outrage
It is a pretty
safe bet that we'll all hear from the anti-Obama contingent before long,
and not without some reason. Notions like "Obama is trying to kill
private enterprise" is garbage better suited to talk radio, but the fact
remains that the Obama administration has made it meaningfully more
difficult to be in the coal business. Whether it's OSHA regulations that
cover underground mine operators like Patriot, Arch Coal (ACI), or Alpha Natural Resources (ANR),
or EPA regulations that make it more expensive to burn coal for
electricity generation, it's not easy to be in the Appalachian coal
business (and not all that much better to be in Powder River Basin).
Please click here to read more:
How Did It All Go So Wrong For Patriot Coal?
Showing posts with label Patriot Coal. Show all posts
Showing posts with label Patriot Coal. Show all posts
Monday, July 9, 2012
Thursday, May 10, 2012
Seeking Alpha: Patriot Coal: Different Coal Company, Same Coal Situation
How bad is the coal market? Some electrical utilities are paying coal
companies *not* to ship them any more coal (negotiated deferrals).
Couple that with rapidly escalating costs and heavy regulatory burdens
on underground mining and a wobbly market for coking (metallurgical)
coal, and Patriot Coal (PCX) is in the same leaky boat as Peabody (BTU), Arch Coal (ACI), and Walter (WLT).
There's definitely value at Patriot coal - at current production levels, Patriot's reserves will outlive most of us. The relevant questions for the stock, though, revolve around whether the market can recover fast enough to forebear a difficult liquidity situation and whether the U.S. government will let miners like Patriot stay in business.
Please click here to continue:
Patriot Coal: Different Coal Company, Same Coal Situation
There's definitely value at Patriot coal - at current production levels, Patriot's reserves will outlive most of us. The relevant questions for the stock, though, revolve around whether the market can recover fast enough to forebear a difficult liquidity situation and whether the U.S. government will let miners like Patriot stay in business.
Please click here to continue:
Patriot Coal: Different Coal Company, Same Coal Situation
Friday, August 5, 2011
Investopedia: Penn Virginia Still A Solid Resource Income Play
Coal has stayed in the news throughout 2011, as companies like Peabody Energy (NYSE:BTU), Alpha Natural Resources (NYSE:ANR) and Walter Energy (NYSE:WLT) have all been active in trying to build their thermal coal positions. Powder River Basin coal, too, has been a hot topic as more and more utilities switch to this plentiful and (arguably) less environmentally damaging coal reserve.
And Penn Virginia Resource Partners (NYSE:PVR) is involved in exactly none of that. Still, the fact remains that leasing thermal coal reserves and operating midstream gas assets is a cash-generating proposition, and Penn Virginia offers investors a tax-advantaged income stream tied directly to natural resources without much of the volatility seen in the sector.
Read the full article at Investopedia:
http://stocks.investopedia.
Tuesday, February 1, 2011
Alpha Looks To Be The Big Dog In U.S. Met Coal
This weekend's announcement from Alpha Natural Resources (NYSE:ANR) that it reached an agreement to acquire Massey Energy (NYSE:MEE) not only ends months of speculation about Massey's future, but it also represents yet another tremor through the metallurgical coal world. With steel prices already on the rise, met coal trading at about twice the price of steam coal and relatively modest near-term supply coming online, it seems a safe bet that met coal pricing is going to be a popular topic this year.
Alpha's Deal
Alpha agreed to pay over $7 billion in cash and stock to acquire Massey. The deal is being structured as a mix of equity and cash, with Massey shareholders getting 1.025 shares of Alpha (and thereby owning about 46% of the combined company) and $10 in cash. That is not only a 21% premium to where Massey closed on Friday (and the stock has been strong since the summer of 2010), but a rather high multiple relative to normal historical coal stock metrics. (For more, see Coal Burns Bright Despite Pressures.)
Alpha may have felt that it needed to make an impressive bid for Massey in order to fend off potential rivals. Though unattributed rumors are hardly proof, it does not seem unreasonable that companies like Arch Coal (NYSE:ACI) or ArcelorMittal (NYSE:MT) may have been interested in Massey as well.
