Oxford Resource Partners, L.P. (OXF), a Ohio-based low cost producer of high value steam coal, priced its IPO on 13th July at $18.50 per share, within the expected range of $18-$20 per share.
Business Overview (from prospectus)
We are a low cost producer of high value steam coal, and we are the largest producer of surface mined coal in Ohio. We focus on acquiring steam coal reserves that we can efficiently mine with our modern, large scale equipment. Our reserves and operations are strategically located in Northern Appalachia and the Illinois Basin to serve our primary market area of Illinois, Indiana, Kentucky, Ohio, Pennsylvania and West Virginia. We market our coal primarily to large utilities with coal-fired, base-load scrubbed power plants under long-term coal sales contracts. We believe that we will experience increased demand for our high-sulfur coal from power plants that have or will install scrubbers. Currently, there is over 54,500 megawatts of scrubbed base-load electric generating capacity in our primary market area and plans have been announced to add over 18,400 megawatts of additional scrubbed capacity by the end of 2017. We also believe that we will experience increased demand for our coal from power plants that use coal from Central Appalachia as production in that region continues to decline.
We currently have 17 active surface mines that are managed as eight mining complexes. During the first quarter of 2010, our largest mine represented 12.6% of our coal production. This diversity reduces the risk that operational issues at any one mine will have a material impact on our business or our results of operations. Consistent coal quality across many of our mines and the mobility of our equipment fleet allows us to reliably serve our customers from multiple mining complexes while optimizing our mining plan. Our operations also include two river terminals, strategically located in eastern Ohio and western Kentucky, that further enhance our ability to supply coal to our customers with river access from multiple mines.
Offering: 8.8 million shares at $18-$20 per share. Net proceeds of approximately $96.5 million will be used for debt repayment, approximately $19.6 million to C&T Coal in respect of its limited partner interest, approximately $22.1 million for purchase of major mining equipment.
Total revenues increased 12.3% to $88.1 million in the first quarter of 2010 compared to $78.4 million for the first quarter of 2009...Cost of coal sales increased 35.2% to $55.2 million in the first quarter of 2010 from $40.8 million in the first quarter of 2009... Cost of purchased coal declined 7.6% to $7.9 million in the first quarter of 2010 from $8.5 million in the first quarter of 2009... SG&A expenses for the first quarter of 2010 were $3.5 million compared to $3.1 million for the first quarter of 2009...Interest expense for the first quarter of 2010 was $1.8 million compared to $1.1 million for the first quarter of 2009, an increase of $0.7 million...Net loss attributable to unitholders in the first quarter of 2010 of $0.3 million compared to net income attributable to unitholders of $9.4 million in the first quarter of 2009...
The coal industry is highly competitive. There are numerous large and small producers in all coal producing regions of the United States, and we compete with many of these producers. Our main competitors include Alliance Resource Partners, L.P. (NASDAQ:ARLP), Alpha Natural Resources, Inc. (ANR), Armstrong Coal Company, Buckingham Coal Co., Inc., The Cline Group (NYSE:CMK), CONSOL Energy (NYSE:CNX), Massey Energy Company (NYSE:MEE), Murray Energy Corporation, Patriot Coal Corp. (PCX), Peabody Energy, Inc. (NYSE:BTU) and Rhino Mining Inc.