Tue, May 5, 2:14 PM
Fri, May 1, 10:32 AM
- Peabody Energy (BTU -2.9%) is downgraded to Underperform from In-line with a $3.50 price target, cut from $6.50, at Imperial Capital, which says it is bearish on the company's cap structure.
- The firm says it expects all BTU securities other than the term loan to trade lower in coming months, given strong negative headwinds in coal due to sub-$3 natural gas, coal retirements and oversupplied seaborne met coal, but it believes BTU likely will last multiple rounds in the coming shakeout in coal, as upcoming maturities roll into first or second lien debt, the company improves liquidity and reduces cash outflows.
- The firm says it is watching closely for any settlements with Patriot Energy, where $270M of contingent liabilities could materialize.
Fri, Apr. 24, 5:23 PM
- Peabody Energy (NYSE:BTU) held steady a day after a larger than expected Q1 loss triggered a 7.6% pounding in the stock price.
- Sterne Agee's Michael Dudas is optimistic, noting BTU ended Q1 with liquidity of $2.2B following its recent refinancing; at cycle lows for pricing, strong current and anticipated cost reduction efforts, and liquidity to meet estimated fixed outlays, the firm thinks BTU shares should benefit once pricing resets to more normalized levels.
- BTU said during yesterday's earnings call that it has studied creating a coal MLP, and Clarkson analyst Jeremy Sussman says BTU's Illinois Basin and Southwest assets could prove a good fit for an MLP structure because of the long-term nature of contracts and general stability of pricing in those regions.
- However, Nomura reiterates its Reduce rating on the shares, citing concerns about cash flow generation.
Thu, Apr. 23, 11:49 AM
- Peabody Energy (BTU -7.5%) plunges after reporting a much bigger than expected Q1 loss due to lower prices and declining Chinese demand, and issuing disappointing guidance.
- BTU says it now expects a Q2 adjusted EPS loss of $0.59-$0.49, vs. analyst consensus estimate for a loss of $0.35.
- BTU's Australian mining business swung to an operating loss of $24.5M vs. a profit of $1.8M in the year-ago quarter, due to hedging losses; before hedging, Australian operations rose $61.9M from $21M.
- BTU says U.S. coal generation fell 14%, alongside a 14% increase in natural gas generation, and cuts its 2015 U.S. sales forecast to 180M-190M tons from 190M-200M tons previously.
- Q1 revenue fell 5.5% Y/Y to $1.54B, due to lower pricing and a shift in U.S. production mix toward the Southern Powder River Basin; sales volume slipped 1.1%.
- Q1 results include the impact of $103M related to currency and fuel hedging.
- While Q1 results missed, Citi's Brian Yu believes BTU is "structurally different from its weaker U.S. peers," noting that BTU outlined $685M of potential annual cash improvements by early 2017, including $275M of lower cash payments related to PRB reserves and $335M of savings due to lower currency rates and fuel prices as hedges roll off.
Thu, Apr. 23, 8:04 AM
Wed, Apr. 22, 5:30 PM
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Tue, Apr. 21, 4:59 PM
- Peabody Energy (NYSE:BTU) says CEO Gregory Boyce and CEO-Elect Glenn Kellow will take voluntary and temporary 10% pay cuts for the rest of the calendar year, which the company says is part of its cost-cutting strategy.
- Boyce's base salary will be reduced from $1.23M/year to $1.1M annually from May 1 until June 30, and from $900K/year to $810K annually from July 1 until Dec. 31; Kellow's base salary will be cut from $950K/year to $855K from May 1 until the end of the year.
- Both execs will revert to their original salaries at the start of 2016.
Thu, Apr. 16, 12:25 PM
- A federal appeals court begins hearing arguments today in two cases challenging the EPA’s far-reaching proposal to cut pollution from U.S. coal-fired power plants.
- The lawsuits - one from a coalition of 15 states and another brought by privately held coal miner Murray Energy - are part of a growing pushback from opponents who say the move is illegal and will kill jobs, hurt demand for coal and drive up electricity prices.
- The EPA rule proposed last year requires states to cut carbon emissions by 30% by 2030, giving customized targets to each state and leaving it up to them to draw up plans to meet the targets.
- Coal industry arguments will be helped by an unlikely ally: iconic liberal law professor Laurence Tribe, who is representing Peabody Energy (NYSE:BTU) and likens Pres. Obama's climate change policies to "burning the Constitution."
- ETFs: XLE, XLU, VDE, ERX, OIH, KOL, IDU, VPU, ERY, DIG, DUG, IYE, FENY, PXJ, RYE, FUTY, RYU, UPW, FXN, FXU, DDG, SDP
Tue, Apr. 7, 12:59 PM
- Peabody Energy (BTU +7.3%) spikes higher after Balyasny Asset Management's Christian Zann tells CNBC he likes the stock as a value play in the coal space.
- Zann points out that coal is a relatively low capital intensive business vs. shale producers, who must spend considerable sums drilling new wells to maintain a production base.
- Zann likes Schlumberger (SLB +1%) and Halliburton (HAL -1.3%) among oil services stocks, and Marathon Oil (MRO +1.3%) in the E&P group.
