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Peabody Energy Corporation (BTU)

  • Wed, Jan. 7, 7:35 PM
    • Energy bonds have become one of the riskiest sectors in the bond market, as the cost of buying five-year credit default swaps protecting $10M of bonds has jumped from $139K/year last June to $377K today for companies in the S&P/ISDA CDS U.S. Energy Select 10 Index.
    • The index consists of 10 large major energy companies: APC, APA, CHK, COP, DVN, OTCQB:FSTO, HAL, BTU, VLO and WMB.
    • Even though most of the companies boast investment-grade ratings, it now costs more to insure bonds in that index against default than it costs to insure bonds of an average junk-rated company, according to S&P.
  • Dec. 29, 2014, 10:26 AM
    • Pummeled this year thanks to slumping coal prices, a general rout in commodities names, and (in some cases) bankruptcy fears, coal stocks are seeing bargain-hunters emerge on a quiet late-December trading day.
    • Gainers: CLF +8.2%. WLT +4.6%. ACI +3.3%. BTU +2.1%. ANR +3.8%.
    • On SA, Equity Watch recently argued more pain is in store for the U.S. coal industry 2015, given the April implementation of MATS regulations, declining thermal coal demand (due to the retiring of coal-fired plants), and an unfavorable global supply/demand balance for metallurgical coal. The author does, however, think rising Asian demand could provide some relief for U.S. firms.
    • ETF: KOL
  • Dec. 19, 2014, 2:27 PM
    • U.S. coal companies will no longer be able to settle royalties at low domestic prices when they make lucrative sales to Asia, according to a new proposal from the Interior Department.
    • The reforms would update rules on how energy companies settle their royalty payments on coal, oil and gas pulled from federal lands, but the changes to the coal program may have the biggest impact.
    • Arch Coal (ACI +8.2%), Peabody Energy (BTU +4.2%) and Cloud Peak Energy (CLD +1.7%) are among the leaders in mining coal from federal land in the U.S. west.
  • Dec. 18, 2014, 12:35 PM
    • Peabody Energy (BTU +0.6%) is one of two remaining bidders for a contract to develop the Tavan Tolgoi coking coal deposit in Mongolia, which holds 7.4B tons of the coal used to make steel.
    • Development of the mine has stalled since a botched tender in 2011 that saw the Mongolian government rescind an agreement that would have allowed BTU, China Shenhua and OAO Russian Railways to operate the mine.
    • A unit of Mongolia Mining (OTCPK:MOGLF), which already mines coal at another site in the Tavan Tolgoi coal basin, leads a group making the other bid.
    | 1 Comment
  • Dec. 15, 2014, 6:33 PM
    • Calpers and Calstrs, the two biggest pension funds in the U.S., would be required to divest its holdings in companies that produce coal under a bill to be introduced by Kevin de Leon, the new leader of the state Senate.
    • Calpers, with assets of $294B, had nearly $46M in coal and consumable fuels holdings as of Sept. 30, with its largest holdings in Consol Energy (NYSE:CNX), Peabody Energy (NYSE:BTU) and Alliance Resources Partners (NASDAQ:ARLP), according to Bloomberg data.
    • The measure, if passed by lawmakers and signed into law by Gov. Brown, would make Calpers the largest pension to end investment in coal.
  • Dec. 11, 2014, 3:36 PM
    • J.P. Morgan analysts think sliding oil prices could be good news for coal miners such as Arch Coal (NYSE:ACI) and Peabody Energy (NYSE:BTU), as the current problems in the E&P world appear to signal an inflection point for the shale oil and gas business, which has been a major thorn in coal’s side.
    • Gas supply should turn lower in 2016, JPM says, resulting in higher coal prices and a realization that coal must have a bigger role in U.S. power supply than was expected just a few weeks ago.
    • The firm likes the high yielding Illinois basin MLPs Foresight Energy (NYSE:FELP) and Alliance Resource Partners (NASDAQ:ARLP), but for more aggressive investors it thinks the other coal names with financial strength like Cloud Peak Energy (NYSE:CLD), Consol Energy (NYSE:CNX), and BTU should benefit more from the new paradigm by H2 2015.
  • Dec. 3, 2014, 12:35 PM
    • Mongolia has restarted bidding for development of the giant Tavan Tolgoi coal project as it tries to boost a flagging economy hit by falling commodity prices and a decline in foreign investment.
    • A consortium comprising China Shenhua Energy (OTCPK:CUAEF), the world's largest coal producer by volume, Sumitomo Corp. and a subsidiary of Mongolian Mining (OTCPK:MOGLF) has submitted a bid; Peabody Energy (NYSE:BTU) and a local Mongolia mining firm also submitted separate bids
    • Tavan Tolgoi holds ~7.5B metric tons of coking coal, but Mongolia's cash-strapped government has struggled to finance its development.
