Wed, Oct. 7, 12:41 PM
- Peabody Energy (BTU -8.9%) and Cloud Peak Energy (CLD -1.6%) give back some of yesterday's gains, as Morgan Stanley says coal prices could remain weak for a few more years and forecasts U.S. utility coal burn to fall by 75 metric tons Y/Y to 774 metric tons in 2015 and remain near that level until 2020.
- The firm downgrades BTU and CLD to Equal Weight from Overweight, saying both companies need an uptick in coal pricing to remain or return to free cash flow positive.
- Also: ACI -12.2%, WLB -1.4%, CNX +4.4%, ARLP +2.6%.
- Earlier: Things can't get much worse for coal after disastrous 2015, analyst says (Oct. 6)
Tue, Oct. 6, 7:11 PM
- Most utilities that are able to switch to cleaner burning and cheaper natural gas already have done so, BB&T Capital said in a new report that may have helped propel coal company stocks (NYSEARCA:KOL) to big gains today.
- Newly implemented federal regulations prompted closures of several coal-fired power plants in 2015, and natural gas prices that have dropped 37% in the past year made that fuel more attractive than coal for electricity generation.
- "The good news is that we can’t even fathom a fall in coal demand in 2016 that resembles anything like what happened in 2015,” BB&T's Mark Levin writes.
- The worst case for coal next year is for demand to slide another 2%-4% rather than the 10% drop suffered in 2015, according to Levin, but Bloomberg analysts warn that coal producers may want to brace themselves as the flood of cheap gas flowing into power plants shows no signs of receding.
- In today's trade: BTU +34.9%, ACI +33.3%, CLD +6.6%, ARLP +3.1%, CNX +1%, WLB -0.5%.
Tue, Oct. 6, 12:44 PM
Thu, Oct. 1, 12:34 PM
- Coal stocks (KOL -0.7%) are broadly lower after Moody's issues a weak forecast for the North American coal industry, saying the outlook "remains negative amid ongoing challenges for both metallurgical and thermal coal, including declining coal consumption and low met coal prices."
- The ratings agency forecasts a ~10% Y/Y decline in the industry's EBITDA for 2016, following the 25% drop it anticipates for 2015.
- BTU -10.7% after allowing for a 1-for-15 reverse split that took effect today; also ACI -5.4%, CNX -6.4%, WLB -5.1%, CLD -3%, ARLP -0.7%.
Thu, Oct. 1, 9:15 AM
Thu, Sep. 24, 3:22 PM
- Peabody Energy (BTU +25.4%) is surging following a Bloomberg report that a group of the company's senior lenders hired New York-based law firm Davis Polk & Wardwell in anticipation of talks to restructure its $6.3B in debt.
- The creditors hold BTU's $1.17B first-lien term loan and are concerned that any proposal by BTU could dilute the value of the assets that secure the debt.
- The news suggests BTU is serious about de-leveraging, and that such a move has the potential to wipe out some of the value of its outstanding debt.
- Arch Coal's (ACI +38.6%) agreement to extend its debt exchange plan for another month, seen as a potential benchmark for a debt swap by BTU, also is helping shares.
- Along for the ride: CLD +4.7%, WLB +5.4%.
Thu, Sep. 24, 12:40 PM
Tue, Sep. 22, 9:21 AM
Fri, Sep. 18, 6:21 PM
- Boosted by a recent victory in Colorado, environmental groups are expanding their legal campaign to try stop coal mining by challenging permits for some of the largest mines in the western U.S.
- This time, WildEarth Guardians is asking a federal judge to block mining at Cloud Peak Energy's (NYSE:CLD) Antelope mine in Wyoming, Arch Coal's (NYSE:ACI) Black Thunder mines in Wyoming, Peabody Energy's (NYSE:BTU) El Segundo mine in New Mexico, and others.
- Rather than just saying U.S. regulators should take the climate change impacts of individual mines into account before approving permits, the group is finding some success by claiming regulators should be considering the cumulative effect of mining as a whole and whether the U.S. should allow any more.
- Another court win could lead regulators to change their approach and start taking climate change into account before approving future coal leases, some law professors say.
Thu, Sep. 17, 12:41 PM
Thu, Sep. 17, 9:15 AM
Wed, Sep. 16, 5:35 PM
Thu, Sep. 10, 12:44 PM
Wed, Sep. 9, 8:49 PM
- The federal appeals court in Washington, D.C., has declined an emergency request from Peabody Energy (NYSE:BTU) and 15 states, including West Virginia, to temporarily block the Obama administration's clean air standards.
- The plan mandates a 32% nationwide cut in emissions by 2030.
- Coal producers and coal-producing states have pressed for a delay in the rules, which will be applied to existing power plants, but the EPA has rejected such requests.
Wed, Sep. 2, 3:23 PM
- Volatility in U.S. coal equities (NYSEARCA:KOL) has reached the highest level since March 2010, as miners that fell more than 90% jumped to a two-week rally that abruptly ended yesterday when they slid as part of the stock market's wider selloff.
- Short sellers are a big factor: Last week's bounce suggests short sellers were fleeing their positions, which pushed up prices - Peabody Energy (BTU -3.6%), for example, had averaged ~15M trades/day for a month before Thursday, when it totaled nearly 60M.
- The companies also are trying to restructure their debt: After reports said Arch Coal (ACI +6.8%) was looking to compromise with lenders opposed to its proposed debt swap, and thus stave off the threat of bankruptcy, shares soared 633% in nine trading days.
- But Bloomberg says ACI is having trouble completing the swap, with senior lenders still opposed, and bond traders do not think the deal would be enough to fend off a bankruptcy.
- Also: CLD +1.3%, WLB +3%, ARLP -2.2%.
Tue, Sep. 1, 3:39 PM
- Coal stocks (KOL -4.4%) are surrendering large chunks of their recent gains, as might be expected, but J.P. Morgan analysts think coal's share of the U.S. power market might have hit its low point, seeing grid inflexibility making a reduction in coal’s share below ~30% difficult without more investment in the grid, pipelines and more gas power plants.
- The JPM team thinks it is reasonable to assume that once the U.S. gas market begins to balance and the gas price picks up, coal’s market share will recover to the mid or even high 30s prior to the introduction of the greenhouse gas rule, assuming the rule overcomes its many legal challenges.
- Meanwhile, the firm cuts its 2016 EPS estimate on Alliance Resource Partners (ARLP -1.7%) to $0.83 from $0.89, and imitates a 2016 estimate on Peabody Energy (BTU -17.98%) for a loss of $0.37, Arch Coal (ACI -28.9%) for a loss of $6.78, and Cloud Peak Energy (CLD -22.1%) for a loss of $0.21.
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