Mon, Apr. 6, 5:35 PM
Tue, Mar. 24, 11:49 AM
- Power companies have taken a pounding at the Supreme Court over the last decade, but will be looking to break that trend this week when the high court hears arguments on hazardous pollution caps that apply to 460 coal-fired power plants, including facilities owned by Southern Co. (NYSE:SO), American Electric Power (NYSE:AEP) and Peabody Energy (NYSE:BTU).
- The industry says the EPA did not adequately take into account what the EPA estimates will be $10B in costs imposed by the rules; the agency says the new standards are worthwhile because they will prevent 11K premature deaths per year and produce as much as $90B in annual benefits.
- Not all power companies are fighting the EPA rules: Exelon (NYSE:EXC), the largest U.S. owner of nuclear plants - which do not emit greenhouse gases - joined with other businesses to file a brief supporting the EPA’s actions.
- ETFs: XLU, IDU, VPU, RYU, FUTY, UPW, FXU, SDP
Tue, Mar. 17, 12:59 PM
- The outlook for U.S. coal producers is "increasingly bleak," and the sector is likely to undergo a wave of bankruptcies, Macquarie Research warns as it forecasts U.S. coal prices (NYSEARCA:KOL) will no longer move in conjunction with international coal prices.
- The decoupling, which will feature declines in U.S. coal prices, will be a "necessary step to force rationalization on U.S. producers" but also likely will result in production cuts and bankruptcies, says analyst Anthony Young.
- Peabody Energy (BTU +4.8%) recently had to pay a 10% interest rate on bonds it issued, which Young says bodes badly for other coal producers, making it harder to refinance debt and leading to cuts and liquidity squeezes.
- Macquarie lowers its stock price targets on Alpha Natural (ANR -4.2%) to $0.60 from $1.15, on Arch Coal (ACI -1.9%) to $0.90 from $1.25, on BTU to $5.30 from $6.40, and on Consol (CNX -0.1%) to $29.50 from $31.50.
Thu, Mar. 12, 9:14 AM
- Peabody Energy (NYSE:BTU) -1.5% and Consol Energy (NYSE:CNX) -1.7% premarket after BofA Merrill downgrades both stocks to Underperform from Neutral on a weaker coal outlook.
- BofA cites poor China fundamentals, reflected in high inventory levels at ports and lower recent thermal imports, in reducing its thermal coal outlook 12% to $57/metric ton in 2015 with a 28% drop to $52/ton in 2016, and cutting its met coke view 12% in 2015 to $110/ton and 18% in 2016 to $115/ton.
- In lowering BTU's stock price target to $5 from $7, the firm cuts its FY 2015 EPS estimate to a $1.40 loss from its earlier view of a $0.90 loss, and slashes its FY 2016 EPS estimate to a $0.90 loss from a loss of $0.05.
- BofA sees CNX as "the less bad option" for investors, but still lowers its price target to $26 from $33 as consensus earnings estimates for the company "needs to drop with the new market reality."
Tue, Mar. 10, 3:45 PM
- Peabody Energy (BTU -5.6%) slides sharply after Jefferies downgrades shares to Hold from Buy with a $6 price target, cut from $10, on continued concerns about domestic thermal coal fundamentals due to low natural gas prices, weakening exports, MATS related coal plant closures and increased renewable capacity.
- BTU's Australian coal business is more likely to improve in the near-term due to higher seaborne thermal coal prices, the firm says, but operating costs have not declined nearly as much as competitors due to its extensive hedging program.
- Jefferies is bearish on mining shares in the near-term, and the firm revised many of its commodity price forecasts lower, but it has placed four metals and mining stocks above the rest: Freeport McMoRan (FCX -3.5%), Rio Tinto (RIO -2.6%), First Quantum (OTCPK:FQVLF -6.8%) and Angofagasta (OTCPK:ANFGY -5.8%).
Thu, Mar. 5, 6:56 PM
- Peabody Energy’s (NYSE:BTU) borrowing ability is being capped by lenders who are extracting concessions in return for allowing the company to raise $1B in the bond market, Bloomberg reports.
- BTU is said to have changed terms on its proposed second-lien notes, which would have allowed it to issue another $1B of junior-ranking debt; that limit has been cut to $500M, and may borrow an additional $500M if it is successful in raising $250M in equity.
- A successful deal would mean BTU’s next significant debt maturity would not arrive until 2018, according to Bloomberg.
Thu, Feb. 26, 2:45 PM
- J.P. Morgan analysts see some encouraging signs for coal (NYSEARCA:KOL), which would be good news for companies such as Peabody Energy (BTU -5.7%), Cloud Peak Energy (CLD -5%), Alliance Resource Partners (ARLP +0.9%) and Foresight Energy (FELP -1.2%).
- Coal equities have bounced off lows, the JPM crew says, which meshes with its belief that the greater financial challenges faced by oil and gas E&Ps should reduce natural gas supply and help coal prices later this year and into 2016.
- JPM has Overweight ratings on the two MLP coal miners ARLP and FELP, which it expects to benefit as the gas market tightens in 2016 and with the added attraction of yield in a yield-starved world; BTU and CLD enjoy stronger balance sheets, which should see the companies through what could still be a sloppy coal market in 2015.
- Alpha Natural Resources (ANR -6.9%) and Arch Coal (ACI -4.3%), however, acquired so much debt that their equity effectively has become primarily an “option" on fluctuations in the coal market, the analysts say.
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