  • Dec. 2, 2014, 3:35 PM
    • Walter Energy (WLT -29.2%) sells off nearly 30% following a note from BB&T Capital predicting the coal company would fall into bankruptcy in 2015.
    • BB&T thinks WLT has enough cash to get through 2015 at the current met coal price of $119/metric ton, but believes WLT's board "will reach the conclusion before that point that the met market won't improve enough over the next couple of years to save the company from needing to restructure."
    • Most other coal names also are lower: ANR -2.3%, ACI -1.9%, CLD -3.1%, CLF -2.2%, CNX -0.7%, BTU +0.6%.
  • Nov. 28, 2014, 10:25 AM
  • Nov. 25, 2014, 7:57 AM
    • Glencore (OTCPK:GLCNF, OTCPK:GLNCY) and Peabody Energy (NYSE:BTU) form a joint venture to develop an open-cut coal mine between existing operations run by the two companies in Australia's New South Wales state.
    • The 50-50 JV will dig the pit between Glencore's United coal mine in the Hunter Valley and BTU's Wambo operations nearby; the project is expected to start in mid-2017 and could produce 6M metric tons/year of thermal coal used in power stations.
    • The plan, expected to take effect in mid-2017, would improve recovery of coal from the combined operations and sharply cut capital and operating costs.
    | Comment!
  • Nov. 24, 2014, 11:58 AM
    • Electric utilities from Minnesota to Texas are trying to pressure Berkshire Hathaway's (BRK.A, [BRK.B]]) BNSF Railway to speed up deliveries of coal on its congested tracks before the worst winter weather hits.
    • One group of utilities has petitioned federal regulators to impose a timetable on BNSF to add workers and improve tracks leading east from coal fields in Wyoming; some of the group’s utilities depend on BNSF, one of the largest shippers of coal from the West, for their coal supply, and they say they do not have an alternative.
    • Xcel Energy (NYSE:XEL), which owns utilities in eight states, says all its coal plants served by BNSF have less than 30 days’ worth of coal; Allete’s (NYSE:ALE) Minnesota Power temporarily shut two smaller coal plants in September to conserve coal for its large coal plant in Cohasset.
    • Coal producers also are struggling to cope with the rail service problems; Peabody Energy (NYSE:BTU) says coal shipments from its Western operations, including Wyoming mines that supply power plants in Minnesota, fell 2% in Q3 because customers could not find enough rail capacity.
  • Nov. 21, 2014, 6:45 PM
  • Nov. 21, 2014, 10:28 AM
  • Nov. 14, 2014, 2:39 PM
    • Thermal coal and coal stocks are rallying after Glencore (OTCPK:GLCNF, OTCPK:GLNCY) said it would halt production at its Australian mines for three weeks to try to tackle a global supply glut.
    • Deutsche Bank says the move is an important signal from the world’s largest producer of seaborne thermal coal: “Taking 5M tonnes out of the 1.1B [a year] seaborne market is a relatively small starting point, but may mark the start of more to come."
    • But other analysts say it is no sure thing that Glencore’s move would be copied by others or lead to permanent mine closures; unlike some rivals, Glencore has less exposure to "take or pay” contacts which oblige miners to pay charges of up to $25/metric ton to use rail and port.
    • ACI +10.7%, ANR +10.1%, WLT +5.2%, BTU +4.3%, CLF +3.2%, CLD +2%, CNX +1.9%.
    • ETF: KOL
  • Nov. 10, 2014, 8:29 AM
    • The big Republican victory in last week's congressional elections is raising coal industry hopes for a rollback of the Obama administration’s plan to cut emissions from coal-fired power plants, according to Peabody Energy (NYSE:BTU) CEO Greg Boyce.
    • Boyce says BTU advocates building “supercritical” power plants worldwide that pollute less per unit of power produced than traditional plants, but he says the EPA's provisions requiring them also to be fitted with technology for carbon capture and storage technology is impractical and potentially very costly.
    • Shares in BTU, the largest U.S. coal producer, have jumped 13% since last Tuesday after hitting 10-year lows a month ago.
  • Nov. 6, 2014, 5:49 PM
    • Peabody Energy (NYSE:BTU) CEO Greg Boyce lashes out at climate change activists, arguing that even as coal is the biggest source of carbon emissions, divesting from fossil fuels is “misguided and anti-poor."
    • “It’s pretty strange that, globally, not only the UN, but developed country leaders are spending so much time on, quote, climate change,” Boyce says. "They aren’t focusing on how you eliminate poverty, eliminate energy poverty, and start driving global economic activity.”
    • Boyce’s position is drawing heavy criticism at a time when the UN warned recently that humans must act to cut carbon emissions to prevent widespread harm from rising global temperatures.
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Company Description
Peabody Energy Corp is involved in mining. It mines, prepares, and sells thermal coal to electric utilities and metallurgical coal to industrial customers.