What Alpha Will Be
With this deal, Alpha acquires 2.9 billion tons in coal reserves, with 1.3 billion of those being the more valuable metallurgical coal. All told, the combined company will have more than 5 billion tons in coal reserves and will become a real player in the global met coal market. Though BHP Billiton (NYSE:BHP), Mitsubishi and Teck Resources (NYSE:TCK) will still have roughly 40% of the world met coal market, the new Alpha will crack into the double-digits in terms of share of the global seabourne market.
Please click below for the full piece:
http://stocks.investopedia.
Alpha's Deal
Alpha agreed to pay over $7 billion in cash and stock to acquire Massey. The deal is being structured as a mix of equity and cash, with Massey shareholders getting 1.025 shares of Alpha (and thereby owning about 46% of the combined company) and $10 in cash. That is not only a 21% premium to where Massey closed on Friday (and the stock has been strong since the summer of 2010), but a rather high multiple relative to normal historical coal stock metrics. (For more, see Coal Burns Bright Despite Pressures.)
Alpha may have felt that it needed to make an impressive bid for Massey in order to fend off potential rivals. Though unattributed rumors are hardly proof, it does not seem unreasonable that companies like Arch Coal (NYSE:ACI) or ArcelorMittal (NYSE:MT) may have been interested in Massey as well.
What Alpha Will Be
With this deal, Alpha acquires 2.9 billion tons in coal reserves, with 1.3 billion of those being the more valuable metallurgical coal. All told, the combined company will have more than 5 billion tons in coal reserves and will become a real player in the global met coal market. Though BHP Billiton (NYSE:BHP), Mitsubishi and Teck Resources (NYSE:TCK) will still have roughly 40% of the world met coal market, the new Alpha will crack into the double-digits in terms of share of the global seabourne market.
Please click below for the full piece:
http://stocks.investopedia.
Friday, January 7, 2011
Investopedia: Will Aussie Flooding Rain On China's Parade?
Australia's summer has brought more than its usual wet season to parts of the country. This year the large northeastern state of Queensland has seen devastating flooding; the sort of flooding that leads to world news clips of people paddling boats through streets and animals seeking refuge wherever they can from the waters. Though the human toll of the disaster is likely to be severe for Australians, there are economic impacts that will stretch beyond the country and be felt throughout 2011.
Trouble In Coal
Australia is a major producer of metallurgical coal, and mines in Queensland produce about half of the country's supply of this critical steel component. In particular, China is critically dependent upon Australia's met coal mines to feed its ever-hungry steel sector. With about 90 million tonnes of met coal already subject to force majeure, it would seem that steel customers in Asia are going to have to scramble (and pay up) to find the coal to fuel their blast furnaces.
BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RIO), Wesfarmers and Xstrata all have major met coal operations in Australia. Even for those companies and mines that are relatively less affected, there is the issue of the ports and rails - flooding has damaged infrastructure and delayed ship loadings, and it will take some time to work through the backlog. While companies like Xstrata do have other producing areas (South Africa for Xstrata, for instance), there is only so much coal to go around. Likewise, for companies like Peabody (NYSE:BTU), which does have some operations in New South Wales (in addition to Queensland), there is only so much they can do to increase mine production in the short term.
Please follow the link below:
http://stocks.investopedia.
I realize this isn't really "news" anymore ... unfortunately, it got held up in queue.
Trouble In Coal
Australia is a major producer of metallurgical coal, and mines in Queensland produce about half of the country's supply of this critical steel component. In particular, China is critically dependent upon Australia's met coal mines to feed its ever-hungry steel sector. With about 90 million tonnes of met coal already subject to force majeure, it would seem that steel customers in Asia are going to have to scramble (and pay up) to find the coal to fuel their blast furnaces.
BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RIO), Wesfarmers and Xstrata all have major met coal operations in Australia. Even for those companies and mines that are relatively less affected, there is the issue of the ports and rails - flooding has damaged infrastructure and delayed ship loadings, and it will take some time to work through the backlog. While companies like Xstrata do have other producing areas (South Africa for Xstrata, for instance), there is only so much coal to go around. Likewise, for companies like Peabody (NYSE:BTU), which does have some operations in New South Wales (in addition to Queensland), there is only so much they can do to increase mine production in the short term.
Please follow the link below:
http://stocks.investopedia.
I realize this isn't really "news" anymore ... unfortunately, it got held up in queue.
Subscribe to:
Posts (Atom)